Policy Statement on Future Thermal Coal Mining Projects and Project Expansions

Key findings from the strategic environmental assessment conducted for the statement by the Government of Canada on thermal coal mining.

Thermal coal is used in coal-fired electricity plants and supplies 40% of the world’s electricity demand; however, it is a significant source of global CO2 emissions.

According to the International Energy Agency (IEA), CO2 emitted from the combustion of coal has been the single largest source of global temperature increase, responsible for at least 0.3°C of the 1°C increase in global average annual surface temperature above pre-industrial levels. Coal-fired power plants accounted for 10 100 Mt, or 20% of global greenhouse gas (GHG) emissions in 2018. These emissions are largely attributed to coal-fired power generation in Asia, including in China, India and a few countries in South and Southeast Asia where demand for electricity is high and prices are low. Environmental policies, cheap renewables, and abundant supplies of natural gas have contributed to the decline of coal demand in Europe and North America.

In Canada, thermal coal combustion is concentrated in Alberta (48% of provincial utility generation), Saskatchewan (42%), Nova Scotia (53%) and New Brunswick (14%). Coal produces a disproportionate amount of CO2 emissions for the electricity that it generates, emitting 62% of the electricity sector’s emissions, for only 8% of the utility electricity generated in Canada in 2019.

Coal combustion also emits air pollutants that have significant health impacts. A recent analysis found that more than 800,000 people around the world die each year from the pollution generated by burning coal.

Canada is a party to the Paris Agreement, a legally-binding international treaty on climate change by which Canada and other parties have committed to limit global warming to 1.5 °C, compared to pre-industrial levels. The global phase-out of emissions from coal power is the first and most important step towards achieving Paris Agreement goals, as it is the most carbon-intensive source of electricity in the world. In 2012, Canada became the first country to introduce coal-fired electricity GHG regulations. Those regulations effectively required the phase-out of unabated (i.e., not connected to carbon capture and storage) coal-fired electricity units by 2062. In December 2018, the regulations were amended to accelerate the phase-out of all conventional coal-fired electricity in Canada by 2030.

Canada has helped set the pace with international action in addressing this source of GHG emissions though co-founding the Powering Past Coal Alliance with the United Kingdom in 2017. Since then, the Alliance has grown to over 135 members as of September 2021, making the Alliance the world’s leading initiative to accelerate the phase-out of coal power. Thermal coal mining provides the coal used for this type of power generation.

In addition, Canada has had a price on carbon pollution, including from coal-fired electricity generation, since 2019. Provinces and territories have the flexibility to put in place systems that meet minimum national stringency criteria (the benchmark). A federal carbon pricing system applies in jurisdictions that request it or that do not implement a system that meet the benchmark. The national minimum price for explicit price-based systems is set to increase annually to reach $170 per tonne CO2e in 2030. Carbon pricing will continue to drive low-cost emission reductions and support Canada’s longer-term low-carbon transformation.

Earlier this year, the Minister of Environment and Climate Change took action to deter the use of coal power, by issuing a statement indicating that new and expanded thermal coal mine projects undergoing a federal review under the Impact Assessment Act (IAA) will be considered as likely to cause unacceptable environmental effects. The IAA authorizes the Minister of Environment and Climate Change Canada (“the Minister”) under s. 9 to designate projects for assessment that are not listed in the Physical Activities Regulations. The IAA also provides authority for the Minister under section 17 to inform a project proponent early in the process that it is clear that the project is likely to cause environmental effects within federal jurisdiction that are unacceptable.

This statement provides greater certainty to investors, the mining sector and Canadians, by clarifying the Government of Canada’s position on new thermal coal mining and expansion projects in Canada.

Key outcomes of the initiative

Environmental outcomes

Deterring new thermal coal mines or the expansion of existing mines could significantly reduce the amount of coal that is produced and combusted, therefore curbing GHG emissions. By reducing GHG emissions, the initiative is intended to decrease rates of global warming and thereby slow the progression of climate change. Slowing the progression of climate change will have a number of benefits to the environment including preserving terrestrial and oceanic ecosystems and the biodiversity they support, limiting the rise of sea levels, and reducing the frequency and severity of natural disasters (e.g., forest fires, hurricanes, droughts, floods, etc.).

Human health and socio-economic conditions

In addition to the benefits to the natural environment, there are direct and indirect outcomes that are advantageous to the human environment, including human health and socio-economic conditions. Thermal coal combustion has direct, negative impacts to human health, including but not limited to asthma, cancer, heart and lung ailments, and neurological problems. Indirect consequences to human health from thermal coal include those associated with climate change (e.g., frequent heat waves, natural disasters). As the policy statement seeks to deter the combustion and export of thermal coal, it will both directly and indirectly improve human health by removing or reducing these hazards. Negative outcomes associated with socio-economic conditions (e.g., loss of employment, government revenues) that may arise from the option will be mitigated through strategies that aim to transition coal-workers to other industries or employment opportunities so that they continue to apply or even grow their skills and remain productively employed. These strategies also include gender and other equity considerations so that employment opportunities exist for vulnerable or diverse groups after the cessation of thermal coal mines (e.g., women, Indigenous groups, etc.).

International commitments

This decision responds to Canada’s commitments under the Paris Agreement. It is consistent with Canada’s international leadership as co-lead of the Powering Past Coal Alliance, where Canada has been leading on international efforts to accelerate the phase-out of emissions from thermal coal.

The expected outcomes of the initiative will contribute to the following goals of the 2019-2022 Federal Sustainable Development Strategy including:

This initiative would also contribute to the following Sustainable Development Goals of the UN 2030 Agenda: SDG#3- Good Health and Well-Being, SDG#6 – Clean water and sanitation, SDG#11 - Sustainability Cities and Communities, SDG#12 - Responsible Consumption and Production, SDG#13 – Climate action, SDG#14 - Life Below Water, SDG#15 - Life on Land.

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