Global offshore wind: Canada | Global law firm

Concentrate on: Canada

Market overview

Canada has nice potential for offshore wind improvement because of the high quality sources on its coasts and offshore. Whereas no offshore wind tasks have been inbuilt Canada thus far, market circumstances are bettering on account of the introduction of proposed legislative and regulatory modifications, that are anticipated to pave the best way to an offshore wind market on Canada’s Atlantic coast, and vital federal authorities monetary commitments and incentives with respect to wash vitality improvement. Canada is predicted to see the completion of its first-ever offshore wind farm in Nova Scotia in 2030.

Onshore wind energy accounts for 7.7 % of Canada’s complete electrical energy capability. Together with photo voltaic photovoltaic, Canada additionally counts wind vitality as certainly one of its quickest rising renewable vitality sources, possible as a result of its extremely scalable nature. Canada’s onshore wind capability has grown from eight wind farms in 1998 to 337 in 2023, with an put in capability of over 15 gigawatts (“GW”). That is due largely to the robust historic wind management demonstrated by Ontario, Alberta, and Quebec, because the nation’s main wind markets.

Coverage in relation to offshore wind continues to develop in Canada, significantly because it pertains to Canada’s East Coast. As of August 28, 2019, the Canadian Power Regulator Act (the “Act”) is now in impact governing the Canadian vitality sector, together with offshore wind. The Offshore Renewable Power Rules (“ORER”) initiative is supporting the implementation of this Act with respect to offshore renewable vitality tasks. The Act additionally effected a renascence of the Nationwide Power Board because the Canada Power Regulator (“CER”) with a brand new mandate that covers rising vitality developments resembling regulation of offshore renewable vitality.

The accelerating tempo of change to the regulatory regime for offshore wind in Atlantic Canada is noteworthy. On Might 30, 2023, the federal Minister of Power and Pure Assets launched Invoice C-49¹, proposed laws which might allow offshore wind improvement for the primary time within the provinces of Nova Scotia and Newfoundland and Labrador. Invoice C-49 proposes amendments to the prevailing frameworks governing joint federal-provincial administration of offshore petroleum sources. The amendments underneath Invoice C-49 would develop the regulatory authority underneath these frameworks to offshore wind energy, typically modernize regulation of offshore vitality sources in Nova Scotia and Newfoundland and Labrador, and supply added certainty and consistency with respect to the approvals course of to potential builders, financiers and different stakeholders. As well as, in December 2023, the federal authorities and the federal government of Newfoundland and Labrador signed a memorandum of understanding (“MOU”) which goals to make sure that offshore renewable vitality challenge approvals inside designated provincial bays might be regulated by the Province alone, with out involvement from the joint federal-provincial regulator as proposed by Invoice C-49.

Canada: Offshore Wind Initiatives

East Coast

As of January 2024, the deliberate St. George’s Bay challenge in Newfoundland and Labrador, developed by Atlantic Canada Offshore Developments (“ACOD”) has been paused. The deliberate Sea-Breeze Tech Demonstration Undertaking in Nova Scotia, to be developed by Brezo Power, is in early stage improvement.

The Province of Nova Scotia has introduced its intention to supply leases for 5 GW of offshore wind vitality by 2030 in help of inexperienced hydrogen manufacturing. The leases might be granted by means of a aggressive bidding course of, collectively managed by the provincial and federal governments, with the primary name for bids scheduled to be issued in 2025.

The Nova East Wind Undertaking in Nova Scotia, with a projected technology capability of 300 to 400 megawatts (“MW”), is predicted to be the primary offshore wind farm in Canada. The Undertaking is at present present process survey work and the Province of Nova Scotia should full a regional evaluation and environmental evaluations with engagement with native communities. The Nova East Wind Undertaking would use present undersea cables leftover from the deserted offshore pure gasoline sector to carry clear electrical energy to shore.

