Canadian energy issues

2008-05-23T09:34:00.002-04:00

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2008-05-20T16:03:00.003-04:00

Power up, ’topes down: Canadian government rolls the nuclear dice in Ontario
Last March, the Harper government finally threw some money at Atomic Energy of Canada Ltd. (AECL): $300 million to finally commercialize its new flagship, the ACR1000 power reactor.

AECL, a federal crown corporation, is in the fight of its life in Ontario, where, for the first time, it faces international competition in its bid to sell reactors to the province. The feds have made it known they want Ontario to buy Canadian. The $300 million was therefore as much a signal to Ontario as it was a response to the Auditor General, whose January report had confirmed AECL has long been under-funded.

The problem is, Harper runs his government on a budget. That means he won’t fund every AECL project. So last week AECL announced it will abandon its Maple isotope reactors, which were supposed to replace the company’s ageing NRU reactor and maintain Canada’s primacy in medical isotope production. The Maples are eight years over schedule and who-knows-how-many dollars over budget. AECL couldn’t say how long it might take to put things right, so the feds pulled the plug.

On the surface this looks like Harper may have contradicted himself. After all, hadn’t he blasted the former head of the nuclear regulatory commission for refusing to let AECL power the NRU back up after a maintenance outage late last year? If he’s so concerned about the supply of medical isotopes, why did he pull the plug on the Maple reactors? The Maples’ nearest likely competitor, a reactor in Missouri that uses low enriched uranium (the NRU uses high-enriched uranium), appears at least five years from commercial production.

Maybe the idea is to do everything to help AECL prevail in Ontario. Maybe killing the Maples was another signal to Ontario that AECL is fully focused on the ACR1000.

If so, that is one hell of a roll of the dice. If AECL loses in Ontario, Canada might be right out of the nuclear reactor business.

2008-05-15T09:14:00.008-04:00

Natural gas will drive power price hike: spirit of Enron lives in Ontario
When George W. Bush became U.S. president in January 2001, his friend Ken Lay, the CEO of Enron, tried hard to persuade him to adopt the carbon emission reductions required by the Kyoto Protocol. Enron, as you will remember, was a new giant in the U.S. energy business until its spectacular collapse in August 2001. Though it had acquired a fleet of power plants and was active in the newly deregulated California electricity business, Enron had begun as, and was primarily still, a natural gas company.

Lay’s support for carbon reductions was the result of simple arithmetic. Half of America’s electricity in 2000, nearly two trillion kilowatt-hours, had come from coal-fired generating plants. Almost two billion tonnes of carbon emissions had accompanied this output. Because gas-fired power generation is less emission intensive than coal-fired, one obvious and fast way to chop power-sector emissions would have been to shift some of that coal-fired power to gas.

Lay knew that even a small overall shift toward gas would result in major sales for properly positioned gas companies. And no company was better positioned, or politically connected, than Lay’s Enron. So, unlike his colleagues in other energy companies, Lay supported the Kyoto Protocol and its requirement for emission reductions.

But Bush understood, well before Enron tanked in August, that trying to meet the Kyoto target through a shift to gas was a bad idea. First, it was a glaringly obvious political non-starter: U.S. senators, who have the final say on whether America adopts an international treaty, had made it plain they would never ratify Kyoto. Second, coal plays a role in America’s life and economy that extends far beyond its gargantuan power output. Shifting to gas, on the Kyoto timetable, would have caused an economic calamity.

Political capital is a president’s main source of power. There was simply no way Bush was going to lead off his presidency with a quixotic effort to force a disruptive transformation in American power generation.

Subsequent developments proved it was the right decision. Beginning in 2002, the price of natural gas on the North American market began trending upwards, reflecting tightening continental supply. Through 2003, the price of gas per unit of heat was three to four times that of coal. It has stayed at least in that range since then, sometimes spiking to over $10 per million Btu. Yesterday, May 14 2008, gas futures for 2012 were selling for over $8.90. Nobody should be surprised by news of the rising natural gas price.

Nor should anyone be surprised that this has caused dramatic electricity price increases. In the U.S. Northeast, where concern over emissions led to a rush of gas-fired generating plant construction in the late 1990s, retail residential electricity prices are now, on average, 15.85¢ per kWh, by far the highest in the continental U.S. In coal-fired Ohio, they are 8.19¢.

European governments, quick to support Kyoto and condemn Bush for abandoning it, are learning the hard way that they won’t meet their own Kyoto targets without a wholesale shift from coal to nuclear or gas in power generation. Germany, which will phase out nuclear by 2020 and has put a moritorium on new coal construction, has no alternative but gas.

In the middle of all this, Ontario sticks to its plan to phase out coal by 2014 and hold the line on nuclear capacity. Everybody knows that this province cannot double renewable capacity by 2014, as planned—unless the plan includes annexing hydro-rich Quebec or Manitoba.

How, then, will we plug the 6,000 megawatt electricity supply gap when coal exits in 2014? With gas. The Ontario residential price of electricity is around 12¢ per kWh. Two weeks ago, over 500 megawatts of gas-fired capacity entered service. In which direction will retail power prices go?

The spirit of Enron lives in Ontario.

2008-05-12T08:59:00.007-04:00

Ontario nuclear competition: which Team Canada will show up?
Atomic Energy Canada Limited (AECL) is, for the first time in its history, in a competitive process to sell nuclear reactors in Ontario. It is competing against two deep-pocketed giants of the international nuclear industry, Areva and Westinghouse.

As the incumbent vendor—all power reactors in Canada are CANDUs—does AECL have the inside track? Yes and no. Yes, in that its machines provide roughly half of Ontario’s electricity on any given day. Without them, we would be powering most of the province with coal. If you think power-sector emissions are high now, consider the alternative.

And no, for the exact same reason. Every glitch in the performance of Ontario’s reactors reflects on AECL. And there have been many glitches.

I don’t envy the bid evaluators, or the provincial Energy Minister who will have to explain the results of their evaluation. This is because there are really two AECLs to consider. There is the Bruce/Pickering AECL—the original sixteen-reactor fleet whose construction began in the 1970s. The Ontario government yanked eight of them out of service in the mid-1990s, well before they were scheduled for decommissioning. The day-to-day performance of the still-operating units in this part of the fleet is a bit spotty, to say the least. Tracking their operation—and their impact on Ontario’s power system and its total emissions—is like watching a young fireball closer throwing heat in the bottom of the ninth. You hope he does well but he makes you nervous.

And then there’s the post-Pickering AECL. This consists of fourteen units in five countries. These include the four at Darlington on Lake Ontario just east of Oshawa.

The performance of this part of the AECL fleet has been good. AECL likes to point to Nuclear Engineering International’s yearly Power Plant Performance rankings, which regularly put three of South Korea’s Wolsong CANDUs in the top ten global performers. Not bad for a technology that represents about seven percent of the world power reactor fleet. Neither Areva nor Westinghouse has a unit on the top-ten list, though the South Korea–developed PWRs at Yonggwang and Ulchin were based in part on Westinghouse technology.

The question for the Ontario bid evaluators, then, is which AECL will show up?

This question becomes positively fascinating when you delve into the reasons for the layups at Bruce and Pickering in the mid-90s. I recently sat down with Steve Paikin, host of The Agenda, to discuss the Ontario nuclear competition. He asked me how our province’s experience with the construction of the Darlington station, which saw cost overruns of around $10 billion, might affect the bid evaluators’ perception of AECL.

Not an easy question to answer. I tried to explain that this wasn’t strictly AECL’s fault, that the huge overrun was a function of the convergence of many factors, including high cost of borrowing, the shifting in regulatory requirements in the wake of Three Mile Island and Chernobyl, etc. By the time I finished my answer, I felt like a political science professor. There are reasons, and there are excuses. The fact remains that AECL was the reactor vendor.

All of which is to say, incumbency is a double-edge sword.

2008-05-01T10:01:00.002-04:00

Ontario power output, emissions drop in April: what will summer bring?
Last winter’s massive snowfalls, as I mentioned on April 22, did Ontario a big favour by melting—thereby adding to the province’s hydroelectric output. Hydro provided around a third of our electricity in the month of April; it usually provides about 25 percent.

According to Electric Power Statistics, while overall provincial power output was down by 11 percent from March, power-sector emissions were down by nearly 30 percent. We should all thank Old Man Winter.

While all that hydro provided a major benefit, in the form of 24/7 power from a completely emission-free source, we can’t count on hydro spikes of that magnitude every year. Nor can we count on massive hydro output during the critical months in mid-summer when every air conditioner in the province is running at capacity full time.

Luckily, we are the authors of our own destiny. We can control the amount of emission-free baseload power, by bringing more nuclear power online.

Mainstream environmentalists will dispute this, claiming that renewable energy like wind and solar generation together with conservation measures can replace both coal and nuclear.

Easy for them to say; they’re not the ones who will have to deal with an enraged public when the lights go out.

2008-04-28T09:38:00.012-04:00

GNEP in doubt: implications for Canada’s nuclear plans
Canada joined the Global Nuclear Energy Partnership (GNEP) in late 2007, under somewhat ambiguous terms. The GNEP is a U.S.-led international effort to promote nuclear power while ensuring strict control over the proliferation-sensitive parts of the nuclear fuel cycle.

GNEP envisions two types of members: fuel-cycle states, and fuel-recipient states. Fuel cycle states will provide enriched uranium fuel to recipient states, and will take back the spent fuel for possible reprocessing. Recipient states are thereby guaranteed a supply of fuel for their reactors and spared the fuss and expense of manufacturing fresh fuel and storing highly radioactive spent fuel.

Control over the fuel cycle will, in theory, minimize the number of states possessing proliferation-sensitive enrichment and reprocessing technologies.

Canada’s role in GNEP, as I discussed back in September, is interesting. We currently don’t use enriched fuel in our power reactors (all current CANDUs use natural unenriched fuel). But we soon will. Whichever reactors Ontario decides to buy, they will require either slightly- or low-enriched fuel.

Does this mean we would “lease” enriched fuel from one of the fuel-cycle countries under GNEP? Not necessarily. With last week’s announcement that the U.S. will no longer oppose Canada’s plan to enrich uranium, Canada is closer to getting the green light from the Nuclear Suppliers Group to develop its own enrichment facilities. If that were to occur, Canadian companies could sell enriched fuel to an Ontario nuclear utility. And we could also be on the verge of becoming, at least potentially, a fuel cycle state in the GNEP.

This is where it gets really interesting. If Canada were to supply enriched fuel to a recipient state, GNEP, in its original two-tier incarnation, would have obliged us to deal with that state’s spent fuel. However, when we joined GNEP our Natural Resources minister, Gary Lunn, said Canada will not—repeat not—receive other countries’ spent fuel. So presumably Canada-origin spent fuel would go to a full fuel cycle state for reprocessing, or to another state that is willing to host a spent-fuel repository.

Well, the ultimate fuel cycle state is the good old U.S. But GNEP’s crucial reprocessing component, which would see fast reactors destroying the fissile material in spent fuel, is quickly losing its appeal among the congressmen and senators who control the funding dollars on which the entire enterprise depends. As for the spent-fuel repository, even Yucca Mountain’s strongest congressional supporters are starting to talk about alternatives.

If the fast-burner GNEP dies, Canada would either have to abandon its no-repatriation position or just forget about supplying enriched fuel to any country other than itself and full fuel-cycle GNEP members. The second scenario is the more likely.

Once again, the U.S. is our biggest potential market. Oh well, there are worse things that could happen.

2008-04-22T16:45:00.006-04:00

Winter pays big power dividend: Ontario emissions plummet as snowmelt jacks hydro output
Like many others, I cursed last winter’s massive snow dumps when I was driving, and blessed them when I was skiing.

And now, with most of the snow gone, I’m blessing them again. That’s because I’m watching winter’s second big payoff in near real-time, as all that melting snow starts thundering through Ontario’s 60-odd hydro generating facilities.

How has this affected the emissions from the provincial electricity system? Emissions are way down, of course: they would be even if only average amounts of snow had fallen during the 2007–2008 winter. That’s because of the generally moderate temperatures, which have resulted in daily system load in the neighborhood of 420 million kWh, compared with around 480 million in March. This reduced demand translates into daily emissions that have not exceeded 123,000 tonnes in April, as opposed to totals that went above 139,000 tonnes in March. At this rate, April’s emissions will have been roughly 480,000 tonnes less than March’s.

Reduced demand plays a part in that, but so does the increase in hydro’s contribution to the supply mix. As I write this (two p.m. on Tuesday, April 22), hydro was putting nearly 5,900 megawatts into Ontario’s system. Collectively, the provincial non-emitting generation sources (hydro’s 5,900 MW, plus over 8,600 MW from the nuclear plants, and the whopping 50 MW from wind) accounted for over 77 percent of Ontario’s electricity.

This meant power-sector emissions were 3,800 tonnes in the hour between 2 and 3 p.m. today, over 1,000 tonnes less than in the corresponding hour on March 22 (which was a Saturday). Not bad for Earth Day in a heavily industrialized jurisdiction like Ontario.

And here’s something else to think about. If Darlington unit 1, Bruce unit 4, and Pickering units 7 and 8 had been available at two p.m. today, then over 90 percent of Ontario’s power would have come from non-emitting sources. In that scenario, power sector emissions between 2 and 3 p.m. would have been 1,300 tonnes, nearly one-third of the 3,800 they actually were.

Anybody who advocates meeting our Kyoto emission reduction targets and is anti-nuclear should explain how else we could achieve this kind of emission reduction. Anti-nuclear Kyotophiles will surely point to wind power as a big part of the answer. But as I mentioned above, at two p.m. today wind was only putting 50 MW—not even 11 percent of the provincial installed capacity—into the system.

They built all those windmills, and the wind didn’t show up.

2008-04-17T08:12:00.003-04:00

Earth Hour Ontario post mortem: what the numbers tell us
I mentioned on March 30, and it bears repeating: Ontario electricity output increased during Earth Hour. Some media stories claimed that there were decreases in power consumption in cities like Toronto and Ottawa during the big event, and they may be right (though the cynic in me suspects they are not). But make no mistake: Ontario generators collectively produced more electricity in that time.

More to the point, since we are talking about Earth Hour, and Earth Hour was supposed to encourage environment-friendly behavior, generators in the province put nearly 4,500 tonnes of emissions into the air during Earth Hour, up from just over 4,200 the previous hour.

This doesn’t necessarily mean that Earth Hour participation in Ontario was weak. It does seem to have been a popular event; it was widely covered in the media, and I personally know many people who participated. For all I know, this part of it may have been a success. But if provincial generation and generation emissions increased in spite of this high uptake, what does that say?

