Pembina Institute

Electricity from coal: time to turn the page on Canada’s dirtiest source of power

Burning coal to make electricity is a dirty habit. We’ve known for years that it’s bad for our health, bad for our kids and bad for the climate. When it comes to air pollution and carbon intensity, coal plants are Canada’s worst electricity source. Yet many parts of the country still rely heavily on coal for electricity.

High Costs of Cheap Power - Report coverOur new report, The High Cost of Cheap Power: Pollution from coal-fired electricity in Canada, helps to explain why it’s time to turn the page on coal–fired electricity.

While several Canadian provinces have already taken serious steps to stop using coal, others, including the federal government, are not acting with the required sense of urgency to clean up our electricity grid. Ontario, for example, will soon become the first jurisdiction in North America to completely phase out its coal fleet, while other provinces, like Alberta, burn lots of the black stuff and intend to keep on burning it for decades.

There are good reasons why we should be looking to act more quickly, especially considering that phasing out conventional coal is one way we could make significant progress toward reaching our climate change commitments.

Coal was cheap — if you discount health and the environment

Coal power is a big contributor to toxic air pollution and GHGs, and provinces that burn a lot of it — Alberta, Saskatchewan and Nova Scotia — have the most polluting electricity systems in the country. These three coal-powered provinces alone emit the most GHGs per kilowatt-hour of electricity, with Alberta’s grid five-times more carbon-intensive than the national average.

Coal report, figure 4
For the same electricity generated, Canadian coal plants emit at least twice the GHGs as new natural gas plants and twenty-times more than the average of all of Canada’s other power sources. By not recognizing and internalizing the costs of carbon dioxide emissions to the atmosphere artificially hide the true costs of coal power.

The existing fleet of coal plants in Canada also emit large amounts of toxic and noxious gases, particularly sulphur dioxide and mercury. Indeed, coal plants emit over 60 per cent of the mercury emissions in the three heavily coal-reliant provinces, including over 75 per cent in Saskatchewan, where coal plants also emit over 85 per cent of sulphur dioxide emissions in the province.

High Costs of Cheap Power - Figure 10This should be a big concern for anyone living downwind of a coal plant, considering mercury emissions result in breathing complications and other diseases, such as brain development disorders in children.

High Costs of Cheap Power - Figure 6 So when old coal plants are able to produce electricity that appears cheap on your bill, it’s important to ask: at what cost to our health and to our environment?

Coal’s hidden costs — disease and premature death, acid rain and climate change — are high. And, according to studies in the United States and Ontario, if these costs were actually covered by the polluters, it could more than triple the price of power from coal. For example, pollution requirements that apply to coal plants being built today increase their costs, making them much more expensive than existing plants.

When we dig beneath the surface to uncover what we as a society actually pay for coal-fired electricity, it turns out it isn’t so cheap.

A climate change solution too good to ignore

Reducing coal use in our electricity mix is one of the smartest and fastest ways to achieve substantial reductions in GHG emissions. Coal’s carbon intensity is so high that cutting it down could make a big difference, and cost-effective alternatives to coal are ready and waiting.

An analysis by the Pembina Institute shows that, to meet the current federal government’s GHG reduction commitments, the electricity sector should cut emissions by 37 per cent, or around 40 megatonnes (Mt), from business as usual. Considering that around half of these reductions could come from Alberta’s heavily coal-reliant electricity sector, it’s clear that cutting coal use is central to meeting our targets.

Whatever reductions are not made by the electricity sector will have to come from elsewhere in our economy, and from sectors where cutting GHGs might not be as easy or as cost-effective. There are no two-ways about it, cutting out coal is one of our best opportunities for low cost emissions reductions.

Cutting coal

Environment Canada’s proposed coal-power regulations, which will be finalized soon, take steps to cut these emissions. In their proposed form, they are expected to achieve five Mt of GHG reductions — a far cry from the federal government’s 40 Mt target but a step in the right direction, particularly if some suggested improvements are adopted.

THigh Costs of Cheap Power - Figure 17ahat said, Environment Canada has since come under pressure to weaken the regulations, by allowing existing coal units to operate without any GHG reductions until they reach a full half-century, and by weakening the standards that both new plants and old plants have to meet. Together, these two changes would reduce the overall effectiveness of the regulations by more than half over their first fifteen years.

Enforcing strong standards for coal power is a great opportunity for the federal government to show that it’s serious about its international commitments on climate change. In fact, the opportunity is too good to pass up when cleaner alternatives are readily available.

Coal-fired electricity may have been cheap, but it’s costly to our health and our environment.

michael gervais — Jul 29, 2012 - 11:24 PM MT

Hey Ben did you read this or do you just research other peoples information that are friendly to your cause?

Germany Returns to Coal
Coal use projected to rise 13.5 percent in 2012, while nuclear plants sit idle

Posted by Jesse Jenkins on May 11, 2012 at 4:39 PM
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Coal use will rise an estimated 13.5 percent in Germany this year, resulting in at least 14 million metric tons of additional carbon dioxide (CO2) emissions, even as the nation continues to idle two-fifths of its nuclear power fleet.

