Canada Finalizes GHG Rules for Coal-Fired Power Plants

Final regulations that seek to tamp down greenhouse gas (GHG) emissions from new and end-of-life coal-fired power plants announced by Canada’s federal government on Wednesday, and which will become effective on July 1, 2015, apply a more relaxed performance standard than proposed in the draft rule.

The rules, promulgated under the Canadian Environmental Protection Act, 1999 (CEPA, 1999), set a performance standard of 420 tonnes/GWh, which is the emissions intensity level of Natural Gas Combined Cycle technology, the government said—but it is much higher than the of 375 tonnes/GWh limit proposed in the draft rule. New and end-of-life units that incorporate technology for carbon capture and storage may also apply for an exemption from the performance standard until 2025.

The federal regulation would stand down if provinces have a set of enforceable rules that delivers “an equivalent environmental outcome,” the Environment Ministry said. A draft equivalency agreement, for example, has been developed with Nova Scotia; the federal government and Saskatchewan have announced that they are working towards equivalency; and discussions on equivalency have also begun with Alberta.

Canada has set a target to reduce its GHG emissions to 17% below 2005 levels by 2020, and Ottawa has said that country’s coal-fired power plants are responsible for 11% of its total GHG emissions. Coal-fired plants generate about 15% of the nation’s total electricity. In the first 21 years, the regulations are expected to result in a net cumulative reduction in GHG emissions of about 214 megatonnes, the government said.

The rules were warranted because “Canada’s electricity generating industry is faced with an ageing coal-fired electricity generating fleet. Regulatory certainty will allow companies to make investments in new generating capacity,” Canada’s Environment Ministry said. “The performance standard will foster a permanent transition towards lower or non-emitting types of generation such as high-efficiency natural gas and renewable energy.”

The rules apply to new units—those that begin producing power commercially after July 1, 2015—and units that are at their end of their lives or have been operating for 50 years—not 45 years, as draft rules had implied. “Building a coal unit is a long process, so we don’t expect many units to come on stream between now and 2015,” the ministry said. It added that it expects the first unit closures as a result of the regulations to occur in 2020, but noted a number of units will close prior to that date in Ontario and Saskatchewan due to provincial actions and company plans.

The Environment Ministry said that the rules would provide benefits of C$7.3 billion, factoring in avoided costs associated with climate change and electricity generation, and avoided health problems from smog and air pollutants. Benefits also include use of carbon capture and storage technology whereby captured carbon dioxide is used for enhanced oil recovery.

The final rules have incited criticism from environmental groups, which said they are much more relaxed than those proposed in the draft rules. Federal Environment Minister Peter Kent on Wednesday admitted the new rules are "at the high end" of the 360 to 425 tonnes/GWh range that had been considered, but he defended the decision, saying it would avoid putting the "consuming public at risk of inadequate power supply." The 375 tonnes/GWh performance standard “would have been applicable only if, in the coal-fired electricity sector, plants operated at a steady productivity," Kent said. "In reality, plants go up and down in the generation of energy depending on demand."

Sources: POWERnews, Canada Environment Ministry

—Sonal Patel, Senior Writer (@POWERmagazine)