The new regulations may force at least five coal-fired power plants to close by 2020.
The federal government has released final regulations for coal-fired power plants that eases the expected burden on utilities by allowing them to run their plants longer before having to replace them with lower-emission alternatives, and to average emission reductions among their plants.
The new regulations may force the closing of at least two coal-fired plants in Alberta by 2020 and prevent construction of one planned by Maxim Power Corp., unless the provincial government can reach an agreement with Ottawa to impose its own regulations while meeting overall federal targets.
Saskatchewan and Nova Scotia are both working with Ottawa to reach such a deal.
In Saskatoon Thursday, Environment Minister Peter Kent unveiled the long-anticipated regulations which the government describes as being among the most stringent in the world, but are significantly weakened from what was first proposed two years ago.
Under the new rules, companies will not be able to commence construction of a new coal-fired power plant after July 1, 2015, unless it is equipped with carbon-capture and storage (CCS) technology that would bring greenhouse gas emissions (GHG) down to a level of high-efficiency gas plants.
Companies would also have to close plants built before 1975 by the year 2020, and any plant built after 1975 would have to close by 2030, unless equipped with CCS.
Draft rules had set a 45-year end-of-life limit on operating coal plants, while the final version extends that to 50 years or 2030, whichever comes first. The change will mean several plants that would have faced closure between 2020 and 2030 will now be able to stay in operation. Officials said the government consulted with industry and other stakeholders, and decided the changes were needed to ensure stable electricity supply at reasonable costs to consumers.
As well, companies like Calgary-based TransAlta Corp. and Capital Power Corp. of Edmonton will be able to manage their emission reductions across their fleet of plants rather than meet the standards in each facility. That means if they add CCS to one coal-fired power station, they will be able to apply any extra GHG-reduction credits to other plants.
"It's an improvement over what we saw before in terms of flexibility," said Jim Burpee, CEO of the Canadian Electricity Association, which represents the country's largest power producers.
Federal officials said the rules could force as many as five existing power plants to close by 2020, including two in Alberta, two in Saskatchewan and one in Nova Scotia. But the Saskatchewan plants are being fitted with CCS technology, which would allow them to remain open. Nova Scotia plans to keep its older plant open and find other ways to reduce emissions from the electricity sector.
Environmental groups criticized the easing of the regulations and the fact that existing plants will not be required to reduce their current GHG emissions. But Mr. Burpee said Canada now has the most stringent regulations in the world.
Coal-fired power plants account for seven of Canada's 10 largest sources of GHG emissions and represent 11 per cent of Canada's total GHG emissions – roughly double those from the oil sands.
"These changes mean Canada has gone from moving at a tortoise's pace to a snail's pace when it comes to regulating coal," said P.J. Partington, a policy analyst at the Calgary-based Pembina Institute.