Monday, July 31, 2006

Harper’s Kyoto dilemma, part II
Carbon taxes, emissions trading, outright fines... these are the most prominent suggestions for reducing Canada’s greenhouse gases (GHGs). It is significant that the prominent people advancing them—Stéphane Dion, Michael Ignatieff, Bob Rae—happen to be Liberal leadership hopefuls, out of government. Hence they can afford to bravely propose taxes or trading schemes or fines. If they were in government, they’d be singing a different tune. I know, because the Liberals were in power for the first eight years following the Kyoto Protocol, and Canada’s response to Kyoto’s requirements couldn’t have been more wishy-washy.

This isn’t because the Liberals are dumb. It’s because of the structure of our federation, the preservation of which is, to a federal politician, more important than honouring a treaty that no one else is really honouring anyway. The Kyoto treaty in its purest form pits Alberta against certain, uh, central Canadian provinces. And federal politicians have learned the bitter lessons of the Trudeau and Mulroney eras: don’t favour Quebec at the expense of Alberta.

Now the Harper Conservatives are grappling with the same basic problem. Alberta emits by far the most greenhouse gases per capita; Quebec among the least. Alberta—if you listen to its political and business elite—hates Kyoto. Quebec, with its gigantic ultra-low-emitting hydroelectric capacity—loves it.

Doing something meaningful to reduce GHG emissions therefore means forcing Alberta oilsands producers, the backbone of the provincial economy, to take a financial hit in one form or another. But Harper has to do something meaningful: Quebec demands it, and Harper needs Quebec votes to turn his minority government into a majority.

No one knows what the Conservatives will come up with, but reading the tea leaves might give a clue. According to recent news reports, the so-called Green Plan II, the sequel to Brian Mulroney’s Green Plan, will, among other things, focus more on reducing air pollution than GHGs.

In a way, this makes sense. What’s more dangerous: air pollution, which harms human respiratory systems, or GHGs, which might warm the planet by a degree or two over the next hundred years?

But in another way, it seems a futile attempt to re-frame the issue. Burning fossil fuels produces many types of air pollution. But it also produces carbon dioxide, the principal GHG. It is possible to reduce the air pollution from burning fossil fuel by using emission control devices. However, these devices don’t remove the GHGs from fossil emissions.

So you’re back at square one. There’s simply no escaping the fact that the best way to reduce both air pollution and GHGs is to use less fossil fuel.

In the area of electricity generation, this means shifting more capacity to low- or zero-emission technologies. In previous posts I have shown that the Ontario Liberals are actually leading the way in this area, with their recently announced recommitment to nuclear generation. Since the Kyoto problem is as much political as environmental, there is room for some window dressing. The Conservatives should therefore increase the Wind Power Production Incentive (WPPI) to at least 2,000 megawatts, and promote it like crazy. No one expects them to do this, and the moral effect could be decisive.

Then, to make the measure truly meaningful, they should extend the WPPI to include nuclear power.

I’ll elaborate in upcoming posts; stay tuned.

Sunday, July 23, 2006

Natural gas lobby launches new PR campaign to gasify Nanticoke

It looks like Jack Gibbons, the never-say-die head of the Ontario Clean Air Alliance, is back trying to land the juicy Nanticoke gas contract for his clients in the natural gas industry.

The July 21st Toronto Star wrote up the OCAA’s most recent report, in which Gibbons, furious with the McGuinty government for backing away from the reckless coal phase-out policy, desperately recycles his business case for converting the 3,800 megawatt coal-fired Nanticoke generating station to run on natural gas.

In spite of the obvious flaw in this proposition—switching to gas would drive electricity prices through the roof—the Star continues to give Gibbons a pass. Gibbons’s trademark anti-coal hyperbole permeates the report but is absent from the Star article, presumably for the sake of journalistic balance. Moreover, the article fails to mention a little nugget that might add some perspective to Gibbons’s anti-coal crusade: that the OCAA receives funding from Enbridge and Union Gas, Ontario’s two biggest gas distribution companies, and the biggest beneficiaries of any coal-to-gas conversion.

