HomeCoal FiredA long goodbye to coal

A long goodbye to coal

goodbye to coal
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While Canada is ditching coal fired power generation with a blueprint designed to ‘show the world what is possible’, it faces calls to impose a shorter timeframe, reports Elisa Wood.

The Canadian government sealed the fate of conventional coal-fired power plants when it enacted new greenhouse gas rules in September.

From 1 July 2015, coal plants will begin a phase-out set to continue for several decades. The move has won praise for its decisiveness. But not its pace.

“The way it was presented was that we are going to be tough on coal. In a literal sense, it’s true. But it’s more of a natural death phase-out,” says P.J. Partington, technical and policy analyst at the Pembina Institute, a Canadian sustainable energy think tank.

New coal plants stand little chance of being built in the country beyond 2015, unless they employ the currently unproven technology of carbon capture and storage (CCS). But older plants will be around for some time ࢀ“ and that is what concerns environmentalists.

Canada is phasing out coal as part of its sector-by-sector approach to reducing greenhouse gases to 607 megatonnes (Mt), a 17 per cent drop below 2005 levels by 2020. So far, the government has tackled the electricity and transport sectors, with gas and oil still awaiting action.

Electricity offers the best prospects for near-term emissions reductions, according to the National Round Table on Environment and the Economy. In fact, of all Canada’s economic sectors ࢀ“ such as electricity, transport, oil and gas, industry, buildings, agriculture and waste ࢀ“ the electricity sector is the only one expected to actually lower its greenhouse gas (GHG) emissions by 2020, and it will do so by about 25 per cent.

Canada formally withdrew from the Kyoto Protocol last year to align its GHG reduction policies with the US, which accounts for 85 per cent of Canadian trade or C$1.8 billion ($1.8 billion) in goods and services daily. To reduce emissions from coal, the federal government opted not for a carbon dioxide (CO2) cap-and-trade programme, but instead for performance standards that coal-fired generators must meet to continue operating.

Specifically, coal-fired plants must achieve the emissions profile of natural gas combined-cycle plants, which is challenging without CCS. The standard applies to coal units that begin operating after 1 July 2015, while older plants can continue to operate throughout their useful lives of about 50 years.

Growth in emissions by economic sector
Growth in emissions by economic sector, 2005 vs.2020 (Mt CO2)
Source: National Round Table on Environment and the Economy,
Reality Check: The State of Climate Progress in Canada

The regulations will bring about the first plant retirements in 2020, according to Environment Canada, a federal agency. More than half, or 28 plants, will shut by 2025. Another nine will go by 2030, and a further eight by 2040. But about 18 per cent of Canada’s conventional coal-fired plants will keep operating beyond that date, says the Pembina Institute. “They are letting the coal plants run for so long, coal will still be around in 2061,” according to Partington.

Draft rules circulated last year pushed for closure five years earlier, when plants hit 45 years ࢀ“ and environmental groups have complained that even this is too long. However, after a year of public comment on the plan, the government went the other way, easing the rule by five years and weakening the emissions requirement. The original standard was 375 tonnes of carbon dioxide (tCO2) per GWh; the new standard is a less stringent 420 tCO2/GWh.

Hydro continues to dominates

While the final rules are not as tough as the original proposal, they still bolster Canada’s already sizeable bragging rights in the world arena as a leader in clean energy production.

“Canada already boasts one of the cleanest electricity systems in the world, with three quarters of our electricity supply emitting no greenhouse gases,” says Peter Kent, Canada’s environment minister. “These regulations will further strengthen our position as a world leader in clean electricity production, while continuing to grow our economy.”

Indeed, 63 per cent of Canada’s power comes from hydroelectricity. Combustion turbines and conventional steam units make up another 21 per cent and nuclear power 15 per cent. Wind, solar and tidal energy provide the remaining small, but growing, sliver.

Coal already accounts for only 15 per cent of the power supply. But it was important for Canada to curb its use because coal-fired power emits 11 per cent of the nation’s GHG emissions and 77 per cent of GHG emissions from the electricity and heat sector, according to government statistics. Over 21 years, the new coal plant regulations will cut GHG emissions by about 214 Mt, equivalent to removing 2.6 million cars from the road annually, according to government estimates.

Some provinces have their own coal retirement or emissions reduction plans (see sidebar, p.20). The federal government will let the provinces override the federal rule if their plans deliver an “equivalent environmental outcome”, according to Environment Canada. The provinces of Nova Scotia, Saskatchewan and Alberta are all seeking to win government approval to pursue their own plans.

Power sees new investment

Officials say they pushed the rule forward to give the power sector regulatory certainty. Knowing what is to come, power plant developers can proceed with new projects, as Canada prepares to build $347.5 billion in new electricity infrastructure over 20 years. In 2011 alone, investment in power plants and transmission and distribution infrastructure jumped 10 per cent to $9.2 billion, according to the Canadian Electricity Association (CEA).