West Coast

In 2020, it was introduced that Oceanic Wind (previously NaiKun Wind Power Group) bought the event rights of their offshore wind challenge situated in Hecate Strait between Haida Gwaii and Prince Rupert in British Columbia to Northland Energy Inc. The challenge has the Environmental Evaluation Certificates from the provincial and federal governments for the primary part of the challenge, 300 MW to 400 MW. Absolutely developed in phases over a few years, the wind useful resource in Hecate Strait might present in extra of two GW of energy.

Canada: Growth course of

Notes:

• The adoption of Invoice C-49 into regulation would streamline the regulatory regime and processes for offshore wind improvement within the provinces of Nova Scotia and Newfoundland and Labrador by leveraging the prevailing regulatory framework for single joint federal-provincial regulation of offshore petroleum sources.
• The MOU between the federal authorities and Newfoundland and Labrador confirms that the provincial authorities of Newfoundland and Labrador can have sole regulatory authority with respect to the approval and administration of offshore wind tasks in 16 designated inland bays within the province.
• The Canadian Power Regulator Act has been in impact since August 28, 2019 and the Nationwide Power Board grew to become the CER. Collectively, these initiatives are a part of the federal authorities’s legislative framework for a sustainable Canadian vitality sector, which incorporates offshore wind.
• Ontario traditionally had a regime for offshore wind energy improvement within the Nice Lakes, however a moratorium was imposed on new tasks in 2011.

Canada: Alternatives

Rising renewable vitality market

• Important improvement alternative alongside the coast of the Gulf of Saint Lawrence and on each the Atlantic and Pacific coastlines.
• Glorious environmental circumstances – shallow water near land and constant, robust winds.
• Current infrastructure and a powerful industrial base – expert workforce with transferable abilities, appropriate deep water ports (serving as provide and repair hubs), and offshore expertise (from oil and gasoline business).
• Export alternatives to the US and Europe.
• Inexperienced hydrogen manufacturing utilizing renewable electrical energy sources resembling onshore and offshore wind, a clear various to fossil fuels which doesn’t produce greenhouse gasoline emissions.
• Accelerating commercial-scale hydrogen commerce between Canada and Germany inserting Canada pursuant to the Memorandum of Understanding signed on March 18, 2024 underneath the Canada–Germany Hydrogen Alliance, which goals to safe early entry to the German marketplace for Canadian hydrogen producers and make Canada a precedence marketplace for Germany to supply clear hydrogen.
• Preferrred storage places and geographic benefit for worldwide transport of inexperienced hydrogen from the Atlantic shoreline, permitting Canada to export inexperienced hydrogen overseas, together with to Germany underneath the Canada–Germany Hydrogen Alliance.

Entry to domestically sourced parts

• The foundations and sure different parts could also be sourced domestically.
• Whereas set up and interconnection would most certainly be sourced internationally, an area workforce is obtainable to take care of onshore and offshore help actions.
• A big a part of substation design work, tools and supplies could also be sourced regionally.
• Upkeep and inspection companies – oil and gasoline expertise in offshore logistics can form evolving methods in offshore wind.

Dedication to inexperienced vitality

The federal authorities has launched insurance policies aimed toward selling using renewable sources such because the Powering Canada Forward: Building a Clean, Affordable, and Reliable Electricity System for Every Region of Canada revealed in August 2023. In 2022, the federal price range allotted $250 million over 4 years to help pre-development actions of unpolluted electrical energy tasks on the nationwide scale, in addition to inter-provincial electrical energy transmission tasks. The 2022 federal price range additionally dedicated $600 million over seven years to help renewable electrical energy and grid modernization tasks. Offshore wind tasks are thought of eligible tasks for this funding, topic to sure necessities and standards. Newfoundland and Labrador has obtained federal funding for a number of renewable vitality analysis tasks, together with a challenge utilizing floating wind generators to energy oil and gasoline property.

