Wednesday, February 28, 2007

Conservation proponents set to score Pyrrhic victory on incandescent lights
Advertising guru David Ogilvy once wrote that good advertising is the fastest way to sink a bad product. This applies just as much to dumb ideas. We’ll see how right he was if and when various provincial governments across Canada jump on the stupid ban-the-incandescent-lightbulb bandwagon.

When Canadian consumers respond to the hype about the environmental virtues of compact fluorescent light bulbs, they’ll find out what we early adopters have known all along: that the compact fluorescent’s light quality is markedly inferior to that of an incandescent, and that the energy savings, as reflected on the bi-monthly power bill, are too negligible to outweigh their hefty price tag (which is about 20 to 30 times that of an equivalent incandescent).

There is a ton of media hoopla surrounding the calls to ban the incandescent—this is Ogilvy’s good advertising. The arguments underpinning the proposal are laughable, but ultimately the positive advertising will serve a useful purpose. When consumers, furious from having been taken in by the hype, reject the over-priced, under-performing, and mercury-laden compact fluorescents en masse, somebody will inevitably turn to the conservation proponents and say: “that’s your recipe for fighting climate change?”

At that point, having dispensed with the idiocy, we might finally get serious about the issue.

Thursday, February 22, 2007

No deal on Alcan power in BC: major economic, environmental opportunities slip by
The British Columbia Utility Commission (BCUC) recently shot down a proposal that would see BC Hydro buying up to 130 megawatts of carbon-free electricity at a premium rate (7.1 cents per kWh) from Alcan’s Kemano hydro facility near Kitimat. Their reason? Ostensibly, BC Hydro failed to demonstrate enough in-province electricity demand to warrant the high price. Plus, the company apparently didn’t bother to compare that price with what Alcan could have gotten from other prospective buyers.

It is difficult to tell the real reason why the BCUC nixed the deal. Perhaps the commission took the proponents’ lofty hectoring the wrong way—Alcan’s submission advised the BCUC that it “should avoid broadening the scope of its review into a socio-economic inquiry that is beyond its mandate.” Or maybe the commission simply felt the proponents failed to demonstrate a good economic justification for the price. Either way, the decision sent BC Hydro and Alcan back to their communication advisers.

If they do it right, their next go-round should be successful. There is a market for that power, if not in B.C. then in the land of Bush and Schwarzenegger. Upgrades to the Bonneville Power Administration’s Pacific Inter-tie have made it possible to wheel far more than 130 megawatts of electricity through Oregon into power-hungry California. And California, as its governor made clear when he signed SB 1368 (which limits imports of coal-fired electricity), will put a premium on clean electricity.

How much of a premium? More than 7.1 Canadian cents per kWh? According to the Intercontinental Exchange, for sixteen of the first thirty-three days in 2007, yes. On the days when the California wholesale market price was below CAN$0.071, the clean electricity premium would have kicked in.

Of course, it’s a bit of a mystery why BC Hydro didn’t put this up front in its submission to the BCUC. But Hydro and Alcan are appealing the commission’s decision. Maybe this time round they’ll remind their readers of the competitive advantages of selling hydro power to California. Because of SB 1368, American generators looking for a piece of California’s wholesale market in the near term can only offer power generated with either natural gas or gasified coal. Neither can compete with hydro, even if you factor in thousand-mile line losses.

And time is of the essence: sooner or later somebody will take advantage of the EPAct and build a new nuclear station, on the basis of the size of the California market.

Saturday, February 17, 2007

Emissions and remissions: using the tax system to wipe out greenhouse gases in Canada
It looks like the federal Conservatives are thinking hard about giving a tax rebate to buyers of hybrid cars. As I argued in Taking the giant step
, this would be the best way to get more of these efficient cars on the road. The faster we do this, the faster auto manufacturers will respond to the next wave of demand, which is to increase the distance hybrids can go on pure electric power.

This will make driving in provinces like British Columbia, where grid electricity comes with low emissions (a paltry 24 grams of CO2 for every kilowatt hour generated), as clean as riding public transit.

