By: Astrid Kalkbrenner

PDF Version: Cleaning Up Coal II

Regulations Commented On: Federal Regulations “Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations” as of 30 August 2012, (Canada Gazette Part II, Vol. 146, No 19, SOR/2012-167)

On 27 August 2011 the federal government published proposed regulations on the “Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity” (the “Draft Regulations”) (see my previous ABlawg post Cleaning up Coal).  The Draft Regulations were open for comments for a 60-day public consultation period. Environment Canada received over 5000 submissions during the consultation period, including submissions from 4 provincial governments, 16 electricity industry corporations and system operators, 17 other industry corporations and associations, 6 Non-governmental Organizations (NGOs) and from the general public. The Regulatory Impact Assessment Statement (RIAS) for the Regulations acknowledges that the comments and extensive discussions with industry and provinces led to refinements of the Draft Regulations which in its final version provides greater flexibility to industry, while respecting the draft regulatory framework and maintaining the contribution of the Regulations to meeting Canada’s Copenhagen target (for the RIAS see Canada Gazette Part II, Vol. 146, No 19, SOR/2012-167, 2002 at 2003). On 30 August 2012, the final Regulations were published as a regulation of the Canadian Environmental Protection Act, 1999 (CEPA), SC 1999, c 33.

In my previous ABlawg post I described the underlying rationale of the Regulations which is to assist in meeting Canada’s GHG commitments and climate targets.  This post focuses on the major changes between the Draft and the final Regulations.

Content of the Regulations

The most significant changes are:

• the performance standard level was lowered from the proposed 375 tonnes of CO₂/GWh to 420 tonnes CO₂/GWh, and
• the definition of useful life was revised from 45 years in the Draft to 50 year and is now based on the unit’s commissioning date.

The final Regulations follow the structure of the Draft Regulations and consist of 29 sections and 6 schedules divided into four parts: (1) regulated units and emission limit; (2) reporting, sending and recording of information; (3) quantification rules; and (4) dates for the coming into force.

Sections 29 provides for staggered entry into force provisions and require careful attention to determine when particular sections and obligations come into force for which units and situations.  The main obligations (the performance standards) of the Regulations will come into force on 1 July 2015, unless otherwise stated. However, other sections of the Regulations with respect to registration, substitution of units, deferred application, and CCS related provisions will come into force on 1 January 2013. Section 3 (performance standard for standby units (units that operate at a capacity factor of 9% or less)) comes into force on 1 January 2030.

The Regulations apply to CO₂ emissions that result from the production of electricity by means of thermal energy using coal as a fuel, whether in conjunction with other fuels or not (section 1(1)). The definitions of the terms “coal,” “responsible person,” “new units,” and “old units” are identical with the Draft Regulations.

The new and final emission-intensity limit for coal fired power plants is now “420 tonnes CO₂ emissions from the combustion of fossil fuels in the unit for each GWh of electricity produced by the unit during a calendar year” (section 3(1) of the Regulations). Section 3(1) provides that emissions do not include emissions captured through carbon capture and storage (CCS) (section 3(5) of the Regulations).

The Draft and final Regulations define “old units” as those that have reached the end of their useful life but continue to produce electricity.  Old and new units have to fulfill the new performance standard. If they do not fulfill the standard the responsible person will have to close down these units. Significant changes were made to the term “useful life,” which means the period that begins on the commissioning date and ends on a specified date as set out in the Regulations.  The Regulations determine different useful life periods depending on the commissioning date. The final version opts for a longer useful life (50 instead of 45 years).

The commissioning and end of useful life dates of coal fired power plants are defined, as follows:

• For a unit whose commissioning date is before 1975 the end of useful life (whichever comes first) is: 31 December of the calendar year that is 50 years after the commissioning date or 31 December 2019;
• For a unit whose commissioning date is after 1974 but before 1986 the end of the useful life (whichever comes first) is: 31 December of the calendar year that is 50 years after the commissioning date or 31 December 2029;
• In any other case the end of useful life is 31 December of the calendar year that is 50 years after the commissioning date.

A new (“other than an old unit, whose commissioning date is on or after 1 July 2015”) or old unit (see above) combined with a carbon capture and storage system may receive a temporary exemption from the application of the performance standard (ordinarily 1 July 2015) until 31 December 2024 (sections 9 – 13 of the Regulations). Unlike the Draft Regulations, the new CCS deferral provision is available to both new and old units (RIAS, at 2005).

In addition, a responsible person can apply for a transfer of an exemption from the performance standard from existing units (“units that are neither an old unit nor a new unit”) to an old unit in recognition for early action (RIAS, at 2005). A precondition to this is that the existing units begin carbon capturing before they are required to. The exemption from the performance standard will be for 24 consecutive months (final Regulations), instead of 18 consecutive months (Draft Regulations) (section 14).