The recent deal struck between Ottawa and the Province of Nova Scotia to shrink the province’s carbon footprint has been touted as a “win-win“ by Premier McNeil. Consumers will dodge a direct and visible Carbon Tax bullet on electricity, gasoline, and home heating oil in favour of less visible (and purportedly smaller) price increases under a cap-and-trade system to be set up by 2018.
The big win for Nova Scotia Power is Ottawa’s decision to allow limited use of the Province’s coal-fired plants up until 2050.
News releases announcing the federal-provincial agreement on carbon highlighted the year 2030 — essentially extending, without change, the cap on emissions placed on NS Power back in 2010 under Renewable Energy Standards legislation. But the fine print allows the coal-fired plants to run on a “back up” or as-needed basis until 2050. The point was confirmed by the province’s Deputy Energy Minister Murray Coolican during a recent Energy Council of Canada conference in Halifax.
Yesterday, leaders with the Sierra Club of Canada and Margaree Environmental Association called a news conference to denounce the newly inked federal-provincial agreement “for allowing Nova Scotia to continue burning coal rather than have a plan to shut down coal-burning plants as soon as possible,” said Gretchen Pierce, national director for the Sierra Club. “I was really shocked and disappointed we have moved to the back of the class”.
“Major reductions in coal burning could take place in Nova Scotia by 2020,” said Peggy Cameron, president of the Sierra Club’s Atlantic chapter. “Five of seven coal-fired units can be shutdown by building more renewables such as wind and solar in Nova Scotia and using power from Muskrat Falls and Hydro Quebec.”
Currently, about 56 per cent of the province’s electricity is generated from coal. Shutting down five units would eliminate about 80 per cent of that, according to Neal Livingston, a small hydro developer and co-founder of the Margaree Environmentall Association. (NS Power has indicated it plans to close at least one unit at Lingan soon.)
Livingston’s group produced an email from an aide to the Quebec Energy Minister indicating 500 megawatts of electricity is available to purchase from Quebec, but also acknowledged that delivering that electricity to Nova Scotia through New Brunswick would require money to upgrade the tie-line between the two provinces. Cameron said previous estimates put the cost of a new substation near Moncton at approximately $100 million.
Ottawa’s 2050 extension for Nova Scotia coal plants (those in other provinces must still close in 2030 to help meet federal targets on greenhouse gas emissions) is conditional on NS Power behaving as if all its coal-fired plants had been mothballed in 2030. That means the power company will probably have to buy “credits” between 2030 and 2050 to offset its carbon production.
“The power company can’t predict today how much that might cost after 2030,” said Sasha Irving, vice-president of communications for NS Power. How many megatonnes of carbon will be added to the Earth’s atmosphere by the ongoing use of coal fired plants at Trenton, Lingan, and Point Tupper is another open question.
To the Sierra Club’s plea the province can and should get off coal before 2030, Irving says doing so would drive up the cost of electricity without offering any further reductions in greenhouse gas emissions. Irving says all fuels cost more than coal (even hydro) and closing all coal plants by 2020 would see the power company lose “the flexibility” negotiated in the new federal-provincial carbon agreement that allows it to offset higher priced renewable energy with lower cost coal.
Think of it as quitting smoking: instead of going cold turkey, the province can sneak the occasional smoke to help it taper off.
Despite reductions, Nova Scotia is still a huge greenhouse gas emitter
Nova Scotia Power executives and officials with the McNeil government often describe the province as “leading the pack” when promoting the pace at which it has moved away from fossil fuels and embraced renewables such as wind and hydro. Statistics from Canada’s Second Biennial Report on Climate Change back up that statement, with Ontario catching up fast. But the same statistics also show that on a “tonnes per capita” basis, Nova Scotia is the country’s fifth largest provincial carbon polluter.
When you look at total Greenhouse Gas Emissions by Province (the most recent data available is for 2014), Nova Scotia released 16,600 kilotonnes a year or 16.6 million tonnes. New Brunswick lowered its emissions to 14,900 kilotonnes.
Ontario produces 10 times that amount at 170,000 kilotonnes and Alberta emits 274,000 kilotonnes a year. According to the Report on Climate Change, since 2005 Nova Scotia has reduced total greenhouse gas emissions by about 10 per cent. In the electricity sector, emissions are down 25 per cent, with NS Power’s parent company Emera targeting a 60 per cent reduction by 2030. For now, that’s a best-in-class performance, particularly when contrasted with Alberta and British Columbia, where oil and gas production increased greenhouse gas emissions by 86 per cent and 18 per cent respectively over the same period.
