Sunday, August 21, 2011

The reality of Canada's new regulations on carbon emissions from coal-burning power plants

On Friday, the Canadian Minister of the Environment announced new emissions rules for coal plants which supposed encourage a shift to effective capture and storage of carbon. And, yes, you may be right to be suspicious about any new regulations announced on a Friday afternoon in the middle of August, when the vast majority of Canadians are planning for the weekend and ignoring the news. According to Minister Peter Kent:

These proposed regulations take into account the fact that many electricity facilities across Canada are old and need to be replaced soon. We're acting now to ensure that power companies understand today, the rules that will affect the new investments they have to make tomorrow. It allows for an orderly process - the bedrock of certainty.

The scant news coverage pointed out that the new standards only apply to plants built after July 1, 2015, thus exempted some proposed new coal plants.

That includes Calgary-based Maxim Power Corp.'s contentious proposal for a 500-megawatt expansion at its HR Milner facility, which received final approval from the Alberta Utilities Commission earlier this month and must be built by July 31, 2015 - a condition of the go-ahead (Calgary Herald)

The actual regulations may prove to be even more controversial. I encourage interesting followers of Maribo to read the text of the regulations (pdf from Environment Canada) and provide their interpretation in the comments.
In my reading of the reults, I found what I think, but I could be mistaken, are very large loopholes which could prevent any real reduction in carbon emissions from coal-electricity generation until at least 2025.

First, here's the actual emissions limit, and I'll leave the intrepretation of the number to the readers:

3. (1) A responsible person for a new unit or an old unit must not, on average, emit with
an intensity of more than 375 tonnes CO2 emissions from the combustion of fossil fuels in the
unit for each GWh of electricity produced by the unit during a calendar year.

Then it gets complicated:

(b) a declaration that includes the following statements:
(i) that, based on the economic feasibility study referred to in paragraph (c), the unit,
when operating with an integrated carbon capture and storage system is, to the best of
the responsible person’s knowledge and belief, economically viable, and
(ii) that, based on the technical feasibility study referred to in paragraph (d) and the
implementation plan referred to in paragraph (f), the responsible person expects to
satisfy the requirements referred to in section 9 and, as a result, to be in compliance with
subsection 3(1) by January 1, 2025;

So, again, if I am reading this right, you can gain an exemption from the regulations if you are able to conduct a study showing that the CCS system will be capable of meeting the new emissions regulation by 2025.

Putting this all together: 

1. Any coal plants built before July, 2015 which have not reached the end of their useful life [ed - see comment #1] are exempt. Given the expected shift towards natural gas in the next few years, it is entirely possible that the regulations will not end up applying to any coal-burning plants unless they are old units, as all the other coal-burning plants will be "grandfathered" in. [ed - fair?]

2. Any coal plants built after July, 2015 are exempt until 2025 so long as it is technologically possible to install a CCS system by 2025. Therefore, CCS systems are unlikely to be operating at any large scale coal plants in Canada for another 15 years. This delay may reflect the technological challenge of CCS or the values of the current government, or both.

Hopefully, I'm wrong.


Hisham Zerriffi said...

Not quite right as I read it. Any unit built before 2015 that has not reached the end of its "useful life" is exempt. "Old units", i.e. those that should be retired but still produce, are not exempt and must meet the limits (I'm assuming that this is because they are likely to be retrofitted and the retrofit allows you to put in better equipment). The difference between old and existing is likely there because the old ones are due for a retrofit and so you are not dealing with the same sunk costs issues as you would if you required all existing units to retrofit.

As for the CCS exemption, you are right, no need to meet the limit if you have what looks like a plan for CCS by 2025 (true for both old and new units).

There is also this interesting unit substitution clause. Still thinking about the implications of that.

Simon Donner said...

Thanks - from the wording of that section of the regulation, you are right. The substitution clause does raise questions about whether the operator of an "old" units could succesfully apply for an exemption.
(any lawyers out there?)

Simon Donner said...

From bigcitylib (comment appeared in another post)...

I thought I saw something, maybe in the press release, about discouraging plants built before 2015 from employing lower emission standards. I suppose that's just a promise, though.