Electricity industry insiders have long known that the OCAA is pure “Astro-Turf”—i.e., a corporate lobby posing as a grassroots organization. (Astro-Turf is fake grass… you get the idea.) One Star writer, John Spears, did mention that Gibbons’s OCAA receives money from Enbridge, but that was over a year ago and the issue hasn’t come up since.

Converting Nanticoke to run on natural gas has been one of Gibbons’s fondest dreams since he launched the gas industry–funded OCAA in the late 1990s. His first crack at building a business case for the conversion was based on gas price forecasts provided by none other than Enron.

In this latest report, Gibbons has wisely dropped Enron from his list of cited references. But he still wants to be the smartest guy in the room. The current report is laden with the same tendentious and misleading assertions as its predecessors. Nuclear is described as “unreliable” even though it provides over half Ontario’s power and has offset hundreds of millions of tonnes of emissions. Coal supposedly kills 668 people a year, but motor vehicles, by far the biggest source category of air pollution in the province, don’t even get a mention—and this in a report from an organization calling itself the Clean Air Alliance. And Gibbons repeats the facile observation that Ontario’s per capita electricity consumption is higher than that of New York or California (it’s true, but so what—a huge portion of Ontario’s usage is by major consumers, who are also major employers and taxpayers).

When an organization ostensibly concerned about air pollution fails to mention the biggest in-province source, you have to wonder about its agenda. And you have to wonder about Canada’s biggest newspaper when it can’t, or doesn’t want to, distinguish real grass from Astro-Turf.

Sunday, July 16, 2006

Canada stuns world with Kyoto plan—maybe
Over the past few weeks I have been offering (admittedly unsolicited) advice on how the Harper government can stickhandle through the tricky Kyoto issue. I have advised the prime minister to use Ontario’s recent nuclear announcement as an example of how Canada and its new Conservative government are surging forward on a file in which everyone—from the loudest pro-Kyoto advocates to the mainstream media—expects them to do nothing.

Now the prime minister is at the G-8 summit in St. Petersburg, talking face to face with Tony Blair, George Bush, and Jacques Chirac, among others. What do the leaders of the U.K., U.S., and France have in common? Each of them supports civilian nuclear power. Blair has, after a year and a half of expectation-building, told his country it needs a major new investment in new nuclear reactors. Bush, by signing the Energy Policy Act of August 2005, has provided the American nuclear industry with billions of dollars worth of construction-delay insurance and power production tax credits. Chirac’s country generates eighty percent of its power with the atom, and is a big Kyoto supporter.

Will any of this nuclear love rub off onto Harper? Chirac recently mentioned in a letter to several Canadian papers that he is “troubled by the weakness of the international fight against climate change.” France might have exceeded its intended greenhouse gas (GHG) emissions limits, but Chirac can still wag his finger at Canada without being a hypocrite. France’s nuclear-intensive power generating sector is also one of the least carbon-intensive in the world. France’s reliance on nuclear-generated electricity is unique among the G-8—just as Ontario’s (at just over fifty percent) is unique among Canadian provinces.

France’s power sector is a model for the G-8; indeed for any industrialized country. It should be emulated wherever possible.

France’s nuclear industry gets a lot of government support. So does Britain’s, so does America’s—and so does Canada’s. It is time for the Canadian federal government to get off the rhetorical fence on nuclear power. If Harper were to promote Ontario’s move as a pro-Kyoto move, he might find support from long-ago-written-off constituencies.

Think of it: Harper pulling off a Kyoto coup would be like arch–anti communist Nixon visiting China. No one expects much from the Conservatives on Kyoto, and no one has framed Ontario’s move as a Kyoto move. It could be a stunner.