It might say that the way in which people were urged to cut consumption—turning off lights for an hour—was perhaps not the one most likely to produce decisive results. I pointed out on March 30 that much better results would have occurred had people voluntarily curtailed consumption for one hour beginning at 5 p.m. the day before, which was a Friday. Power-sector emissions in the hour between 5 p.m. and 6 p.m. that day were over 5,400 tonnes.

But how realistic is it to expect people to cut consumption at 5 on a Friday afternoon? Not very. And that’s the whole problem with the emphasis on cutting consumption as the way to help the environment. It disrupts our normal economic and leisure activity. Some would argue that this is good. After all, power output in Ontario was just over 478 million kWh on February 18, 2008, the inaugural Family Day. That was eight percent more than the previous day, which was a Sunday, and 12 percent less than the following day, a normal working Tuesday.

Was the loss in economic productivity worth the 52,000 tonnes of emissions that were “avoided” during Family Day? Perhaps. But the last day in February, a working Friday, saw power output of 442 million kWh, eight percent less than Family Day. Surprisingly, power sector emissions were 26 percent higher on February 29 than February 18. If the 29th’s lower power output were the result of a public campaign to curtail consumption, there would have been no payoff in emissions reductions, which was the whole point of Earth Hour.

A much more effective and less disruptive way to cut power sector emissions in Ontario would be to simply add more non-emitting generation to the provincial system. The Ontario government is actually taking steps to make this happen, with the request for proposals to add 3,500 megawatts of new nuclear capacity. This is a good move, and we could use more.

2008-04-06T11:48:00.002-04:00

India’s nuclear expansion: climate change and the Great Game
Climate change and nuclear weapons proliferation are the biggest dangers facing humanity. The two issues are inextricably and dramatically linked in the U.S.-India civilian nuclear deal.

In its drive to industrialize, India will need enormous amounts of electricity. As in many other major economies in the world, most of India’s new power will come from two main sources: nuclear and coal. More nuclear means less coal, and vice versa. If we, the developed world, want developing economies to expand without massive greenhouse gas (GHG) emissions becoming a permanent fixture of these economies, we have to encourage expansion of nuclear. Otherwise, coal will predominate and efforts to curb global GHG emissions will be futile.

The situation is already urgent. India suffers from chronic shortages of fuel for its 17 existing power reactors. Electricity output from the reactors was 10 percent less last year than in the year before. This is no way to expand an economy. Hence the urgency with which the Indian government is trying to finalize the deal with the Americans. It faces a formidable challenge from its leftist coalition partners, whose opposition to the deal threatens to at least delay it by a few years.

Of course, the rollout of nuclear power in the developing world has to take place within strict non-proliferation rules. Nuclear trade has to be for peaceful purposes only.

This is where it gets interesting. India is also a nuclear weapons state and will remain so for the foreseeable future. It joined the weapons club in 1974 without the club’s permission (see article), and has been barred from the international civilian nuclear trade ever since.

For strategic reasons, the U.S. badly wants India as an ally. America’s opposition to Iran’s nuclear ambitions, especially since September 11, has led to diplomatic and military maneuvering in what has become the latest round of the Great Game—the international struggle for influence in Greater Central Asia. Good relations with the greatest power in South Asia will help immeasurably in dealing with Iran. Civilian nuclear trade is the vehicle through which the U.S. hopes to solidify the rapprochement with India. Other weapons states—especially Russia and France—feel the same way, so if the deal is successful India will be an accepted member of the nuclear weapons club and will have international help in expanding its nuclear power sector.

Allowing nuclear trade with India requires significant changes in rules, policies, and legislation in many countries, and it requires those countries’—including Canada’s—permission. This is a huge and ambitious diplomatic undertaking. If successful, it will be a major step forward on both climate change and non-proliferation.

Canada appears ready to support the deal. If and when it comes to a vote in the Nuclear Suppliers Group, Canada’s position could become a public issue in this country. Regardless of its salience in our public discourse, our stance on India’s nuclear expansion is a momentous decision. Together with our presence in Afghanistan, it will define the nature of our relationship with the post-9/11 diplomatic world.

Whether we like it or not, Canada is playing the Great Game.

2008-03-29T23:46:00.006-04:00

Earth Hour hoopla fails to move Ontario: conservation proponents head back to the drawing board
At seven p.m. on Saturday, March 29, Ontario’s total electricity output was 17,375 megawatts. At eight p.m., Earth Hour, it was 17,536 MW, and an hour later it was 17,727. Power use increased from eight p.m. to nine p.m., and during that hour the fossil-fueled generators in the system put over 4,500 tonnes of greenhouse gases (GHGs) into the air.

Sorry, but the numbers don’t lie. Earth Hour had no effect on Ontario’s power consumption.

We could argue about whether a cold Saturday night is the best time to hold such an event. In my opinion, the best time would have been at 5 p.m. yesterday, when the provincial fossil-fired plants were helping meet the normal additional demand, plus covering for temporary nuclear generator outages. Emission intensity of Ontario power at that time was more than 300 grams per kilowatt-hour. Between five and six p.m. on Friday the 28th, GHG emissions were over 5,200 tonnes.

What’s the best way to reduce emissions? Conservation, or offsetting coal with non-emitting generation? And if the latter, what kind of non-emitting generation? Don’t forget that non-emitting generation has to meet electricity demand, which, as Earth Hour 2008 has proved, remains stubbornly constant in spite of massive media campaigns and high profile voluntary outages at big public buildings.

How much more proof do we need that lighting is just a bit player in electricity use? The irrelevance of Earth Hour 2008 in Ontario ought to show how irrelevant it is to ban incandescent lightbulbs in this province. As I pointed out in March 2007, banning incandescents is an irrelevant waste of time.

2008-03-25T09:26:00.001-04:00

Feds cut nuclear deal with Ontario: buy all the reactors you want, as long as one is CANDU
Read between the lines, and you might get the impression that the Canadian federal government and Ontario have finally come to a deal on the next wave of nuclear investment in Ontario. Attentive readers will recall my speculation that the $538 million Paul Martin promised Dalton McGuinty back in May 2005 (just before the famous Belinda budget vote), ostensibly to help defray the costs of decommissioning Ontario’s four coal-fired power generating plants, will really go for a new CANDU plant.

Has it really happened? Readers will recall that the Ontario Liberals long said they would replace the 6,400 megawatts of provincial coal capacity with a mix of generation types, including 1,000 MW of new nuclear capacity. But the short-listed reactor manufacturers from whom Ontario recently asked for proposals were told the province really wants 3,500 MW of new nuclear.

Why did Ontario suddenly add the extra 2,500 MW?

I think it is because Ontario wants to make sure it gets that $538 million. Before the feds hand over the money, they want Ontario to buy at least one CANDU (manufactured by Atomic Energy Canada Limited, a federal crown corporation). That’s the quid pro quo. The extra megawatts allow Ontario to accommodate the federal demand and run the publicly-promised bona fide competition.

Is it a good deal? Of course it is. The historical record of Ontario electricity shows that non-hydro baseload generation is either nuclear or coal. If we use more nuclear, we use less coal. And we use more coal when there is less nuclear available. It’s that simple.

This was exactly the case as of eight o’clock this morning. At eight a.m. today, there were 8,618 MW of nuclear capacity in service, and 4,169 of coal. If either of the temporarily out-of-service Bruce units were available, nuclear capacity would have been over 9,300 MW and coal’s output would have been 3,400.

As it was, the emission intensity of Ontario’s electricity at 0800 a.m. today was 278 grams per kilowatt hour. Over one year at that rate, the provincial power sector would emit a whopping 41 million tonnes of greenhouse gases.

And if the proposed 3,500 MW of nuclear were available at eight this morning? The emission intensity of Ontario power at 0800 a.m. today would have been 99 grams per kWh. Over a year at this rate Ontario power-sector emissions would be less than 15 million tonnes.

Readers who know their Kyoto numbers will instantly realize that the latter figure would be 10 million tonnes below the official Kyoto target for Ontario electricity generation.

Best of all, Ontario electricity consumers would never notice a difference in service.

The mechanism through which the $538 million might come was hinted at back in December, when the feds announced their new emission targets. There was an exchange in the Toronto Star about whether Ontario’s coal-plant phaseout would qualify for emission credits (see article).

Given the numbers I cited above, might the $538 million be in the form of emission credits?

2008-03-17T09:59:00.003-04:00

India nuclear deal hangs on PM’s communication skills: lessons for Canada
Anyone interested in the communication dynamics of minority parliaments—and political/technical communication in general—should watch for the outcome of negotiations between India’s ruling UPA and its communist coalition partners over the U.S.-India civilian nuclear deal. These negotiations occur as I write this (mid-morning Ottawa time, early evening New Delhi time).

It is a true nail-biter. This deal has been in the works since 2005, and represents the most significant shift in U.S.-India relations since 1974. If it comes to fruition, India will be a nuclear weapons state, and civilian nuclear trade on a grand scale will commence with the rest of the world.

The Americans have hoped since the end of the Cold War to make India a strong ally, and this is the closest they have come. And since they are the ones who have driven the effort to open India to opportunities that other nuclear-trading nations could seize, they also want to make sure the U.S. nuclear industry gets its fair share of these opportunities. Their bargaining position reflects this.

The challenge for India’s government is that its left-wing coalition partners—the Communist Party of India and its Marxist offshoot—are anti-American. This means that the sheer complexity of the negotiations not only with the U.S. but also with the International Atomic Energy Agency (IAEA) gives the leftists ample opportunity to make their mark. They have said that the draft safeguards agreement with the IAEA is “too technical” and that in any case their problem is with the U.S. deal not safeguards negotiations with the IAEA (though successful conclusion of the latter is a condition of the former).

This means government negotiators have to spin the deal as one with the world, and not just the U.S. Moreover, their spin has to satisfy not just the leftists but other commentators who, like B.S. Raghavan, are well informed on the technicalities of the deal and still don’t like it. The future of the current Indian government therefore hangs on how well the PM, Manmohan Singh, and his colleagues use their communication skills. Singh is one of the very best in the game, so it will be interesting.

If Singh and his colleagues succeed, Canada will soon be called upon to support the deal in the Nuclear Suppliers Group (whose consent is another condition for the U.S.-India deal’s success). If our position is that we do support it, how will our own government sell it to the Liberals, given that the NDP and Bloc will surely cite the history of our relations with India—see article—as justification to oppose it?

Watch and learn.

2008-03-13T11:25:00.004-04:00

Canadian government’s nuclear-friendly rules set the stage for new wave of power investment
As I advocated back in December and many times before (see article), the Canadian federal government will allow Ontario to offset greenhouse gas emissions from the provincial coal-fired generating plants with nuclear power. This means that Ontario Power Generation—the company that owns and operates the four coal plants—will be assessed on the basis of company-wide emissions. OPG can continue offering coal-generated power to the market, and can offset coal emissions with power from plants that emit less, or no, emissions. Recent Ontario history proves the best and most economical form of non-emitting generation is nuclear.

I have also predicted that OPG, and the new federal rules governing its emissions, are a model for other power utilities whose fleets include coal-fired generators. Coal dominates Alberta’s de-regulated power system, which emitted more than 52 million tonnes of greenhouse gases in 2004—fifty percent more than Ontario’s, which generated two-and-a-half times as much power. I hope the feds are negotiating similar rules with Alberta, because this would allow Alberta coal utilities to purchase offsets from less-emitting generating companies elsewhere in Canada. Eventually, it should be possible to do this anywhere in North America.

If the rules allow less-emitting generation to offset coal generation, the nuclear renaissance will become a reality. The U.S. Nuclear Regulatory Commission expects seventeen U.S. utility companies to submit twenty construction and operating license applications for thirty-one new reactors. The Canadian Nuclear Safety Commission expects similar applications for new Ontario plants.

North American power sector emissions will drop if a greater proportion of the continental generator fleet goes nuclear. Offset rules will help accomplish this.

2008-03-05T07:35:00.006-05:00

“Transparent and accountable decision making”: has Greenpeace abandoned its anti-nuclear position?
Two days ago, Greenpeace’s nuclear point-man in Canada, Shawn-Patrick Stensil, told the Toronto Star he thinks creating a short-list of reactor makers will save Ontario time and money as it embarks on a new wave of nuclear generation investment.

He didn’t say Ontario should never have gone nuclear in the first place—which has been Greenpeace’s line since the group was formed thirty-seven years ago—or that Ontario should replace nuclear and coal plants with renewables and conservation.

Has Greenpeace climbed off its anti-nuclear position? Not according to an activist I spoke to yesterday. But Stensil’s comment speaks for itself. When the chief anti-nuclear group passes on an opportunity to advertise cherished dogma, you have to wonder if maybe they’ve acquired some intellectual flexibility over the past while.

It all comes down to the value you place on a tonne of carbon dioxide. Mainstream greens, almost all of them anti-nuclear, have been the loudest voice in favour of meeting Kyoto targets. Their problem is that the hated atom produced a 15 million tonne reduction in Ontario’s power-sector greenhouse gases (GHGs) between 2003 and 2006. This was the biggest reduction in any industrial sector anywhere in North America since the Kyoto Protocol was signed in 1997.

This has produced a policy crisis for the part of the green lobby that is active on the Ontario electricity file. Plan A, the phaseout of Ontario coal generation and its replacement with natural gas–fired generation, went down the tubes in 2003 when the price of gas went above $5 per million Btu and stayed there. Plan B, a call for renewables coupled with energy conservation and efficiency, was instantly discredited as futile and expensive. Meanwhile, Ontario’s proportional shift from coal to nuclear produced the 15 million tonne reduction—without the closure of a single proscribed coal plant. The greens must have known that sooner or later they would just have to face facts.

Have they reached that point? Stensil’s remark suggests they have.

2008-02-27T12:20:00.002-05:00

Forget about AECL privatization, for now: federal cash means reactor maker will stay Canada-owned
Finance Minister Jim Flaherty put to rest rumours about AECL’s impending privatization yesterday when he announced his government will follow the Auditor General’s advice and put up $300 million to help the CANDU manufacturer finish critical work on its Generation III reactor.

Good move. The CANDU has too much potential in the dawning closed-fuel-cycle world to be unloaded at a fire-sale price, something its many detractors have urged. Nuclear power is Canada’s technological route to massive greenhouse gas (GHG) reductions. The feds’ help for AECL is another nudge to the Ontario government to quit pretending it is seriously considering buying light-water reactors—i.e., in the prime minister’s words, to fish or cut bait. Ontario is the scene of North America’s most dramatic GHG reduction since we signed Kyoto; this was because of the return of four nuclear units after 2003.

Flaherty’s other environmental move, pledging $250 million for yet another study into carbon capture and sequestration (CCS), was not so good. CCS, as I pointed out on February 6, is more PR than anything else. Flaherty’s PR did not mollify his intended audience, the mainstream green lobby.

