Phasing out coal: good for the environment, bad for your wallet
Four provinces will be at the centre of the Liberal government’s move toward phasing out the use of coal-fired energy.
Across the country, only Alberta, Saskatchewan, New Brunswick and Nova Scotia still burn coal. Together, the coal-fired power plants account for only 13 per cent of the electricity sector’s capacity, but 70 per cent of the sector’s emissions — and 10 per cent of Canada’s total greenhouse gas emissions.
Proponents say this will be a boon for public health and the nation’s environment. Critics indicate this will be a significant financial burden for provinces and taxpayers.
Here’s what you need to know:
The phase-out means your power bills are going up.
The Alberta NDP government announced a plan last November to accelerate its phase-out of coal-fired electricity and be rid of it completely by 2030. And in March, the Coal Association of Canada said the plan could triple power bills for Albertans within five years.
Currently, Alberta’s electricity rate is a little above the national average. Rates in Nova Scotia and Saskatchewan are even higher.
Nova Scotia, however, reached an agreement with Ottawa to be able to continue burning coal past the 2030 deadline in exchange for reducing emissions to the equivalent level closing down the plants would have achieved.
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Speaking to Global News in the spring, the association’s president, Robin Campbell, didn’t dispute the health and environmental benefits of phasing out coal, but argued the province could achieve cleaner air and decreased greenhouse gas emissions through investments in clean coal technologies.
On top of rates, though, there are also costs to consider related to building infrastructure, transmitting energy and any jobs lost as a result of closing power plants.
“We’re working to ensure [the phase out] does not increase prices to ratepayers, and that any workers that are affected will have opportunities in renewables, in clean power,” Environment Minister Catherine McKenna told reporters on Monday, without offering details.
However you look at it, Canadians will, in some form, pay for these changes, said Warren Mabee, associate director of Queen’s University’s Institute for Energy and Environmental Policy.
“The costs of updating a power system will be passed on to taxpayers,” he said. “The big question is, do the costs flow direct to ratepayers through electricity bills, or are they subsumed in other taxes?”
Is coal already on its way out?
Prior to this morning’s announcement, the provinces still using coal-fired power were already on notice.
The Liberal plan is similar to the plan the previous Conservative government unveiled in 2014, but accelerated.
The Conservative plan was criticized for likely achieving little in terms of emission reductions. It allowed for plants built within 50 years prior to the announcement to stay in business, operating as usual, until 2030; new rules for coal plants only applied to new plants.
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A January study of the Alberta government’s plan, prepared by utilities consultant EDC Associates Ltd., found boosting renewable sources of energy at the cost of coal-fired energy would cut emissions by 45 per cent, or 18.5 million fewer tonnes of carbon going into the atmosphere every year.
But that report also noted costs could come from closing plants down early, with power producers losing out on anywhere between $3 billion and $16 billion in gross operating margin.
On the other hand, considering the age of many of the plants, costs might not be above and beyond “business as usual” costs, said Mabee.
“Most of the capacity would likely have to be swapped out in the next 15 years anyway,” he said on Monday, noting coal as energy looks to be on its way out.
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“The age of the plants in Canada is typically old – in some cases more than 50 years – and most were due to be decommissioned and phased out over the timeframe at hand,” Mabee said. “[Coal] isn’t the primary power source in most places. And, the replacement cost of coal is likely in line with gas, renewables, or nuclear.”
Similarly, Douglas Macdonald, senior lecturer at the University of Toronto’s School of Environment, said despite some upfront costs, coal is no longer significantly cheaper than gas or renewable energy sources.
“The key to this working, to the country reaching its 2030 goal, is the provinces being on board,” he said. So far, Saskatchewan is resisting the move, and Alberta is a bit of a wild card since the NDP is facing an election in May 2019.
What about Donald Trump’s pro-carbon stance?
South of the border, President-elect Donald Trump has pledged to support the coal industry.
That, coupled with his promised corporate tax cut, spells bad news for consumers and the national economy, said one Conservative MP.
“Places like Saskatchewan and Alberta are going to have the same problem that Ontario has faced – skyrocketing electricity prices, and a flow of investment from their province to the United States,” said Conservative environment critic Ed Fast.
With files from Global National’s Mike Le Couteur and The Canadian Press
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