January 12, 2004

CASA proposals for managing electricity emissions would reduce key pollutants by up to 50% at minimal cost

Alberta's Clean Air Strategic Alliance (CASA) has proposed a new framework for managing air emissions from electricity generation in the province. If adopted by the province, the framework would result in reductions ranging from 32% to 50% in emissions of four key air pollutants from electricity generation-sulfur dioxide (SO2), nitrogen oxides (NOX), particulate matter (PM) and mercury-from new and existing coal-fired and gas-fired electricity plants with only a minimal increase in the price of electricity.

Moreover, a CASA-commissioned study estimates that under the framework, electricity prices would increase only marginally, from 73 cents to $1.15 per megawatt-hour (MWh) on average starting in 2006 (the proposed date of full implementation). This represents a 1.5 to 2.5% increase, based on an estimated $50 per MWh price.

Its report, containing 71 specific recommendations for an emissions framework, is the result of a two-year, consensus-based review process. Extensive and detailed discussions are continuing on issues related to greenhouse gases, particularly around targets and allocation methods.

In accepting the report and recommendations, Environment Minister Lorne Taylor applauded the fact that the standards being recommended were developed through a shared commitment by industry, environmental groups, and three levels of government.

"CASA's collaborative approach has already netted huge success with its efforts to reduce flaring and venting in the province, so I am extremely pleased with the fact they have been able to reach consensus on emission standards for electricity," Taylor said. "I understand," he continued, "if the government adopts the standards outlined in the report, we will be a leader in emissions standards for electricity generation in North America."

Based on current emission levels, the framework would reduce SO2 emissions by 52,000 tonnes (46% by 2025); NOX emissions by 29,000 tonnes (32% by 2025); PM by 3,500 tonnes (51% by 2025); and mercury by 400 kilograms (50% by 2009). Coal-fired power plants account for about 80% of mercury emissions in the province.

The CASA framework also encourages development of renewable and alternative energy by endorsing the Alberta government's 3.5% planned increase by 2008 as a minimum. Strategies such as a "green certificate" program and emissions trading are proposed as ways of meeting the target. Complementing this are proposals for measures to reduce energy demand and encourage energy efficiency.

Among the highlights of the CASA framework are new, tighter emission standards for new power plants, both coal-fired and natural gas-fuelled.

Beginning in 2002, new coal-fired units would have to meet the following limits:

-- 0.80 kilograms per megawatt-hour (kg/MWh) for SO2, almost 50% lower than the current standard of 1.69 kg/MWh;

-- 0.69 kg/MWh for NOX, about 60% lower than the current standard of 1.18 kg/MWh; and

-- 0.095 kg/MWh for PM, almost 80% lower than the current standard 0.12 kg/MWh.

As well, new coal-fired units would be required to have mercury controls by the end of 2009.

Limits for new gas-fired units would be as follows:

-- 0.60 kg/MWh for NOX for units less than 20 MW power capacity (down from the current standard of between 0.86 and 1.00 kg/MWh);

-- 0.40 kg/MWh for NOX for units between 20 and 60 MW power capacity (down from the current standard of between 0.50 and 0.65 kg/MWh); and

-- 0.30 kg/MWh for NOX for units greater than 60 MW power capacity (down from the current standard of between 0.50 and 0.65 kg/MWh).

Emission reduction requirements for existing coal-fired power plants would include installing mercury controls by the end of 2009 (with the added benefit of reductions in PM) and reducing emissions to the latest BATEA (best available technology economically avhievable) at the end of a unit's design life.

A proposed emissions trading system for SO2 and NOX would assign each unit a baseline emission rate. Operating below this rate would enable the unit to generate credits, which could be banked or sold to units operating above their baseline rate. Designed to serve as an economic incentive for industry not to pollute, the scheme would grant a 10% discount on credits not used within one year of being generated.

The framework includes provisions for addressing "hotspots," defined as an area close to one or more power plants where air quality guidelines are projected to be continually exceeded or are being exceeded regularly. A hotspot could be triggered if available scientific information and other evidence indicate that power plant emissions contribute to adverse health or environmental outcomes. In such as case, a multi-stakeholder team would be formed, including local community groups, to develop and recommend a plan to resolve the situation as quickly as possible.

CASA further calls for reviews of the framework through a credible, transparent process at five-year intervals, starting in 2008 and involving stakeholders from all sectors including the public. This would allow revisions to be made if, for example, the economic assumptions underlying the framework are found to be significantly different, the framework is affecting the viability of the electricity industry, or if the next five-year projection of NOx, SO2, mercury and or particulate matter emissions are 15% per cent higher than the previous five-year projection.

"Clear emission standards and incentives for continuous improvement within the framework makes good economic and environmental sense," said Mike Kelly , director of environment, health and safety for TransAlta.

"This framework will result in significant emission reductions over time, without significant increase in electricity prices," said Tom Marr-Laing, executive director of the Pembina Institute, "and will support development of renewable and alternate energy supply in the province."

In addition to the obvious benefit of reducing emissions of multiple substances, CASA says the framework offers a sustainable emissions management system which will achieve environmental improvement within an economically feasible time period; increased long-term regulatory certainty for all parties; and a blend of management tools, including an emissions trading system, which will provide industry a wider range of choices and consequently enable it to minimize cost while meeting emission reduction targets.

The provincial government will review the 160-page report and make decisions on subsequent steps within the next few months. The full report, a summary of recommendations and background information on the current and proposed standards may be viewed on the CASA Web site, www.casahome.org. More information is available from Geoff Williams at CASA, 780/427-9793.

Established in March 1994, CASA is a non-profit, consensus-based association of senior representatives from government, industry and non-government organizations (including health and environmental groups) who together advise the province and manage air quality issues in Alberta.

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