Still, one out of two ain’t bad. And the bigger money went to the better project.

2008-02-25T11:45:00.003-05:00

ROK-ing the nuclear world: is Ontario the first stop for new act’s North American tour?
Back in mid-December, the Asian press was abuzz with rumours that two of the major players in South Korea’s recently de-regulated power industry—KEPCO and KHNP—consider themselves serious contenders to sell nuclear reactors to Ontario. If this were to pan out, it would represent South Korea’s first foreign reactor sale. It would also be Ontario’s, and Canada’s, first light-water reactor.

If the rumours are true—and why wouldn’t they be, since the Koreans are also expected to offer reactors to Turkey, in competition with five other vendors including AECL—it adds a new dynamic to the North American nuclear scene. South Korea’s power reactor fleet is one-fifth CANDU and four-fifths light water, while CANDUs make up nearly 17 percent of the North American fleet. The isotopic content of spent light-water fuel makes it suitable for use in CANDUs; this is the whole idea of DUPIC.

Could DUPIC, or something similar, be a solution to the spent fuel disposal problem in the U.S.? South Korea is an ideal place to test answers to this question, and in collaboration with the U.S. and Canada, the Koreans have been studying it in detail for over a decade.

Which means their dreams of foreign sales may also involve the U.S., though they might not necessarily be thinking of light water reactors. Other competitors may have the inside track to the U.S. reactor market, but the Koreans, with their working-level experience with DUPIC, may have an ace in the hole. Their nuclear research organization, KAERI, spent a lot of time trying to convince KHNP to implement DUPIC in its fleet. (Apparently, de-regulation did not apply to the websites of KEPCO, KHNP, and KAERI.)

While KHNP recently decided not to pursue DUPIC because of the fuel fabrication costs (which, according to a Korean study, are $616 per kilogram), the Koreans’ experience with DUPIC over the past decade could prove invaluable in the U.S.

The current cost of direct disposal of spent fuel in the U.S. is about $551 per kilogram, according to Congressional Budget Office testimony to the U.S. Senate Energy and Natural Resources Committee last November. This makes DUPIC about 11 percent more expensive than direct disposal. Cost estimates for the reprocessing scheme currently envisioned in the Global Nuclear Energy Partnership (GNEP), which would use fast-neutron reactors to destroy chemically- or thermally-isolated elements in spent fuel, range from six percent to well over 100 percent over the cost of direct disposal.

So what will the GNEP’s fast-burners cost? In his testimony to the same committee, Matthew Bunn criticized the six percent estimate for assuming that the proposed fast burners would operate at capacity through their lives, and that their costs could be contained enough to make their power attractive in a competitive market. Both assumptions, he says, are dubious. The CBO thinks the fast burner option would cost at least 25 percent more.

With this kind of uncertainty, policymakers might be more willing to look at a process whose characteristics are better known. A U.S. official told Platts in 2006 that DUPIC could cut in half the number of fast reactors required under GNEP.

2008-02-18T23:26:00.003-05:00

Nuclear diplomacy: Canada’s role in India’s entry to the Great Power Club
On February 6, I talked about Canada’s position on whether India should be exempted from Nuclear Suppliers Group (NSG) rules regarding nuclear trade with countries that are outside of the Non-Proliferation Treaty (NPT). Exemption could mean de facto recognition of India as a nuclear weapons state—in the same league as the U.S., Russia, China, France, and Britain—because India has refused to allow International Atomic Energy Agency (IAEA) inspections at “strategic”, i.e., military, nuclear sites. It also won’t commit to refrain from weapons testing, and won’t stop producing explosive fuel for bombs.

I mentioned that there were pro and con arguments circulating through the Canadian government. According to Mark Hibbs of Platts, the Department of Foreign Affairs (DFAIT) supports the exemption and the Canadian Nuclear Safety Commission (CNSC) opposes it, and DFAIT is getting its way. The issue still requiring diplomatic resolution between Canada and India is India’s use of plutonium from a Canadian reactor to make its first nuclear bomb in 1974.

Canada has been trying to patch this up for a few years now. Our position appears to be to let bygones be bygones when it comes to India, in service of the twin goals of finding a research partner on thorium fuel development and supporting the U.S. effort to strengthen relations with the biggest country on the Asian sub-continent. Here’s what David Malone, Canada’s High Commissioner to India, told a university audience in India on February 12: “[The cool relationship between Canada and India] changed … when both governments … woke up to the fact that allowing [the nuclear] issue to dominate the relationship was a bad idea, and that we could agree to disagree about what happened in 1974 and move on recognizing that India had not proliferated internationally since it created nuclear weapons.” (Note the reference only to 1974, though that wasn’t the only instance of India using Canadian know-how in its weapons program. But this is diplomacy.)

What does “move on” mean? Does it mean agreeing to unconditionally exempt India from NSG export rules, an issue which is being debated right now? Perhaps: it appears that influential NSG countries, including Canada, are cool to the idea of restrictions on exports of enrichment, reprocessing, or heavy water production technology to India. India certainly wants this technology.

This is where it could present a challenge. India wants to base a future generation of reactors on fast breeder technology, and will need plutonium to fuel them; hence its desire for enrichment/reprocessing imports. A breeder program would provide plutonium for enough weapons to allow India to present simultaneous, credible nuclear deterrents to certain of its nuclear neighbors.

But the cardinal rule of the NPT is that no signatory should aid in another country’s weapons program. How could the NSG ensure that no sensitive material goes into India’s weapons? In theory, by subjecting all Indian nuclear installations to permanent international safeguards. If this is not possible, such an exemption could create a hole through which NSG-supplied material could slip into India’s military program.

For the above-mentioned strategic reasons, as well as domestic political ones, India has long refused to allow permanent safeguards at all its facilities. Because of this, the Arms Control Association demanded in a recent open letter that NSG countries not export any enrichment, reprocessing, or heavy water production technology to India. However, as mentioned, Canada appears ready to allow such exports. This might mean that, if we are to avoid entirely abandoning our non-proliferation principles, not to mention forgetting about 1974, we will have to be polite but firm on safeguards.

Is this a show-stopper? India’s position against full permanent safeguards may yet contain some wiggle room. Domestic Indian opposition is strongest in the case of the deal with the U.S., which says that transferred material and equipment is “subject to safeguards in perpetuity in accordance with the India-specific Safeguards Agreement between India and the IAEA.” It may not be so vociferous if the other NSG members, such as Russia, were to insist on similar terms.

So proponents of nuclear trade with India are pulling out their best diplomacy. David Malone’s “move on” may therefore be an attempt to convey Canada’s strong desire for a deal while encouraging India to reconsider some aspects of its position on safeguards.

2008-02-15T11:37:00.004-05:00

Backing the winners II: power generation squeeze play in North America
In 2005, the U.S. government passed legislation (the Energy Policy Act, or EPAct) giving incentives to financiers of new nuclear power plants. These incentives included construction delay insurance, power production tax credits, and most important, loan guarantees. I have suggested that Canada follow this, and provide similar incentives.

How have the EPAct incentives worked so far? In the first year after the EPAct, there was some confusion as prospective project proponents and financiers tried to figure out what portion of a project’s debt the government would guarantee. Naturally this led to delays in decisionmaking. The Nuclear Energy Institute says there are 21 U.S. intended construction projects in various decision stages. Many observes have seized on this relatively low commitment as evidence for the general claim that the up-front capital costs of new nuclear plants—by far the most significant part of a build project—pose an insurmountable obstacle to a nuclear expansion. This, some say, makes natural gas by default the strategic winner in the generation investment wars.

This is a bit simplistic. Let’s put the situation into context. The sub-prime market fiasco has made investors skittish about putting down big money. The means the cost of debt is higher and it is hard to leverage deals. But this is just part of the boom-and-bust cycle. Besides, how many major investors put big money into dot.com companies in the second half of 2001? The skittishness will pass.

When it does, the EPAct’s loan guarantees, together with nuclear fuel costs that are lower than or equal to those of coal (the cheapest fossil fuel), will make the long-term prospects of nuclear much more attractive. A recent Public Utilities Fortnightly article reports a prediction that uranium spot prices will rise from $1.21 per million Btu to $2.25 in 2011. They will then settle to $$1.30 by 2017.

Because of the projected price surge between now and 2011, the Fortnightly piece waffled on the prospects for nuclear, and said that high uranium prices cancel any advantages of carbon regulation that would accrue to nuclear power, which emits no carbon. But without an indication of how toothy the regulations would be, this is an empty claim.

I’m more optimistic. Let’s not forget the way the board is tilting in the U.S. As I pointed out on February 1, the three major state-driven emission control schemes, together with strong indications that the next U.S. president—whether it’s McCain, Obama, or Clinton—will support some sort of emissions regulation, indicate that real carbon costs are coming to America.

Besides, while the predicted $2.25 uranium price in 2011 represents a daunting 85 percent increase over the current price, it is still in the neighborhood of the price of coal. More important, it is only one-third of the average Henry Hub price of natural gas in 2007 (which was well over $6 per million Btu). While nobody can predict what gas will cost in 2011, it is safe to say the price will stay high.

If and when carbon costs come to the U.S. utility sector, the already-high price of gas plus the cost of emissions is likely to keep gas where it is today: perfect for peaking and black-start capacity, but too expensive and emission intensive for baseload. Nobody should expect LNG to play price-cavalry in the North American market. LNG will sell into the continental market at the prevailing—high—continental price.

This leaves nuclear and coal for baseload. Again, with carbon costs likely coming to the U.S.—possibly spurred by another successful emissions-related lawsuit against a major emitting company (see article)—nuclear comes out on top.

The Fortnightly article reminds readers that “the US is a good place to invest in an uncertain world.” It's true. Money is coming, and it’s just a question of where it will go. When credit markets ease up, we’ll see how significant the EPAct’s nuclear incentives really are.

2008-02-06T10:01:00.000-05:00

Climate change and nuclear policy in Australia: lots to do with Canada
Two months ago, Australia’s anti-Kyoto PM, John Howard, lost that country’s general election. One of the first moves of his successor, Kevin Rudd, was to bring Australia into the Kyoto club.

The pro-Kyoto crowd has applauded this move. From their point of view, anything that gets in George Bush’s face is good. But let’s take a real look at Australia’s newfound Kyotophilia. Will it lead to actual emission reductions, which, though only dimly remembered, were the main point of Kyoto? Or will it just add another voice to the politically correct cacophony that drowns out intelligent climate change discussion in international circles?

Sadly, the second alternative is the right one. Rudd’s next move was to put a freeze on his predecessor’s ambitious plans to introduce nuclear power to Australia’s highly coal-dependent electricity generation sector. This virtually ensures that Australia’s climate change contribution will be negligible.

Rudd’s alternative to nuclear is carbon capture and sequestration (CCS), a fanciful scheme whereby the CO2 from fossil fuel exhaust is captured and pumped underground. CCS is a familiar concept to anyone who has followed the travails of the U.S. utility sector. While it may be viable in certain limited instances, it is more public relations than anything else; Rod Adams has a good piece about it.

The CCS PR gambit seems to be succeeding, and not just in Australia and the U.S. Politicians from western Canada have seized on it as a way of dealing with the massive emissions from the oil sands. But it is a big strategic gamble, especially in the U.S. By the time people figure out they’ve been had, many new coal-fired plants will have been built. And if a climate-change lawsuit against a coal-fired generator succeeds in the U.S., we could see a corporate meltdown that rivals the dot.com bust of 2001.

Rudd hasn’t limited his nuclear moves to domestic power generation. He has also reversed a Howard decision, taken in mid-August 2007, to consider uranium exports to India.

Howard’s India move followed the U.S.-India nuclear cooperation deal of 2005. India is not party to the Non Proliferation Treaty (NPT), and won’t allow IAEA inspections at some of its nuclear sites. For this reason, the Nuclear Suppliers Group (NSG) doesn’t allow its members, which include Australia and Canada, to export nuclear material or equipment to India. The U.S., for strategic reasons I discussed back in September, wants the NSG to make an exception in the case of India. Howard said he would consider it.

It is difficult to tell if Rudd’s India reversal is more a product of overheated election rhetoric than sober deliberation. My guess is that, unlike the electricity decision, it is the latter.

Regardless, it puts Canada into a delicate position. We joined the Global Nuclear Energy Partnership (GNEP) very recently, presumably as a supplier state. We have also been under concurrent pressure from the U.S. and India to ease the NSG trade sanctions in order to clear the way for the U.S.-India deal.

The problem is, we have an, uh, history with India when it comes to nuclear issues. India manufactured the plutonium for its first bomb using a Canadian research reactor, which we sold in the 1950s on what we felt was the condition that India would use the reactor for peaceful purposes only. Well, India successfully tested a plutonium bomb in 1974. It now refuses to allow the IAEA to inspect the reactor, and this is a bit of an issue with the Canadian government.

In light of this, how have we responded to the pressure from the U.S. and India to change the NSG rules, and from the Arms Control Association to maintain them?

There are voices pro and con in the Canadian government bureaucracy, and according to Mark Hibbs some of the strongest con voices last summer were at the Canadian Nuclear Safety Commission, whose president was fired two weeks ago. If we support easing the NSG sanctions now, some people may note the temporal proximity to the decision to join GNEP and wonder if we bailed on a long-standing international principle for the chance of making a few bucks in India. Worse, they’ll wonder if there’s any connection to the CNSC head’s dismissal.

These are just a few of the reasons why Canada ought to delay deciding on the NSG rules for as long as possible.

2008-02-01T11:45:00.000-05:00

Emissions cap-and-trade schemes crisscross North America: which scheme will actually reduce emissions?
Three major state-level emission control initiatives have popped up in the U.S. Several Canadian provinces are involved. British Columbia and Manitoba are part of the Western Climate Initiative (WCI). Manitoba is also part of the Midwestern Greenhouse Gas Reduction Accord. And Ontario and New Brunswick are official observers of the Regional Greenhouse Gas Initiative (RGGI).

Meanwhile, U.S. state governors are looking into merging the three climate pacts.

Unifying these pacts will be a challenge. RGGI focuses only on the electricity generating sector, while the other two cover all sectors.

RGGI’s is the best approach. Focusing on power generation is the most direct and fastest route to massive emissions reductions, as Ontario’s 15 million tonne example has shown. Reducing the emission intensity of power generation, and then shifting more fuel end-use to electricity—for example, plug-in hybrid cars—is the way modern societies will dramatically drop their carbon output.

Will RGGI actually lead to emissions reductions without ruining the economies of the ten states it covers? There are three promising signs that the answer is yes—but only if the proceeds of carbon permit sales go to building new nuclear plants.