Much of new construction will replace Canada’s ageing power infrastructure, which was built 30 to 60 years ago. About two thirds of the investment will go toward power plants, says the CEA.

The CEA is pushing for what it calls a pan-Canada strategy as part of modernising the electricity sector. Power is now governed primarily at the provincial level, where policy focuses on self-sufficiency and developing local resources. CEA sees this approach continuing, but also calls for the provinces to form more regional power markets with cross-border trades.

Such inter-provincial co-operation would promote development of “Smart Grid, renewable energy, harmonised standards for energy efficiency and the development of electrical vehicle infrastructure”, says Jim Burpee, CEA president and chief executive.

“Although provinces have typically approached their electricity system and supply independently, creating common markets or long-term generation contracts by region, as is currently being considered by Newfoundland and Labrador to Nova Scotia, would create a more efficient, sustainable and affordable electricity system for Canadians.”

By forming such markets, Canada also will be in a stronger position to sell clean power into the US, which is attempting to decarbonise and add renewable energy, according to the CEA. The National Energy Board (NEB) expects Canada to double the amount of electricity it has available for export through 2035. Especially ripe markets for Canadian hydroelectricity and wind power lie in heavily populated northeast US states, which have high electricity rates and strong demand for green energy. Several of these states have aggressive renewable portfolio standards that require large infusions of renewables by 2020. New York, for example, mandates that 30 per cent of power come from renewables by 2015 and Massachusetts is seeking 15 per cent by 2020. Connecticut’s laws require 20 per cent renewables by 2020, but the state is considering increasing this figure with an eye on Canadian hydro.

Canada's generation mix in 2010 and 2035
Canada’s generation mix in 2010 and 2035
Source: NEB, Canada’s Energy Future: Energy Supply and Demand Projections to 2035 – Energy Market Assessment, (www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgyftr/2011/nrgsppldmndprjctn2035-eng.html#smmr)

Meanwhile, developers are working on long-distance transmission projects that would carry this power into US demand centres. Northeast Utilities, New England’s largest utility, has proposed a 1200 MW high-voltage line to carry hydroelectricity from Hydro-Quebec into the state. The project faces strong opposition from property owners in the state of New Hampshire, the line’s path into the US. But the utility remains bullish that it will be built.

Transmission Developers Incorporated is also seeking regulatory approval to build a 530 km underground and subsea line that would carry 1000 MW of Canadian hydroelectricity and wind power into New York City.

Natural gas and renewables grow

What kind of power will Canada develop to replace retiring coal-fired plants, meet its own demand and supply US exports?

In a forecast issued late last year, the NEB projected that electric demand will increase about 1 per cent annually through 2034. Supply will grow by 27 per cent. Of the 55 GW of new capacity, about 19 GW will replace existing supply and 36 MW will serve new demand and export markets. Quebec, Ontario, British Columbia and Alberta will see the greatest capacity increases, says the NEB.

coal generation capacity

While hydropower will remain the dominant fuel nationwide, the actual mix of electric resources will continue to vary by province. In Quebec, British Columbia and Manitoba hydro will remain prevalent. Saskatchewan could continue to use coal, possibly with CCS. Alberta will ease away from coal and shift to natural gas. New Brunswick and Ontario will rely heavily on nuclear, while Nova Scotia, as well as New Brunswick, will decrease their coal use as the 3000 MW Lower Churchill hydroelectric project develops in Labrador, according to the NEB.

Overall, Canada is expected to increase its zero-carbon resources from 76 to 79 per cent of its power mix by 2035. Renewable energy grows in NEB’s forecast from 62 to 68 per cent of electric supply. Biomass, solar and geothermal, together, will contribute about 6 per cent of generation by 2035. Wind power increases from 1 to 6 per cent of the power portfolio, representing the largest growth among non-hydro renewables. Wind power capacity reaches 23 GW in 2035, under the NEB’s forecast, with the largest contributions from Quebec, Ontario and Alberta.

Distribution of world CO<sub>2</sub> emissions from fuel combustion
Distribution of world CO2 emissions from fuel combustion, 2009 Source: Environment Canada, Canada’s Emissions Trends 2012,
(www.ec.gc.ca/indicateurs-indicators/default.asp?lang=en&n=54C061B5-1)

Offshore wind, however, remains something of a wild card. Several wind farms have been proposed in the Great Lakes, but in 2011 Ontario placed an indefinite moratorium on their construction until it can investigate the environmental consequences of wind farms built in fresh water. Trillium Power Wind, which had proposed a 420 MW wind farm in Lake Ontario, is suing the Ontario Provincial government for financial losses associated with the moratorium.

