Powering the Clean Energy Transition: Net-Zero electricity in Canada

A Bigger, Cleaner Power Grid 

Canada’s clean energy transition will require electrification across all sectors, and that electricity must be net-zero. The near-complete phase-out of coal-fired electricity generation has already contributed to a 60% reduction of greenhouse gas (GHG) emissions (measured as carbon dioxide equivalent [CO2e]) in the power sector since 2005. Now only 47 Mt of CO2e remain to be mitigated to reach net-zero GHG emissions; however, this must be achieved while doubling (or even tripling) electricity generation by 2050 if Canada’s other sectors are to reach net-zero too. (“Net-zero” means that CO2e emissions are reduced to zero or that any residual emissions are offset by additional, verifiable, and permanent CO2e removals). While the transformation of Canada’s electricity grids in Canada has been impressive, there is still work to do. 

With widespread renewable resources come widespread sustainable jobs. These jobs range from the technicians and engineers who design, implement, and maintain renewable energy generation projects to project managers and construction workers. Much like in the fossil fuel sector, the impact on employment goes beyond direct employment opportunities, as renewable power hubs support related service industries and otherwise boost local economies. Unlike the fossil fuel sector, however, renewable energy hubs will be distributed widely across the country, spreading jobs, wealth, and investment to communities nationwide.

Day-to-Day Benefits for Canadians 

Lower prices for households

Technical experts at the CCI and CEAC have found that a net-zero electricity grid would reduce average energy costs for Canadians. The CCI finds that “average household energy spending—on energy bills and the equipment that that energy powers—will decrease by 12 per cent between now and 2050 under a net zero transition”. CEAC estimates that a net-zero grid would save Canadian households CAD 15 billion annually by 2050, with 70% of households saving an average of CAD 1,500 per year. There are several reasons for these consumer cost savings, discussed below. 

Low energy costs

Globally, onshore wind and solar are already cheaper sources of power than new fossil fuel alternatives across their lifespan, and costs continue to fall rapidly as these new technologies expand and develop. Recent data from the International Renewable Energy Agency shows that 81% of newly commissioned renewable power generation in 2023 was cheaper than fossil fuel alternatives. Cost savings like this have meant that renewable power generation saved the global power sector up to USD 409 billion between 2000 and 2023. In Canada, the Pembina Institute’s modelling of New Brunswick, Nova Scotia, and Alberta shows that a non-emitting power grid can provide the same energy services at a lower cost than natural gas-reliant alternatives. 

High energy efficiency

An expanded power grid would also unlock huge efficiency gains across the country, as the CEAC explains: “for most needs (heating and vehicles), electricity can be 2 to 4 times more efficient than the energy sources it will replace”. So, even if electricity rates increase in some parts of the country as the grid absorbs the cost of new infrastructure, consumer costs can still decrease as less energy is used. These cost savings can be multiplied when paired with demand-side management. For example, Nova Scotia’s recent investment of CAD 173 million in demand-side management is expected to save ratepayers CAD 542.8 million over the lifetime of the plan. 

Stable pricing

Renewable power sources, such as hydro, wind, and solar, do not rely on internationally traded fuels like oil and gas. A clean power grid, therefore, can be less vulnerable to rapid price spikes caused by commodity supply shocks beyond Canada’s control, such as those that followed Russia’s invasion of Ukraine in 2022. Low-cost wind and solar generation can be locked in by long-term power purchasing agreements that give grid operators cost certainty, resulting in more stable rates for consumers. Removing the price uncertainty inherent to fossil fuels enables businesses and households to efficiently plan, invest, and budget for their energy needs while freeing governments from spending millions in taxpayer money to protect consumers from sudden price spikes via emergency subsidies. Moreover, when households generate their own renewable energy—through rooftop solar—they can effectively hedge against future fossil fuel price spikes while generating tax-free savings on their electricity bills by selling excess power back to the grid. 

