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A provincial approach to regulating coal doesn’t mean the Feds are off the hook
The federal government has repeatedly touted its forthcoming regulations for coal-fired electricity as proof that it’s serious about climate change. While the numerous loopholes in the draft regulations tell a different story, the new rules were nonetheless a modest step in the right direction. It was therefore concerning to see reports from the Globe and Mail last week that suggest the government might “backtrack” on their coal regulations even before the final version has seen the light of day.
The Globe article explained that Nova Scotia, Saskatchewan and Alberta might be given equivalency agreements that would allow the federal regulations to stand down in favour of provincial regulations when the latter is shown to be at least as stringent.
That said, allowing provincial governments to take the lead with their own policy solutions isn’t necessarily a step backwards and it could actually be a good thing if the equivalency agreements are credible. More flexible approaches can typically achieve similar environmental outcomes at lower cost (or even stronger outcomes for the same cost); however, equivalency agreements that aren’t credible and/or enforceable are a giant step backwards.
Under the current draft federal regulations, any coal-burning unit starting operation after June 2015 can’t emit any more greenhouse gas pollution than roughly what would be produced by a highly efficient combined-cycle natural gas plant generating the same amount of electricity. This performance standard would also apply to existing coal-burning units after they have been in operation for their “full economic life,” defined in the draft regulations as 45 years.
In other words, the federal regulations lay out a 45-year schedule from 2015 that dictate when each individual unit must meet this standard or shut down. Some flexibility allows for end-of-life dates to be traded within a province and company for units of a similar size but, otherwise, the standard applies to every unit operating in Canada for any one particular year. This level of specificity has prompted some provinces to cry foul and demand the ability to pursue their own approach.
What would a credible equivalency agreement look like?
First and foremost, any agreement should be based on implemented provincial regulations that will reduce global warming pollution from coal-fired electricity generation at least as much as the reductions projected under the federal regulations. They should also be backstopped by federal regulation in the case that the provincial rules are weakened or don’t perform as expected. We described these ideas in more detail in our submission to the federal government.
Nova Scotia and Ontario are the only two provinces that could currently make a credible claim for equivalency. That said, Ontario doesn’t really need to make a claim because they’re in the process of phasing out the last of their coal-fired generators and will have dismantled all coal-fired capacity before the federal regulations come into force. Neither is it planning to build any new coal plants, so it doesn’t have to worry about trying to muck around with ‘clean’ coal.
Nova Scotia has placed a hard cap on emissions from the electricity sector and plans to cut coal consumption significantly while increasing renewable power to at least 40 per cent of supply by 2020. That’s significant given coal-fired generation made up almost 75 per cent of the province’s supply in 2010! Nova Scotia’s cap requires an emissions reduction of roughly 20 per cent this decade, which appears very likely to match or exceed the emissions reductions from coal that would be produced by the federal regulations alone.
Alberta and Saskatchewan, on the other hand, have much more work to do if they want to make a credible case for equivalency. Apart from financial support for carbon capture and storage at SaskPower’s Boundary Dam 3 unit, Saskatchewan doesn’t currently have any climate change policies that will reduce global warming pollution from their coal plants. Until that changes, any claim of equivalency is hollow.
Alberta is a bit more complicated. The province currently requires its major emitters — including all coal-fired units — to reduce emissions intensity by 12 per cent below baseline, with the target being phased in for newer facilities. In addition to reducing their emissions intensity, coal-fired plants could also comply with the policy by purchasing credits from firms that have exceeded their targets, purchasing offsets from Alberta-based projects or paying into a technology fund at a rate of $15 per tonne of carbon dioxide.
As Alberta’s current policy is structured, it does not provide as strong an incentive to reduce global warming pollution from coal-fired generation as the draft federal regulations would. According to analysis by the International Institute for Sustainable Development, the cost of complying with the federal coal regulations between 2011 and 2020 will be about $50 per tonne of pollution reduced, which is significantly more than the maximum $15 per tonne that coal-fired plants would pay under Alberta’s current policy.
So while there is nothing inherently wrong with equivalency agreements, the lack of equivalent climate policy in Alberta and Saskatchewan is cause for concern. The Ontario environment minister raised a similar concern in a letter sent the federal environment minister following the story in the Globe and Mail. As a province that has already done most of the heavy lifting to phase out coal, it’s entirely reasonable that they’re expecting comparable actions from other parts of the country.
If the federal government is going to hand off responsibility for reducing global warming pollution from coal to the provinces, these concerns need to be addressed in advance.