Provinces balk at federal push to accelerate phasing-out of coal power

theglobeandmail.com
By Shawn McCarthy
Sept. 2, 2016

The Liberal government is pushing to accelerate the phase-out of coal-fired power across the country as part of its pan-Canadian climate strategy, sources said on Thursday.

Ottawa made the proposal - which would move up the timeline for eliminating electricity generated at coal-fired plants from the current goal of about 2040 - at talks with the provinces on the climate plan. No new deadline has been set yet.

Saskatchewan and Nova Scotia, which include coal in their power plans beyond 2030, say such a move could leave them with worthless technology and drive up electricity rates. New Brunwick also expects to use coal until 2040, and its utility opposes an earlier deadline, which it also says could increase prices.

Prime Minister Justin Trudeau wants to reach a federal-provincial-territorial deal this fall, ideally in time to tout it at the United Nations climate summit in Morocco in mid-November. But some provinces worry Ottawa is pushing impractical, but headline-grabbing plans.

“The question is whether they want real strategies with long-term results, or whether they want to put something shiny in the window that would cost us billions of dollars,” said one provincial source, speaking on background because talks are ongoing.

At last year’s summit in Paris, Canada pledged to reduce emissions of greenhouse gases by 30 per cent by 2030 from 2005 levels. But the country is well short of that mark.

Canada has in recent years been viewed internationally as a laggard on climate action. To counter that image, Ottawa is eager to bring a plan to Morocco with three major planks: an accelerated phase-out of coal, an already announced plan to cut methane emissions from the oil-and-gas sector by 45 per cent by 2030, and a minimum price for carbon emissions that would apply across the country, sources involved in the talks said on Thursday.

Federal ministers have sought to reassure their provincial counterparts any revenue from a federal carbon levy - perhaps a tax on fuel - would flow back to the provinces.

No detailed decisions have been made on the climate strategy. Officials met during the summer to work on options, and Environment Minister Catherine McKenna has met with provincial and territorial counterparts, and industry and environmental leaders.

But battle lines are being drawn for the final push this fall, and any effort by Ottawa to impose a solution would provoke a provincial backlash.

Saskatchewan and Nova Scotia oppose a national carbon price. They also say the federal proposal on coal-fired electricity would drive up electricity costs for their consumers and businesses, and undermine their own greenhouse-gas-reduction plans.

However, Ottawa insists it is not looking to impose a hard 2030 deadline that would close coal-fired plants before the end of their operation lives.

“We don’t want to strand assets,” a federal source said.

After years of international criticism of Alberta’s carbon-intense oil sands, the Liberals, like the Conservatives before them, are eager to highlight Canada’s relatively clean electricity system, 80 per cent of which comes from non-GHG-emitting sources.

Alberta’s New Democratic Party government targeted coal-fired power as a key part of a provincial climate strategy that aims to slow emissions growth and take some pressure off the oil sands.

Premier Rachel Notley has announced the province will phase out coal by 2030, and has appointed a mediator to work with utilities and plant owners on compensation.

Ontario closed its last coal-fired plant in 2014, and wants that calculated into what else it will be required to do.

The former Conservative government passed regulations in 2012 that would gradually phase out conventional coal-fired electricity, but several plants would remain open past 2040.

The Conservative regulations also allowed plants with technology that captures carbon dioxide emissions to remain open. Saskatchewan is investing heavily in carbon capture and sequestration technology, and it is unclear whether plants with such equipment would be exempted in the Liberal plan.

Saskatchewan Premier Brad Wall has threatened a court challenge should the Liberals impose carbon taxes on the provincially owned SaskPower.

Coal supplied 46 per cent of the utility’s electricity last year. In December, Mr. Wall announced a plan for 50 per cent renewable sources by 2030. But he says coal will remain important.

Nova Scotia also depends heavily on coal, but has one of the country’s most aggressive GHG-reduction plans and is wary of federal intrusion in that. Efforts to adopt renewable power have come at a steep price for ratepayers.

The province has cut emissions by 29 per cent from 2005 levels, and is on track to reduce GHGs by 43 per cent by 2030.

However, the province says it will need some coal-fired power until 2040, when it expects to use 100 per cent non-emitting sources. It is working with other Atlantic provinces, Quebec, and New England states to complete a northeastern transmission loop that it says provide it with more power from renewable sources.

The provincially owned New Brunswick Power is urging the province to oppose a federally mandated ban on coal, which produced 20 per cent of its power last year.

“An early phase-out of coal would significantly impact customer rates,” Marie-Andrée Bolduc of NB Power, said on Thursday. “We anticipate the impact to be a 38-per-cent increase in rates.”

The province plans to operate its Belledune coal-fired plant in northeastern New Brunswick until 2043. The plant imports coal through the Port of Belledune, and closing it would have a major impact on the viability of the port.

But environmentalists say the provinces are dragging their feet, and praise Alberta and Ontario for their actions.

“It has to be managed, but managed it must be,” said Louise Comeau of the Conservative Council of New Brunswick and a veteran climate-change activist.