Archived: Technical backgrounder: Proposed federal regulations for electricity sector

Backgrounder

Comparison between provinces and territories of electricity generation in terawatt-hours by energy source, in 2015, and megatonnes of greenhouse gas emissions produced from that generation

Electricity sector overview

About 80% of the electricity in Canada is generated from non-greenhouse gas (GHG) emitting sources today. However, the supply mix varies considerably by province and territory depending on the availability of natural resources, transmission infrastructure and market structure. Jurisdictions where fossil fuel-sourced electricity is used have higher GHG emissions profiles.  The graph below identifies the types of electricity generation by province and the total greenhouse gas emissions for the sector.

Electricity sector GHG emissions decreased from 118 megatonnes (Mt) in 2005 to 79 Mt in 2015. A key action underlying this decline was Ontario’s coal phase-out. However, electricity is still the fourth highest GHG emitting sector in Canada, accounting for 11% of total Canadian GHG emissions in 2015.

Coal-fired power plants are among the largest stationary sources of air pollution in Canada. Despite improvements in air quality over the past two decades, the burden of air pollution on the health of Canadians continues to be significant; more than 30% of Canadians live in communities where outdoor levels of ground-level ozone exceed current air quality standards.

Canada has existing federal coal-fired electricity regulations dating from 2012.  The proposed regulatory approach to the electricity sector builds on significant provincial action. All four provinces currently generating power from coal also have clean energy policies in place:

  • Alberta’s climate leadership plan includes a 2030 coal phase-out, a price on carbon and a requirement for 30% of electricity generation to come from renewables by 2030.
  • Saskatchewan has a carbon capture and storage project in place – technology that captures carbon emissions and stores them underground so that they can’t contribute to climate change -- and has committed to 50% of electric generating capacity from renewable sources by 2030.
  • New Brunswick has committed to 40% of in-province electricity sales from renewable sources by 2020.
  • Nova Scotia has set emission caps for its electricity sector, and has also committed to 40% of electricity from renewable sources by 2020.

Canada is supporting the transition to clean electricity by investing in strategic infrastructure and renewables, including support for electricity transmission interties, emerging renewable technologies, smart grids, and reducing reliance on diesel in northern, remote, and Indigenous communities. $21.9 billion over 11 years has been allocated to support green infrastructure under Canada’s clean growth and climate action plan, the Pan-Canadian Framework.

Proposed regulatory approach

As part of the Pan-Canadian Framework on Clean Growth and Climate Change, federal, provincial and territorial governments agreed to work together to increase the amount of electricity generated from renewable and low-emitting sources.

To support this goal, the Government of Canada is publishing two draft regulations.

  1. Proposed amendments to the Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations (2012) would accelerate the phase-out of traditional coal-fired electricity units to 2030.
  2. To complement the accelerated phase-out of coal-fired electricity, proposed greenhouse gas regulations for natural gas-fired electricity to cover new natural gas-fired electricity units and coal-fired units that are converted to run on natural gas.

Environment and Climate Change Canada (ECCC) has developed the draft regulations in collaboration with provinces and territories, businesses, public utilities, industry associations, Independent System Operators, and environmental non-government organizations. National Indigenous Organizations have also been consulted.

The draft regulations for coal and natural gas-fired electricity are being published in Canada Gazette, Part I, on February 17, 2018. Interested parties will have an opportunity to provide additional feedback through a 60 day comment period. Final regulations would be published in Canada Gazette, Part II, approximately one year later.

1. Requirements for coal-fired units

Existing greenhouse gas regulations published in 2012 require coal-fired electricity units to meet a stringent performance standard of 420 tonnes of carbon dioxide emissions per Gigawatt hour (t/GWh). The 2012 regulations apply to new units built after July 1, 2015, and to existing units that have reached the end of their useful life (defined as between 45 and 50 years after commissioning date).