The major reduction in European energy demand and industrial output caused by the global recession has led CO2 emissions to slide faster than the emissions reductions mandated by either the Emissions Trading Scheme or the EU's commitments under the Kyoto Protocol. Yet instead of accelerating emissions cuts, the ironic economics of the carbon trading system have justified a return to coal in Germany and elsewhere, as a glut of emissions permits drives down the cost of carbon pollution and makes coal highly profitable once again.

The odd logic of the emissions targets and timetables has even been used by German greens (and their defenders internationally) to justify trading zero carbon nuclear for greater coal combustion. Germany's decision last year to power down eight of its 17 nuclear reactors leaves idle enough zero carbon power to drive down the country's CO2 emissions another 21 percent from 2008 levels. Yet instead of sounding the alarm at this huge missed opportunity as the nation instead turns back towards coal, some German greens have gone so far as to claim Germany literally "has the right" to eschew nuclear in favor of much greater emissions levels than necessary.

So much for the extreme urgency of climate mitigation...

Rather than Accelerate Carbon Cuts, Recession Leads to Resurgence of Coal

Europe's economic slump has reduced total electricity demand and cut output at industrial facilities across the Eurozone. Both factors have reduced demand for emissions permits under the EU's Emissions Trading Scheme, a cap-and-trade system covering major sources of CO2 emissions in industrial and power generation sectors. The recession has helped push down EU emissions in sectors covered by the ETS by just over 2 percent last year, Reuters reports, creating several hundred million tons of excess emissions permits.

Instead of accelerating total CO2 reductions, however, the glut of emissions permits caused by the recession is leading to a resurgence of coal burning in Europe.

As demand for emissions permits has slumped, permit prices have cratered, falling to around 7 euros (or $9.13) per metric ton of CO2 emitted, 60 percent below 2011 levels, according to Reuters.

Low permit prices have meant increased profitability for coal-burning power plants across European markets, particularly in Germany, where profits for coal-fired power plants are up 30 percent since the beginning of the year, reaching the highest levels since 2008, Reuters reports.

"If you have anything that's coal-fired in your generation park at the moment - be it lignite or hard coal - you will take advantage of the high margins and burn the stuff," a trader with a major German utility told reporters.

Utilities in Germany, the largest power market and economy in Europe, have increased their use of coal-fired power plants continuously since the beginning of the year, Reuters reports. Analysts now project annual coal-fired power generation in 2012 will increase to 130 million megawatt-hours (MWhs), an increase of 15.5 million MWhs or 13.5 percent over 2011 levels.

All that additional coal combustion means about 14 million metric tons of CO2, assuming utilities burn hard coal, according to estimates from Matteo Mazzoni, an energy and carbon analyst at Nomisma Energia. Emissions would be higher if German power plants turn to lignite, or brown coal, a dirtier variety with lower energy content that is plentiful in the country.

Even assuming utilities burn hard coal, the increased emissions would be the equivalent to about 6 percent of total German emissions in 2008, or the average annual emissions of 2.8 million U.S. cars.

Emissions Trading Scheme Acts as Effectively as Floor on Emissions as Cap

The up-tick in coal-combustion is an odd byproduct of the European Emissions Trading Scheme (ETS), designed to cap emissions from industrial and power sector polluters in 30 EU nations.

The trading scheme issues permits to emit CO2 in several year phases, to allow for variances in weather or industrial demand. The most recent phase extends from 2008 to 2012.

But when emissions fall faster than expected, as they have following the impact of the Great Recession and the Eurozone crisis, emissions permits quickly become oversupplied, providing incentive for power plants to turn back towards coal or to bank emissions permits, allowing higher emissions in future compliance periods. Either way, utilities have incentives to use up cheap permits while they last, increasing CO2 output now or (if permits are banked) in the future.

In this manner, the ETS can act just as effectively as a floor on total emissions in covered sectors as it can as a cap.

German Nuclear Capacity Idles as Coal-burning Increases

Even as German utilities burn more coal, eight of the nation's 17 nuclear reactors have sat idle since the March 2011 tsunami and accident at the Fukushima Dai-ichi nuclear power complex in Japan.

When all 17 German reactors were operating, they supplied 133 million MWhs of electricity. The idled reactors total 12.3 gigawatts (GW) of capacity, or 41 percent of Germany's total nuclear capacity of 20.3 GW. Assuming the shuttered reactors produce the same share of total nuclear electricity generation, they represent the capability to produce 54.4 million MWhs of zero-carbon electricity annually.

In other words, even as Germany increases their coal-use by 15.5 million MWh, they are idling enough capacity to instead drive down total-fired power generation by 54.4 million MWh. Assuming the combustion of hard coal, that would slash the nation's total CO2 emissions by 49 million metric tons, or an additional 20.8 percent reduction below 2008 levels. Emissions reductions would be even greater assuming nuclear generation displaced the combustion of lignite rather than hard coal.

What Happened to Dire Climate Warnings?

While the ETS can ensure total covered EU emissions will not rise higher than the emissions trajectory planned prior to the recession, it has clearly done nothing to turn the recession into an accelerating force for further CO2 cuts.