Managing transitions

Some research suggests certain households in Canada may see minor cost increases under a clean power grid, mostly in locations that currently have high rates of natural gas use; however, such risks can easily be offset by smart policy decisions. With lower energy costs across the economy and fewer subsidies required to offset the effects of fossil fuel price spikes, government support can be directed to the small percentage of households that are vulnerable to cost increases, ensuring that a clean power grid brings energy cost savings nationwide.

Clean Power can be Reliable  

Reliable technologies

As a baseline, Canada benefits from vast hydroelectric resources that can be used to offer firm, dispatchable power generation that is available almost all the time. Modelling shows that new renewables, such as wind and solar, can meet the rest of expected demand directly when paired with storage technologies, demand-side management techniques, and electricity-sharing infrastructure (interties) between provinces. The reliability and efficiency of these technologies have improved significantly in recent years. The cost of battery storage projects, for example, declined by 89% globally from 2010 to 2023 as technologies improved and manufacturing capacity expanded. Interties between provincial grids, meanwhile, are already an effective option to efficiently share clean electricity supplies across the country, but they require interprovincial agreement and coordination. This is one area where the federal government can play a pivotal role in coordinating with provinces and territories. 

Energy Security

Because clean power grids rely less on imported (or otherwise globally traded) fuels like oil and gas, Canadian governments can have more control over the cost and supply of electricity, even in times of international tensions or economic instability. This means that a well-designed renewable-based power grid not only protects consumers from sudden spikes in electricity costs but also enhances Canada’s energy independence, making the country more resilient in an increasingly volatile fossil fuel economy. This is not to say that clean power projects will not be impacted by global economic shocks—renewable supply chains will often still be global in scope—but rather that the operating costs of such projects, and thus the availability of affordable power for consumers, will be far less sensitive to developments beyond Canada’s control.

Healthier communities

Coal-fired power plants are especially polluting—emitting high concentrations of sulphur dioxide, nitric oxide, and nitrogen dioxide. These pollutants are linked to heart and lung conditions, with young children and the elderly at disproportionate risk. In 2014, it was estimated that Canada’s 14 coal-fired power plants caused 160 premature deaths and 140 hospital admissions, costing the Canadian economy CAD 800 million per year. While natural gas power generation is less polluting than coal, nitric oxide and nitrogen dioxide are still emitted. Switching to clean power generation—which does not emit such pollutants—can lead to significant health benefits for communities exposed to fossil fuel pollution.    

Healthier environments

Fossil fuel power generation also produces pollutants that remain in the local environment. For example, coal-fired power plants release mercury, a toxic, long-lasting pollutant that often contaminates waterways. Mercury poses significant health risks, particularly for young children, as it can impair cognitive function and motor skills when exposure occurs early in life or during fetal development from consuming contaminated fish. In addition, nitrogen oxides contribute to ground-level ozone and acid rain, both of which negatively impact local ecosystems. By switching to clean power generation, such local pollutants can be avoided.  

Key Policies for Federal and Provincial Governments to Develop Canada’s Net-Zero Power Grid

To accelerate Canada’s transition to a clean electricity grid while ensuring Canadians across the country benefit from clean, cheap, and reliable power, coordinated and complementary policies across provincial and federal governments will be needed.

Conclusion 

A clean power grid is an investment and one that will show returns across the country. By expanding and decarbonizing Canada’s electricity sector, Canadian governments can set the foundation for a successful energy transition between now and 2050, all while ensuring that Canadians will have access to clean, affordable, and reliable power for decades to come. No one level of government can complete this task on their own; federal, provincial, and territorial governments must cooperate and form agreements to make the most of Canada’s vast renewable energy potential in terms of both the environmental and economic opportunities that it presents.  

A full list of references can be found here.

Re-Energizing Canada is a multi-year IISD research project envisioning Canada's future beyond oil and gas. This publication is part of IISD's Clean Energy Insights policy brief series under this project, which outlines the benefits of a net-zero economy for Canadians across the country.