Ottawa faces crucial test in the fight against coal

Blog - July 5, 2011 - By Clare Demerse

Just over a year ago, the federal government announced a plan to regulate some of the dirtiest sources of energy in Canada — coal power plants. Now, a decision by an Alberta regulator to approve a new coal plant has put the ball squarely in the federal government's court to live up to one part of that 2010 announcement, namely a commitment to "guard against" companies rushing new coal plants into service in an attempt to skirt the federal proposal.

Unless Environment Canada acts quickly to keep its word, it looks like the federal government is on track to fail the very first test its planned regulations for greenhouse gas pollution from coal-fired electricity has faced. The result?

Ottawa's new regulations could be tarnished before they're even published.

Ottawa's promise

The story starts on June 23, 2010, when then-Environment Minister Jim Prentice announced that his government would adopt regulations to phase out conventional coal plants. While the regulations would only apply to two groups of coal plants — new plants and those at the end of their economic lives, which is typically 45 years after they were built — we believe that improving those plants' performance could still be a welcome step.

Unfortunately, the regulations are not scheduled to go into effect until July 2015 — a long wait at a time when we need to cut Canada's greenhouse gas pollution urgently. But Prentice offered a promise to reassure anyone worried about the delay: "We will guard against any rush to build non-compliant coal plants in the interim."

Alberta's approval

Fast forward to last Thursday, when many of us were heading out the door for the Canada Day long weekend. The Alberta Utilities Commission (AUC) chose that moment to give its approval to a 500-megawatt coal plant proposal from a company called Maxim Power Corp.

The plant would be located about 20 kilometres north of Grande Cache, Alberta, and would emit over three million tonnes of greenhouse gas pollution each year — the equivalent of adding 590,000 vehicles to the road. (Not to mention some of coal's other ugly side effects, including mercury emissions and large releases of the pollutants responsible for smog and acid rain.)

The Genesee 3 generating station near Edmonton, Alberta Maxim's press release says the plant, known as the Milner expansion, will use "state-of-the-art" technology to make it more fuel-efficient. The reality is that the technology they plan to use (called "supercritical") would fail to meet the environmental performance standards that the federal government says it will require by July 1, 2015.

(At the June 2010 announcement, Minister Prentice proposed a specific standard for the future coal regulations: plants will need to meet an emissions performance standard that's on par with high-efficiency natural gas power generation. A supercritical coal plant would generate nearly twice the greenhouse gas pollution of high-efficiency natural gas. Prentice also proposed that companies would have the option of deferring the application of the natural gas standard until 2025 by incorporating carbon capture and storage technology.)

Maxim's proposed timing is, shall we say, interesting. The company plans to start building the plant in the summer of 2012, and have it up and running by the summer of 2015. Remember that the federal regulations are scheduled to take effect on July 1, 2015. If it can stay on schedule, Maxim's coal plant could sneak under that wire, earning itself a 45-year free pass to pollute.

So Environment Canada has its first test case. Maxim Power is rushing to build a non-compliant coal plant, exactly the kind of thing they said they would "guard against."

The question now is how Ottawa will respond. Was the government's 2010 commitment serious? Or will our current Environment Minister, Peter Kent, let this company (and potentially others) duck its responsibility to reduce greenhouse gas pollution?

The plot thickens

It turns out that we're not the first ones to ask that question. Maxim Power met with federal officials to find out what the fate of their plant would be under the proposed regulations.

Maxim's lawyers summarized what they found out in a letter to the Alberta Utilities Commission dated June 7, 2011. Here's what they have to say about the proposed federal regulations:

"A recent development that is of extreme concern to Maxim is the proposed federal carbon legislation announced to industry by Minister Kent on May 26, 2011. Maxim has consulted with the Minister on this new legislation and understands that the Milner expansion will be considered an Existing Plant if it is commissioned by July 1, 2015. As a result of the anticipated financing, construction and commissioning timeframes, Maxim requires an approval from the AUC as soon as possible and no later than June 30th, 2011 in order to qualify as an Existing Plant under this new federal legislation. Maxim has no chance to complete the power plant expansion by July 1, 2015, unless it receives an approval from the AUC by June 30, 2011. Any regulatory delay, even from today's date, in issuing an AUC approval magnifies the risk of irreparable harm to Maxim. Maxim's plant is accommodated by the pending federal legislation."

Far from "guarding against" dirty coal plants, Maxim's lawyers say that Minister Kent effectively encouraged the company to get it built ASAP.

Maxim asked Alberta's utilities regulator to forgo a public hearing to make sure it could hit that deadline. And last Thursday, that's exactly what the AUC did. The commission's decision notes that Maxim needed a verdict by June 30 in order to "accommodate its business activities," but also "to address the potential impact of pending federal carbon legislation on this plant."

Sorry, but rushing a new coal plant into service isn't "addressing" the proposed federal regulations. It's avoiding them.

The action we need

Coal is a big source of greenhouse gas pollution in Canada: plants operating in Canada today still produce more emissions each year than Alberta's oilsands do. Luckily, there are all kinds of alternatives to burning this fossil fuel, from investing in clean renewable power to using electricity more wisely.“Unless Minister Kent steps in and strengthens the requirements Maxim's new plant will face, it looks like the federal government's tough talk on coal may have been little more than talk.”

The federal government could choose to take a strong stand, supporting solutions through effective regulations that don't let companies off the hook, along with effective clean energy investments.

As it stands, last week's Maxim approval raises real questions about how serious Ottawa really is. Unless Minister Kent steps in and strengthens the requirements Maxim's new plant will face, it looks like the federal government's tough talk on coal may have been little more than talk.

We've written to Minister Kent to ask for a review of Maxim's proposal that would give the government the chance to live up to its 2010 promise. The government appears poised to publish the draft version of its coal regulations soon, which gives Minister Kent a perfect opportunity to announce a review of Maxim's non-compliant proposal. So while last week's news was not promising, the door isn't closed if Environment Canada does want to pass this first crucial test of its coal proposal.

When he announced the future coal regulations in 2010, Minister Prentice said, "One thing is clear. Canada is serious about climate change." The federal government's response to Maxim's plans will help show Canadians whether or not he was right.



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