The proposed amendments being published in February 2018 would accelerate the phase-out of traditional coal-fired electricity across Canada to 2030. The amended regulations do this by requiring all units to meet the performance standard of 420 t/GWh at either end of their useful life or December 31, 2029, whichever is sooner. The fourteen units expected to be impacted are located in Alberta (5), Saskatchewan (1), New Brunswick (1), and Nova Scotia (7). 

Owners and operators of units can meet the performance standard by installing carbon capture and storage (CCS) or by using carbon-neutral biomass. However, most coal units are expected to be shut down or converted to run on natural gas in response to the regulations.

2. Requirements for natural gas-fired electricity

The proposed regulations for natural gas-fired electricity have been designed to ensure that new natural gas-fired electricity generation uses efficient technology, while providing flexibility for new units to meet electricity system demand and incorporate variable renewables, like wind and solar.

For coal units that convert to run on natural gas, the proposed regulations would encourage companies to convert their coal units to natural gas ahead of their end-of-life under the amended coal regulations, while also providing assurance that higher emitting coal-to-gas converted units will be phased out more rapidly than better performers. 

New natural gas-fired units
The proposed natural gas-fired electricity regulations cover new natural gas-fired electricity generation units that sell or distribute more than 33% of their average annual potential electricity output to grid, have a minimum installed capacity of 25 megawatts (MW), and receive more than 30% of their heat input from natural gas. New units are defined as having been built two years after the publication of the final regulations in Canada Gazette II.

All new units with an installed capacity of more than 150 MW would have to meet 420 tonnes per gigawatt-hour (t/GWh), based on an annual average. Smaller units that are 150 MW or less would have to meet 550 t/GWh, reflecting the more frequent need for these units to ramp-up quickly to integrate variable renewables like wind and solar.

Coal-to-gas conversions
The proposed natural gas-fired electricity regulations would establish conditions for the operation of coal units converted to run on natural gas. While these units will have lower emissions than coal-fired generation, their emissions will be higher than some types of new gas-fired generation.

Units converted from coal to gas would be allowed to operate without meeting a performance standard for a fixed period of time after their end-of-life, after which they would have to meet a performance standard of 420 t/GWh. The timing for the application of the performance standard would be based on the result of a performance test conducted in the first year of operation. More efficient units would be able to run for longer periods than less efficient units, as described in Table 1.

Annual tests would be required to ensure that the emissions intensity does not degrade by more than 2% from the previous year.

Anticipated benefits and costs

Amendments to the coal regulations are expected to result in cumulative greenhouse gas reductions of 100 million tonnes (Mt) over the 2019 to 2055 period, including 16Mt in 2030. In addition, these amendments would result in the reduction of air pollutants, including 555 kilotonnes (kt) of sulphur dioxide (SO2) and 206 kt of nitrous oxides (NOx) between 2019 and 2055. These air pollutants have been shown to adversely affect the health of Canadians through direct exposure and also contribute to the formation of smog, including particulate matter and ground-level ozone.

The expected benefits from the proposed amendments over 2019-2055 would be $4.9 billion. That includes $3.6 billion in avoided climate change damage and $1.2 billion in health benefits from reduced air pollutant emissions. The total cost for complying with the proposed amendments is estimated to be $2.2 billion over 2019-2055, resulting in a net benefit of $2.7 billion.

Under the Canadian Environmental Protection Act, the Minister of Environment and Climate Change may enter into an equivalency agreement with provinces that have enforceable regimes resulting in equivalent or better emission outcomes. The intent is to reduce regulatory duplication and provide flexibility for provinces to determine the most cost-effective way for reducing emissions. In 2014, the Government of Canada entered into an equivalency agreement with Nova Scotia on the 2012 coal-fired electricity regulations.

Table 1:



Performance Test Emission Intensity Result (t/GWh) Fixed period of operation after end-of-life
≤ 480 10 Years
> 480 to ≤ 550 8 Years
> 550 to ≤ 600 5 Years
> 600 0 Years

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