The first promising sign is in the form of the Republican front-runner in the U.S. presidential race. John McCain supports cap-and-trade, with auctioning of carbon permits. (His main rival, Mitt Romney, took Massachusetts out of RGGI when he was governor.) McCain thinks the auction proceeds should go, in part, to new nuclear plants, which he views as essential to any credible climate change strategy.

Second, the recently passed Energy Independence and Security act (H.R. 6) included a provision that grants credits for nuclear-generated electricity when it is used to power electric vehicles. This builds incentives into that fuel-shift I mentioned above.

The third promising sign is a call by Barclays Capital for “the broadest possible participation [in RGGI] by as many players as possible.” Barclays says “it is extremely important that allowance markets are liquid, so that forward markets will develop, so they will be able to lock in their future RGGI allowance costs.”

For forward purchasing of carbon permits to have the intended effect, permits must be available on a scale that interests major investors. This means they must be based on utility scale, zero-emission, dispatchable power. Nuclear is the only generation technology capable of achieving this.

I predicted last year that effective carbon caps could spur a restructuring of utility ownership in the U.S. Some coal-fired utilities operating under serious cap-and-trade rules will end up looking like Ontario Power Generation, which owns 6,400 megawatts of coal-fired capacity and a roughly equivalent amount of operating nuclear capacity.

The question is, who will buy whom.

2008-01-28T10:30:00.000-05:00

Ontario’s climate change breakthrough: major bragging opportunity for Dalton McGuinty at Vancouver premier-fest
Ontario premier Dalton McGuinty must be frustrated. He’s at the current Council of the Federation meeting in Vancouver, the focus of which is climate change, and he feels he can’t boast about Ontario’s remarkable progress in reducing greenhouse gas (GHG) emissions. McGuinty could legitimately claim that Ontario is the North American leader in power sector emission reductions.

As I have mentioned, GHGs in Ontario’s power sector were 15 million tonnes less in 2006 than in 2003. That’s the biggest emissions reduction in any sector anywhere in North America since the Kyoto Protocol was signed in 1997.

Ontario’s massive GHG reduction was achieved in part because a of decision that McGuinty took in 2004, to return a previously laid-up nuclear power reactor to service. This, along with McGuinty’s support also for the return of other laid-up units, at the Bruce nuclear station, displaced equivalent amounts of coal generation. Ontario’s power-sector emissions plummeted.

So why isn’t the Ontario premier talking this up? Perhaps because the day-to-day performance of Ontario’s nuclear generators seems so up and down. Usually the province’s reactors crank out over 11,000 megawatts of power, which sometimes meets up to 60 percent of Ontario’s demand.

But sometimes, such as today, reactors come off-line for maintenance. (As I write this, in the early morning of January 28, Ontario’s nukes are providing 9,600 MW, only 44 percent.) When that happens, the coal plants—the other non-hydro workhorses in the provincial generator fleet—leap into service. Right now, coal is providing a fifth of the province’s power. And emissions are going up.

McGuinty should quit worrying about this. Day-to-day only seems up and down. Nuclear is still Ontario’s main workhorse, and will remain so for the foreseeable future. The premier should focus instead on the strong likelihood that, by the end of 2009, the Bruce 1 unit will have re-entered service and Ontario’s operating nuclear capacity will be close to 12,000 MW. By the end of 2010, this will have brought the province’s electricity sector to below the original Kyoto target of 25 million tonnes.

This will be a nice achievement to brag about as the Ontario Liberals gear up for the 2011 provincial election. But McGuinty should start bragging now. The example of Ontario’s 15 million tonne achievement might inspire Alberta, whose power sector is almost all coal-fired.

2008-01-23T10:51:00.000-05:00

The price of carbon in Europe: more lip service, or a real tax?
In just a few hours the European Union will release its draft rules for Phase 3 of the Emission Trading Scheme. Everyone is waiting on word of whether the EU will force emitting companies to purchase all emission credits at auction. If this happens, then the ETS’s teeth will have grown longer and sharper.

The question is, will those teeth rip and slash carbon emissions, or will they maul the European Union economy? Certain heavy industries have been on a media blitz lately, warning of job losses in the tens of thousands if the ETS foists costs on European companies that their competitors don’t have to bear. The head of the German steel industry association told Agence France Presse that “if the law on certificate trading for carbon dioxide emissions is introduced as planned … no steel manufacturer will invest in Europe.”

All those who have been advocating carbon trading, or carbon taxation, will be watching the European Commission’s next move like a Leaf’s fan watches Cliff Fletcher. The ETS has up to now been a giant expectation-management exercise. The price a company pays for permission to emit each extra tonne of carbon depends on everybody’s definition of “extra.” “Extra” minus one tonne is that company’s emissions cap, which is established through an exercise that is part estimate, and part negotiation. The negotiation part is what has so far kept the market price of permits low: companies have tended to highball their estimates of emissions for an upcoming period, and their national governments have tended to support those estimates in dealing with the European Commission (which administers the scheme). And the EC has generally accepted them. So far.

This systemic leniency has led to permit proliferation, which has driven down the market price. Emitters therefore have had little incentive to reduce emissions.

But the EC has become stricter in approving member countries’ emissions estimates (see article). And now with today’s impending announcement on full auctioning of permits, the rubber is about to hit the road. Angela Merkel and Nicolas Sarkozy have both said they will protect their home industries from costs that render them uncompetitive.

So it’s down to a choice: fight climate change or defend jobs. My prediction is we’ll see more of the lip service that has served the EU so well in its self-congratulatory condemnation of the arch-fiend George Bush. The ETS’s teeth will stay short and dull.

2008-01-13T10:42:00.000-05:00

Ontario’s Debt Retirement Charge: voila! It’s a carbon tax
Back in November, I suggested renaming the Debt Retirement Charge portion of every Ontarian’s electricity bill to Climate Change Contribution (see article).

This is just one way of acknowledging that the Darlington nuclear generating plant—which the debt retirement charge pays for—offsets around 27 million tonnes of greenhouse gases (GHGs) every year. History proves that if Darlington weren’t there, we’d be getting its annual 27 billion kWh from coal—and according to Environment Canada coal produces about a kilogram of GHGs for every kWh.

As an electricity consumer, I pay less than $4 a month for Darlington. That’s a small price to pay for the plant’s high quality, zero-emission power.

Last week a federal organization caused a stir by saying that Canadians have to start paying for their carbon. It was suggested that this could result in electricity rate hikes of 50 percent. (Of course it was never mentioned that it is Albertans who would suffer this pain; after all, Alberta’s electricity system is primarily coal-fired. Quebeckers, who already have the cleanest power in the industrialized world, would see no change in power rates. But it is unwise in Canada to point this out.)

Ontario’s experience with the debt retirement charge suggests that the cost of bringing zero-emission power into a system will not result in rate hikes anywhere near 50 percent.

Ontario’s experience also suggests that subsequent incremental rate hikes won’t result in a political apocalypse for the government that brings them in. Other than the usual tax haters and anti-nuclear greens, nobody has raised a fuss over the debt retirement charge.

And if the Debt Retirement Charge were re-framed as the Climate Change Contribution, it would become positively risky to attack it.

2008-01-07T10:33:00.000-05:00

North Korea’s nuclear “disablement”: déjà vu all over again?
One week ago, North Korea missed a critical deadline in its bid to re-enter the international community. According to the six-nation process for the north’s nuclear disarmament (referred to as “disablement” for the sake of politeness), the north was supposed to submit detailed reports on its nuclear materials, equipment, facilities, and programmes. It didn’t, at least not to the satisfaction of the United States.

China appears to agree. There is now another media negotiation in progress, this time through China’s Xinhua news agency (see article). The Xinhua article is polite and even-handed, and points out the north’s desire to be removed from the U.S.’s list of rogue nations. But when you read between the lines you get the impression China is telling North Korea to just cough up the information.

Back in October, North and South Korea reached a separate agreement on getting nuclear weapons out of the Korean Peninsula. I speculated at the time that this could spell opportunities for Atomic Energy Canada Limited, the maker of the famous CANDU reactor. South Korea is a major driving force behind developing DUPIC, a process for burning spent fuel directly in CANDUs. If the deal with the north holds, South Korea can get the green light from the U.S. to commercialize DUPIC on the Korean Peninsula.

History has shown that all nuclear deals with North Korea are subject to change without notice, and last week’s missed deadline underlines this. The new South Korean president, Lee Myung-bak, apparently blames the north’s unreliability in part on the lenient and open-ended policies of his predecessors. He has therefore indicated he will make South Korean financial aid to the north contingent on actual nuclear cooperation.

Go Lee, go. The sooner the nuclear situation in Korea stabilizes, the sooner the south can work out the grid-readiness of DUPIC. DUPIC is the most proliferation-resistant way for the U.S. to reprocess its gigantic stockpile of spent fuel.

2008-01-04T08:03:00.000-05:00

The European emission trading scheme: lessons for Ontario
The EU emission trading scheme (ETS) offers valuable lessons for other jurisdictions looking to get into carbon cap-and-trade. Phase 2 of the ETS became effective three days ago. Will it correct the central deficiency of Phase 1, which was over-allocation of carbon permits?

You will recall that in Phase 1, certain EU national governments were over generous—some would argue deliberately over generous—with carbon permit allocations (see article). The more allocations granted, the cheaper carbon permits became, and the less incentive coal-fired power companies had to deviate from business-as-usual and actually reduce emissions.

Early indications are that the ETS is at least moving in a direction that could bring about significant carbon prices. The European Commission (EC), which administers the scheme, chopped Germany’s proposed quota of 482 million tonnes by six percent, down to 453 million tonnes. In combination with a Phase 2 policy that allows each member country to auction up to 10 percent of its carbon permits, this new administrative toughness might keep permits in the system to a minimum and drive up their market price, which is the whole idea.

Phase 3 draft rules are coming on January 23, and there are rumours that power companies and some governments are lobbying for full auctioning of permits. This would make permits truly expensive.

It will also force EU governments to recognize that nuclear power is the best way to provide cheap non-emitting power on a large scale. The ETS’s main limitation is that Germany, the EU’s biggest greenhouse gas (GHG) emitter, is phasing out nuclear generation. Keeping Germany’s anti-nuclear policy in mind, the ETS’s designers hoped that putting a cost on carbon emissions would spur a sort of anti–Manhattan Project—a giant collective effort to find a non-emitting, non-nuclear way to generate massive amounts of power. It has been obvious all along that this won’t happen, no matter how big or how hard they dream. The only ways to reduce Germany’s power-sector GHGs without adding new nuclear plants are to shift from coal to expensive Russian natural gas or to force coal generators to capture and sequester carbon. Either option would jack the price of power up into the stratosphere.

Few politicians are willing to publicly author a policy that results in massive electricity price hikes. So, presented with choice between a rock and a hard place, EU governments, including Germany, chose to go easy on their domestic power generating companies. Hence their generosity with carbon permits in Phase 1 of the ETS. And hence Germany’s attempt to over-allocate in Phase 2.

But with the EC’s semi-clampdown in Phase 2, the rubber is now about to hit the road. Will Germany choose to force its power generators to buy 10 percent of its permits at auction? If so, power consumers in that country will start feeling the sting of high prices. Will they stay anti-nuclear?

In my previous post, I pointed out that the atom is the most likely way the Ontario power sector will meet Canada’s new 18 percent emission reduction targets by 2010. A reduction this size would bring power generation emissions to below the original Kyoto target for that sector in that province. (The Kyoto target for Ontario’s power sector is 24.8 million tonnes; see Environment Canada’s website.)

Luckily, the Ontario and federal governments aren’t hamstrung by anti-nuclear theology. In light of this high likelihood of success, should the federal government bet on the winning pony and help Ontario meet the 18 percent target? If it did, within two years Canada would have a success story, and a best practice, to show off to the world.

2007-12-24T11:10:00.000-05:00

Negotiating in the media: multi-billion dollar Ontario nuclear decision gets down to brass tacks
Last week there was a telling exchange between federal environment minister John Baird and the Toronto Star’s Ian Urquhart. On Monday, Urquhart published a column claiming that Baird had said that Ontario’s coal plant closures wouldn’t qualify for emission credits under the trading scheme the federal government is contemplating. Baird responded in a letter to the editor saying that any sector that achieves an 18 percent emission reduction—within two years—would be eligible for credits.

Neither Urquhart’s column nor Baird’s letter mentioned the critical baseline year from which reductions would be calculated. I have heard that the feds like 2006.

There is only one sector in one province that can achieve an 18 percent emission reduction by 2010. And that is the electricity generating sector in Ontario. As I have pointed out, Ontario’s power-sector emissions were 15 million tonnes lower in 2006 than in 2003. This was due entirely to the return of previously mothballed nuclear reactors at the Pickering and Bruce generating stations.

If I’m right about 2006 being the baseline year, then Ontario would have until 2010 to chop power emissions to 24.6 million tonnes (which is 18 percent less than the 2006 total of 30 million tonnes). Those who pay attention to these things will know that 24.6 million tonnes is just a bit below the original Kyoto target for this sector. So much for all the talk about the Conservatives abandoning Kyoto targets.

Is it possible to reduce power sector emissions by 18 percent?

It is possible but not certain. After the dramatic reductions of 2003–2006, Ontario’s power sector emissions shot back up in 2007 because longer-than-expected nuclear outages forced the province to shift back to coal. For Ontario to meet Baird’s 18 percent reduction target by 2010, the nuclear power plants—run by OPG and Bruce Power—have to keep their downtime well below the 2007 mark. It is already looking like that may be possible, at least in the case of Bruce Power: unit 4 came back online last week.

Determining Ontario’s eligibility for emission credits is a negotiation with multi-billion dollar implications. When Ontario decides to renew part of the provincial nuclear generator fleet, the feds want the new reactors to be Canadian-made. The McGuinty government, the ultimate decider, is more likely to agree to this if the feds sweeten the pot. Hence the wrangle over emission credits.

2007-12-19T13:56:00.000-05:00

Congress is Santa and Scrooge for U.S. nuclear industry: but presents new Energy bill brilliantly
A year ago I encouraged the Canadian federal government to offer financial incentives to jump-start investment in new nuclear power plants. The incentives would emulate those in the U.S. Energy Policy Act of 2005. Ontario’s stunning record of reductions in greenhouse gas (GHG) emissions in the power-sector—fifteen million tonnes less in 2006 than in 2003—had proved that nuclear power is the way forward to massive reductions in national emissions, and that it is worthy of incentives. The problem, for the politicians to whom I was offering this advice, was selling these incentives to influential, and skeptical, elites.

To sell them, I proposed that the Harper government expand the Wind Power Production Incentive (WPPI) to include nuclear generation, and announce it as an expansion of wind power.

