Canada's proposed electricity regulations will reduce GHG emissions: social benefits to offset costs

WINNIPEG—April 16, 2012—Proposed federal regulations for Canada's electricity coal performance standards will see greenhouse gas emissions from the electricity sector fall, according to forecasts issued by the International Institute for Sustainable Development in a policy brief.

The Canadian government has moved to implement policies that reduce GHG emissions by regulating the performance of modified and new coal-fired power facilities that start generating electricity after July 1, 2015. Coal will likely be primarily displaced by natural gas turbines.

IISD uses original modelling to forecast that GHG emissions in the electricity sector will fall 25 per cent to 87 million tonnes in 2030 from 117 Mt in 2005.

The average cost of the proposed regulation could be about $26 per tonne of GHGs reduced from 2015 to 2030 or roughly $260 million per year. Emissions are likely to be reduced 5 Mt in 2020 and 20 Mt by 2030.

"These societal costs must be weighed against a number of benefits, including the reduction of GHG emissions and improvements in local air quality due to less air pollutants," said IISD climate change and energy director David Sawyer in the paper, Regulating Carbon in Canada: The impact of the federal government's proposed electricity coal performance standards. The actual value of these benefits weren't estimated in the report.

Together with recent federal vehicle efficiency standards and provincial government actions to reduce GHGs, Canada is now on track to achieve nearly a third of its emission reduction target under the Copenhagen Accord.

The regulations will apply to about 8 per cent of Canada's total forecast electricity generation in 2020 and about 54 per cent of fossil fuel generation.

Sawyer said Canadian GHG emitters are facing carbon costs consistent with emitters in the European Union and well above United States competitors' levels.

For additional details on regulating carbon emissions in Canada, please see the commentary Mind the Gap: The state-of-play in Canadian greenhouse gas mitigation.

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For more information, please contact David Sawyer at dsawyer@iisd.ca or Nona Pelletier, IISD manager, public affairs at +1 (204) 958-7740, mobile: +1 (204) 962-1303 or email npelletier@iisd.ca.