Business
Solar and wind power make electricity more expensive—that’s a fact
From the Fraser Institute
By Julio Mejía and Elmira Aliakbari
As a new year dawns and winter takes hold, it’s worth considering the cost of energy. After a meeting in Italy last spring, the G7 countries (including Canada) pledged to triple renewable energy sources (e.g. wind, solar) globally to ensure an “affordable” energy future. But while direct costs for wind and solar are dropping, they remain expensive due in part to the backup energy sources required when renewables are not available.
In short, an “affordable” energy future is incompatible with increased reliance on renewables. Here’s why.
Wind and solar energy are intermittent, meaning they aren’t consistently available, so we need an alternative power source when there’s no sunlight or wind given the current limited ability to store energy from solar and wind. So we must maintain enough energy capacity in a parallel system, typically powered by natural gas. Constructing and upkeeping a secondary energy source results in higher overall energy costs because two energy systems cost more than one. Therefore, when evaluating the costs of renewables, we must consider the costs of backup energy.
Often, when proponents claim that wind and solar sources are cheaper than fossil fuels, they ignore these costs. A recent study published in Energy, a peer-reviewed energy and engineering journal, found that—after accounting for backup, energy storage and associated indirect costs—solar power costs skyrocket from US$36 per megawatt hour (MWh) to as high as US$1,548 and wind generation costs increase from US$40 to up to US$504 per MWh.
Which is why when governments phase out fossil fuels to expand the role of renewable sources in the electricity grid, electricity become more expensive. In fact, a study by University of Chicago economists showed that between 1990 and 2015, U.S. states that mandated minimum renewable power sources experienced significant electricity price increases after accounting for backup infrastructure and other costs. Specifically, in those states electricity prices increased by an average of 11 per cent, costing consumers an additional $30 billion annually. The study also found that electricity prices grew more expensive over time, and by the twelfth year, electricity prices were 17 per cent higher (on average).
Europe is another case in point. Between 2006 and 2019, solar and wind sources went from representing around 5 per cent of Germany’s electricity generation to almost 30 per cent in 2019. During that same period, German households experienced an increase in electricity prices from 19.46 cents to 30.46 cents per kilowatt hour—a rise of more than 56 per cent. This surge in prices occurred before the war in Ukraine, which led to an unprecedented price spike in 2022.
For Canada, the outlook is also dire. In a recent report, TD Bank estimated that replacing existing gas generators with renewables (such as solar and wind) in Ontario could increase average electricity costs by 20 per cent by 2035 compared to 2021. In Alberta, electricity prices would increase by up to 66 per cent by 2035 compared to an scenario without changes. These increases are on top of the 15 to 20 per cent increase in average generation costs expected by 2035 under current government policies.
Clearly, when accounting for backup costs, renewable-powered electricity is more expensive than fossil fuels. Policymakers in Ottawa and across Canada must recognize that integrating renewables into electricity grids can lead to significant price increases for consumers, and they should be honest about that fact with Canadians in 2025 and beyond.
Julio Mejía
Policy Analyst
Elmira Aliakbari
The Canadian Taxpayers Federation released new Leger polling showing that half of Quebecers say the most effective way to reduce gun crime is to crack down on illegal gun smuggling from the United States, not a federal gun ban and confiscation.
“Law enforcement experts say the best way to make Canada safer is to stop illegal gun smuggling and Quebecers say exactly the same thing,” said Nicolas Gagnon, CTF Quebec Director. “It makes no sense to pour hundreds of millions into a confiscation that only takes guns from lawfully licensed gun owners.”
In 2020, the federal government launched its policy to confiscate thousands of so-called “assault-style” firearms from licensed gun owners. Ottawa recently announced a pilot project in Cape Breton to start taking firearms from individual owners.
The Leger poll asked Quebecers what they think is the most effective way to reduce gun crime. Results of the poll show:
- 51 per cent say introducing tougher measures to stop the illegal smuggling of guns into Canada from the United States
- 37 per cent say banning the sale and ownership of many different makes and models of guns along with a government buyback program
- Six per cent say neither of these options
- Seven per cent do not know
The results of the polls arrived as recorded remarks from Public Safety Minister Gary Anandasangaree made headlines in September.
In a leaked audio recording, the minister suggested the confiscation program is being pushed in part because of voters in Quebec, while also expressing doubt that local police services have the resources to enforce it.
