Section 3: Issues (Comments and Responses)

• 3.1 Pollution Prevention
• 3.2 Regional Differences
• 3.3 Technology
• 3.4 Economic Considerations
• 3.5 Health and Environment

• The proposed Guidelines have no provision for pollution prevention. The proposed nitrogen oxides (NO_x) limits require the use of back-end technology (i.e. coal-fired units will be able to achieve the NO_x emission limit only with the use of selective catalytic reduction (SCR)).

Environment Canada recognizes pollution prevention as the preferred option for managing emissions, and the emission limits in the Guidelines are consistent with the use of pollution prevention as a first step. For example, the use of cleaner fuels is an option that can contribute to meeting all of the emission limits. Also, the use of output-based emission limits means that more efficient combustion and generation technology can also contribute to meeting all of the emission limits.

However, it is common practice in many sectors, including thermal power generation, to go beyond pollution prevention. In the case of NO_x emissions from coal combustion, best available technology commonly includes low NO_x combustion systems as a first step to minimize emissions via pollution prevention. This reduces the cost and complexity of subsequent back-end technology used to meet the emission levels now commonly adopted for coal-fired electric power plants.

• There is a lack of vision in the whole energy issue. Guidelines are needed that will result in more renewables rather than more thermal plants. The Guidelines should recommend a change to less polluting, more renewable and more efficient energy production.

The use of output-based emission limits means that more efficient combustion and generation technology can contribute to meeting all of the emission limits. The Guidelines apply to thermal power plants only and so cannot deal directly with renewables. However, the emission limits that apply to thermal plants will help level the playing field between renewable and fossil energy sources.

• The Guidelines need to address the different environmental needs of the provinces.
• The Guidelines must consider the range of operating modes, age of equipment as well as different fuel choices available in each province. This will allow the provinces to develop emissions standards that are tailored to meet their regional needs.

Environment Canada recognizes that jurisdictions implement regulatory requirements for electric power plants. The Guidelines present Environment Canada's expectations for appropriate performance standards at the national level for emissions from new plants, and the federal Minister of the Environment recommends that jurisdictional air pollution control agencies adopt them as practical baseline standards for their regulatory programs. It is recognized in the Guidelines that local conditions may necessitate the adoption of more stringent standards.

The emission limits in the Guidelines are based on emissions performance consistent with best available technologies that are economically feasible, in accordance with commitments by all Ministers of the Environment to Canada-wide Standards for PM and Ozone. It is expected that this will assist jurisdictions in developing effective responses for keeping clean areas clean.

Proponents of new power plants will retain access to the full set of technology, fuel and operating mode options available for new electric power projects, and building new sources clean is a fundamental principle consistent with a wide range of options for air quality management across all regions. Since the emission limits in the Guidelines apply to new plants only, regional differences in age of existing equipment would not be a barrier to application of the Guidelines.

Environment Canada believes that the Guidelines, in their present form and application, are consistent with the jurisdictional processes for developing emission standards that are tailored to meet regional needs.

See Section 5.2: SO₂ Emission Limits

• The proposed emission limits are very technology prescriptive by imposing the use of certain technologies. It is not the role of government to make such marketplace decisions.
• Specifically, the proposed NO_x emission limits effectively prescribe selective catalytic reduction (SCR) for many units. The benefits of SCR do not justify adverse secondary effects caused by SCR use such as generation of fine particulates from the use and release of ammonia, the production of SO₃ by the SCR catalyst, and the hazards associated with ammonia handling. Alternate NO_x control strategies can achieve NO_x emission levels that are almost as low as what SCR can accomplish without these adverse effects.
• The proposed Guidelines prescribe technology and, as a result, do not encourage investments to optimize fuel and technology flexibility and research and development for multi-pollutant technology.

Environment Canada does not agree that the proposed emission limits are technology prescriptive. The emission limits are expressed in the form of mass of pollutant per megawatt-hour of electricity output; they do not prescribe any specific technology, and can be met by various combinations of clean fuel, technology and efficiency options.

With respect to technologies, a variety of options are in common usage in North America and Europe to meet the proposed sulphur dioxide and particulate matter emission limits. In the case of the proposed NO_x emission limits, SCR technology has become the predominant choice of electric utilities in North America and Europe for meeting stringent NO_x emission standards for coal-fired plants based on cost, performance and other considerations. As a result, the proposed emission limits are based largely on the demonstrated performance capabilities of SCR technology. However, the limits themselves deal with emissions performance, and so do not rule out the use of other technologies or approaches which are available now or may be developed in the future, and which may be found to be preferable to SCR. In the past, stringent emission limits have stimulated investment toward the development of improved technologies and approaches for the prevention and control of emissions. It is anticipated that the proposed emission limits will do this also.

The secondary effects of using SCR technology, including the release of ammonia and the production of SO₃ are well known and documented. To put this in context, the use of SCR at a coal-fired power plant will commonly reduce NO_x emission concentrations by 100 parts per million (ppm) or more, and release ammonia (ammonia slip) at concentrations of 5 ppm or less. The widespread use of this technology to meet stringent NO_x standards in North America and Europe suggests that the secondary effects are judged acceptable in other jurisdictions. Where NO_x concentrations are minimized by design of the combustion process, ammonia slip can be reduced below 5 ppm. Some manufacturers are targeting near zero levels of ammonia slip in the future.