In 2023, the federal authorities dedicated vital monetary sources within the type of financial investments and funding tax credit (“ITC” or “ITCs”) to help the event of inexperienced vitality in Canada, together with offshore wind. The ITCs obtainable embrace:

• Clear Expertise ITC: Value as much as 30% of capital value of investments in wind, photo voltaic photovoltaic, and energy-storage applied sciences;
• Clear Hydrogen ITC: Value between 15% and 40% of capital value of investments in inexperienced hydrogen manufacturing, assessed primarily based on produced carbon depth;
• Clear Manufacturing ITC: Value as much as 30% of capital value of investments in clear know-how manufacturing, together with wind vitality tools; and
• Clear Electrical energy ITC: Value as much as 15% of capital prices of funding in non-emitting electrical energy technology methods, together with wind.

As well as, eligible companies will have the ability to profit from the prevailing Atlantic ITC, value as much as 10% of the capital value of funding in wind vitality conversion methods. Particularly, the Canada Infrastructure Financial institution might be investing $20 billion to help the event of main clear electrical energy and clear progress infrastructure tasks. The 2023 federal price range additionally features a dedication $3 billion over 13 years to Pure Assets Canada to create new investments for Canada’s offshore wind potential.

As well as, on the provincial stage, the Canadian Power Technique (“CES”) was created; an settlement between all Provinces and Territories that units the plan for shaping Canada’s vitality future.

Canada: Challenges

Allowing and regulatory challenges

With the anticipated exception of Atlantic Canada, which may benefit from added readability and certainty on account of the regulatory modifications flowing from Invoice C-49, a combination of federal and provincial approvals might be required to assemble and function an offshore wind challenge in the remainder of Canada, together with Canada’s west coast. Each the federal and provincial approvals course of will possible require tasks to undergo an environmental evaluate course of. Whereas quite a few federal statutes and rules govern many actions in federal offshore areas, the Canadian Power Regulator Act is the legislative framework for the administration of renewable tasks, together with offshore wind tasks. Pure Assets Canada is implementing new rules to develop trendy security and environmental safety for offshore renewable vitality tasks by means of the Offshore Renewable Power Rules Initiative. As well as, Pure Assets Canada is conducting a four-year (2019 to 2023) renewable useful resource evaluation on wind vitality, together with an evaluation of offshore wind potential in Canada.

The approval processes for offshore wind tasks in Nova Scotia and Newfoundland and Labrador could be considerably improved by means of the expanded regulatory mandates proposed by Invoice C-49, assuaging a number of the challenges that come up from twin federal/provincial jurisdictional administration by permitting builders to acquire all crucial approvals by means of a joint singular regulator, reasonably than coping with provincial and federal authorities individually.

On December 6, 2023, the federal authorities and the federal government of Newfoundland and Labrador signed a MOU, signaling to traders and builders their dedication to advance the offshore wind market inside a delegated offshore renewable vitality space, which encompasses 16 provincial bays. On the situation that Invoice C-49 passes into regulation, the MOU will present Newfoundland and Labrador with sole offshore wind regulatory authority throughout the designated space.

Whereas there are vital alternatives for offshore wind progress in Pacific Canada, there are at present no publicly recognized plans to switch the prevailing regulatory regime in the identical method as is being undertaken in Atlantic Canada.

First Nation – Responsibility to Seek the advice of

Canada’s Structure recognises and affirms present Aboriginal and treaty rights and thus they profit from particular safety in regulation. The Crown has a constitutional obligation to interact with Indigenous peoples in Canada in significant session and infrequently lodging the place its actions (together with the issuance of regulatory permits) might adversely have an effect on established or credibly asserted Aboriginal and/or treaty rights. The Supreme Courtroom of Canada has additionally confirmed that choices associated to permits or different approvals issued by a regulatory tribunal (together with vitality regulators) can set off the obligation to seek the advice of. In such instances (and topic to the laws governing such regulator), the regulatory tribunal might contemplate that obligation to seek the advice of by means of a regulatory listening to course of.