As U.S. tariffs rippled across the world’s economies Tuesday, Canadian calls to boost internal trade turned to questions over its fractured electricity grid.
The U.S. move levies a 25 per cent surcharge on all Canadian goods, with energy products facing a lesser 10 per cent tariff. The B.C. government’s latest budget found the province could see the loss of 45,000 jobs and $43 billion cut from its gross domestic product by 2029.
The tariffs could also impact people’s electricity bills on both sides of the border. Many provincial utilities export hydro power to the U.S. when prices are high, and import electricity from the U.S. when costs are low. Overall, the strategy is meant to lower rates.
A 10 per cent tariff throws the benefit of such arrangements into question. BC Hydro has not responded to requests asking how much the tariffs might impact rates in B.C.
Chris Severson-Baker, executive director of the Pembina Institute, warned against “knee-jerk reactions” to drive investment into oil and gas infrastructure. Instead, he said “Canada should pursue a coordinated policy of electrification” that would amount to “a true nation-building endeavour.”
“The tariffs really suggest we lean even harder into our strengths,” Severson-Baker said.
Grid inter-ties a 'win-win'
As part of BC Hydro’s call to power, the provincial government has already accelerated the approval of 10 wind and solar projects across B.C. — projects some calculate will fully make up for the province’s growing electricity demands until at least 2030.
But according to the Canadian Climate Institute, Canada's electricity systems will likely need to grow double to more than triple their current size by 2050. To keep that grid running on renewable energy would require an 18-fold increase in wind and solar energy, one 2022 study found.
Experts say that one of the best ways to increase the availability of electricity while keeping rates low is through building out grid inter-ties. In Western Canada, that would mean establishing connections between B.C.’s hydro-electric reservoirs and Alberta’s potential for cheap and easily deployable wind energy.
Once built, wind energy could be sent from Alberta to B.C. in the summer months when reservoir water levels are low. In the winter, Alberta would benefit from its neighbour’s re-charged hydroelectric capabilities, models show.
Both provinces would have alternative markets to sell their excess energy in the face of the new 10 per cent U.S. tariffs on Canadian energy products. Ultimately, said Severson-Baker, ratepayers would see cost savings.
“Really, it’s a win-win for everybody. Everyone gets more value for the electrons they put on the grid,” he said.
B.C. Energy Minister Adrian Dix did not immediately respond to requests for comment.
But according to Electricity Canada president and CEO Francis Bradley, U.S. trade barriers would likely spur serious conversations on the future of inter-provincial trade in electricity.
“I think that's a good thing for every sector to look at it,” said Bradley in the lead up to U.S.’s initial tariff deadline last month.
National grid would boost production, temper costs
Other industry experts said tariffs have raised frustration in the electricity sector to new highs that could finally prompt action to build out a national grid.
“Canada is at peak frustration,” said one industry expert, who spoke on background due to contractual restrictions. “Ministers are musing about the prospect of losing the U.S. as a security and economic partner.”
He warned any such project would fail if provinces didn’t first set up ways to share modelling, procurement and grid planning. Throttling electricity exports to the U.S. could also lead buyers to look elsewhere for electricity, the expert said.
Rachel Doran, vice-president of policy and strategy at Clean Energy Canada, said in a statement that over the short-term, financial support for Canadian workers and Canadian business is key in the wake of U.S. tariffs.
But looking forward, new ideas need testing, she said. Doran pointed to establishing procurement policies that prioritize goods and services based on carbon intensity, rather than origin.
She said that would “indirectly prefer clean Canadian-made cement, steel and vehicles while also being trade law-compliant.”
“With Canada’s relatively green grid and ongoing efforts to reduce emissions, many of Canada’s heavy industries already produce lower-emissions products than international competitors,” she added.
Of course, building green products, will inevitably require a steady supply of electricity.
In the past, Severson-Baker said provincial leaders have been reluctant build out their grids east and west into other jurisdictions. Today, the movement to overcome internal trade barriers has once again raised the prospect of launching such a national project.
“People are looking at this thing that before was seen as the impossible,” he said. “Now is the time.”