Natural gas-fired capacity increases from 9 to 14 per cent of the power supply by 2035, rising from 18 GW in 2010 to 28 GW. The largest increase is expected in Alberta, which will use natural gas to replace coal and also to fuel combined heat and power plants for developing oil sands.

Nuclear power increases slightly from 82 TWh to 83 TWh. It actually makes up less of the overall pie, falling from 14 per cent to 11 per cent in 2035, as natural gas-fired generation and wind power expand. Oil-fired generation now accounts for about 4 per cent of electric capacity and 1 per cent of generation and will remain a small part of the mix.

Westshore coal terminal
The Westshore coal terminal, Vancouver
Source: Delta Port

Meanwhile, use of conventional coal-fired generation falls from 14 per cent to 3 per cent of capacity, from 78 TWh in 2010 to 41 TWh by 2035. At the same time, the NEB expects Canada to have 3000 MW of coal-fired generation in operation with CCS in Alberta and Saskatchewan.

With all of these changes, Canada’s GHG emissions are falling. In its August 2012 emissions trend report, Environment Canada projects that emissions will be 5.3 per cent lower in 2020, despite a 0.8 per cent rise in gross domestic product. The government will still miss its goal of 607 Mt by that year. Instead, it projects emissions of 720 Mt, without further government action. The figures, say environmentalists, underscore why Canada needs to shutdown conventional coal plants more quickly.

For its part, the government says GHG emissions will fall further as it works out changes in oil and gas, as well as other sectors. The oil and gas industries are the second only to transport as a source of GHG emissions in the country.

But for now the burden falls on Canada’s electric energy industry, as the nation says its long, slow goodbye to conventional coal-fired generation.

Canada’s disappearing coal: A province by province count down

Provincial government plays a strong role in determining the electricity supply mix in Canada. Below is a look at the provinces that currently have coal fired generation and how new federal performance standards will affect them.

Alberta

Alberta’s installed capacity is 14,098 MW, with coal making up the largest single resource (6239 MW) and natural gas the second (5504 MW). Its coal fleet is ageing and 13 of 18 units are expected to close by 2035. Alberta has placed restrictions on coal generation, which require a 12 per cent reduction in 2003ࢀ“05 emissions intensity.

Ontario

Ontario has taken an aggressive stand to shutdown coal. The province has banned coal-fired generation by 31 December 2014, in what Ontario’s government describes as the single largest GHG reduction measure in North America. Eleven of 19 plants have already closed. In September, Atikokan power plant stopped operating with coal and will return to service as a 200 MW biomass plant in 2014. The province has a generous feed-in tariff that has encouraged rapid renewable energy development. Since 2003, 10 GW of new clean energy has begun operating. The province is home to Canada’s 25 largest solar projects, with 550 MW of solar now online and 1800 MW under contract. Wind power totals 1500 MW, with nearly 700 MW more set to begin operating in 2013.

Saskatchewan

Coal accounts for about 15 per cent of Saskatchewan’s primary energy. The province expects to close four out of nine of its coal plants by 2035. SaskPower, which operates about 3500 MW in the province, has signalled plans to close two of its coal units in the near term, Boundary Dam Units 1 and 2. Meanwhile, the provincial government has approved SaskPower’s plan to rebuild Boundary Dam Unit 3 into the world’s first commercial-scale fully integrated CCS storage facility. The C$1.24 billion project will create a 110 MW facility. Carbon sales are expected to offset projects costs. The carbon will be used in enhanced oil recovery applications.

Nova Scotia

Nova Scotia gets 75 per cent of its electricity from coal and is home to one of the first coal plants expected to cease operation early, in 2020, as a result of the new federal GHG standards. The province contains eight coal units and all but two are due to close by 2030. The province has a Climate Change Action Plan, which imposes a series of GHG caps on power production through 2020, with an overall goal of reducing emissions by 10 per cent below 1990 levels. Nova Scotia has a goal to secure 25 per cent of its power from renewables by 2015, with 40 per cent by 2020. It is working on an equivalency agreement with the federal government to avoid subjecting industry to duplicative regulations.

New Brunswick

New Brunswick expects to close two of its coal plants before 2035 and the final one by 2039. The province has a goal to secure 10 per cent of its electricity from renewables by 2016 and become self-sufficient in energy by 2026.

Manitoba

Manitoba’s only coal-fired unit is due to shut in 2030. The province, which expects to meet Kyoto Protocol targets in 2012, has a ‘Beyond Kyoto’ strategy that calls for taxes on coal emissions and government funding to help industry develop clean energy, including biomass to replace coal power. The province plans to increasingly pair hydroelectric and wind projects for reliability purposes.

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