In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, a public statement of environmental and economic effects has been prepared for the federal loan guarantee provided to Nova Scotia Power Maritime Link to reduce the costs of refinancing the Maritime Link project in Nova Scotia.
Summary
In 2013-2014, the Government of Canada provided loan guarantee support to the Lower Churchill projects, including the Muskrat Falls Generating Station, the Labrador-Island Link and the Maritime Link.
On September 16, 2024, the Government of Canada and the Government of Nova Scotia agreed to negotiate a loan guarantee for up to $500 million to reduce the costs of refinancing the Maritime Link project in Nova Scotia.
The Maritime Link is a critical element of the Lower Churchill projects, enabling clean power to flow from Newfoundland and Labrador to Nova Scotia. The refinancing of the Maritime Link concludes federal efforts related to these projects. This support is consistent with measures already taken to put the projects led by Newfoundland and Labrador Hydro on a sound financial footing for the benefit of all Newfoundlanders and Labradorians. This federal loan guarantee will help mitigate impacts of delays to benefit Nova Scotians.
This support is in addition to the Government of Nova Scotia’s actions to purchase $117 million of the Fuel Adjustment Mechanism balance to address costs associated with the delays in electricity delivery from Muskrat Falls. This action by the Government of Nova Scotia reduced rate increases for residential customers from 7% to about 1% in 2024.
On December 16, 2024, the Maritime Link Financing Trust issued $500 million in federally guaranteed bonds with the proceeds flowing to the entity that owns the Maritime Link, Nova Scotia Power Maritime Link. Most of these funds were subsequently transferred to Nova Scotia Power, which applied the funds against the Fuel Adjustment Mechanism deficit.
The loan guarantee ensured that Nova Scotia could retain the financial capacity to make long-term investments in clean electricity. Nova Scotia requires substantial investments in clean electricity infrastructure to successfully phase out coal-fired electricity by 2030, meet new electricity demand, comply with the Clean Electricity Regulations starting in 2035 and achieve net-zero emissions in 2050.
This will require sizable near-term investments in renewables, storage, and interprovincial transmission, and has the potential to stress Nova Scotia electricity consumers, which are already grappling with high levels of energy poverty. Ultimately, this agreement helped the Government of Canada deliver on its priorities to contribute effectively to regional electrification and decarbonization efforts in Atlantic Canada.
Strategic environmental analysis
The Strategic Environmental and Economic Assessment did not detect any important environmental effects. As such, no strategic environmental analysis was undertaken.
Federal Sustainable Development Strategy considerations
This federal action indirectly supports the following the 2022 to 2026 Federal Sustainable Development Strategy goals:
- Goal 7: Increase Canadians’ access to clean energy by maintaining the financial capacity of the Government of Nova Scotia and Nova Scotia Power, the proposed approach may help improve access to affordable, reliable, and sustainable energy via future provincial investments in clean electricity
- Goal 9: Foster innovation and green infrastructure in Canada by allowing the Government of Nova Scotia and Nova Scotia Power to maintain financial capacity, the Maritime Link refinancing may enable additional investment in building sustainable and resilient infrastructure, promote green industrialization, and foster innovation
Strategic economic analysis
The Strategic Environmental and Economic Assessment economic analysis found that the proposal to provide a federal loan guarantee to Nova Scotia Power Maritime Link to support a refinancing of the Maritime Link project in Nova Scotia indicated that it could have large sectoral economic impacts in the short term, with uncertain long-term impacts. Analysis also indicated that low local economic effects are expected in the short term, with uncertain long-term effects. Nationally, short-term effects are nil/negative, while long-term effects are uncertain.