The energy transition is transforming how we generate, manage, and consume energy, shifting away from fossil fuels toward clean, renewable sources like renewable gas, Hydrogen, wind, solar, hydro, and nuclear. Canada is a leader in this shift, with over 80% of its electricity now coming from non-greenhouse gas-emitting sources (Canadian Renewable Energy Association). Wind is Canada’s lowest-cost new generation capacity, and solar costs have dropped by 90% over the past decade, creating economic benefits and jobs, especially in Indigenous communities. However, the transition requires robust policies and regulations to ensure clean energy technologies are adopted and climate goals are met.

Key Policies and Regulations

Canada has taken significant steps to phase out fossil fuel support. In November 2021, Canada signed the Glasgow Statement, committing to end new public support for unabated fossil fuel projects by the end of 2022, except for projects aligned with the Paris Agreement’s 1.5°C limit (Government of Canada). As of January 1, 2023, Canada has implemented a policy phasing out public support for international fossil fuel projects, except for cases involving mitigation, decommissioning, or humanitarian needs. This policy encourages investment in renewables and aligns Canada with broader climate goals.

Success Stories

Countries like Sweden and Denmark demonstrate the effectiveness of well-designed policies in driving the energy transition. Sweden, with an Energy Transition Index (ETI) score of 78.4, has made significant strides with its diverse energy mix, including nuclear and renewable sources. Denmark, with a score of 75.2, has successfully transitioned away from oil, primarily through strong wind energy investments. Both countries benefit from stable carbon pricing and strong regulatory frameworks (Energy Monitor).

Addressing Natural Gas and Heating Oil Challenges

While Canada is making some progress in renewable gas in some regions (The 360 on Energy and Carbon), a significant challenge remains in reducing gas (natural gas, propane) and heating oil usage for winter heating (The 360 on Energy and Carbon). These fossil fuels are still heavily relied upon in colder regions. Transitioning to renewable gas will require new policies that promote renewable heating solutions, including electric heat pumps and geothermal systems, along with investment in infrastructure to ensure an affordable and practical shift.

ISSB Regulations and Emissions Reporting

Upcoming regulations from the International Sustainability Standards Board (ISSB) – (The 360 on Energy and Carbon) will require companies to publicly report their emissions, including financed emissions from banks and financial institutions. These new standards will influence the accuracy of reporting, impacting the financial landscape by encouraging banks to support businesses with lower emissions. This shift is expected to drive greater investment in low-carbon solutions as companies are incentivized to adopt cleaner practices.

Challenges and Areas for Improvement

Canada’s carbon pricing system, while crucial for promoting clean energy investments, faces uncertainty that could hinder investment decisions. Stabilizing carbon pricing will provide confidence for long-term investments in renewable projects (BLG). In emerging markets, geopolitical events such as the Ukraine invasion have disrupted energy supply chains and diverted attention from renewables. Clear regulatory frameworks and financial incentives will be necessary to overcome these barriers and foster renewable energy development (FTI Consulting).

Future Outlook

Hydrogen is emerging as a critical component of Canada’s energy future. Federal and provincial governments are advancing hydrogen initiatives, including new tax credits and efforts to reduce regulatory barriers (BLG). Additionally, investment tax credits for clean technologies will play a key role in maintaining Canada's competitiveness in the global clean economy.

Political changes in key countries, such as upcoming elections in Germany, could also affect progress in renewable energy adoption. It will be important to monitor how regulatory developments and global trends influence the pace of the energy transition (Clean Energy Wire).

Conclusion

The energy transition is a complex process that requires effective policies and regulations to drive investment in renewables and manage the shift from fossil fuels. Addressing challenges like renewable  gas usage for heating, stabilizing carbon pricing, increasing the electrical grid infrastructure in a timely fashion and improving emissions reporting standards will be crucial to accelerate the transition. Continued collaboration and decisive action from governments, , financial institutions and the whole eco energy system are essential to achieving global climate goals and creating a sustainable, low-carbon future.