Carbon taxes on coal-fired power plants to affect only some emissions

Coal-fired power plants in Canada will pay to keep polluting once the federal government imposes a carbon price but, like other heavy emitters in Canada, they won’t pay for every tonne of greenhouse gas they produce.

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Environment Minister Catherine McKenna says the final regulations for the emission-pricing system for big industry are still in development but insists coal plants will pay a carbon price until national regulations force the plants out of existence by 2030.

“We’re absolutely committed to phasing out coal,” McKenna said Friday.

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“We’ve said that. We’re taking practical measures to do that.”

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The government’s aim is by 2030 to ensure all of Canada’s 17 existing coal plants will either stop operating entirely, be converted to natural gas, or use technologies like carbon capture and storage to make their net greenhouse gas emissions virtually zero.

Watch April 2017: All coal-fired plants must be shut down in Alberta by 2030 but one Alberta power provider is working to beat the clock. Tom Vernon reports.

1:54 TransAlta to phase out coal power years ahead of Alberta’s deadline

However, Ottawa is still negotiating with provinces that have coal plants on how they will be phased out and whether they will be allowed to keep operating any of them by reducing equivalent emissions elsewhere.

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In 2016, Canada had 16 coal generating stations, which operated 36 generators in five provinces. At least 20 of those generators are scheduled be taken offline by 2030.

Alberta, which has 18 generators and accounts for almost half of the emissions from coal plants, is building new solar and wind generators to replace about two-thirds of its coal plants. The others will be converted to natural gas, which produces about half the carbon dioxide produced by burning coal.

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Under the carbon price system for big emitters, plants will not pay the $20-per-tonne carbon price on all of the coal they burn to generate electricity. Rather, they will be affected by the carbon pricing system for big emitters, which applies the price only to a portion of the emissions they produce.

Conservative Finance Critic Pierre Poilievre says this plan exempts the biggest polluters from paying their fair share of the carbon price, and instead saddles soccer moms and grandmothers on fixed incomes with a far bigger burden.

In question period this week, he demanded the government explain why they are “charging more to grandmothers driving to get groceries but almost nothing to coal-fired plants.”

“If the carbon tax really was about saving the world, we would presume the largest industrial emitters of carbon would have to pay it,” Poilievre said.

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The big emitters’ pricing system will see an emissions cap set for every industry based on the average emissions produced by that sector, with industry paying the carbon tax on emissions over that cap.

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For most industries, including coal plants, the cap will be 80 per cent of the average. For industries that are more exposed to foreign competition, like cement, steel, nitrogen fertilizer and lime, the cap will be 90 per cent. Additional industries, like oil and gas, are lobbying to be included in the 90 per cent group and final decisions on that are to come early in 2019.

Watch Nov. 2016: A week after vocally protesting a surprise federal announcement, the Saskatchewan government has changed its tune. The province announced today it has reached an equivalency agreement with Ottawa for more flexibility on phasing out coal-fired electricity. Blake Lough has more.

1:34 Saskatchewan, Ottawa reach agreement on future of coal-fired power plants

The system for big industry affects any facility that produces at least 50,000 tonnes of greenhouse gases a year and all of Canada’s remaining coal plants are well above that marker. Together, Canada’s coal plants produce almost one-tenth of Canada’s total emissions.

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Poilievre is concerned that while an individual will pay $20 a tonne for the pollution for which they are responsible, industry in some cases will pay less than $1 a tonne — a figure he arrives at by dividing the total carbon pricing cost to coal plants by their total emissions.

But McKenna said attention must be paid to the impact on rate payers. Rate payers in provinces where coal is being phased out are already going to be bearing some of the costs of either replacing or converting those plants.

“We need to be doing things in a way that makes sense for consumers,” she said.

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The federal system for big industry will apply in the provinces and territories that requested it — Prince Edward Island, Yukon and Nunavut — and the four provinces that don’t have equivalent systems of their own, Saskatchewan, Manitoba, Ontario and New Brunswick.

Saskatchewan has an output price for big emitters except for power plants and pipelines, so the Ottawa system will only be applied in those areas.