Proposed amendments to coal-fired electricity regulations and proposed natural-gas-fired electricity regulations

Backgrounder

Proposed amendments to coal-fired electricity regulations

Proposed amendments to Canada’s coal-fired electricity regulations would ensure that all coal-fired units meet a stringent performance standard, by December 31, 2029. This approach accelerates the phase-out of traditional coal-fired units to 2030, as committed to as part of Canada’s clean-growth and climate action plan, the Pan-Canadian Framework on Clean Growth and Climate Change.

Under regulations that came into effect on July 1, 2015, new coal-fired electricity units are required to meet a stringent emissions performance standard (420 tonnes of carbon dioxide per gigawatt hour) while existing coal-fired units need to meet the standard at the end of their operating life. Under those existing regulations, Canada defines coal-fired plants reaching their end of life as being between 45 and 50 years old. This means without the proposed amendments, some coal-fired plants could have remained in operation well beyond 2030, making Canada’s climate targets under the Paris Agreement harder to reach.

Environment and Climate Change Canada estimates that 14 of Canada’s coal-fired electricity units at 9 power plants currently in operation would be affected by the proposed amendments to accelerate the phase-out of traditional coal power to 2030. They are located in Alberta (5), Saskatchewan (1), New Brunswick (1), and Nova Scotia (7). Owners and operators of coal-fired plants may choose to comply with the amended regulations by installing carbon capture and storage. However, most coal-fired plants are expected to close at or before their end of life, or by 2029, instead of meeting the performance standard. They would be replaced with cleaner sources of generation, including natural gas and renewable energy.

Anticipated benefits and costs

The proposed amendments would lead to significant reductions in greenhouse gas emissions. Over the evaluated time period (from 2019 to 2055), Canada’s amended coal-fired electricity regulations would result in a cumulative reduction of carbon dioxide emissions of approximately 100 million tonnes, including 16 million tonnes in 2030.

Canadians would also benefit from improved air quality and reduced exposure to harmful air pollutants from the accelerated phase-out of coal-fired electricity. These pollutants are linked to health issues, such as asthma and heart disease, which can lead to higher numbers of hospital admissions and premature deaths.

Over the period of 2019 to 2055, estimated environmental benefits from avoided climate change damage and improved health outcomes are $4.9 billion. Total industry costs from the proposed amendments are estimated at $2.2 billion, producing net benefits of $2.7 billion over the same time period. Complete details can be found in the Regulatory Impact Analysis Statement.

Equivalency agreements

Under the Canadian Environmental Protection Act, 1999, the federal government may negotiate equivalency agreements with provinces that have regulations that can achieve equal-or-better emission-reduction outcomes to the federal regulations. These agreements would establish conditions under which the federal regulations would stand down and provincial regulations would apply.  

The governments of Nova Scotia and Canada have established an agreement in principle to develop an equivalency agreement for amended coal-fired electricity regulations. This equivalency agreement would build on the current coal-fired electricity agreement between the two governments. Both Canada’s amended coal-fired electricity regulations and Nova Scotia’s provincial regulations must be finalized before a new equivalency agreement can be signed.

In addition to the proposed amendments to Canada’s coal-fired electricity regulations, the governments of Canada and Saskatchewan have an agreement in principle to develop an equivalency agreement for the existing coal-fired electricity regulations that would apply to coal-fired electricity units, until the end of 2029.

Proposed natural-gas-fired electricity regulations

The proposed regulations for natural-gas-fired electricity complement Canada’s accelerated phase-out of traditional coal-fired electricity.

The proposed regulations have been designed to

  • ensure that clean technology is used for new natural-gas-fired electricity generation;
  • encourage the early conversion of coal-fired plants to run on natural gas; and
  • provide assurance that higher emitting coal-to-gas converted plants will be phased out over time.

Requirements for coal-to-gas conversions

The proposed regulations for natural-gas-fired electricity have been designed to permit industry to convert their coal-fired boilers to lower emitting natural gas under certain conditions, resulting in earlier emission reductions. In addition, the proposed regulations will ensure that converted boilers will be phased out and replaced with cleaner sources over time. Canada’s proposed approach will allow converted boilers to provide backup power to help ease the transition to cleaner sources of electricity, including renewables.

The proposed regulations stipulate that converted coal boilers would be tested once per year to determine their greenhouse gas emission intensity. These test results would be used to determine the length of time during which these boilers could operate before having to meet a stringent performance standard. For example, boilers with the lowest greenhouse gas emissions would be permitted to run for up to 10 years after their end-of-life date as defined in the amended coal-fired electricity regulations. However, plants with the highest emissions would not be permitted to run past their end of life.

Requirements for new natural-gas plants

The proposed regulations will cover new natural-gas-fired electricity generation plants that sell or distribute more than 33 percent of their average annual potential electricity output to the grid and that have at least 25 megawatts in installed capacity. These plants will have to meet an annual greenhouse gas performance standard that will ensure companies use clean technology. More details can be found in the proposed natural-gas-fired regulations technical backgrounder.


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