Instead, both the incentives created by the ETS and Germany's decision to idle almost half its nuclear fleet have led to an increase in coal combustion while squandering an opportunity to more rapidly reduce CO2 emissions and accelerate the transition away from fossil fuels.

Even as climate scientists counsel ever-more-urgent action to reduce greenhouse gas emissions and arrest climbing global temperatures, policy makers and green activists in Germany and elsewhere in Europe have decided that they are doing enough to reduce CO2 already.

Germany, and the EU at large, have certainly been aggressive at deploying renewable energy, improving efficiency, and otherwise cutting carbon emissions. For these efforts they should be lauded.

Yet Germany's total emissions from fossil fuels were already 11 percent lower than 1990 levels when the Kyoto Protocol was negotiated in 1997, and 20 percent lower when the ETS first went into effect in 2005. Germany's emissions declines were aided substantially by Reunification in 1990 and the subsequent modernization of the East German economy, which saw the closure of countless inefficient, outdated Soviet-era factories and power plants. More recently, the Great Recession and the Eurozone Crisis further slashed German and EU emissions.

Whatever the cause, should Germany's emissions reductions to date be used as an excuse to slow further carbon cuts to the minimum levels mandated by the ETS or the Kyoto Protocol? Do they justify leaving much greater emissions reductions opportunities sitting on the table? How urgent do European greens take their own dire warnings about impending climate catastrophe? Shouldn't climate activists sound alarm bells whenever coal use rises, rather than falls?

As the German green think tank, Heinrich Boll Stiftung, admits with honesty, shuttering the nation's nuclear plants will most certainly increase carbon emissions. But according to a pamphlet from the think tank, "Germany actually has the right to increase its carbon emissions since it completely blew past its Kyoto target of a 21 percent reduction [below 1990 levels by 2012]."

There you have the odd logic of emissions trading. And an unfortunate missed opportunity for much deeper carbon cuts.

Benjamin Thibault — Aug 07, 2012 - 12:44 PM MT

Hi Michael,

Thanks for the article. It is an interesting discussion about a weakness in the European Union’s Emissions Trading System (ETS) as it relates to burning coal for electricity in Germany.

As the article indicates, Germany has taken laudable strides to decreasing dependence on dirty coal power and transitioning to clean renewable electricity. The ETS has helped in that transition by starting to put a value on the very large amount of climate pollution that coal-fired electricity is responsible for. But according to the article, the “glut of emissions permits” under the ETS during this economic downturn has made coal power “highly profitable once again”. Unfortunately, this means that Germany could see more of the health-impacting pollution attendant to coal power that is reviewed in my blog.

Germany could pursue a number of solutions to this problem. One would be to set more aggressive climate policy in light of its success, to date, in reducing emissions and meeting international commitments. An example of this could be minimum prices within the ETS, which would prevent this sort of perverse outcome. Another would be to force coal plants to pay for coal's other (non-climate) air pollution in line with the health and environmental costs that this pollution causes to society. A third option could see Germany set a clear path toward turning off of dirty coal power, as Ontario is in the process of doing. Either way, Germany could help to avoid coal power upticks that mean backward steps on the path to a cleaner electricity grid.

Thanks for passing along the article – I am certainly happy to read and consider its application to the Canadian context, just as we were keen to review a broad diversity of sources for our report, including self-reported air pollution data for coal plants. It does not, however, question the need to transition away from dirty coal power for both climate and health protection. Indeed, it underlines the need – in Germany just as in Canada – for better policy to spur this transition.

Richard — Jun 15, 2012 - 10:48 AM MT

Your report is very good. As it show percentagess and not tonnage how much coal does Ontario burn and Alberta burn. It would be more meaningfull to me in understanding the full impact.

Benjamin Thibault — Jun 25, 2012 - 01:01 PM MT

Hi Richard, thanks for the question.

The total amount of coal burned for electric power generation in each province can be found in CanSIM Table 127-0004, thanks to the good folks at Statistics Canada. In 2010, the amount of coal used as fuel for electricity is as follows:

Mass of Coal as Fuel (megatonnes) % of Canada
Canada 43.74 100.0%
Nova Scotia 2.75 6.3%
New Brunswick 0.82 1.9%
Ontario 6.01 13.7%
Manitoba 0.03 0.1%
Saskatchewan 9.75 22.3%
Alberta 24.39 55.8%

Because of Ontario's coal phase-out, the Ontario number has fallen further in 2011. As you can see, over 3/4 of the coal used for electricity in Canada is in Alberta and Saskatchewan -- more than half is in Alberta alone. This goes some way to explaining why the National Round Table on the Environment and the Economy's recent Reality Check report finds that the best remaining opportunities to reduce greenhouse gases in the electricity sector are to deal with Alberta and Saskatchewan's coal plants.

You can see the amount of electricity that this generated in 2010 in Figure 3 of our report on page 13.

Thanks again for the question!


Greg — Jun 14, 2012 - 11:52 AM MT

The nefarious gutting of environmental regulations through budget bill C-38 complements this piece well: the current federal government's environment policy is nothing short of a pro-fossil fuel sector policy.

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