Well, it looks like the U.S. congress and administration have done something very similar. Congress and the administration have agreed on a new energy bill, and the media is touting it as support for a “six-fold increase in ethanol use and energy-efficiency standards for appliances and lighting ... [and] in commercial and government buildings.” House speaker Nancy Pelosi says the bill is “groundbreaking in what it will do.”

It’s groundbreaking, all right. But not because efficiency measures will play anything bigger than a marginal role in reducing U.S. GHGs. The truly important part of the bill is the confirmation of financial incentives for new nuclear power plants. Nuclear power, and not efficient lightbulbs or ethanol-blended gasoline, is how America will reduce GHGs.

Ask any of the environmental lobbyists who are applauding the bill’s efficiency measures if they like its nuclear incentives. Most will say no, and emphatically no. But they generally applaud the bill, which means it has been skilfully presented.

While congress was generous with nuclear construction incentives, it was stingy with the critical back-end of the industry. It cut funding for the Yucca Mountain spent fuel repository. This means the U.S. nuclear regulator will very soon be asking hard questions about what exactly utilities will do with the spent fuel piling up on their generator sites. If it can’t go to Yucca Mountain, where will it go? To one of the fast burner reactors proposed under the Global Nuclear Energy Partnership (GNEP)? Not much relief on that front either: congress gave the GNEP less than half what the president had asked for.

Moreover, a fast burner doesn’t currently exist in North America. Few experts are convinced fast burners can economically dispose of spent fuel. So the spent fuel problem remains unresolved.

Nevertheless, the new U.S. energy bill is a model for how the Canadian government can ramp up investment in true GHG-reduction technology in a way that is palatable to public opinion.

2007-12-15T10:18:00.000-05:00

Chalk one up for the system: isotope flap proves it works
The Chalk River reactor shutdown escalated into a political issue last week, because a shortage of medical radioisotopes had developed along the worldwide supply chain. What does it say that the federal government overrode the nuclear regulator by ordering the reactor to resume production?

It says that the Canadian nuclear regulatory system works, and that everyone—from the regulator, to the company that runs the reactor, to the government and opposition—did their job, and did it well.

This is not a case of the government ordering an unsafe reactor to restart; the reactor works just fine. It is a case, unprecedented in our history, where the government (and opposition parties, I might add) decided to place concerns over medical well-being ahead of concerns over the possibility of a devastating earthquake in Chalk River. No one, including the nuclear regulator, believed or argued that the latter will occur over the next 120 days. After the 120 days, AECL will have to make the safety upgrades the regulator originally demanded.

All the rest—question period accusations, counter-accusations of partisan motives, etc.—is politics as usual. Canada is a Parliamentary democracy. What else should we expect?

U.S. observers should take note. Utilities down south are reaching a tipping point where on-site storage facilities for spent fuel rods are reaching their capacity. The U.S. nuclear regulator might not grant reactor extension licenses unless those on-site storage facilities are relieved. Meanwhile, Yucca Mountain remains unresolved. What will happen if a U.S. utility comes to a point where it cannot get regulatory approval to continue generating electricity?

2007-12-09T09:35:00.000-05:00

Bawling over Bali: while greens whine, Japan rolls out climate investment plans
Japan has announced it is considering investing $4.5 billion to help developing countries reduce greenhouse gas emissions. According to the Organization of Asia-Pacific News Agencies, this money will be for energy efficiency, new energy sources, and nuclear power.

The Pint of Old Harper on this list is nuclear power, of course. If the Japanese money materializes, that’s where the bulk of it will go. As well it should. Nuclear power is the world’s technological route to substantial greenhouse gas (GHG) reductions. Energy efficiency and new energy sources are politically correct drops in the bucket.

The main recipient country will, probably, be China. Japan is still not comfortable with allowing India, the developing country with the next-biggest nuclear investment plans, back into the club of legitimate nuclear nations.

Meanwhile, a chorus of condemnation emanates from mainstream environmentalists the world over. This is in response to the climate discussions in Bali, which have disappointed the greens because the conversation is not sufficiently anti-corporate. If anybody notices Japan’s announcement, they will either commend the energy efficiency and “new energy” components, or condemn the nuclear component. Either way, the greens still don’t get it.

2007-12-06T09:05:00.000-05:00

Nuclear power and Kyoto: Baird’s guest-list hints at climate strategy
Environment minister John Baird has taken some interesting people with him to the Bali climate discussions. Among them is Elizabeth Dowdeswell, an adviser to the Nuclear Waste Management Organization. As I have pointed out, the countries involved in the Asia-Pacific Partnership are members of another partnership, the GNEP.

What’s the connection? The APP focuses on a technological solution to climate change, rather than Kyoto’s bulky, unwieldy everyone-aboard-one-big-spaceship approach. No technology will reduce greenhouse gas emissions more than nuclear-generated electricity. And if nuclear power is to develop worldwide beyond its current capacity, and it will, then there absolutely must be a safe way to deal with spent fuel from reactors.

Hence GNEP, and Canada’s decision, announced last week, to join it. Whether or not you like GNEP’s central technological proposal—which is to use special reactors to destroy certain dangerous components of spent fuel—you have to agree that there must be close international supervision of the nuclear fuel cycle. And hence Dowdeswell’s presence in Bali. Her organization will be closely involved with spent fuel management in Canada.

But now that Canada is in GNEP, “management” in this country might mean more than directly storing spent fuel in a geologic repository. It might mean reprocessing, i.e., separating plutonium from spent fuel and burning it using either CANDU or fast-neutron technology.

I like the idea of recycling fuel, but we should think hard before we start separating plutonium. It is safer when this stuff is entrained in highly radioactive spent fuel. Separating it from spent fuel requires close monitoring and supervision, which is fine as far as Canada is concerned. But if other countries do the same with their spent fuel, the International Atomic Energy Agency’s monitoring responsibilities increase in complexity. South Korea secretly produced small amounts of plutonium in 1982; the IAEA only learned about it in 2004.

On the other hand, disposing of U.S. spent fuel in CANDU reactors (i.e., DUPIC) doesn’t entail separation beyond mechanical reformation of fuel rods. DUPIC spent fuel maintains the radiation shield. I hope Canada hasn’t succumbed to the accepted wisdom which says CANDU won’t sell in the U.S. The situation has changed since AECL’s last failed attempt to sell to a U.S. utility.

2007-11-29T22:45:00.000-05:00

Prominent Canadian environmentalist admits nuclear power is emission-free: green is really blue
John Bennett of ClimateforChange.ca has acknowledged in a letter to the Ottawa Citizen that nuclear power is emission-free. This is a major departure from the mainstream green position on nuclear, which is to remain silent about the millions of tonnes of emissions it has offset while howling for punitive measures against emitters.

I’m paraphrasing Bennett, of course. Here’s what he actually said in his letter: “the failure of the nuclear plants in Ontario forced the province to use coal plants 24 hours a day instead of a few hours during peak demand.”

This one sentence neatly encapsulates the sheer limpness of anti-nuclear arguments. Everybody knows that during the period to which Bennett refers, 1995 to 2003, Ontario’s nuclear fleet, though mauled by politically motivated layups, still powered more than half the province. With a few more reactors, Ontario could chop power-sector greenhouse gases more than in half. Nuclear’s record in Ontario has been a success, not a failure.

Bennett also claims in his letter that “had the U.S. ratified Kyoto ... Ontario could have afforded to switch to natural gas.” Unbelievable. This shows that the true colours of mainstream greens in Ontario are gas-industry blue. Just about every organized mainstream environmentalist in Ontario touts natural gas as the solution to our climate change problems.

Where have the greens been since 2002? The price of natural gas has gone through the roof many times in the past five years. This is precisely why George Bush never ratified Kyoto. He knew that a large-scale shift from coal to gas in the electricity generating sector was the only way America could meet its Kyoto targets, and that this would bankrupt ratepayers across the country. Bush saw through the self-interested gas industry propaganda urging him to sign. But not Canadian greens. They call for caps on emissions while touting gas-fired generation—which would produce not only massive emissions but also long-term markets for the fossil-fuel companies they pretend to hate. Go figure.

It’s a shame, because most of Bennett’s other environmental ideas are pretty solid.

2007-11-24T10:17:00.000-05:00

Two down, one to go: can Harper withstand Kyoto Konformism?
Australian PM John Howard just got murdered in his country’s general election, losing both his seat and his job. His opponent and PM-elect, Kevin Rudd (any relation to AC/DC’s Phil?), has announced his first act will be to bring Australia into the Kyoto Klub.

Where does that leave Canada’s prime minister? Stephen Harper’s only remaining anti-Kyoto counterpart, U.S. president George Bush, won’t be president after January 20 2009 (and will be a lame duck starting next summer).

Canadian Kyotophiles have had a bad five months. P-Rod’s Parliamentary success—P-Rod (Pablo Rodriguez, a Liberal MP) wrote a pro-Kyoto bill that passed the House in June; see article—has translated into zero Parliamentary advantage. Harper et al have touted the Asia-Pacific partnership—an alternative to Kyoto that has, in my opinion, far more potential of actually reducing emissions than Kyoto ever did or ever will—with impunity.

But a new wave of pious pro-Kyoto platitudes from world leaders, together with Howard’s demise and the imminent beginning of Bush’s long, slow exit, have given Kyotophiles new hope. I said it a year ago, and it is worth repeating: nothing is more important to Kyotophiles than talking the talk (see article).

What’s the half-life of the current round of lip service? Rich countries have promised poor countries more than $1 billion to fight climate change. As I have pointed out, the only investments that will actually reduce emissions in the third world are those that develop emission-free power systems (see article). This means nuclear power must go to the third world. If history is any guide, those who most ardently support Kyoto will also remain ardently opposed to the spread of civilian nuclear technology.

So, even if that $1 billion materializes—and the Guardian’s David Adam is sure it won’t; see article—it is doubtful the money will be well spent.

In Canada, the big near-term political question is: can Stephen Harper, sitting atop a precarious minority government, hold out against the current round of Kyoto lip service?

2007-11-19T09:36:00.000-05:00

Nuclear fuel reprocessing in the U.S.: it’s a guessing game
One of the central components of the Global Nuclear Energy Partnership (GNEP) is the reprocessing of spent nuclear fuel. How much would that cost? According to the Boston Consulting Group, six percent more than it would cost to store spent fuel directly in Yucca Mountain. The Kennedy School of Government says it would be twice as much as direct storage.

The U.S. Congressional Budget Office (CBO) looked at the question in detail and told the U.S. Senate committee on energy and natural resources that it cannot see any scenarios in which the cost of reprocessing would ever be less than that of storage. So did Matthew Bunn of the Belfer Center for Science and International Affairs. He too told the committee that reprocessing would be much more expensive. “No policy-maker should make decisions about reprocessing based on an expectation that the costs will be similar to those projected in the Boston Consulting Group report.”

Fair enough. But as far as I can see, none of these studies considered carbon or emission abatement costs. Emission costs exist in the U.S. only in the area covered by the Regional Greenhouse Gas Initiative. These haven’t yet been quantified, so we don’t know how they would affect nuclear energy in a competitive market. But they would certainly affect general cost and price scenarios of power generation if emission limits were imposed across the U.S. Half America’s power comes from burning coal.

Environmental policy entrepreneurs have been launching legal challenges against U.S. coal-fired power generators, because of greenhouse gas emissions. Some of these challenges are based the tort doctrine of public nuisance. The Boston College Environmental Law Review warned in 2006 that there is more substance to these challenges than is indicated in the innocuous phrase “public nuisance.” Should one of them succeed, an important precedent will have been set, to put it mildly. This would change all the cost scenarios mentioned.

Reservations toward GNEP aren’t limited to cost, of course. Matthew Bunn’s testimony focused more on the proliferation implications of reprocessing. He suggested that directly storing spent reactor fuel poses far lower proliferation risks than reprocessing it.

This makes me wonder two things. First, does all public policy advice come from Massachusetts? And second, has anyone considered DUPIC, which could prove to be an excellent alternative to the fast burner reactors currently envisioned under GNEP? Unlike the GNEP’s high capacity fast burner, CANDU operating costs are well known. Some might even argue that they are relatively low. As a ratepayer and consumer of CANDU power, I can personally vouch for that.

DUPIC is a direct solution to spent fuel pile-up at reactor sites. Its own spent fuel could go into a permanent repository (after a cooling period: the heat load would be higher than that of spent fuel from light water reactors). And because it doesn’t involve UREX + or pyroprocessing or any of the separation entailed in other GNEP reprocessing alternatives, wouldn’t it pose the same level of proliferation risk as Yucca Mountain? As Matthew Bunn points out, if this were the only proliferation risk facing the world, we should all celebrate.

2007-11-11T13:40:00.000-05:00

Honda’s new ultra low emission Accord: how to build credibility
I’m watching the Sunday U.S. political talk shows. I notice a Honda ad, plugging the “ultra low emission Accord.” You know that whoever advertises on these shows wants to curry favour among those-in-the-know. Go to honda.com, the ad says.

So I go to honda.com. This is about ten seconds after watching the ad. There’s nothing, repeat nothing, on the site about an ultra low emission Accord, or any other ultra low emission vehicle.

Way to build credibility among critical stakeholders, Honda. Who was it who said “half my advertising money is wasted but I don’t know which half”? After today’s howler, I hope someone at Honda knows which half.

2007-11-09T07:31:00.000-05:00

Ontario power rate debate: what should the rate increase pay for?
Ontario’s regulated power generator, OPG, has asked the provincial regulator for permission to increase rates by 14 percent. OPG says it needs to raise money to build new nuclear and hydro facilities. It appears that green groups, or at least those who talked to the Toronto Star’s Ian Urquhart the other day, approve of the rate hike.

This is a bit of a switch. Have the greens accepted nuclear’s predominant role in our energy mix? Either they missed the part about the proposed rate hike paying for new nukes or they’re finally prepared to admit that conservation and renewables cannot play a significant role in our power system.

I have no problem with a utility raising rates to cover costs and maintain reasonable return on investment. I have been calling for new nuclear plants, and this is at least part of the way we’ll pay for them. I also suggested a way to make this palatable to electricity consumers, by rewording the Debt Retirement Charge portion of the bi-monthly power bill (see article).

But that’s how OPG can pay for its regulated assets (assuming Pickering 2 and 3—and the entire Pickering B station—stay regulated if and when they’re replaced with new reactors). How will the operator of OPG’s non-regulated nuclear assets, Bruce Power, raise the money to replace the reactors at Bruce B? Should government provide the same kind of financial assistance—loan guarantees, construction delay insurance, tax credits on zero-emission power production—that the U.S. EPAct does? To me that’s not a bad idea. Ontarians and Canadians have indicated they approve of money being spent to reduce emissions, and nuclear has a proven track record of doing that on a grand scale (see article).

