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
Director, Natural Resource Studies, Fraser Institute
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President Donald Trump signed an executive order moving marijuana from a Schedule I to a Schedule III controlled substance, despite many Republican lawmakers urging him not to.
“I want to emphasize that the order I am about to sign is not the legalization [of] marijuana in any way, shape, or form – and in no way sanctions its use as a recreational drug,” Trump said. “It’s never safe to use powerful controlled substances in recreational manners, especially in this case.”
“Young Americans are especially at risk, so unless a drug is recommended by a doctor for medical reasons, just don’t do it,” he added. “At the same time, the facts compel the federal government to recognize that marijuana can be legitimate in terms of medical applications when carefully administered.”
Under the Controlled Substances Act, Schedule I drugs are defined as having a high potential for abuse and no accepted medical use. Schedule III drugs – such as anabolic steroids, ketamine, and testosterone – are defined as having a moderate potential for abuse and accepted medical uses.
Although marijuana is still illegal at the federal level, 24 states and the District of Columbia have fully legalized marijuana within their borders, while 13 other states allow for medical marijuana.
Advocates for easing marijuana restrictions argue it will accelerate scientific research on the drug and allow the commercial marijuana industry to boom. Now that marijuana is no longer a Schedule I drug, businesses will claim an estimated $2.3 billion in tax breaks.
Chair of The Marijuana Policy Project Betty Aldworth said the reclassification “marks a symbolic victory and a recalibration of decades of federal misclassification.”
“Cannabis regulation is not a fringe experiment – it is a $38 billion economic engine operating under state-legal frameworks in nearly half of the country that has delivered overall positive social, educational, medical, and economic benefits, including correlation with reductions in youth use in states where it’s legal,” Aldworth said.
Opponents of the reclassification, including 22 Republican senators who sent Trump a warning letter Wednesday, point out the negative health impact of marijuana use and its effects on occupational and road safety.
“The only winners from rescheduling will be bad actors such as Communist China, while Americans will be left paying the bill. Marijuana continues to fit the definition of a Schedule I drug due to its high potential for abuse and its lack of an FDA-approved use,” the lawmakers wrote. “We cannot reindustrialize America if we encourage marijuana use.”
Marijuana usage is linked to mental disorders like depression, suicidal ideation, and psychotic episodes; impairs driving and athletic performance; and can cause permanent IQ loss when used at a young age, according to the Substance Abuse and Mental Health Administration.
Additionally, research shows that “people who use marijuana are more likely to have relationship problems, worse educational outcomes, lower career achievement, and reduced life satisfaction,” SAMHA says.
Canadians are told dairy farmers need protection. The newest numbers tell a different story
Every once in a while, someone inside a tightly protected system decides to say the quiet part out loud. That is what Joel Fox, a dairy farmer from the Trenton, Ont., area, did recently in the Ontario Farmer newspaper.
In a candid open letter, Fox questioned why established dairy farmers like himself continue to receive increasingly large government payouts, even though the sector is not shrinking but expanding. For readers less familiar with the system, supply management is the federal framework that controls dairy production through quotas and sets minimum prices to stabilize farmer income.
His piece, titled “We continue to privatize gains, socialize losses,” did not come from an economist or a critic of supply management. It came from someone who benefits from it. Yet his message was unmistakable: the numbers no longer add up.
Fox’s letter marks something we have not seen in years, a rare moment of internal dissent from a system that usually speaks with one voice. It is the first meaningful crack since the viral milk-dumping video by Ontario dairy farmer Jerry Huigen, who filmed himself being forced to dump thousands of litres of perfectly good milk because of quota rules. Huigen’s video exposed contradictions inside supply management, but the system quickly closed ranks until now. Fox has reopened a conversation that has been dormant for far too long.
In his letter, Fox admitted he would cash his latest $14,000 Dairy Direct Payment Program cheque, despite believing the program wastes taxpayer money. The Dairy Direct Payment Program was created to offset supposed losses from trade agreements like the Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada–United States–Mexico Agreement (CUSMA).
During those negotiations, Ottawa promised compensation because the agreements opened a small share of Canada’s dairy market, roughly three to five per cent, to additional foreign imports. The expectation was that this would shrink the domestic market. But those “losses” were only projections based on modelling and assumptions about future erosion in market share. They were predictions, not actual declines in production or demand. In reality, domestic dairy demand has strengthened.
Which raises the obvious question: why are we compensating dairy farmers for producing less when they are, in fact, producing more?
This month, dairy farmers received another one per cent quota increase, on top of several increases totalling four to five per cent in recent years. Quota only goes up when more milk is needed.
If trade deals had actually harmed the sector, quota would be going down, not up. Instead, Canada’s population has grown by nearly six million since 2015, processors have expanded and consumption has held steady. The market is clearly expanding.
Understanding what quota is makes the contradiction clearer. Quota is a government-created financial asset worth $24,000 to $27,000 per kilogram of butterfat. A mid-sized dairy farm may hold about $2.5 million in quota. Over the past few years, cumulative quota increases of five per cent or more have automatically added $120,000 to $135,000 to the value of a typical farm’s quota, entirely free.
Larger farms see even greater windfalls. Across the entire dairy system, these increases represent hundreds of millions of dollars in newly created quota value, likely exceeding $500 million in added wealth, generated not through innovation or productivity but by a regulatory decision.
That wealth is not just theoretical. Farm Credit Canada, a federal Crown corporation, accepts quota as collateral. When quota increases, so does a farmer’s borrowing power. Taxpayers indirectly backstop the loans tied to this government-manufactured asset. The upside flows privately; the risk sits with the public.
Yet despite rising production, rising quota values, rising equity and rising borrowing capacity, Ottawa continues issuing billions in compensation. Between 2019 and 2028, nearly $3 billion will flow to dairy farmers through the Dairy Direct Payment Program. Payments are based on quota holdings, meaning the largest farms receive the largest cheques. New farmers, young farmers and those without quota receive nothing. Established farms collect compensation while their asset values grow.
The rationale for these payments has collapsed. The domestic market did not shrink. Quota did not contract. Production did not fall. The compensation continues only because political promises are easier to maintain than to revisit.
What makes Fox’s letter important is that it comes from someone who gains from the system. When insiders publicly admit the compensation makes no economic sense, policymakers can no longer hide behind familiar scripts. Fox ends his letter with blunt honesty: “These privatized gains and socialized losses may not be good for Canadian taxpayers … but they sure are good for me.”
Canada is not being asked to abandon its dairy sector. It is being asked to face reality. If farmers are producing more, taxpayers should not be compensating them for imaginary declines. If quota values keep rising, Ottawa should not be writing billion-dollar cheques for hypothetical losses.
Fox’s letter is not a complaint; it is an opportunity. If insiders are calling for honesty, policymakers should finally be willing to do the same.
Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.
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