Based on these considerations, Environment Canada believes that, for coal-fired power plants, the advantages of a stringent NO_x emission limit outweigh the possible secondary effects of using SCR technology to achieve that limit.

• Technology available today has the capacity to substantially reduce harmful pollutants. The Guidelines should be reflective of these technologies and ensure that they are integrated into facilities, regardless of cost.

The proposed revisions to the Guidelines are based on emissions performance consistent with best available technologies that are economically feasible, in accordance with commitments made by Ministers of the Environment to Canada-wide Standards for PM and Ozone. The federal Minister of the Environment stands by this commitment to economic feasibility.

The Guidelines will, at the national level, continue to present emission limits for SO₂, NO_x, and PM that consider the economic feasibility of best available technologies.

• Technologies to control the pollutants of concern are available, proven, and cost effective. Technologies, such as flue gas desulphurization (FGD) and selective catalytic reduction (SCR), are widely available in international markets and are proven over decades of industry experience. In addition, the trend in improved performance is likely to continue.

Environment Canada agrees with this comment.

• The term Best Available Technology (BAT) needs to be clarified.
• Are there legal interpretations for this type of terminology in Canada and if so, how do they apply vis-à-vis regulation and enforcement?

In the context of the revisions to the Guidelines, the term Best Available Technology (BAT) refers to technology that can achieve superior emissions performance and that has been demonstrated to be economically feasible through successful commercial application across a range of regions and fuel types in the U.S. and other jurisdictions.

The Guidelines do not impose legal requirements. They are not regulations, nor are they subject to the enforcement provisions under CEPA 1999.

• Environment Canada has over-simplified the issue of Best Available Technology (BAT) that is economically feasible by reviewing BAT in a foreign jurisdiction and applying the resulting technology to Canada. The U.S. has a formal Best Available Control Technology (BACT) process which includes air quality modeling and analysis of attainment or non-attainment designation. Economic situations are different between the two countries

In the U.S., new power plants proposed in areas designated as non-attainment for air quality must meet emission limits developed through determination of the Lowest Achievable Emission Rate (LAER). This determination is not constrained by the cost of achieving emission reductions. Environment Canada has not included the very stringent emission rates determined through LAER in its review of BAT. Nor has Environment Canada included the rates determined through the U.S. Maximum Achievable Control Technology (MACT) process, for the same reason.

The Environment Canada review of BAT included U.S. determinations of Best Available Control Technology (BACT). In these determinations, the most stringent limits are considered to represent BACT unless they can be demonstrated by the proponent to be inappropriate based on site-specific energy, environmental, economic and other factors. Because the U.S. BACT determinations considered costs, and because in most cases the plants are operating successfully, the U.S. BACT determinations were considered to be consistent with Environment Canada's interpretation of BAT.

Although it is true that economic situations differ between Canada and the U.S., Environment Canada does not believe that these differences would make BACT in the U.S. economically unfeasible in Canada. Furthermore, Environment Canada's review of BAT also considered the U.S. New Source Performance Standards (NSPS) which are mandatory for all new plants and are also applied to modified existing plants through the Clean Air Act New Source Review (NSR) provisions. Further, it considered emission requirements in several European nations. Environment Canada has found no information that shows why emission performance levels required for new plants, and in some cases even for existing plants, in the developed nations that are our major trading partners would not be economically feasible for new plants in Canada.

• For Ontario power plants, economically feasible BAT has been determined to be natural gas-fired combined cycle (NGCC) technology. The Guidelines should include emission limits for Ontario which are equivalent to NGCC.

As indicated above, the Guidelines present Environment Canada's expectations for appropriate performance standards at the national level for emissions from new plants. It is recognized in the Guidelines that local conditions may necessitate the adoption of more stringent standards. Environment Canada expects that jurisdictions would implement such standards where appropriate.

Environment Canada agrees that performance as clean as gas is an appropriate long term objective for fossil fuel-fired power plants, and would like to engage Canadians in a discussion on this. However, for new coal-fired power plants, BAT that is economically feasible cannot currently achieve this level of performance. The emission limits in the Guidelines will be based on what can be achieved with current Best Available Technology that is economically feasible, and will be updated periodically as BAT evolves.

• One province confirmed that it intends to apply Best Available Technology (BAT) that is economically feasible, to any new units, based on that province's determination. This will be required for emissions of PM, SO₂ and NO_x.

Environment Canada is supportive of provinces applying emission requirements consistent with BAT that is economically feasible. It is expected that the Guidelines will provide information that is of value to jurisdictions in their permitting of new plants based on BAT.

• The concept of economic feasibility with respect to BAT, in the introduction of the Guidelines, is not further addressed in the remaining text. The provincial/territorial departments must consider economic feasibility to define optimal outcomes, which are viable over the long term. This should be further outlined in the Guidelines.

