Canada's electricity industry just got switched on to a new reality, all thanks to the Clean Electricity Regulations (CER). These regulations have reshaped how power is generated across the country.
Whether you're a business owner or a utility operator, this guide covers the basics of the CER. If there's anything else that you need to know about these regulations, you can always reach out to a Lexpert-ranked energy lawyer for electricity near your area.
What are the Clean Electricity Regulations?
The CER is a federal regulation created under the Canadian Environmental Protection Act, 1999 (CEPA). It was finalized in December 2024 and came into force in January 2025.
The main purpose of the Clean Electricity Regulations is to move Canada toward a net-zero electricity grid by 2050. To do this, the CER governs the following matters:
- reduce greenhouse gas (GHG) emissions by shifting electricity generation toward cleaner sources, such as renewables
- ensure the affordability of electricity for all Canadians, while aiming for a net-zero electricity grid by 2050
- maintain grid reliability, so that the electricity system remains stable during peak demand and emergencies
As an introduction, watch this 2023 video from when the federal government announced the CER:
To know how the Clean Electricity Regulations impact your business, you can consult the best energy lawyers for electricity in Canada as ranked by Lexpert.
Background of the Clean Electricity Regulations
The CER was enacted under the CEPA to support Canada's net-zero emission goals, specifically its push for a net-zero electricity system. These two are related, since achieving a net-zero economy requires cleaner energy sources.
Various government actions also led to the enactment of the CER:
- in 2021, the federal government set its 2030 national target of reducing GHG emissions by 40 percent to 45 percent below 2005 levels
- the passing into law of the Canadian Net-Zero Emissions Accountability Act (CNZEAA), which received royal assent in 2021
- creation of the 2030 Emissions Reduction Plan (ERP), which was released in 2022
The CER is also positioned to contribute to the goals of the:
- 2022-2026 Federal Sustainable Development Strategy (FSDS)
- Sustainable Development Goals (SDGs) of the United Nations 2030 Agenda
What are the highlights of the Clean Electricity Regulations?
The CER introduced several major changes to how Canada's electricity sector operates, particularly in electricity generation.
Below are the highlights of the CER. For more information on these rules, you can contact any of the Lexpert-ranked best energy law firms for electricity in Canada.
Net-zero electricity grid by 2050
The biggest highlight of the Clean Electricity Regulations is the goal itself: Canada's electricity grid must be a net-zero electricity system by 2050, through significant reduction of GHG emissions. This also supports the overall net-zero emissions target of the Canadian government.
This means that all existing fossil fuel power plants must either meet the CER's emissions limits or retire by the deadline. If the plan does well, new renewable and nuclear projects across the country are expected to fill the gap.
However, changes under the CER will not be implemented until 2035, giving companies and governments time to adjust.
Covered entities of the Clean Electricity Regulations
Not all entities are covered by the new rules under the CER. The CER applies to electricity generation units that:
- uses fossil fuel
- capacity of 25 megawatts (MW) or larger
- connected to North American Electric Reliability Corporation (NERC) directly or indirectly
Another factor to look at if a power plant is covered by the CER is when it was built:
- existing units commissioned before December 31, 2024 can continue operating without emissions restrictions until January 1, 2035
- units already under development when the regulations were finalized (called planned units) have until December 31, 2034 to be commissioned
- new units built from January 1, 2025 onwards must be designed to meet the emissions limits under the CER
This phased approach is intentional, as it gives the electricity industry some time to plan major transitions, while ensuring that new projects in Canada are already CER-compliant.
Exemptions from the Clean Electricity Regulations
Most major power plants in Canada are governed by the CER. However, the CER also exempts certain generators from its coverage, such as:
- units with electricity generation capacity of less than 25 MW
- units in isolated systems not connected to NERC-regulated grids
Usually, these exempt units are found in small communities that use small diesel generators. Examples of these are units used:
- in hospitals
- by Indigenous communities
- by public safety installations
- in remote communities and regions not connected to NERC
- for backup power used by residential and commercial buildings
Limiting emissions under the Clean Electricity Regulations
The CER aims to reduce GHG emissions from fossil fuel-based electricity generation, rather than banning fossil fuel plants outright. It phases out higher-emission sources while allowing cleaner fossil fuel generation to transition gradually.
For most electricity generation units using fossil fuels, the CER sets an emissions intensity limit of 30 tonnes of CO2-equivalent per gigawatt-hour (tCO2e/GWh). Also, rather than unit-specific limits, the CER uses an Annual Emissions Limit (AEL) approach.
This gives electricity system operators flexibility in how they meet compliance targets. Other examples of this flexibility under the Clean Electricity Regulations are:
- banking unused credits from one year to use in future years
- pooling credits between multiple facilities reporting to the same system operator
This flexibility acknowledges that electricity grids need to manage varying demand and generation.
Still, there are concerns from the provinces and territories about the new rules, particularly regarding the net-zero electricity system envisioned by the Clean Electricity Regulations:
Check out our Special Edition on Energy Law for more information about the CER and other related laws and regulations
Emergency operations
When grid reliability is threatened, electricity system operators need to act quickly. This is why the CER has simplified how high-emissions power plants can be used in times of emergencies and other special circumstances.
Under the CER, system operators can independently authorize the operation of these plants for up to 30 days during emergencies caused by natural disasters or fuel shortages. This allows operators to direct units to provide electricity during emergencies.
Also, the emissions during this emergency can be exempted from the emissions limit for the same 30 days. No prior federal approval is needed for this exemption.
Reporting requirements
While hard compliance with the CER is still years away, the reporting requirements for the covered entities have already started.
The first annual reports will be due at the end of the year 2025. Electricity system operators must submit detailed data on emissions, generation output, and compliance status.
This early reporting allows regulators to monitor the transition and helps utilities understand their baseline before full compliance kicks in. It also gives the government early warning if certain operators face unexpected challenges.
Who administers the Clean Electricity Regulations?
Similar to the CEPA, several government bodies are responsible for the implementation of the CER:
- Environment and Climate Change Canada (ECCC): liable for the administration, implementation, and enforcement of the CER
- Natural Resources Canada (NRCan): with support from several departments, leads Powering Canada's Future, the government's Clean Electricity Strategy
The federal government has also announced significant support through investment tax credits, funding, and low-cost financing. These measures are intended to support the expansion of clean electricity generation and transmission infrastructure.
Provincial and territorial regulation of clean electricity
Although not directly involved in administering the Clean Electricity Regulations, provinces and territories play a key role in meeting Canada's energy net-zero goals. They hold primary authority over:
- electricity grid management and rate-setting
- distribution of electricity within their borders
- approving major infrastructure projects
- overall regulation through its utilities commissions
Provinces and territories can also develop their own electricity regulations and ask the federal government to recognize them as equivalent to the CER. These are called "equivalency agreements."
If the federal government agrees that the provincial rules achieve the same emissions outcomes, it can suspend federal regulations in that province or territory. This allows local governments to tailor rules to their circumstances, while meeting the federal climate goals.
Clean Electricity Regulations: A jolt to the energy industry
Transitioning from traditional electricity generation to cleaner sources may be challenging. But one thing's for sure: the coming years will bring major changes for major shifts for Canada's electricity sector.
As the Clean Electricity Regulations begin to roll out new rules for the industry, it's important that businesses and companies understand these rules. It's also advised to get the services of an energy lawyer for electricity to prevent any shocking brushes with these new regulations in town.
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