Emission Impossible: Positively Shocking Solutions for Abating Greenhouse Gas Emissions from Canada’s Electric Power Industry

Federal and provincial electricity policies have proven to be inadequate at mitigating greenhouse gas (GHG) emissions from the power industry. Existing abatement policies and electricity markets in Canada do not provide sufficient incentives to shift investment patterns towards low carbon generation technologies. The primary research method used to analyze this incentive problem is an econometric analysis of provincial electricity GHG emissions and abatement policies. This quantitative analysis is supplemented with case studies of Alberta and Texas to control for explanatory factors not addressed directly in the regressions and to explore interactions between subsidy policies and electric system operations. The analysis indicates that a combination of subsidy policies, political barriers, and U.S. trade rules interact to negatively affect electricity system operations. These interactions create technical challenges and negative externalities that minimize the effectiveness of current policies at reducing GHG emissions.