From Consensus To Action – Energy Exchange

From Consensus to Action: How to Transform Canada’s Energy System

by Richard Carlson, Pollution Probe & Aïda Nciri, QUEST Canada

June 14, 2021

True in Canada as elsewhere, the coming transition to a low-carbon energy system will require changes to the way energy is regulated.

To better understand the role regulation will play in innovation, Natural Resources Canada asked Pollution Probe and QUEST to facilitate two National Dialogue Sessions to support the International Smart Grid Action Network (ISGAN)’s work on developing frameworks for regulatory innovation and regulatory sandboxes. ISGAN is one of the Technology Collaboration Programmes of the International Energy Agency. As an active participant in this programme, Canada used the opportunity to better understand the frameworks emerging nationally and internationally for regulatory experimentation and regulatory sandboxes. This improved understanding could support policy makers and regulators to accelerate the transition to clean energy systems.

The National Dialogues were built upon QUEST and Pollution Probe’s Innovation Sandbox initiative and featured a diverse group of participants from jurisdictions across the country. Three key takeaways from these sessions emerged on Canada’s regulatory landscape.

First, there is still a strong desire to have meaningful conversations and collaboration among various stakeholders. Despite COVID-related online-engagement fatigue and the challenges of designing interactive online workshop sessions, participants were enthusiastic to examine the barriers to regulatory innovation in Canada and had a rich conversation.

Second, from the participants, there was a broad consensus that:

The adoption of net-zero by 2050 targets by various governments has changed the conversation. The scale and pace of change required in energy infrastructure to meet that target has to be greater than just incremental improvements. Utilities, regulators and policymakers will need to keep up with the rapid and in-depth transformation.
There is a strong need for improved national dialogue and cooperation so we can learn from one another. Canadian jurisdictions tend to do their work independently from one another, and not share ideas and lessons. Given all the critical changes that need to happen, all the players evolving in the energy sector, new or old, public and private, large and small, must work together.
Regulators recognize the need to be part of the energy transition, and promote that they have the ability to complement the policy-making processes through independent regulatory reviews. However, they are not often given the resources or mandate to do so, except in certain cases. Environmental or climate considerations and some intersection of social considerations are generally not within the scope of their mandate, and as a result, they do not currently have the tools or frameworks to adopt a climate lens while controlling costs.

Without policy leadership — at all levels, federal, provincial, territorial, and municipal — these changes will not be possible. That leadership directly affects four major stakeholders who will shape this transition: regulators, utilities, private sector developers, and energy consumers.

The third and most important finding that reappeared through the conversation: without policy leadership — at all levels, federal, provincial, territorial, and municipal — these changes will not be possible. That leadership directly affects four major stakeholders who will shape this transition: regulators, utilities, private sector developers, and energy consumers. Regulators often need policy direction and support to consider climate objectives. Only then, can they undertake the work needed to be more proactive in investigating the value of emerging business cases and models connected to the broader energy sector transformation. Utilities and new entrants also need long-term visions, such as infrastructure and technology roadmaps, to inform their investments. Consumers need to trust that their interests are taken into consideration, which is only possible with strong policy leadership and opportunities to meaningfully engage.

Although these observations are not new to those already involved in the regulatory innovation space in Canada, these sessions did highlight that there is a consensus amongst national participants from across Canada on what needs to be done. We now just need to do it.

Our work on these National Dialogue Sessions has helped inform ISGAN’s recommendations to the Clean Energy Ministerial. As part of QUEST and Pollution Probe’s work on Innovation Sandboxes, and furthering low-carbon targets, we are also working to identify Canadian jurisdictions interested in developing tailored roadmaps for Innovation Sandboxes. These policy tools can be instrumental in accelerating the transition to net-zero — stay tuned for more news or contact us if your jurisdiction would benefit from an Innovation Sandbox.

Richard Carlson

Director, Energy Policy and Energy Exchange, Pollution Probe
Richard Carlson joined Pollution Probe in 2017 as Director of Energy Policy and Energy Exchange. He brings extensive energy policy and energy-literacy experience, most recently at the University of Toronto’s Mowat Centre. A recognized expert on energy policy and engagement, Richard has presented at numerous industry events. Media often invite him to provide commentary and context on energy stories. Beyond Canada, Richard has worked professionally and academically on energy development and policy in Europe, Central Asia, the Middle East, and East Asia. He also sits on the board of Transition Énergétique Québec, the Québec government’s energy transition agency.