Ottawa Requires Provinces to Phase Out Coal by 2030, Expected to Affect Taxpayers
CALGARY – The federal government’s plan to phase out coal-fired power ahead of schedule will affect taxpayers in Nova Scotia, New Brunswick and Saskatchewan, but have little effect in Alberta, the province with most coal-generated electricity plants in the country.
Federal Environment and Climate Change Minister Catherine McKenna announced Monday that coal-fired power plants in the country now must shut-down or install technology to eliminate their emissions by 2030.
The government’s goal is to move Canada’s electric grids toward 90 per cent renewable or non-emitting sources by 2030, up from 80 per cent now.
“Taking traditional coal power out of our energy mix and replacing it with cleaner technologies will significantly reduce our greenhouse gas emissions, improve the health of Canadians, and benefit generations for year’s to come,” McKenna said in a press release.
Ottawa’s move follows a similar plan in Alberta, announced last year by the province. “We are well ahead of other jurisdictions that are grappling with this,” Alberta Environment Minister Shannon Phillips said.
Alberta is home to the most coal-fired electric plants in the country, but the province’s NDP government has announced plans to phase-out coal fired emissions by 2030. “We don’t expect (Monday’s announcement) will change much for us,” Phillips said.
University of Calgary economics professor Trevor Tombe said that Alberta’s experience, and evidence from the futures market for electricity, shows that electricity prices shouldn’t rise significantly for ratepayers in province’s with coal-fired generation, though there could be some costs for taxpayers.
Previously, federal regulations required coal power plants to shut down after operating for 50 years.
Under that 50-year time limit, Tombe said, coal generation in 2030 would shrink to about one-third of what it is today. “There are a lot of plants on their way out anyway,” Tombe said.
Electricity analysts said Ottawa’s new time frame for coal plants to shut down would affect Nova Scotia, New Brunswick and Saskatchewan. There is also a generating station in Brandon, Man. fuelled by coal, but it is scheduled to close in 2019.
“I don’t think there’s any question that this will increase costs,” Calgary-based electricity market consultant Gary Reynolds said. He said coal-generating facilities that were scheduled to retire after 2030 will now be considered “stranded assets” and “those costs will be borne by the taxpayer.”
Saskatchewan Premier Brad Wall accused Ottawa of ignoring commitments to collaborating with the provinces on climate change policies Monday morning, after the coal-phase out announcement.
“The federal government has now violated that commitment for a second time by making its second major policy announcement in advance of the First Minister’s meeting in December — the announcement last month of a national carbon tax and now today’s announcement of an accelerated phase out of coal-fired electrical generation,” Wall said in a release.
Saskatchewan is home to three coal-fired power plants, which produce 40 per cent of the province’s electricity. The province has installed carbon capture and storage technology at one of those power plants, in Estevan, Sask., which will allow it operate past 2030.
David Gray, CEO of AIM Energy Pros, said that carbon capture and storage and underground combustion could help coal-fired power plants eliminate their emissions, though costs for those early-stage technologies are still high relative to natural gas. Natural gas-fired power competes directly against coal-fired power in electricity markets.
Nova Scotia is home to four coal-fired generating stations, none of which has installed emissions-limiting technologies.
Premier Stephen McNeil released a statement Monday announcing it had reached a deal with Ottawa that will allow its coal-fired power plants to operate later than 2030 because it had already reached the federal 2030 emissions reduction target.
He also announced the province would introduce a cap-and-trade system for emissions.
New Brunswick, home to one coal-fired plant, has yet to reach an agreement with Ottawa, but Environment Minister Serge Rousselle said in a release, “We applaud them for including flexibility to province’s in today’s announcement.”
Financial Post