Police organizations have long warned Ottawa’s confiscation program is misguided. The RCMP union says it “diverts extremely important personnel, resources, and funding away from addressing the more immediate and growing threat of criminal use of illegal firearms.”
The program was first estimated to cost $200 million. Just providing compensation for the banned guns, not including administrative costs, could cost up to $756 million, according to the Parliamentary Budget Officer.
Premiers of Alberta and Saskatchewan have both publicly said that they would not cooperate with Ottawa’s gun ban. Premier François Legault has stayed silent on this issue.
“Quebecers have been clear: the real problem is illegal gun smuggling, not law-abiding firearms owners,” said Gagnon. “The police have also made it clear the gun confiscation will waste money that could be used to stop criminals from committing gun crimes.
“Legault needs to stand up for Quebec taxpayers and refuse to help implement Ottawa’s costly and ineffective confiscation scheme. The federal government needs to drop this plan and focus its resources on intercepting illegal guns at the border: that’s how you actually make communities safer.”
From the Fraser Institute
By Julio Mejía and Elmira Aliakbari
The PBO estimates that the CFR will decrease Canada’s economic output by up to 0.3 per cent—or approximately $9.0 billion—in 2030. For context, that’s more than the entire output of Prince Edward Island in 2024, so the effects are roughly equivalent to wiping out the economy of a whole province.
The Carney government recently announced changes to the Clean Fuel Regulations (CFR), signalling stricter carbon content rules for gasoline and diesel—though few details were provided. While the prime minister expressed confidence that the changes will strengthen the Canadian economy, in reality, the CFR is designed to increase fuel prices in exchange for negligible environmental benefits. If the government is serious about prioritizing the wellbeing of Canadians, it shouldn’t tinker with the CFR—it should eliminate it.
The CFR, which came into effect in July 2023, aims to reduce greenhouse gas (GHG) emissions by requiring a gradual reduction in the carbon content of gasoline and diesel. By 2030, fuels must contain 15 per cent fewer GHG per unit of energy than in 2016. Those who don’t meet the target must buy compliance credits, which raises their costs. Ultimately, these costs are all passed on to Canadians at the pump.
According to a recent study by the Parliamentary Budget Officer (PBO), the CFR is expected to increase fuel prices by up to 17 cents per litre for gasoline and 16 cents for diesel by 2030. These costs will be added on top of already high, policy-driven fuel costs. In 2023, for example, the average price of gasoline in Canada was 157.3 Canadian cents per litre, compared to just 129.4 cents per litre in the United States—a 21 per cent difference, mainly the result of fuel taxes in Canada.
As fuel prices rise due to the CFR, the costs of running tractors, powering machinery, and producing and transporting goods and services will all increase, setting off ripple effects across our economy. The PBO estimates that the CFR will decrease Canada’s economic output by up to 0.3 per cent—or approximately $9.0 billion—in 2030. For context, that’s more than the entire output of Prince Edward Island in 2024, so the effects are roughly equivalent to wiping out the economy of a whole province.
Of course, increases in fuel prices also mean more pressure to household budgets. The PBO estimates that in 2030, the average Canadian household will incur $573 in additional costs because of the changes to the CFR, and lower-income households will bear a disproportionately larger burden because they spend more of their budget on energy.
The policy’s uneven impact across provinces is particularly significant for lower-income regions. For example, households in Nova Scotia and P.E.I.—two of the provinces with the lowest median household incomes—are expected to bear average annual costs of $635 and $569, respectively. In contrast, families in Ontario and British Columbia—two of the provinces with higher median household incomes—will pay less, $495 and $384 per year, respectively. Simply put, the CFR imposes more costs on those who make less.
To make matters worse, the expected environmental benefits of the CFR are negligible. Even if it delivers its full projected reduction of 26 million tonnes of GHG emissions by 2030, that represents only “two weeks of greenhouse gas emissions from the Canadian economy,” according to the federal government.
Given that GHG emissions cross all borders regardless of where they originate, in a broader perspective, that reduction represents just 0.04 per cent of projected global emissions by 2030. So, Canadians are being asked to pay a material price for a measure that will have virtually no environmental impact.
Toughening regulations on carbon content for gas and diesel won’t benefit Canadians, in fact, it will do the opposite. The CFR places a real financial burden on Canadian households while delivering no meaningful environmental benefit. When a policy’s costs vastly outweigh its benefits, the answer isn’t to adjust it, it’s to scrap it.
Julio Mejía
Elmira Aliakbari
Director, Natural Resource Studies, Fr
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