And with the greens’ uncharacteristic mildness on OPG’s overt nuclear-related rate hike, maybe this is not as much of a political non-starter as it seems at first blush.

2007-11-01T12:11:00.000-04:00

Ontario’s new power plan: somebody wants to know what somebody else thinks
The Ontario Energy Board wants to know what you think of the Ontario Power Authority’s Integrated Power System Plan (IPSP). And the Ontario Power Authority (OPA) wants to know if you think the IPSP reflects the government’s wish to reduce peak electricity demand, increase the contribution of renewables, and cap nuclear capacity.

The reason this all sounds convoluted is because it is. But it really comes down to whether Ontario can—or should—replace coal-fired power generation without increasing nuclear generation.

And so begins a new version of the debate that has raged since before the McGuinty Liberals came to power in 2003. What role can conservation and renewables play in picking up after coal’s departure? In my most recent appearance on The Agenda with Steve Paikin, I said that their role is way overblown.

The advent of smart meters will prove me right. Smart meters won’t reduce our overall energy use. If they bring about the desired change in Ontarians’ electricity demand patterns—i.e., if electricity consumers, en masse, shift their current peak use to off-peak periods—the effect will merely be to flatten the provincial load curve. If peak demand drops, baseload demand must rise.

That won’t happen if there is not enough baseload. And there won’t be enough baseload without nuclear. Nuclear is essential if smart meters are to play any role in reducing our peak demand.

2007-10-30T14:40:00.000-04:00

Nuclear politics in America: the difference between blueprint and rhetoric
Every time a Republican wins the presidency, people in the centre and on the left fear that his words during the primaries were the blueprint for the actions he will take as president. They forget that a presidential campaign has two components: the primaries and the general election. Each component has its critical constituencies, and the successful candidate is the one who reaches them. Social conservatives are seen as the Republicans’ constituency during the primaries. Naturally, Republican candidates take extra care to talk the right talk when they’re courting social conservatives.

Well, it’s the same with the Democrats. Except their critical primary constituents are social liberals.

The issue of nuclear power has until recently been spit along partisan lines, with Republicans generally supporting it and Democrats generally opposing it. But with climate change showing some longevity as a public issue, that partisan divide has become a bit blurry (see article)—except in the left wing of the Democratic party. It is this constituency that Democratic presidential candidates must win over in order to grab the nomination next year.

I mentioned last week that all of the major Democratic candidates oppose Yucca Mountain. This includes Hilary Clinton, who, when she’s not appeasing the left wing, actually has solid mainstream views on nuclear power. But she is as good at partisan rhetoric as anybody else.

If Hilary wins, what will U.S. nuclear policy look like? Will Yucca Mountain’s supporters lose their DOE champions when she appoints their successors? I’m not sure Mrs. Clinton’s words in the primaries should be our guide in making predictions on this. She’s smart enough to know that nuclear power is a sine qua non of any meaningful action on climate change.

2007-10-23T10:36:00.000-04:00

Nuclear power goes presidential: what’s GNEP’s future?
Every major Democratic presidential candidate opposes the Yucca Mountain nuclear waste repository. We’ll hear all about it soon: a senate hearing on the issue is scheduled for October 31.

This is just a high-profile manifestation of a situation that has the U.S. nuclear industry a bit nervous these days. The nuclear renaissance, proclaimed as a done deal by Energy Secretary Samuel Bodman and Nuclear Regulatory Commission chairman Dale Klein earlier this month, is suddenly looking iffy.

Funding for the Global Nuclear Energy Partnership (GNEP) took a hit in a House appropriations committee bill last June. Two of the industry’s strongest congressional supporters—Senator Pete Domenici and Rep. David Hobson—have announced they are retiring. The 2008 election prospects generally don’t look good for congressional Republicans, who have traditionally supported the atom. In sixteen months, George Bush, the industry’s staunchest presidential champion since the 1970s, will no longer be president. His successor could well be one of the anti-Yucca Democrats.

Meanwhile, spent fuel waste piles up at U.S. reactor sites, to the point where utilities are suing the Department of Energy for not having a permanent repository available. DOE is set to re-apply for the Yucca Mountain license; this will surely come up at the October 31 senate hearing.

Will this jeopardize any of the reactor life extension applications going to the Nuclear Regulatory Commission? It’s scary to think that it could.

But there’s always climate change. Democrats could find a way to support nuclear if they were made aware of the sheer size of the emission reductions that are possible when nuclear plays a significant role in the power generation sector. As I have pointed out in this blog, Ontario is the most dramatic current example of this. Power sector emissions in this province were 15 million tonnes lower in 2006 than in 2003 (see article).

Other power systems could and should follow our example.

2007-10-17T16:04:00.001-04:00

Harper disrespects Kyoto, but calls for emission reductions and carbon trading
It looks like wherever the Kyoto Treaty is in public opinion, the prime minister puts it well down on his list of political priorities.

And where is it in public opinion? Today, I counted 98 individual newspaper articles containing “throne speech” and “Kyoto.” Looks impressive, but it’s not. Harper’s alleged abandonment of the Kyoto Treaty—which is how yesterday’s Throne Speech acknowledgement that Canada cannot meet Kyoto targets is being generally spun—is not news. Everyone in Canada, including everyone in Quebec, knows Harper has never cared much for the Treaty.

In spite of this, Kyotophilic Quebeckers handed Harper the Kyotophobe some major encouragement—and Stéphane Dion the arch-Kyotophile some major discouragement—in last month’s by-elections. Kyoto is important, but not that important. Most people know the difference between paying lip service to the treaty and actually reducing emissions. Harper didn’t say he wouldn’t cut emissions. So as long as he makes gestures toward reducing them, that’s good enough.

Dion knows this, which is why he will support the Throne Speech.

2007-10-10T10:43:00.000-04:00

Coal-fired generator, ratepayers on hook for billions to cut pollution in Ohio: are greenhouse gases next?
American Electric Power (AEP), one of the biggest power generators in the U.S., recently settled a lawsuit that alleged it violated clean air laws. AEP agreed to pay over $6 billion to install pollution control devices at 16 of its coal-fired plants. Five of the plants are in Ohio, a regulated state, which means the cost of upgrades to those plants will be borne by ratepayers.

What will happen with Ontario’s coal plants? If the McGuinty Liberals win today’s election, their plan is to phase out coal by 2014. Should anybody copy the action against AEP and sue Ontario Power Generation, the company that owns the coal plants, what will the government do? My guess is they will install control devices. Currently, only six of the 15 individual generating units in Ontario are equipped with any kind of pollution controls. Installing controls on all or most of the remaining units would cost billions, but would keep coal available as part of our generation mix.

It comes down to a choice between natural gas and coal. Pollution emissions from “scrubbed” coal are on a par with those from natural gas. Which means cost and grid availability ought to be the main decision criteria.

But as I have mentioned elsewhere (see article), bona fide air pollution, i.e., nitrogen and sulphur, is not the only problem facing coal-based generators. Most coal exhaust is carbon dioxide (CO2), the principal greenhouse gas (GHG). If a public nuisance action against a U.S. coal generator succeeds, on the basis of CO2’s role in climate change, the financial implications could be staggering.

This is why there will be a nuclear renaissance in the U.S. Probably in Canada too.

Watch ratepayer activism in Ohio. If there’s not much fuss over the hikes associated with the new pollution controls on AEP’s generators, that could be the way to finance nuclear plants in regulated areas.

2007-10-04T13:44:00.000-04:00

Koreas reach nuclear deal: major implications for Canada’s role in GNEP
South Korea has achieved a stunning breakthrough in nuclear negotiations with the North. This agreement, assuming it holds, may free the South to commercialize technologies that recycle spent nuclear fuel. Prominent among these is DUPIC, which uses CANDU reactors to burn spent fuel from light water reactors. DUPIC is a joint effort between Atomic Energy Canada Limited and the Korean Atomic Energy Research Institute.

A deal with the North has been a prerequisite for the U.S. Department of Energy (DOE) to accept South Korea’s use of DUPIC under the Global Nuclear Energy Partnership (GNEP). If the deal holds, South Korea will become DUPIC’s proving ground: though the South has four CANDUs, its nuclear fleet is dominated by light water.

Successful DUPIC demonstrations in South Korea would hugely increase CANDU’s attractiveness around the world. Rather than competing with light water technology in the once-through-fuel-cycle world—and constantly coming out on the losing end—CANDU with DUPIC could play an integral role in the worldwide nuclear renaissance.

But the deal with the North has to hold.

2007-10-03T09:01:00.000-04:00

Electricity or gas: what’s cleaner?
Back in May, I talked about the environmental advantages of electricity over natural gas for space heating. Most people think electricity is the last fuel you should use to heat your home. In provinces like Alberta, Saskatchewan, Nova Scotia, and New Brunswick, they’re right: you’d be better off using natural gas. But electricity in Newfoundland-Labrador, British Columbia, Manitoba, and especially Quebec, is as much as 25 times as clean as natural gas.

In Ontario, my home province, we’re right at the point where electricity from our power system is as clean as natural gas in terms of emissions per British Thermal Unit. If Ontario adds more low- or non-emitting generation to the system, then electricity would be much cleaner than gas. And that’s on the basis of average annual system emission intensity. An electric furnace, running in Ontario only during off-peak hours (and powered with batteries during peak hours), would have a far lower environmental impact than even the highest-efficiency gas model.

There’s a lot of talk these days about whether—and if so how—Canada can make the transition to a low-carbon energy economy. We can, and it depends on electricity. As I have illustrated elsewhere (see article), an electric furnace is easier on the environment than an equivalent gas-powered model depending on which province you get your electricity from.

Energy policy should, therefore, be to encourage low- or non-emitting generation and encourage greater uptake of electric powered equipment.

Is that what’s happening? In the current Ontario election campaign, the two biggest political parties say they will at least maintain nuclear generation in its present proportion. Since the emission intensity of a power system is what determines the environmental friendliness of electric-powered equipment, I’d say this is a good start.

2007-09-26T10:16:00.000-04:00

How to pay for new nuclear plants in North America
Over the past year I have suggested emitting jurisdictions become involved in cap-and-trade systems. Even though the European Emission Trading Scheme, or ETS, is deeply flawed and in desperate need of stronger support from the member countries that tout it (see article), I recommended becoming involved in cap-and-trade as a way of easing into a world where carbon and pollution emissions cost something.

The aim is to encourage a shift from emitting to non-emitting electricity by making the costs of running new coal- and gas-fired power generating plants less competitive compared with the costs of building plants that don’t emit anything. i.e., nuclear plants.

We should still look at cap-and-trade, but let’s not fool ourselves into thinking higher power costs will encourage electricity consumers to use less. They won’t, any more than ridiculous gasoline prices in Europe have encouraged Europeans to drive less.
Rather, we should use the proceeds of carbon sales to pay for non-emitting power plants.

But however we proceed, it is unavoidable that some government, somewhere, is going to have to impose a cap on emissions. Caps in regulated areas mean regulated utilities should be able to finance the cost of building a new nuclear plant at least partly by increasing rates.

Emission caps in deregulated systems would be a bit trickier, but perhaps the operators of deregulated systems could apply the costs evenly across all types of generation in order to achieve a system-wide emission intensity of so many grams per kilowatt-hour. That cost would be a permanent component of the market price of power.

This of course would require a sales job. An integral part of this would be framing the cost increase properly. In Ontario, power consumers are still paying for our most recent nuclear plant, Darlington. This appears as the “Debt Retirement Charge” on every consumer’s power bill. This label appears to have been deliberately designed to antagonize tax-hating conservatives and anti-nuclear greens. Change it to “Climate Change Contribution,” and everybody would calm down.

2007-09-20T08:18:00.000-04:00

Enviros sue Canadian government over Kyoto: climate change electoral test is on
As I predicted last week, green activists decided to take legal action against the federal government on climate change. Ontario is in the middle of an election campaign, and the issues of energy, especially electricity, keep popping up. The incumbent Liberals are taking some heat for failing to keep their 2003 promise to close the provincial coal plants by 2007.

The original reason for the promise was that coal is dirtying up our air. But recently, closing coal has been touted as a pro-Kyoto move. So—how prominently will yesterday’s legal action against the federal government figure in the rest of the Ontario campaign?

Watch or listen to the provincial leaders debate tonight and find out. Steve Paikin will moderate the debate. He’s very familiar with the coal/electricity issue, and will surely bring it up. Will any of the party leaders invoke Kyoto in their response?

Also watch the debate de-brief on The Agenda with Steve Paikin at eight p.m.

2007-09-12T13:20:00.000-04:00

Nuclear cooperation and Canadian energy policy: Harper’s complicated decision tree
A couple of Canadian newspapers are on the prime minister for being coy about the prospects of Canada joining the Global Nuclear Energy Partnership (GNEP). They’re trying to pin him down on how Canada will deal with radioactive waste, i.e., whether we would import it or not. Harper is too smart to answer right now. Any positive statement at this point would send nationalists and greens alike into a frothy paroxysm.

Plus, there’s a whole lot of negotiating going on about Canada’s role in the GNEP. Canada has major potential clout in nuclear matters, but realizing this potential means thinking through some pretty complex issues.

Laying out the terms of Canada’s involvement in the GNEP won’t be easy. This decision depends on a number of investment scenarios, which have major bearing on Canadian industry, security, energy, and environment policy. The successive decision points in these scenarios beget further branches in the decision-tree. Following them illustrates how complicated it can get. In one scenario, the power reactor fleet in this country remains based on heavy water. Because CANDUs use natural unenriched uranium, Canada could be a net contributor of fuel to the system, in the form of plutonium in spent fuel.

Sounds straightforward, but it gets complicated depending on subsequent decisions. If we decide to allow spent fuel reprocessing (or recycling, or re-use) in this country, then Canada could also be a major recipient of spent fuel waste. And the implications of this activity would in turn depend on how we re-use spent fuel. Would it be in fast burner reactors, or advanced CANDUs via the DUPIC process (the proximity of which to technical and commercial viability has yet further bearing on Canada’s decision)?

And what if a Canadian utility decides to go with light water technology? That utility would have to import enriched uranium (not difficult; that’s the commercial front end of the GNEP). The advantage would be that it is viable now, since a third-generation light water reactor does exist—as opposed to the third-generation CANDU, which is still in development. Another advantage would be that the utility would be part of an emerging international supply chain of standardized reactor components, a critical consideration in terms of construction timelines.

Also, a light water decision would of course have an impact on the federal government’s plans for AECL.