Harper and company could help other provinces bring their power-sector emissions more into line with those of BC, Quebec, Manitoba, and Newfoundland-Labrador by making it worth their financial while to invest in low- or zero-emission generation technology. As I pointed out in Backing the winners, the most economically feasible way to generate utility-scale clean power is by fissioning uranium and burning gasified coal (and capturing the carbon emissions).

Introducing a clean–power production tax credit, along with other targeted measures like loan guarantees and construction delay insurance, could persuade investors to build generating plants based on these technologies.

Would these measures fly in the current Parliament? As I mentioned two weeks ago, New Democrat anti-nuclear dogma might pose an obstacle to such a plan. The NDP also complains incessantly about “corporate welfare for rich Alberta oil companies.” By this they mean the slew of tax breaks oil companies allegedly get (never mind the federal turnaround on income trusts, or Alberta’s recent cancellation of the royalty tax credit). If Harper were to frame tax breaks for zero-emission generation projects in a way that Jack Layton could spin as an environmental victory for the NDP, he might get the NDP’s support.

And one way to do this would be to start an emission trading scheme in Canada. This would enable companies to forward-purchase carbon credits as a way of buying down initial capital costs. The NDP, fearful of bleeding green support to other parties on the centre and left, desperately need to show their constituents they can effectively steer environment policy. They would surely support emissions trading.

Wednesday, February 14, 2007

Ontario Liberals finally admit they’ve reduced power emissions: Duncan adviser gives the atom its due
Few have noticed so far, but the Ontario Liberals gave a hint yesterday about their communication strategy for the upcoming provincial election campaign. Energy Minister Dwight Duncan’s senior adviser Steve Erwin told the Toronto Star
that Ontario has been reducing the emissions from its coal-fired plants by using them less as refurbished nuclear power units come back on line.

So, while the current provincial Conservative TV ads point out what a sterling fellow is their leader John Tory, the Liberals are gearing up to deliver what could be the zinger line in the upcoming election campaign: “we slashed air pollution emissions by 15 million tonnes.”

Fifteen million tonnes? Shouldn’t that be twelve million tonnes? Readers will note, after all, that I have been hammering away on the 12 million tonne theme for months now. I base this on the fact that four nuclear reactors have returned to service since 2003, and that they displaced coal generation—the primary source of Ontario’s power-sector emissions.

Well, both figures are true. Power-sector greenhouse gas (GHG) emissions were roughly 30 million tonnes in 2006, which is around 12 million tonnes less than in 2000. And, due to a recent change in Environment Canada’s GHG calculation formula for power generation, it now turns out that Ontario’s power-sector emissions in 2003 were 45 million tonnes. (See Environment Canada’s GHG inventory for Ontario electricity.)

Which means the McGuinty Liberals could credibly claim that they have knocked a whopping 15 million tonnes off Ontario’s electricity sector GHG inventory since they came to power.

And the Tories could with equal credibility claim that the reduction was due to their efforts, since they began the nuclear renaissance in Ontario by approving the Pickering unit 4 rehabilitation in 2000.

It’ll be interesting to see how the parties play this. Stay tuned.

Monday, February 12, 2007

Harper plays environment card in Quebec
The prime minister will announce later today that his government is funneling some $1.5 billion toward environmental projects in various Canadian provinces. Reports indicate this will include over $400 million for Quebec. No doubt some of this money will pay for yet more wind power, which provides spectacular visible evidence of a commitment to clean energy (even if its actual power output is small and unreliable).

But will the Quebec package include support for the rehabilitation of Gentilly 2, Quebec’s only nuclear power reactor? And if so, does this mean Harper and company will also help Ontario and New Brunswick with their nuclear reactors?

You never know, they just might. As I said last summer (see “Made in Canada” Kyoto plan takes shape
), federal money for Quebec and Ontario environmental projects would solve two problems for the Harper Conservatives: the fiscal balance and Kyoto. You solve fiscal balance problems with big money. And you get giant-size greenhouse gas (GHG) emission reductions with nuclear power (which costs big money).

