Normand Mousseau
Professor of Physics and Academic director
of the Trottier Energy Institute

Guy Marleau

A common energy policy for Canada: what is there to gain?

Energy and environmental context in Canada

From a constitutional point of view, energy in Canada is a shared responsibility between the federal and the provincial governments. Provinces and territories manage their non-renewable natural resources as well as being in charge of producing, transporting and distributing electricity. Nuclear energy is the only sector under the sole control of the federal government. The provinces also share, with the federal government, powers related to the protection of the environment. One consequence, one should talk more in terms of several “energy and environment policies” than one common policy for Canada.

Apart from the constitutional issues, other problems must be solved before an agreement between the various provincial governments and the federal on a common energy policy for Canada can be reached. The provinces being what they are, namely regional government, have access to widely different resources to provide energy to their population. Some provinces are net energy producers and rely heavily on the revenues generated by their large natural resources to ensure the living standards of their population. Others are net energy consumers and require low energy prices to reach the same goal.

Finally, GHG production resulting from energy use is also highly different in each province. However, from the point of view of the environment, these differences are irrelevant since these gases, wherever they are produced, contribute to the global warming problem.

Having a single energy policy for Canada is something that should be aimed at but may be impossible to achieve because of constitutional questions. On the other hand, harmonizing provincial energy policies based on a fair price policy, while being difficult to attain, should bring about the same result, namely ensuring that Canadians have access to reliable and less polluting energy sources. In the short term, such a harmonization could be applied to the Eastern Canada market, before being extended to the other provinces that might then be interested to join this internal market.

Harmonized energy policies based on fair price

Harmonizing the energy policies of the province in Eastern Canada might not be easy. However, since two of these provinces are amongst the largest GHG producers in the country and all have populations that are very sensitive to the possible changes in climate these emissions imply, the incentive for starting negotiations on this topic should be high.

The common components of harmonized energy policies in Eastern Canada could be based on the use of real costs for current and replacement energy, including land occupation, construction, production, transport, decommissioning and waste management. These two concepts namely real current and replacement costs are in fact essential if a fair and environmentally sound energy trade system between provinces is to be established.

As an example, the energy prices paid by the users rarely reflect environmental costs. Consumers having to pay the real cost, including pollution taxes, would certainly favour moving to less environmentally damaging sources. This would also provide the consumer with a strong incentive to reduce its energy use or to consider energy saving investments. In addition, since GHG emission costs are not included in free market energy prices, replacement of GHG emitting energy sources often means a displacement of GHS production, not reduction.

A harmonized Eastern Canada energy policy that relies on real current and replacement energy costs could serve as the basis for a fair and environmentally sound energy market between provinces. Then, a province would not be able to rely solely on low cost energy from another source to replace its high GHG emission energy sources. Low GHG emission energy would be sold at replacement costs for the seller with an “eco” rebate proportional to the global GHG reduction. This rebate would be partially at the expanses of a province selling the energy, but considered as its contribution to GHG global reduction effort.


Although, it would be very difficult to develop a common energy policy for Canada or even Eastern Canada, I think that some harmonization of the energy policies of the different provinces could be achieved based on the real cost of current and replacement of energy. This is the position I will defend at the workshop.

Tuesday 21 October 2014

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