Greener light for growth – Province provides further clarity on renewable energy future in Nova Scotia

By Sadira Jan, Dave Randell, Nancy Rubin, Kimberly MacLachlan, and Onye Njoku

Bill 471, the Advancing Nova Scotia Opportunities Act, received Royal Assent and introduces changes to the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation (Nova Scotia) Act, the Marine Renewable-Energy Act, and the Gas Distribution Act.

The changes reflect a bullish stance by the Province for renewable energy investment and provides greater commercial certainty for developers, lenders, and key stakeholders of renewable projects in relation to offshore renewables, tidal and low-carbon fuels.

Offshore renewables

Coming into effect on proclamation,¹ changes to the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation (Nova Scotia) Act expands the mandate and name of the Canada-Nova Scotia Offshore Petroleum Board to the Canada-Nova Scotia Offshore Energy Regulator (the “Regulator“) (section 13). The Regulator will oversee offshore renewable energy projects in addition to petroleum. These changes are in alignment with the Federal regime introduced in Bill C-49 which received Royal Assent on October 3, 2024. (See October 22, 2024 update.)

Bill 471 expands the scope of authority for the Regulators including:

• Allows for consultation with the Indigenous peoples of Canada on adverse impacts of work or activity in offshore areas and the ability to accommodate, as appropriate (section 16).
• Prohibits interest owners from continuing or commencing work in offshore areas if there is an environmental or social problem of a “serious” nature or in the case of “dangerous or extreme weather conditions” affecting health and safety (section 36).
• Allows the Regulator to issue submerged land licences and provides guidance for when submerged land licences are not permitted or required.
• Requires the Regulator to follow a call for bids process to issue submerged land licences on Crown reserve land unless an exception applies. Exceptions include at the direction of the Federal or Provincial Minister, the surrender of another submerged land licence at the request of the Regulator, or the offshore area became Crown reserve lands in error.
• Allows the Regulator to, if applied for by the interest owners of two or more submerged land licences, consolidate two or more licences into one. A submerged land licence or share in a submerged land licence cannot be held by any person other than a corporation incorporated in Canada.
• Submerged land licences may be restricted to particular technologies or types of offshore renewable energy resources. The licences will not be required for research or assessments conducted in relation to the exploitation of a renewable resource that does not require attaching a facility or structure to the seabed (section 46).

Additional amendments Bill 471 introduces include:

• Adds clarification with respect to work or activity carried out in transboundary pools (areas that extend beyond the Regulators’ jurisdiction) and potentially into the jurisdiction of a foreign government (section 67).
• Defines and/or amends various definitions including offshore renewable energy project, offshore renewable energy recommendation, call for bids, Crown reserve lands, interest, and significant discovery (section 9 and 34).

Hydrogen, renewable natural gas, and other gases

Coming into effect on proclamation, amendments to the Gas Distribution Act support investments in low-carbon fuels such as hydrogen, renewable natural gas, or other gaseous fuels. Key highlights include:

• Allows a licensee/franchise holder to apply to the Nova Scotia Utility and Review Board² (the “Board“) to recover its costs for the acquisition and use of an “alternative renewable energy resource.” Alternative renewable energy resource is defined as “hydrogen, renewable natural gas or other gaseous fuels with lower carbon-emission intensity than traditional natural gas” (section 150).
• Allows a licensee/franchise holder to apply to recover its costs for the construction and operation of “hydrogen-production equipment” and related costs of capital. Hydrogen-production equipment is defined as any “equipment, apparatus, mechanism, machinery, instrument, or ancillary facility, or any building or structure that houses or protects any of the foregoing” that is used in the production, processing, or distribution of hydrogen with lower carbon-emissions than traditional natural gas, and related equipment and pipelines attaching to a gas delivery system (section 150).

Public interest and public policy considerations would be components of the Board’s approval in determining cost-recovery for these investments.

Tidal and offshore wind

Amendments to the Marine Renewable-Energy Act provide an alternate pathway for offshore renewables and tidal licensing, broadens the scope for environmental assessments, and expands the Minister’s delegation power. Key highlights include:

• Allows the Minister to delegate any power or duty of the Minister to “any regulator established by an enactment” or “any corporation” who, in the Minister’s opinion, has the requisite qualifications and experience (section 152).
• Adds “regional assessment or equivalent assessment” to the types of environmental assessments that can be conducted with respect to marine renewable-electricity areas and activities (section 153).
• Allows for licence splitting:
  • Upon the request by a licence holder, the Minister may split an existing licence into two or more licences in alignment with factors prescribed by the regulations and will revoke the original power purchase agreements, issuing new power purchase agreements.
  • The new power purchase agreements would be issued in accordance with criteria outlined in the legislation with respect to term, rate, and final in-service date (section 154). This increased flexibility should allow for smaller-scale projects to advance.

This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Energy Group.

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1 Sections 2 to 109, 118 to 123, 126 to 128, 150 and 151 of the Act will come into effect upon proclamation.
2 The “Energy Board” in 2025 (expected) following the proclamation of Bill 404.