On August 27th, 2011 Environment Canada published draft regulations for coal-fired electricity generation facilities.  The new regulations are part of the federal government’s sector-by-sector approach to regulating emission of GHG’s in order to fulfill Canada’s obligations under the Copenhagen Accord.  Statements made by Environment Minister Peter Kent indicate that the draft coal regulations have been prepared with the intention of aligning performance standards for coal-based facilities with the emissions targets that will be set for natural gas-fired plants in the near future.

The regulations will apply to coal-based plants which begin producing electricity after July 1st, 2015 as well as plants which are at the end of their useful life (defined generally to be 45 years after commissioning but subject to certain exceptions). The performance standard for coal-based plants subject to the regulations is set at 375 tonnes of CO2/GWh, which is the emissions intensity level for natural gas combined cycle technology, a high-efficiency type of natural gas generation.

Environment Canada has provided an explanatory document together with the draft regulations.  The analysis included in the document explains that the electricity needs of provinces currently dependant on coal-powered generation are expected to be met through increased investment in natural gas facilities and through inter-provincial transfers.  In particular, over 2015 to 2030, it is expected that Alberta will import more of its electricity from British Columbia, with a net increase of 31 TWh in imports (roughly the amount of power required to supply 200,000 households over the fifteen year period).  A small rise in the cost of electricity for consumers is expected, ranging from a $0.73 increase for residents of Saskatchewan to a $2.14 increase in the monthly power bill for Alberta residents.

However, because the regulations governing emissions from natural gas fired plants have not yet been released, the impact of the new coal regulations is uncertain.  Some industry spokespersons have expressed concern that the anticipated target would not be achievable for most natural-gas based facilities without dramatic increases in the price charged to ratepayers.  A more flexible approach to regulating emissions – such as a fleet-wide emissions cap for each provider – is supported by several major players in the industry as a more realistic route to shifting away from coal-powered generation.

The draft regulations will be finalized after a 60-day public consultation period ending on October 26, 2011, which will be a last opportunity for concerned parties to influence the regulations. The Ministry of the Environment can be contacted at ecd-dec@ec.gc.ca  in relation to this process. The final regulations are expected to be published in 2012, and will come into effect on July 1st, 2015.