Nova Scotia Power’s decision to “pause” its participation in the proposed Atlantic Loop megaproject is just a temporary setback in the bid to end the region’s reliance on coal, says the federal cabinet minister charged with moving the electrical grid off fossil fuels.
Natural Resources Minister Jonathan Wilkinson told The Canadian Press earlier this month that the utility’s move is a challenge to the project, which envisions a C$5-billion transmission project giving the region more access to Labrador and Quebec hydroelectricity.
However, he said the federal government is still actively pursuing the energy corridor.
“We’ve been working on this project for a few years,” he said. “This is a bump in the road, but it’s something I am very focused on ensuring can be overcome.”
Emera, Nova Scotia Power’s parent company, said last week it was putting participation in the project on hold after the provincial Progressive Conservative government introduced legislation capping power rate hikes for non-fuel costs at 1.8% over the next two years.
The legislation says those increases must be to build a more reliable grid following widespread outages that occurred during post-tropical storm Fiona.
In a statement to CP, Emera said it has “paused work on the Atlantic Loop project” while it assesses the full impact of the Nova Scotia legislation.
It added that this “is just one example of the investments Nova Scotia Power will be forced to reassess,” saying the law could put other clean energy projects worth about $500 million on the shelf. Details have yet to be released.
But with both federal and provincial legislation setting out carbon emission goals, Wilkinson said the loop remains an important project.
“The reality for the Nova Scotia government is there are few other options that will enable them to be in compliance with the federal legislation and… their own domestic plans, which include a move away from (carbon) emissions from the electricity grid,” he said.
Both Nova Scotia and New Brunswick have committed to phasing out their coal-fired generation by 2030, while Nova Scotia has enshrined in law its goals to reduce greenhouse gas emissions to at least 53% below 2005 levels by 2030 and achieve net-zero emissions by 2050.
Wilkinson’s mandate letter from Prime Minister Justin Trudeau calls on him to support efforts to achieve a net-zero electricity system by 2035, and to consult with provinces and territories to remove carbon from the systems.
Earlier this year, Dominic LeBlanc, the federal minister of intergovernmental affairs, had said the hope was to have a clear business model for the Atlantic Loop this year. Wilkinson said he’s aiming for that to happen by early 2023.
“I’m still hopeful we will be in a position where we will actually have… an agreement on how the financials will work by early next year,” he told CP.
In a release earlier this month, Nova Scotia Power said even its plans to make the grid more resilient in the face of more intense storms could face “limits” due to the province’s proposed rate hike limitations.
Some experts are urging the province and utility to stop quarrelling over this issue, considering the risks that further mass blackouts pose, and to seek federal financial assistance to improve the infrastructure before another massive storm hits.
Wilkinson said “the federal government understands it has a responsibility to play a role” in making the grid more reliable, but added that it also expects the province to participate financially.
A study released last May by the Halifax-based Ecology Action Centre concluded the Atlantic Loop is only one part of the solution to meet future demand for clean electricity. The study warned the modelling to measure the costs of the project is uncertain because the cost of large projects is often underestimated, while the costs of renewable energy sources has been falling faster than grid planners anticipated.
Tynette Deveaux, a spokesperson for the Sierra Club Canada, told CP there have long been doubts about the viability of the Atlantic Loop, and that the province and Nova Scotia Power should have been more vigorously pursuing renewable energy based in the region.
“If we were to use the wind energy, we could be off coal before 2030,” she said.
A Hydro-Québec spokesperson said the utility continues to participate in Atlantic Loop discussions. “In order for a project to materialize, a commercial agreement must be reached by all partners, including the federal level, Hydro-Québec, and all Atlantic utilities,” Maxence Huard-Lefebvre wrote in an email.
This report by The Canadian Press was first published October 25, 2022.