Who’s really winning the race to end coal? A comparison of Canada and U.S. federal regulations

Updated on June 26, 2013:

Yesterday, U.S. President Barack Obama released a major climate action plan that includes a directive for the U.S. Environmental Protection Agency to begin regulating greenhouse gases from existing power plants. This is an important move and could potentially put the United States ahead of Canada in terms of addressing coal power emissions.

The two countries’ timelines for implementation appear similar, but it's not yet possible to compare Canada’s standards to the U.S. approach. Ultimately, the details of stringency and structure will determine their effectiveness, and these will be negotiated over the coming year as the rules are drafted. The World Resources Institute has found that a “go-getter” approach to the power plant regulations could put the U.S. on track to meet their target, and the Natural Resources Defense Council has outlined a very detailed proposal for affordable, ambitious action. Stay tuned!

The U.S. ambassador has made it crystal clear that as America steps up its climate action it expects us to do better too. The new line from the Harper government is that we’re already there, particularly on curbing emissions from coal power. Foreign Affairs Minister John Baird recently suggested “maybe the United States could join Canada” on “taking concrete direct action with respect to dirty, coal fired electricity generation,” adding that “we’re the only country in the world that’s committed to getting out of the dirty coal electricity generation business.”

Sadly, Canada isn’t the shining example of coal-curbing excellence that Harper’s ministers are claiming. When it comes to regulating greenhouse gases (GHGs) from coal power, we’re doing about the same as our neighbours to the South — and may well be eclipsed before too long. While coal power is America’s biggest source of GHGs, accounting for over a quarter of national emissions in 2010, it accounted for about 11 per cent of Canada’s in the same year. As for “getting out of the dirty coal electricity generation business,” Canada won’t be fulfilling that commitment until 2062.

First mover: U.S.A.

The United States was actually first out of the gate when it comes to placing regulated limits on GHG emissions from coal power. Since the beginning of 2011, new or modified power plants have had to demonstrate they are applying the “best available control technology” to limit GHGs as part of their pre-construction permitting under the Clean Air Act. Canada won’t have any federal limits on GHGs from new coal plants until mid-2015.

Verdict: advantage U.S.

Equivalent action on new facilities

Starting in July 2015, any new coal plant powering up in Canada will need to limit its emissions per unit of electricity generated to levels similar to a combined-cycle natural gas plant — a level that, realistically, can only be achieved by capturing at least part of the facility’s emissions. In other words, starting in mid-2015 companies can no longer build conventional coal plants in Canada. (In practice, however, they could still operate new coal plants as conventional units until 2025 as long as they make a commitment to start capturing emissions thereafter).

The U.S. EPA has proposed essentially the same thing, and is expected to finalize their approach, known as New Source Performance Standards, within the next few months. Any unit that was not already fully permitted by March 2012 and under construction by March 2013 is subject to the standard. This makes the timing of the regulation roughly equivalent to Canada’s.

Verdict: tie.

Existing units awaiting attention

Canada’s regulation does not apply to existing units (those built before July 2015) until they reach the end of their economic life. This is between 45 and 50 years of operation, averaging about 49 years. Any unit built after 1985 gets to run for a full half century without federal GHG limits, even if that means until the end of 2061, as is the case with Alberta’s Keephills 3 facility, which powered up in 2011. This timeline is so relaxed that no units will be affected until 2020, after which more units will gradually be covered as the decades wear on.

Environment Canada expects that the regulation will reduce GHGs by 3.1 million tonnes below projected levels in 2020 — a 0.4 per cent reduction of Canada’s total emissions. Put another way, they expect the rule will close less than three per cent of the 113 million tonne gap between our international commitments and where our emissions are currently headed. Environment Canada isn’t expecting the regulation to result in any notable absolute reductions in power sector emissions until the end of next decade.

This approach could have been far more ambitious, particularly when you consider that the average age of coal units retired to date in Canada (not even counting those units phased out “early” by Ontario’s policy) is just 36.

The EPA has yet to present regulations for existing units, but it is widely expected that will be their next step. Indeed, once the rules for new units are finalized, the Clean Air Act obligates the EPA to address existing sources. There is a broad range of options for what they could propose. Given the importance of this sector to fulfilling America’s climate commitment, it’s easy to imagine the U.S. taking an approach more ambitious than Canada’s: environmental organizations like the New York-based Natural Resources Defense Council have proposed an approach that would reduce emissions from existing power plants by 26 per cent by 2020 using existing Clean Air Act tools. At this point, however, we don’t know how ambitious the EPA will choose to be.

Verdict: too soon to call the final score; for now, advantage Canada.

Different contexts

Another interesting factor is the role of market dynamics and other environmental regulations. In the U.S., these factors have led to sharp decline in coal generation. Due mainly to low natural gas prices, coal has fallen from 50 per cent of America’s electricity mix to 38 per cent in just six years. This dynamic is a lot less pronounced in Canada due to our differing fleet (our plants are typically younger and we don’t have spare gas-fired capacity to the extent it was present in the U.S.), but provincial action like Ontario’s coal phase-out is having a big impact. Ontario’s phase out will be complete this year, however, and after that coal power is likely to remain on a pretty flat trajectory in Canada — until the federal regulations begin addressing it unit by unit.