August 20, 2011
Ottawa unveils new coal power regulations
Canada released new carbon emissions regulations on Friday (August 19) that will require new electric generating plants to be as clean as natural gas-fired generators, emitting no more than 375 tons of CO2 per gigawatt-hour of power produced. Coal plants would have to cut nearly 70 per cent of emissions, and thus the practical effect of the new rules is to prohibit new coal plants from being built in Canada without carbon capture technology. Existing coal facilities will have to meet new performance standards only once they reach end-of-life, at 45 years. The rules, open to comment for 60 days after they are officially published Aug. 27, apply to plants commissioned after July 2015. The rules prescribe targets to be achieved, and it is up to individual plant operators to choose either a technological solution (such as carbon capture and sequestration, or CCS) or switch to alternate, cleaner fuels. While some in the carbon capture industry in Canada welcomed the new rules, there is some concern that another possible outcome will be to increase the country’s reliance on natural gas, given that carbon capture may likely be less cost-effective than simply switching generators to cleaner-burning natural gas. In either event, both industries will benefit by the elimination of uncertainty. Electricity generators in Canada will know the rules of the game, and can evaluate the most cost-effective means over the long run of complying with the new emissions rules. This regulatory certainty will result in both industries being able to attract capital, and on more reasonable terms, given the reduced risk.