Environment Canada does not agree that the Guidelines are the appropriate place for addressing economic feasibility. The discussion document outlined, in general terms, the approach taken to develop emission limits based on BAT that is economically feasible at the national level. Where there is a need to address the economic feasibility of BAT for a specific plant proposal, this can best be done at the local level.

• The financial impacts on electricity generators, and ultimately consumers, must be considered. Issues include:
  • industry re-structuring, deregulation, the state of current industry structure in the marketplace and the facilities currently operating under this new framework;
  • certainty in the evolving competitive marketplace;
  • the development of new generation to meet Alberta's growing demand; and
  • the plentiful low-cost, low sulphur coal resources used to produce competitively priced electric power.
  
  It was felt that the Guidelines do not consider these issues and, instead, introduce additional costs that do not significantly further environmental goals.

The financial impacts on electricity generators and consumers were in fact one of the factors considered in revising the Guidelines. It is understood that it is always less costly to build new facilities clean than to build remedial measures into existing plants. This issue becomes even more important when considering the 40-year expected life of the new generation likely to be built to take advantage of the coal resources in Alberta and other provinces.

Industry restructuring toward a competitive marketplace makes it even more important that all new power plants meet up-to-date emissions performance standards to lessen market distortions and the perception of unfair competition as a result of lax requirements. The increasing integration of the North American electricity market means that there are now both environmental and competitive reasons for aligning Canadian standards with those in the U.S. and the proposed revisions contribute to doing this. Knowing that Environment Canada will expect emissions performance consistent with best available economically feasible technologies, and that the Guidelines will be kept up-to-date in this respect, contributes to greater certainty in the competitive marketplace.

Environment Canada does not agree that the Guidelines do not significantly further environmental goals. The Guidelines support the commitment by Ministers of the Environment, under the Canada-Wide Standards for PM and Ozone, to the goal of keeping clean areas clean by "ensuring that new facilities and activities incorporate best available economically feasible technologies to reduce PM and ozone levels".

• Environment Canada's review of U.S. Best Available Control Technology (BACT) infers that if the technology is economical in the U.S., it must also be economical in Canada. This does not consider economic criteria (the higher cost of equipment, nor the lower price paid for power) nor environmental criteria in Canada. Also, it was noted that the U.S. has tax incentives, emission credits and other state-by-state rules.
• Control technologies should be implemented regardless of cost. For example the Lowest Achievable Emission Rate (LAER) and Maximum Achievable Control Technology (MACT) processes in the U.S. do not allow economics to prevent the implementation of control technologies.

See Section 3.3: Technology.

In consideration of the comment relating to taxes, Environment Canada has investigated the implications of differing tax provisions between Canada and the U.S. on the economic feasibility of emission control technologies. Although tax provisions in individual provinces and states vary, a comparison of typical Canadian and U.S. tax provisions indicates that emission control technologies would not generally be more expensive in Canada as a result of taxes.

• The Minister of Finance should develop a tax credit program for those industries which install control technologies, such as SCR. There was a tax credit in the last budget for industries using renewable energy options.

Environment Canada will pass along this comment to Finance Canada as part of their continuing discussions on the use of the tax system to achieve environmental benefits.

• In some jurisdictions, the contribution of the power sector to PM, specifically, is minor compared to other sectors. By adopting emission limits that force extra expenditures on environmental controls on sources whose impacts on the local environment fall within acceptable limits, resources are diverted from other areas where greater environmental benefits would be gained.

Under the Canada-wide Standards (CWS) for PM and Ozone, Ministers of the Environment committed to keeping clean areas clean by "ensuring that new facilities and activities incorporate best available economically feasible technologies to reduce PM and ozone levels". This commitment was based on the recognition that:

• There are numerous locations across Canada that have ambient levels of PM and/or ozone below the CWS levels but still above the levels associated with observable health effects.
• The CWS levels are only a first step to subsequent reductions towards the lowest observable effects levels.
• It would be wrong to convey the impression that no action is required in these areas or that it would be acceptable to allow pollutant levels to rise to the CWS levels.
• Polluting "up to the limit" is not acceptable and that the best strategy to avoid future problems is keeping clean areas clean.

It is recognized that jurisdictions will endeavour to direct resources to areas where greatest environmental benefits will be achieved. Environment Canada believes that building new sources clean is a fundamental first step that is most cost-effective in the long term for all jurisdictions.

• The Guidelines should describe how the proposed emission limits will directly address health and environmental effects.
• The proposed revisions to the Guidelines are technology driven and do not focus on the environmental and health impacts of the receiving environment. These issues should form the basis of the Guidelines, not what is BAT that is economically feasible.
• A new discussion document should be commissioned that looks at environmental and health issues.

Environmental and health effects are most directly related to air quality, and this is the result of the cumulative impacts of many sources of emissions. It is usually difficult to isolate the effects of one new source. Environmental and health issues were addressed in detail in the consultations leading to CCME agreement on Canada-Wide Standards for PM and ozone. Under this agreement it was recognized that the best strategy to avoid future problems is keeping clean areas clean. This led to the commitment by all Ministers to ensuring "that new facilities and activities incorporate best available economically feasible technologies to reduce PM and ozone levels".