And remember that each decision point is fraught with political danger. Never mind that recycling spent fuel turns a dangerous waste product into huge amounts of useful energy. You just have to mention “spent fuel waste” and imagine the headlines.

Whether or not to join the GNEP is, arguably, the most important decision on energy and security policy Canada has had to take in decades. No wonder Harper is being non-committal.

2007-09-08T18:35:00.000-04:00

Kyoto faces its first major electoral test in Canada
On June 27 I said Kyoto’s traction—or lack of traction—as a public issue in Canada might finally be proven by an electoral test. This was because Bill C-288 (a private members bill sponsored by Pablo Rodriguez, a.k.a. P-Rod) had received royal assent on June 22. P-Rod’s bill calls for the federal government to come up with a plan to implement the Kyoto Treaty within 60 days, and to develop regulations by mid-October.

That is, the regulations are to have been developed around a week after Ontario’s provincial election.

Saturday’s Toronto Star carried an article citing recent polls that suggest the environment, “driven by climate change,” may be the number one issue in Ontario’s election campaign. “It’s a potent issue that political parties ignore at their peril,” says Environmental Defence’s Rick Smith.

Hold on, Rick. The Star article also points out that, according to the smart guys who run and interpret the polls, the three major parties can pretty much get by by paying lip service to the environment. Unless somebody screws up big time, some other factor will decide the October 10 outcome.

Maybe there’s another way to read this. P-Rod’s 60 days came and went in late August without much media fuss. If the federal Conservatives have developed the required plan, they’re keeping it secret. In fact, it looks like they’re thinking hard about joining the Asia-Pacific Partnership for Clean Development and Climate, an alternative to Kyoto. This might suggest the environment is actually lower on the agenda than all the experts think.

Oddly, the Star article didn’t mention anything about the feds missing P-Rod’s deadline. Why should it, you may ask—it’s about Ontario not federal politics. Well, for one thing the Star’s editorial leanings are not toward the federal Conservatives. The Star ordinarily pounces on any Conservative mis-step, real or perceived, no matter how minor. Besides, the McGuinty Liberals keep talking about closing the province’s coal-fired generating plants as their contribution to meeting Ontario’s Kyoto targets. So Kyoto is a provincial issue.

Which means either the greens, who scoff at the Asia-Pacific Partnership, have decided to forego a juicy opportunity to force the Ontario parties into a commitment on climate change by attacking the federal government—or they’re planning something. If it’s the first alternative, maybe they’re catching the dreadful feeling that the environment isn’t all that big after all. But I bet it’s the second. The greens won’t willingly slide away into irrelevance.

Like I said, this will be an interesting fall.

2007-09-06T15:49:00.000-04:00

The Asia-Pacific Partnership and GNEP, versus Kyoto and the NPT
I mentioned on May 24 that climate change and nuclear weapons proliferation are the two biggest dangers facing humanity. The Kyoto Treaty addresses climate change, but several of the biggest emitting countries, including the U.S., have refused to sign it. This, together with the fact that some of Kyoto’s strongest adherents cannot establish economy-friendly mechanisms for reducing greenhouse gas (GHG) emissions, renders the Treaty all but unworkable.

Keeping this in mind, which international framework stands the better chance of producing significant emission reductions: Kyoto or the Asia-Pacific Partnership for Clean Development and Climate? The latter includes the U.S., India, and China, which all stayed out of Kyoto. It is significant that these countries also support expansion of civilian nuclear power as a major technological solution to climate change.

India’s pro-nuclear position, and its inclusion in the Asia-Pacific Partnership (though it continues to be denied entry to APEC), raises concerns regarding the other danger I mentioned: nuclear weapons proliferation. Until recently, India was on Uncle Sam’s list of nuclear delinquents, because of its bomb test in 1974 and refusal to sign the Non-Proliferation Treaty (NPT).

But September 11, the nuclear crisis between India and Pakistan in 2002 (the diplomatic resolution of which was brokered by the Bush administration), and the advent of bigger proliferation problems than India—i.e., Iran, North Korea, and, of course, Pakistan—spurred a reality-based rethink of U.S. India policy. The subsequent diplomatic reversal made it palatable for the U.S. to enter into last month’s commercial nuclear fuel agreement with India.

However, this agreement was made in spite of the fact that India has rejected, and probably will continue to reject, the NPT. Though others are troubled by this, Bush & co. have apparently decided India could do far worse than stay out of an arrangement that isn’t working anyway.

Where does that leave current anti-proliferation efforts? The other day, I mentioned the dual promise of the GNEP: to boost civilian nuclear power generation—and displace fossil fuels on a grand scale—while safeguarding the commercial nuclear fuel market against weapons proliferation. (“Promise” is the operative word; not everyone agrees the GNEP would work as intended.) The GNEP is in lockstep with the spirit of the Asia-Pacific Partnership. How do the GNEP’s requirements regarding international inspection differ from those under the NPT? If there’s little or no difference, we could be seeing the beginning of a new international approach to non-proliferation.

What is Canada’s position on all this? We’re thinking about joining the GNEP, and that’s a good thing (see article). We’ve also been thinking about joining the Asia-Pacific Partnership. Not surprisingly, this hasn’t gone down too well with the pro-Kyoto, anti-nuke crowd. The knives have come out quickly. Canada’s point man on nuclear power, Natural Resources Minister Gary Lunn, has already had to correct media reports that say Canada would be “forced” to accept imports of nuclear waste.

This is a leadership opportunity. Canada could and should use its role as an energy superpower as a lever to achieve a stronger non-proliferation regime.

2007-09-04T08:20:00.000-04:00

How Canada can punch above its weight in energy
Canada has been called an energy superpower, largely because of the massive petroleum reserves entrained in the Alberta oil sands. But this country is also a major player in the international nuclear industry. Canada is the world’s largest uranium producing country, and a Canadian company, Cameco (formerly the government-owned Eldorado Nuclear), is the world’s leading individual uranium producer.

Most of the major activities in the nuclear fuel cycle—mining, refining, fuel fabrication, power generation, and spent-fuel storage—occur in several provinces in Canada. Canada does not enrich uranium, as the country’s domestic nuclear power generation technology—CANDU, for Canadian deuterium uranium—uses natural unenriched fuel. Canada exports uranium fuel to other countries that use CANDUs, and it manufactures and exports uranium hexafluoride for enrichment, primarily to the United States. In accordance with the terms of various international treaties, Canada’s uranium exports are for peaceful purposes only.

The end of the fuel cycle—sequestration of spent fuel—is the subject of some controversy. Spent fuel in Canada is stored at reactor sites, as it is at every power reactor site in the U.S. The Nuclear Waste Management Organization, or NWMO, recently recommended burying it 500 to 1,000 meters deep in the Canadian shield, and mentioned several locations in Canada that may be suitable. A final decision could be years away.

A major concern about deep geologic storage is that, as more nuclear plants enter service in Canada and around the world, the amount of highly radioactive waste will outgrow the available storage space. Enter the Global Nuclear Energy Partnership (GNEP), a U.S. scheme in which only several countries would enrich uranium, then lease it to countries for use in moderated reactors. Spent fuel would be returned to the countries that enrich uranium. These countries would then extract the uranium and plutonium from spent fuel and burn them in special reactors that generate electricity while destroying their more dangerous components. Canada is considering participating in the GNEP.

Canada’s role in the scheme would depend heavily on decisions, yet to be taken, regarding near- and long-term power generation investment in several Canadian provinces. Should the bulk of Canada’s nuclear power fleet remain based on CANDU technology, there would be no need to “lease” enriched uranium from Tier 1 countries. Canada would in that case be a net contributor of fuel—in the form of natural uranium for CANDU reactors abroad, and, possibly, uranium- and plutonium-laden spent fuel—to the GNEP system. But would we build burner reactors? Would we receive spent fuel from countries using CANDU technology?

The GNEP addresses concerns related to both spent fuel and weapons proliferation. For this reason, I’m glad Canada is at least looking at it.

2007-08-29T09:23:00.000-04:00

Electricity as an Ontario election issue: what is reality?
Readers of this blog may have noticed my disdain for the mainstream environmental movement’s take on electricity investment in Canada. I think the greens are a bunch of Luddite misanthropists (see article). They either don’t understand basic things about modern electricity systems, or they do understand them and advocate policies that are harmful nevertheless. Either way, I don’t want them advising governments.

But they are advising governments. I have to admit, my disdain is tinged with jealousy. The greens have successfully framed the environmental debate as a David versus Goliath story, with themselves as David. They have managed to get professional bureaucracies in both Toronto and Ottawa to come round to their put-on-a-sweater-and-turn-down-the-thermostat prescription for saving the planet.

Worse, they are the go-to people when the major media vehicles need “the other side of the story” on an energy or environment piece. This is a real achievement, given the fundamental weakness and impracticality of their arguments.

Like I said, my jealousy at their success turns me greener than the three main parties in the Ontario election campaign purport to be. But I’ll try to rise above this, and look for an objective explanation of their success.

The greens are poor, and rely on federal and provincial funding. Or at least that’s what they want their media interlocutors to think. So if they’re poor, then they must be committed idealists, intrepid seekers after truth. Therefore their arguments deserve as much play as those of their opponents, who are acknowledged industry spokespeople. Politics is about who gets what, especially in a democracy. So is reporting about politics.

But there are times when fairness isn’t fair. Al Gore points out that climate skeptics get as much media play as pro-Kyoto scientists. Is this fair? No, say Gore and his supporters. The Kyotophiles have science on their side. The Kyotophobes are just a bunch of shills, bought and paid for by companies in industries threatened by Kyoto implementation. The media should know the difference.

I’m wondering if it’s the same with the Ontario electricity debate. It should be obvious by now that conservation and renewables—the greens’ answer to coal- and nuclear-generated power—cannot cover more than a minuscule amount of our power requirements. It should be obvious that anybody who says they can play a bigger-than-minuscule role is either not telling the truth or doesn’t know what he or she is talking about. Given this, at what point do we stop listening to them?

Whatever that point is, I think it will be soon. David-v-Goliath is archetypal and powerful, but it’s wearing thin. But if it continues to prevail, there are options for the pro–status quo. One of the supposedly poor green groups, the Ontario Clean Air Alliance, is backed with natural gas money. The actors playing David and Goliath could switch roles. Or the one playing David could be touched with scandal.

2007-08-17T09:26:00.000-04:00

Prentice goes to Industry: major nuclear initiative in the offing?
Does anyone remember May 2005, when Paul Martin promised $538 million to Dalton McGuinty to help defray the costs of closing Ontario’s coal plants? And that the Harper Conservatives told McGuinty they would honour Martin’s promise? Nobody ever mentions it. I wonder if anybody does remember.

When the Ontario Liberal government introduced, in June, the regulation that requires the closures of the Nanticoke, Lambton, Thunder Bay, and Atikokan coal-fired power generating plants by 2014, they didn’t mention the $538 million. This is a bit surprising, in light of the fact that (1) they are politically correct provincial Liberals in a perpetual fiscal squabble with politically incorrect federal Conservatives, and (2) they have taken it on the chin from the environmental lobby for failing to phase out coal by 2007, as they promised before, during, and after the 2003 election they would do.

Few, if anyone, noticed this little anomaly. But the Ontario Liberals’ silence on the promised half-billion speaks volumes. It means the federal money may still be on the table.

But for what?

Everybody knows the feds want to sell Atomic Energy of Canada Limited (AECL), the makers of Canada’s flagship heavy water power reactors. But they want to jack up AECL’s value first, by setting it up with a major sale.

Everybody also knows that the provincially owned Ontario Power Generation (OPG) is waiting for the government’s go-ahead to replace Pickering units 2 and 3, which will be decommissioned, with new reactors.

Will OPG (read: the Ontario government) choose AECL’s latest CANDU design or a competitor’s light water model to replace Pickering 2 and 3?

And what will the federal Conservatives do to steer Ontario in the CANDU direction, other than admonish them through the media?

You might wonder why I mentioned Jim Prentice, Harper’s sure-footed new Industry minister, in the headline. Prentice is from oil- and gas-rich Alberta, Canada’s biggest engine of wealth and greenhouse gases. His new duputy, Richard Dicerni, is a former OPG man. One of his last decisions at OPG was to decommission Pickering 2 and 3.

Could the Conservatives be planning an industrial-strategy approach to solving their environmental and fiscal balance problems? It’s been a while since Canada had a coherent industrial strategy. If this is in the works, good move.

I sense a shift in the nuclear order of things.

2007-08-15T22:21:00.000-04:00

Ontario launches another legal complaint against U.S. utilities: a public nuisance?
Last Thursday, the government of Ontario filed comments to the U.S. Environmental Protection Agency (EPA) regarding proposed changes that would relax rules governing emissions from U.S. coal-fired electricity generating plants. The provincial Liberals say, as they have said all along, that emissions from U.S. coal plants drift into Ontario, harming the province’s citizens and economy.

Never mind that, like its previous complaints, Ontario’s most recent go-round repeats the spurious claim (see article) that coal emissions kill thousands of Ontarians each year. And set aside also the fact that Ontario’s premier refused, at last week’s conference in Moncton, to consider tailpipe emission standards—even though Ontario motor vehicles are by far a bigger source of more dangerous pollutants than U.S. or Ontario coal plants. He’s worried about coal plants hundreds of kilometers from Toronto but doesn’t care about the hundreds of thousands of cars emitting carbon monoxide literally meters from where humans inhale it?

Regardless of its flimsy and hypocritical basis, Ontario’s complaint will attain instant credibility if and when a public nuisance lawsuit against a U.S. greenhouse gas emitter is successful. So far, the public nuisance lawsuits against coal-based U.S. utilities have failed. But the cumulative effect of the actions will be to entrench in judges’ minds the quantity of emissions coming out of the stacks. Emissions consist almost entirely of carbon dioxide (CO2). Though it is toxicologically innocuous, CO2 is also the principal man-made greenhouse gas. It belches out of smokestacks in quantities measured in the millions of tonnes. Environmentalists have, successfully, lobbied to classify CO2 as a pollutant. This makes it perfectly legitimate for them to say there are millions of tonnes of pollution coming out of the stacks of coal-fired power plants.

When a public nuisance action succeeds, there will be major implications for the power generation industry. Most utilities know this, and are scrambling to develop responses in advance.

They should look at Ontario. Ontario’s stunning success in reducing emissions from coal-fired power plants—15 million tonnes less in 2006 than in 2003—is the best example of how to deliver utility-scale power without emissions. It was achieved by displacing coal-generated baseload power with nuclear power. The atom is our way forward.