Last week the Alberta government of Rachel Notley announced it would spend $1.34 billion to shutter coal-fired power plants there to meet the federal 2030 target of a 30 per cent reduction in carbon from the 2005 benchmark. Alberta is aiming to replace coal with renewable fuels. In the meantime, it estimates it needs about $30 billion worth of new natural gas plants.
That option was rejected in Nova Scotia, where natural gas is imported and the cost of construction for new natural gas plants would add “hundreds of millions of dollars” to the cost of electricity, according to NS Power’s President, Karen Hutt. The price of natural gas in Nova Scotia is seven times higher than in British Columbia, even when BC’s carbon tax is figured in, says Nova Scotia’s deputy Energy minister.
“Our objective was NOT to transition to natural gas despite its lower carbon footprint but to ‘go clean’,” said Murray Coolican. “We would have been emitting carbon until 2070 using natural gas. This equivalency agreement with Ottawa protects ratepayers from a significant price bump tied to using natural gas. By agreeing not to force the closure of all coal plants by 2030, it allows us the flexibility to operate coal plants when we have to — for example when the wind isn’t blowing or during the cold of winter — provided that, by the end of 2050, Nova Scotia has cut emissions by the same amount as if the plants had been closed in 2030.”
NS Power has said some coal-fired units at Lingan, Cape Breton will close before 2030 and the use of coal at three other locations will gradually decline.
The utility is banking on replacing the fuel with hydro from Newfoundland and/or Quebec via the Maritime Link — a new, regional underwater cable connection scheduled to go into service in 2018 — regardless of when construction at Muskrat Falls is complete, now two years behind schedule. NS Power is proposing modest rate increases of 1.1 per cent each year for three years (2018-2020) to cover the cost of construction of the Maritime Link, but that doesn’t include the fuel costs of replacing coal with hydro, a decision taken a few years ago by the Utility and Review Board on the grounds it represented “the least-cost alternative.”
After a rocky start to negotiations with the federal Environment minister last summer, both the province and the power company appear greatly relieved Ottawa has seen fit to spare consumers the predicted “rate shock” if all coal plants had been closed at once. That said, the price of electricity is likely to increase after 2030 as NS Power navigates a steep reduction in the use of its coal-fired plants and may find itself looking to buy carbon credits to stay below the 2030 cap.
Part 2 of the carbon agreement negotiated between Ottawa and Nova Scotia contains other unknowns when it comes to cutting greenhouse gas emissions tied to transportation and home heating fuels.
How much carbon emissions will have to be reduced has not been determined, but the agreement will take effect in January 2018 after being negotiated and put in regulations. Nova Scotia rejected a carbon tax predicted to add about 11 cents to the price of a litre of gasoline by the end of the five-year phase in period, mostly because of the impact on rural commuters.
“We wanted something affordable for Nova Scotians,” said Coolican, “and a tax was not in the cards for us.”
Carbon Tax vs Cap and Trade
Both Alberta and BC have adopted a carbon tax while Ontario and Quebec have opted for a “cap and trade” system that cuts overall emissions by allowing companies that produce carbon to buy credits from companies that reduce it — including firms in other parts of the world, such as Europe and California. The idea behind the exchange is to soften the blow and keep prices from rising as much as they would have under a consumption tax.
Coolican says the McNeil government has adopted a unique “made in Nova Scotia” form of cap and trade. The framework hasn’t been developed but it will limit the trading of credits to companies located within the province.
Asked to explain why it didn’t join the broader carbon trading network that includes Ontario, Queebc and California, the deputy likened Nova Scotia’s trading position to “negotiating with elephants” and doubted the paperwork could be ready in time for Ottawa’s 2018 implementation date.
There are a couple of reasons why the province is betting a cap and trade system should be “more affordable for Nova Scotians than a carbon tax,” to use Coolican’s words.
For one thing, the Province gets to keep the money and is prepared to offer initial “allowances” or payments to companies cutting emissions so they won’t immediately pass along the price increases to consumers. So far, that’s all the detail there is. Over time, Coolican believes the new caps and inevitably higher prices for gasoline and furnace oil will result in people changing their behaviour to drive more fuel-efficient vehicles and install electric heat pumps in their homes — changes that could make the transition to a lower carbon world less costly if emission targets can be met through less demand for energy.
That’s the name of the game at Efficiency One — the utility in charge of programs to retrofit your home or business — where president Steve MacDonald says 30 per cent is the agency’s working target to reduce energy consumption across the province by 2030.
For now, until a framework for cap-and-trade is worked out and a replacement fuel arrives to end the province’s dependence on coal, there will be more questions about how a policy intended to reduce climate change will affect prices paid by energy consumers.