Question Period Note: Coal-fired Electricity Generation

Coal-fired Electricity Generation

• Phasing out traditional coal-powered electricity in Canada is good for the environment, the economy, and the health of Canadians.
• Canada’s climate change plan for coal electricity includes both phasing out coal and pricing carbon pollution. These measures will ensure the Government works to reduce emissions at the lowest cost possible, drives innovation, and enables Canadian businesses to compete in the emerging global low-carbon economy.
• This approach creates incentives for the use of renewable and lower-emitting energy sources. It also minimizes costs for households and businesses.
• The Government of Canada remains committed to providing a just transition to support coal workers and their communities impacted by the shift to cleaner energy.
• The Government of Canada is also supporting the development of provincial electricity regulations that achieve or surpass outcomes of the federal regulations.

Current Canadian regulations require coal-fired electricity units to meet a stringent emissions performance standard (420 tonnes of carbon dioxide per gigawatt hour) at the end of their useful life or by December 31, 2029, whichever is soonest.

Canada’s coal regulations are expected to result in cumulative GHG reductions of 94 million tonnes (Mt) over the 2019 to 2055 period, including 12.8 Mt in 2030.

The regulations are also expected to have benefits for Canadians totaling $4.7 billion, including $3.4 billion in avoided climate change damage, $1.2 billion in health benefits for Canadians, and $40 million in environmental benefits.

Phasing out traditional coal-fired electricity by 2030 will result in 260 avoided premature mortalities, 40 000 fewer asthma episodes, and 190 000 fewer days of breathing difficulty and reduced activity in Canada by 2055.

Owners and operators of coal-fired units may choose to comply with the regulations by installing carbon capture and storage to reduce carbon dioxide emissions. Most coal units are expected to close at their ‘end-of-life’ instead of meeting the performance standards, and be replaced with cleaner sources of generation, including natural gas and renewable energy. Affected power plants are located in Alberta, Saskatchewan, New Brunswick, and Nova Scotia.

Under the Canadian Environmental Protection Act, the federal government may negotiate equivalency agreements with provinces. Under this authority, the federal regulation on coal-fired electricity would stand down and provincial rules would apply, if the provincial rules will achieve equal or better emissions reduction outcomes from the electricity sector.

All carbon-based electricity generation – coal, natural gas, diesel—located in jurisdictions where the federal carbon pollution pricing system applies will be subject to pricing. Most coal-fired electricity generators are large emitters, and will therefore be subject to the federal Output Based Pricing System (OBPS), which has a lower cost impact than the federal fuel charge. The carbon pricing’s output based pricing system (OBPS) regulatory development process is ongoing – Environment and Climate Change Canada continues to engage with stakeholders on the proposed approach. Draft regulations will be released for public comment later this fall. The current proposal for electricity would set output based emissions intensity standards for fossil fuel electricity generation differentiated by fuel type including 800 tCO2e/GWh for coal, 550 tCO2e/GWh for diesel and 370 tCO2e/GWh for natural gas.

Question Period notes as provided by the Department to the Minister’s Office