Sunday, July 09, 2006

Power generation, air quality, and talking to Americans: how to truly lead by example

Ontario’s electricity debate has produced more than its share of wacky ideas. But none is more bizarre than the notion that closing the provincial coal-fired generating plants will compel the Americans to follow our example.

American utilities generate over half of their electricity with coal. The sheer size of continental coal reserves means they could continue doing so for another two and a half centuries. So Ontario can sacrifice and moralize all it wants, but the Americans won’t stop generating power with coal. It’s just not going to happen.

Happily, the Liberals have come to their senses and abandoned the coal phase-out. Even better, Ontario has already begun to lead by example. The recent nuclear announcement means Ontario will at least maintain the fifty percent nuclear proportion in our generation mix. Together with large-scale hydro, this means that three-quarters of Ontario’s generating capacity is emission free. Not bad for an advanced industrialized economy.

If the Ontario government wants to show full leadership on trans-boundary air quality, it should increase nuclear’s proportion to beyond the intended fifty percent. As I showed in my June 8 post, increasing the proportion to sixty percent—the situation that existed in 1994—would chop power-related emissions to less than half of what they are now.

Next, the government should finish the cleaner coal implementation at Ontario’s coal plants. Aside from electrostatic precipitators, only six of the fifteen coal-fired generating units in this province are currently equipped with any kind of emission-control devices. Of these six, only two are designed for sulphur removal.

It would cost around $3.5 billion to equip the remaining nine units with new emission control devices. This would—according to manufacturers of these devices—remove the lion’s share of the nitrogen and sulphur emissions from coal generation.

If the Liberals are serious about a new air quality agreement with neighboring U.S. states, then $3.5 billion for emission controls at Ontario’s coal plants will be money well spent. It will show to the Americans—and the rest of the world—that you can have clean air, plentiful electricity, and a healthy economy.

Sunday, July 02, 2006

Kyoto faces crucial test as new round of emissions trading begins

As climate change attains unprecedented prominence as a global public issue, we face a further test of humankind’s ability and willingness to do something about it.

The countries participating in the European Union’s Emission Trading Scheme (ETS) are set to hand in their new National Allocation Plans (NAPs) for Phase 2 of the scheme, which will cover the period 2008–2012.

Recall the recent volatility in the carbon-permit market (see my May 19 post) due to over-generous allocations in Phase 1 of the ETS. As the Phase 1 trading period neared its end, some large emitters found to their pleasant surprise that they had many more permits than expected. As those with surpluses scrambled to sell—and profit from—permits they had received for free, the market price of permits dropped from €30 to €8. Suddenly, it became cheaper for those who had run out of permits to continue high-emitting business-as-usual than to reduce emissions.

This was exactly the opposite of what the ETS’s designers had intended. None of this would have happened if the European Commission, which administers the system, had been less lenient about approving certain countries’ obviously inflated emission estimates. I predicted that the EC would learn from this embarrassment and apply greater critical scrutiny to countries’ NAPs in Phase 2, or develop instrumental safeguards against over-estimation.

Well, we’re about to find out if it has.

No doubt the member countries are mindful of the likelihood of increased critical scrutiny on the part of the EC. This might explain why almost all of them have missed the June 30 deadline for submitting their estimates of the amount of greenhouse gases (GHGs) their respective industries will emit. So far, only Germany and Estonia have submitted their plans. The UK says it is close to submitting its own, with tougher emission caps this time (its estimate for 2005 was 36 million tonnes higher than actual emissions) and a requirement that emitters buy 7 percent of the total permits at auction. In Phase 1, all permits were free.

The ETS’s proponents are careful to point out that Phase 1 was a trial, and that they expected some kinks and hiccups. These would of course be eliminated in subsequent phases. As Canada struggles to develop its own response to the Kyoto imperative, we would do well to pay close attention to the next steps in the ETS drama.

I know I will. A carbon market is in the cards; it’s just a matter of time. Stay tuned.