Alberta, which probably will not receive much of Harper’s environmental largesse, will foot a big part of the bill by virtue of the giant-size taxes its companies and citizens send to Ottawa every year. The problem is, only those-in-the-know know that it’s Alberta money that will pay for this. Everyone else thinks Alberta oil companies are corporate welfare bums. Some, like the federal NDP, make their living off this misperception.

So Harper has the tricky job of explaining to central Canada that Alberta—Canada’s biggest provincial GHG emitter—is paying its fair share for the environment (see How to fund Kyoto programs without hurting Alberta). How can he do this?

By establishing a carbon market, and tying emission credits with tax remissions. This would jibe perfectly with current political and elite thinking on this issue. And, as I said in Greenhouse gas reductions in the EU: talk meets reality, there are ways to soften the initial impact of carbon caps. This would make a trading scheme palatable to major emitters. I’ll explain in upcoming posts; stay tuned.

Sunday, February 04, 2007

Canadian Carbon market imminent; will involve emission trading with U.S.
Under intense media pressure, the Harper Conservatives are scrambling to put forth a coherent plan for reducing emissions. Environment Minister John Baird has recently told broadcast reporters that he intends to put limits on Canada’s major emitters. This contradicts statements from the prime minister and other government officials, which indicates the level of pressure.

Here’s the opportunity for the government to complete the outflanking of the opposition and green lobbyists that began two weeks ago with the Conservative green blitz. Set up an emissions trading scheme, similar to the European Emission Trading Scheme (ETS), and work with neighboring U.S. states with similar programs (such as the Regional Greenhouse Gas Initiative) to harmonize ours with theirs.

Harper and company shouldn’t worry about hurting Alberta oilsands operators or other major emitters by rolling out such a scheme. As I have pointed out in previous posts (see GHG reductions in the EU: talk meets reality), the ETS’s operation over the past two years—characterized by carbon prices so low that they provide no disincentive to major emitters—has proven its value as a public relations instrument. (European government officials like Stavros Dimas, the environment commissioner, still admonish Canada and the U.S. to get with the program, and point up the value of projects under the ETS’s auspices as if that is proof that it works.)

So the Conservatives should roll out an ETS-style plan, then work out its ETS-style kinks later. How could the greens possibly disagree with it?

Thursday, February 01, 2007

New Democrat dogma threatens Canada’s only successful emission-reducton program
It’s a bit ironic that Canada’s drive to Kyoto compliance could be thwarted by the political party that says it is Kyoto’s biggest supporter: the NDP. The NDP, which holds the balance of power in the current Parliament, is in the lucky position of driving the minority Conservative government’s environmental agenda. All indications are it will drive it right off the road.

The NDP caucus is staunchly anti-nuclear. We’ll find out how serious that sentiment is when the Conservatives go to put their money where Natural Resources Minister Gary Lunn’s mouth is. Lunn, as Canadian newspaper readers and television viewers have learned over the past month, loves the atom. He wants Alberta to embrace it, as a way of reducing the massive greenhouse gas (GHG) emissions from that province’s petroleum producing and power generating sectors.

So far the NDP has scoffed at Lunn’s enthusiasm. No nukes, they say. Well, if they dig in on this issue they could put the kibosh on the Conservatives’ plans to bankroll the nuclear renaissance in Ontario. As I and others have pointed out, recently refurbished nuclear reactors are the reason Ontario’s electricity GHGs were 12 million tonnes less in 2006 than in 2000.

How unified are the Dippers on the issue? Their environment critic, Nathan Cullen, sounds like he gets his media lines from Greenpeace. But their leader Jack Layton, on The Agenda with Steve Paikin on January 16, told about how he handed a copy of Tim Flannery’s book The Weathermakers to Stephen Harper in an attempt to turn the Prime Minister into a climate change believer.

Does Layton know that Flannery is pro-nuclear? Maybe that’s what Harper got out of reading him.