Clean electricity will power Canada's net zero transition.

Reaching Canada’s climate targets requires a big switch from fossil fuel energy to clean electricity. This electricity transformation in Canada involves producing more clean electricity in every region. It phases out emitting sources, and uses clean electricity to power more and more of the economy. It will underpin Canada’s climate progress and power Canada’s future prosperity.

But getting there will require governments at all orders to leverage their policy tools—ideally in a coordinated way.

Transforming electricity in Canada will impact how nearly every household and business will use energy. The policy choices that governments make to align electricity systems with net zero are therefore extremely consequential. Getting it right—or wrong—will have big implications far beyond the electricity sector.

Electricity transformation in Canada

Acting early with smart policies can significantly reduce overall costs and make achieving net zero easier. Electricity transformations will require significant capital investment. Early and effective action, including initiatives to make electricity systems more resilient to the effects of climate change, allows Canada to avoid a more difficult transition later. It would entail higher consumer prices from stranded assets and from underbuilt systems struggling to keep up with growing demand. Acting now also reduces overall costs by driving innovation. 

Strategic action today can unlock clean growth opportunities. Canadian companies active in low-carbon electricity, batteries and storage, and solar and wind equipment are well-positioned to grow in the global low-carbon transition. New sources of transition-consistent growth can offer export opportunities, employment, and prosperity for Canadians.

Electricity system transformations can be pursued in ways that support equity. Ensuring rates remain reasonable for low-income households could help address potential inequities.

Catalysing Indigenous participation and leadership can support Indigenous self-determination and reconciliation. Clean energy projects represent an important means of advancing reconciliation and the rights and well-being of Indigenous Peoples.

While the stakes are high, Canada is fortunate to have significant advantages to draw on for its electricity transformation. Over 80 per cent of its electricity production is already non-emitting thanks to its abundant hydroelectric resources. Electricity systems across the country are supported by robust institutions and structures that deliver reliable and affordable electricity. Building on these advantages can ensure Canada meets its climate goals while strategically positioning its economy to succeed in the global low-carbon transition.

powering the switch: BIGGER, CLEANER, AND SMARTER ELECTRICITY SYSTEMS

This section summarizes the findings of our technical pathways report Bigger, Cleaner, Smarter, describing the changes needed in Canada’s electricity systems to align them with net zero. Aligning electricity systems with net zero requires attention to all three changes—bigger, cleaner, and smarter.

Transforming electricity systems

Aligning electricity systems with net zero is both necessary and achievable. Transformations will vary across Canada: regions without abundant hydropower resources face different challenges than those that are hydropower-rich. Some solutions face technological barriers, while many others face social, political, or institutional ones. 

Governments have a driving role in these transformations. Provincial and territorial governments are central in developing policy, given their authority over electricity systems. The federal government can set the national policy framework and act as an enabler of regional progress. Meaningful involvement of Indigenous Peoples in policy making and key decisions will also be required to achieve successful transformations. It will be necessary to ensure Indigenous Peoples continue to take a leading role in identifying and seizing clean energy opportunities. In short, policy interventions from different orders of government will be required to flip the switch.

FLIpping the switch: policy recommEndations for electric federalism

Our second report, Electric Federalism, identifies how Canadian governments can drive the transformations electricity systems require to achieve net zero.

Recommendations for building electric federalism:

1. The federal government should strengthen climate policy in the electricity sector. Significant policy gaps still remain, if the sector is to reach net zero by 2035. Federal climate policy in the electricity sector should provide sufficient incentives for non-emitting generation: for example, better incentives to ramp down use of unabated natural gas-fired electricity.
2. Federal, provincial, and territorial governments should leverage public funds to defray the costs of electricity system investments for ratepayers. Proactively mitigating potential upward pressure on rates can support a smooth net zero transition.
3. Provincial and territorial governments should flex their policy muscles in driving transformation of their electricity systems. Federal climate policies can help motivate greater integration. But it’s ultimately up to provinces and territories to choose how much they want to coordinate and integrate.
4. Both orders of government should pursue greater coordination and integration using their respective policy tools. Federal climate policies can help motivate greater integration. But it’s ultimately up to provinces and territories to choose how much they want to coordinate and integrate. 
5. To enable and accelerate policy action, the federal government should consider offering sustained, predictable financial support to provinces and territories. In exchange, provinces should implement a limited number of high-level policy actions.

Project briefing video

In this 30-minute briefing, Jason Dion and Caroline Lee walk through the main findings and recommendations of The Big Switch.

See here for the briefing deck that Jason and Caroline present in the video.

Scoping Papers and Case Studies

As part of this project, the Institute has commissioned a series of scoping papers and case studies on key topics relating to electricity system transformation. The purpose of these papers is to generate new thinking and useful insights from recognized experts.

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