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Canada to phase out older coal-fired power plants

by Reuters
June 25, 2010

Canada will phase out older coal-fired power plants to cut the country's greenhouse gas emissions, Environment Minister Jim Prentice said on Wednesday, as it moves to make natural-gas-fired plants the new clean-power standard.

The new standards, expected to be firmed up by early 2011, will force electricity producers to phase out older, high-emitting coal-fired plants and require newer facilities to match the lower greenhouse-gas emissions of more efficient natural-gas fired plants.

Canada has 51 coal-fired units producing 19 percent of the country's electricity and 13 percent of its greenhouse gas emissions. However, 33 of those plants will reach the end of their economic lives by 2025. Unless the operators make substantial investments to cut emissions from the aging facilities, they'll be required to shut down.

"Our regulation will be very clear," Prentice said at a press conference. "When each coal-burning unit reaches the end of its economic life, it will have to meet the new standards or close down. No trading, no offsets, no credits."

Canada is frequently criticized by green groups for not doing enough to protect the environment and for allowing emissions of greenhouse gases to rise steadily over the last two decades.

As well, the Conservative government's record is expected to be under scrutiny as green groups and international media descend on Toronto for the G8 and G20 summits this week.

Still the measures, expected to reduce emissions by 15 megatonnes--the equivalent of taking 3.2 million vehicles off the road--received some support from the green sector.

"We're looking at this positively," said Marlo Raynolds, executive director of the Pembina Institute, an environmental think tank. "For once the minister is heading in the right direction but the details of the regulations must actually result in a true and timely phase out (of coal power) in Canada."

The move is a departure from the Canadian government's usual practice of coordinating its emission-reduction targets with U.S. moves. The planned regulations are much stricter than current proposals for coal-fired power in the United States.

The only regulation of carbon dioxide from coal plants in the United States is within the 10-state Regional Greenhouse Gas Initiative in the Northeast, which aims to cut emissions from power plants by 10 percent by 2018.

The U.S. climate bill sponsored by Senators John Kerry and Joe Lieberman would put emissions caps on power plants, including ones fired by coal. It would also launch a cap and trade market in emissions credits, but the future of the legislation is uncertain as it faces stiff opposition from lawmakers from coal and oil states.

TransAlta, the country's largest operator of coal-fired plants, said on Wednesday it supports the new standard as long as the regulations don't threaten the reliability of the country's power system.

"We're supportive of the approach," Steve Snyder, TransAlta's chief executive, said in an interview. "We think it raises some issues that have to be resolved, but we think they can be."

Capital Power Corp, which has three coal-fired units in Alberta with a combined capacity of 1,315 megawatts, also welcomed Ottawa's push to phase out inefficient plants but Brian Vaasjo, the company's chief executive, said the government must come up with appropriate standards.

"There needs to be some certainty on what the natural-gas regime would look like so that developers can go forward and build gas plants," he said. "Some of that detail needs to be worked out."

Along with the proposed regulations, Prentice also announced the government would contribute C$400 million ($384 million) for its share of a fund set up under the Copenhagen accord to help impoverished countries cope with climate change.

Shares in companies that own Canadian coal-fired plants were mixed on the Toronto Stock Exchange after the announcement. TransAlta fell 37 Canadian cents to C$20.73 ($19.90 USD) midafternoon on Wednesday while Atco's Class 1 shares dropped 39 Canadian cents to C$47.61 ($45.71 USD) and Capital Power rose 14 Canadian cents to C$22.95 ($22.03 USD).

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