Thank you, Mr. Chair.
I'm Gilbert Bennett, representing WaterPower Canada. Thank you to the honourable members for the opportunity to appear before this committee today.
WaterPower Canada represents Canada’s hydro power industry. Hydro power provides 60% of Canada’s electricity, with over 82,000 megawatts in service.
However, electricity is only a piece of the puzzle, as fossil fuels supply three-quarters of the energy consumed by Canadians. Achieving our net-zero ambitions by 2050 will require us to double our electricity supply, repeating the past 100 years of work building the electricity system that we have today in the next 25 years.
Hydro power generation offers three important benefits to our electricity system. First is long-term storage. Hydro power with facilities with reservoirs provide massive storage capacity over a period of months. Second is flexible production, with the ability to control output as needed and with pumped storage to be able to store surplus energy for use later. Third is firm output. With water in storage, hydro power facilities can provide reliable and stable power when needed.
Canada’s electricity system is operated, maintained and, to a significant extent, owned by provincial entities. Notwithstanding the federal government’s role in aspects of environmental assessment, permitting and interprovincial transmission, the provinces are constitutionally responsible for electricity generation, transmission and distribution.
Electricity system operators and utilities operate within a provincially regulated framework that addresses reliability, cost recovery and the approval of investments. Except for a limited set of matters under federal jurisdiction, most environmental assessment and permitting responsibilities also lie with provincial authorities.
Ultimately, expansion of Canada’s electricity system will be approved by provincial electricity regulators, and absent any other source of financial support, costs will be recovered from provincial electricity customers. Each province is responsible for the development of its net-zero road map.
Historically, more transmission capacity exists between Canada and the United States, with less so between Canadian provinces. The rationale is straightforward: Canadian producers have been able to justify transmission investments so that they can participate in U.S. electricity markets, particularly when peak demands in those markets do not coincide with their own. This business case is not as obvious for east-west trade between provinces, particularly when market structures don't always facilitate real-time trading, but we need to investigate these opportunities on a broader scale.
Interconnecting larger areas provides greater diversity of supply for a larger region and provides greater ability for surpluses in one area to offset shortfalls in another. Interconnecting hydro power-producing areas with their neighbours extends the reach of hydro power reservoir storage more broadly. Interconnecting areas with high quality, variable renewables extends their market reach and improves their business case during periods of low demand in their own market.
Substantial expansion of our electricity system is required to meet our net-zero aspirations, but we are concerned with the challenges to developing projects in Canada.
The environmental assessment and permitting process for clean energy projects is long and arduous, and uncertainties created by the Impact Assessment Act, the Fisheries Act and the migratory birds regulations create unnecessary risk.
Clear timelines for decision-making do not exist, and prohibitions on necessary activities have been imposed without compliance mechanisms for project developers. Some departments, notably Fisheries and Oceans Canada, have created new compliance risks by creating uncertainty for existing facilities that were permitted decades ago. Federal programs that were meant to encourage investment, such as the clean electricity investment tax credit, are unnecessarily complex, have extraneous conditions and are set to expire before they are useful to developers of long-term projects.
Although climate change is an overarching priority for our federal government, processes and programs are not operating with that goal in mind and are focused on their own silos of responsibility. We are hopeful that the commitments made by our federal government regarding regulatory streamlining will achieve their intent.
Ultimately, our energy transition will happen when end-users, from individuals to industrial customers, decide to change their energy sources from fossil fuels to electricity. Those individual decisions will drive electricity consumption to justify regulatory approvals for generation and transmission projects.
Given the extent of provincial jurisdiction and the requirement for end-user action, our national government needs to consider itself as a change enabler.
Our summary recommendations are as follows.
Develop support for energy projects nationally. The scope of change expected will require large-scale projects everywhere in Canada.
Urgently streamline project approval processes and provide guidance to permitting authorities that energy projects are required to meet our net-zero aspirations.
Encourage and support regional planning initiatives to unlock the benefits of greater interprovincial transmission interconnection.
Support low-cost investments in alternatives to fossil fuel use with standards and incentives to encourage switching.
Finally, actively work with provinces and municipalities to address barriers to electrification and facilitate the change to our net-zero future.
Thank you again, Mr. Chairman, for the opportunity to present before the committee. I would be pleased to address any questions the committee may have at the appropriate time.