2007-08-11T13:50:00.000-04:00

Provincial premiers play platitude politics on the environment
Ontario premier Dalton McGuinty, at the Council of the Federation meeting in Moncton this week, missed another opportunity to claim credit for Canada’s biggest emission reduction in recent memory. Apparently feeling safer talking about closing Ontario’s coal plants by 2014 (seven years from now) as that province’s contribution to addressing climate change, McGuinty decided not to mention the biggest story on the climate change front, and one that has vaulted Ontario way into the lead on the file: that Ontario’s power sector greenhouse gas (GHG) emissions were 15 million tonnes less in 2006 than they were in 2003.

To his credit, though, Ontario’s premier did call for a cap-and-trade system. Hopefully he knows that his province’s 15 million tonne reduction would be worth $225 million if carbon were $15 a tonne.

Alberta premier Ed Stelmach opposes the trading system. He should rethink his position. If the system were credible, it would allow forward purchasing of carbon credits. An Alberta consortium could use this revenue to finance a plant that uses nuclear heat to both generate power and steam bitumen out of the oil sands. If the consortium includes an oil sands operator, then nobody loses.

The Ontario example proves that nuclear is the only viable technology capable of reducing fossil emissions on a grand scale. More Canadian provinces need to look at it. Especially Alberta.

2007-08-06T12:06:00.000-04:00

Energize, don’t minimize: Africa needs more not less electricity
David Suzuki, on CBC’s radio program Climate Currents told of how satellite photos of our planet at nighttime show North America lit up while Africa remains pitch black.

Suzuki’s fashionably misanthropic sentiments, typical of an affluent political yokel, leave him only one way to interpret this. North Americans and western Europeans are energy guzzlers, Africans are not. What’s his solution? Should Africans renounce electricity and stay the way they are?

There is another way to interpret the satellite photos. Africa at nighttime looks dark from outer space because Africa does not yet have a ubiquitous continental electricity grid capable of illuminating its towns and cities. The lack of a reliable power grid is not because Africans are morally averse to “wasting energy”; it’s because they don’t have either the money or the political stability to build one.

If he were to look at similar satellite photos from the early 1960s, Suzuki would notice the same darkness over India and China. Today these countries would probably appear grey, indicating their increasing electrification and the concomitant increasing quality of life.

Is the brightening over India and China good or bad? We should stop listening to people who think it’s bad and start thinking about how to fully electrify the poor parts of the world.

As I have emphasized on this blog, the only way to do this on a large scale without increasing fossil fuel consumption is by using nuclear energy. The atom is the means by which Africans, Indians, and Chinese can bypass the fossil fuel phase of electrification and vault directly into the post-industrial age.

And we rich energy hogs in North America and western Europe can help make this happen by sponsoring more nuclear projects in the developing world. But first we have to make it financially worth while for western companies to get involved in nuclear development projects.

We can do this by making nuclear projects eligible for international carbon credits. Put the atom back into the Clean Development Mechanism, which is the principal arrangement through which Kyoto signatory countries can finance carbon-reduction projects in developing countries.

Today is August 6, 2007. Sixty-two years ago today two pounds of enriched uranium destroyed the Japanese city of Hiroshima. Hiroshima is a yearly reminder of the paramount importance of nuclear weapons non-proliferation efforts. The Global Nuclear Energy Partnership—a U.S.-led plan to recycle spent fuel and plutonium from nuclear power plants while controlling the manufacture of enriched uranium and plutonium—could strengthen the non-proliferation regime while facilitating the spread of clean power generation to the developing world.

We should solve this problem soon, so that the brightening over India, China, and hopefully Africa is due to non–fossil fueled power generation.

2007-07-29T15:41:00.000-04:00

Rate debate: will Ontario re-regulate electricity?
Last week, CIBC World Markets predicted that closing Ontario’s coal plants would result in electricity price hikes of 60 to 70 percent. This is based on a CIBC economist’s assumption that coal’s main replacement would be natural gas.

The assumption is correct, but only if you believe the Liberal government’s pledge that it won’t increase the proportion of nuclear power in the electricity generation mix beyond the current 50 to 55 percent. If the Liberals hold to this pledge, only gas could replace coal. And gas prices have been rising, sometimes in dramatic spikes, since 2003.

Ontarians have the electoral cycle to thank for the fact that the CIBC’s scary future is not today’s reality. A concerted effort to replace coal with gas would have been economically feasible prior to the 2003 provincial election. Up to then, the cost of generating power with gas was only slightly higher than it was with coal. Gas was touted as the best alternative to coal because of its lower combustion emissions per kilowatt-hour. Hence, deregulation of the power generation markets in some parts of the U.S. led to a dramatic expansion of gas-fired capacity. This happened concurrently with the high-tech boom; the zombie capital mentality didn’t affect only the techies.

But because of the subsequent jumps in gas prices, power prices in the deregulated Northeast are now among the highest in the continental U.S.—so high that they have become a political issue.

A similar scenario is playing out in other deregulated areas, such as Illinois and Virginia, where governments tried, a decade ago, to minimize the shock of the transition to market pricing by imposing power price caps. These came off recently, spurring rumblings among politicians about re-regulating.

And here we are in Ontario, where the government has also tried to prepare rate payers by increasing the capped retail price of power.

The re-regulation debate, if you can call it that, is beside the point. Power prices have been rising in regulated areas too. This is in large part because of the increase in gas-fired generation.

As was the case elsewhere, the interest in gas in Ontario was partly because of its lower emission intensity. But it is the system’s emission intensity that is the critical factor. As I have pointed out, Ontario’s overall system emission intensity has dropped since the Pickering and Bruce nuclear reactors began returning to service after 2003. Gas’s is roughly 550 grams per kilowatt-hour. The system’s was 302 in 2003, and 200 last year. The drop in intensity translated into emissions that were 15 million tonnes less in 2006 than in 2003.

In 1994, all 20 units in Ontario’s nuclear fleet were running at high capacity. The power system’s emission intensity was an incredible 104 grams per kilowatt hour. Power sector emissions were 15.8 million tonnes in that year—almost half what they were last year.

Ontario doesn’t need large scale gas to reduce power-sector emissions. We just need to shift more baseload generation away from coal and toward nuclear.

2007-07-22T15:24:00.000-04:00

Coal-fired power and premature death: another wave of pseudo-statistics from the natural gas lobby
Last week, the Ontario Clean Air Alliance and Toronto Environmental Alliance demanded that Ontario stop exporting coal-fired power to the U.S. Ontario Premier Dalton McGuinty “knows that the pollution from coal-fired electricity kills Ontarians,” said the TEA’s Franz Hartmann.

Hartmann’s death-by-coal claim is based on a series of reports from a few years ago, which estimated that noxious emissions from Ontario’s coal plants kill hundreds of Ontarians every year. The basis for that estimate is the astounding discovery of statistical significance between smog levels and numbers of premature deaths.

Statistical significance. Wow. It sounds so credible, unless you’ve taken an introductory course in statistics. Every elementary textbook on the subject makes plain that statistical significance equals neither causality, nor direction of influence. All it tells you is that you probably can’t argue that there is no statistical relationship between two variables.

Any first-year stats student will tell you, after his or her first run-in with SPSS, that statistical significance is a depressingly common occurrence, especially when you are dealing with large samples.

So take the death-by-coal reports with a large grain of salt.

In spite of this, death-by-coal has underpinned some pretty important electricity investment policy in this province. Natural gas distributors, drooling over the potential billion-dollar sales of their product if the government really does ban coal-fired power generation, latched onto death-by-coal as a way of guilting the province into outlawing the competition. Their principal lobby group, the astro-turf OCAA, has been harping on that theme for ten years now.

When McGuinty & co. were back in opposition, they thought that the green lobby was an untapped source of political support. So they set about winning the greens over. They promised to close the coal plants, and in their first year in government they regurgitated the OCAA’s anti-coal nonsense almost verbatim.

Then the OCAA’s strategy started to unravel. The McGuinty Liberals did what they could to support the construction of more gas-fired plants. The problem is, with natural gas prices spiking since 2003 the only profitable way to sell gas-fired power is to sell it as peaking power or blackstart capacity. Gas-fired power could never survive in the market for baseload, which means that to replace coal the government would have to either underwrite new gas plants, or guarantee the price.

Underwriting plants was a non-starter: in a supposedly de-regulated wholesale market, new gas generators would have to sink or swim. And though guaranteeing a certain price might be reasonable for intermediate or peaking power, it would be hard to justify in the case of baseload. Either way, the price of power would go up, creating a real political problem for the government. Was there an alternative to gas or coal for baseload? Of course there was: nuclear power.

The OCAA thought it had the anti-nuclear base covered, through its alliance with Greenpeace and other fanatics whose antipathy for the atom overrides their alleged concerns about climate change. But after governing for a while the Liberals realized that wiping out a quarter of an electricity system’s generating capacity in order to please a corporate lobby on one hand and a gang of Monty Python fanatics on the other isn’t responsible policy.

So, rather than shifting baseload generation to gas, the government decided to restart the Pickering unit 1 nuclear reactor. Together with concurrent restart projects involving other laid up reactors at the Pickering and Bruce plants, this would prove hugely successful—not only in keeping the lights on, but also in chopping power-sector emissions on a grand scale.

Now we have a power sector whose emissions were 15 million tonnes lower in 2006 than in 2003. Regardless, the anti-coal, anti-nuke crowd still sucks and blows. Some things never change.

2007-07-17T07:44:00.000-04:00

Nuclear opponents score quiet but huge victory
Last week I mentioned the almost laughable flimsiness of anti-nuclear arguments. I also pointed out that this weakness is largely irrelevant (or at least has been irrelevant so far). The anti-nuclear movement is alive and well, and still a powerful threat.

Witness the quiet victory for the U.S. movement back in June. The U.S. House Appropriations Committee voted to remove nuclear projects from the list of those eligible for loan guarantees under the 2005 Energy Policy Act (EPAct). As I pointed out on May 14, the so-called nuclear renaissance could be stillborn if the critical players—like prospective financiers of new build projects—aren’t assured that at the very least they won’t lose their shirts if they finance a project. The loan guarantees were written into the EPAct to provide exactly this assurance. And taken out precisely to thwart that purpose.

The White House said President Bush would veto the House bill, but that is little comfort for prospective financiers. Bush won’t even be president after next year. Who knows what his successor’s position will be. And who knows what the congress will look like after the 2008 election. So the bottom line is, the EPAct loan guarantees aren’t really guarantees.

All this points to a basic frame through which the Appropriations Committee lawmakers view the nuclear issue. Nuclear is a money hog, which sucks dollars away from wind, solar, biomass, and all the other alternative forms of energy. Politics is about who gets what. Alternative energy needs and deserves federal support; the atom doesn’t.

It seems amazing that the congressmen really see things this way. But they do. How to deal with this?

By making the case that nuclear is the only viable way to deliver massive amounts of carbon-free electricity. And proving the case.

2007-07-08T21:53:00.001-04:00

The nuclear renaissance: the way forward is through Ontario
Ontario has achieved stunning emission reductions since 2003. The chart shows that this was due almost solely to the return of the Pickering and Bruce nuclear generators that were mothballed in the mid- and late 1990s. (Click on the image to enlarge it.)

As you can see, when the Darlington nuclear units came on line in the early ’90s, coal declined. When the Pickering and Bruce nuclear unts were taken off line in the mid-’90s, coal shot up. When the Pickering and Bruce units began returning to service in 2003, coal dropped. Hydro power, the other major contributor to Ontario’s system, stayed more or less constant over the 16 year period. It is nuclear, and nothing else, that has displaced coal generation since 2003. And the emission reductions have been massive: 15 million tonnes less in 2006 than in 2003.

Anti-nuke activists don’t like to hear this. When I mentioned it on The Agenda back on March 15, the two anti-nuke people on the panel wasted no time trotting out the tired old “lifecycle” nag, claiming there are “huge” emissions associated with uranium mining. When they said this, the other pro-nuclear person, Bruce Power’s Duncan Hawthorne, rolled his eyes and shook his head. The lifecycle claim is preposterous, and the anti-nuke people know it.

Still, advocacy campaigns based on even flimsier arguments have succeeded. Greenpeace specializes in these kinds of campaigns. So nobody should assume superior argumentation will win the day.

What will win it? I’ll take this up in upcoming posts. Stay tuned.

2007-07-03T15:10:00.000-04:00

How to verify international carbon reductions: GNEP, CDM, and other acronyms
There’s been a lot of talk lately about the gaping holes in the international carbon market, and in the European scheme that has spurred it, the EU ETS. Financial writers are, rightly, pointing out that it’s difficult to verify that, say, an airline selling carbon permits isn’t selling the same tonne of carbon to multiple buyers.

Faith in this exploding new system diminishes further when you consider that it’s the United Nations that’s running it. Anybody who trusts UN verification should read up on the famous oil-for-food program.

And faith disappears altogether when you consider that nuclear energy projects are not eligible for credits under the Clean Development Mechanism (CDM), the principal arrangement through which Kyoto signatory countries can finance carbon-reduction projects in developing countries. The atom might have been eligible under the CDM, but anti-nuke activists mounted a successful campaign to remove it during the 2001 Bonn conference. The no-nuke edict puts most current CDM projects squarely into the rinky-dink column, especially when it comes to power generation. Power-starved India realizes this, which is why the Indian prime minister and U.S. president discussed the CDM soon after the G-8 summit in early June.

The sad thing is, we could have an international carbon market that does result in massive, economy-friendly emission reductions, and that is totally verifiable. That is by participating in the Global Nuclear Energy Partnership (GNEP). Strict verifiability is what underpins the GNEP. The inspectors who oversee the transfer of plutonium and/or spent uranium fuel from a moderated reactor could be the same people who verify that that reactor’s output has displaced coal-fired power.

Unlike the current free-for-all, investors could safely bank on these reductions. And the reductions would be massive. As I have pointed out (see article), Ontario’s shift from coal to nuclear reduced annual power sector carbon emissions by 15 million tonnes since 2003. If carbon were $15 per tonne, Ontario Power Generation and Bruce Power (the two nuclear operators in the province) would have earned $225 million between them.

This could spur peaceful nuclear development in countries like India and China, the latter of which added 100,000 megawatts of coal-fired generating capacity in 2006.

The atom should go back into the CDM.

2007-06-27T22:13:00.000-04:00

Federal Conservatives “forced” to live up to Kyoto: P-Rod steals home
As I predicted back in October, P-Rod, a.k.a. Pablo Rodriguez (Liberal MP from Honoré-Mercier) got his private member’s bill passed by Parliament. It requires the Canadian government to come up with a plan, within 60 days, to implement the Kyoto Treaty.

On one hand, whoop-dee-do. The bill just says the government has to come up with a plan and then introduce regulations to implement it. It doesn’t force the government to spend any money.

On the other hand there are public relations. If the Kyoto brand gains traction on the public agenda, it could be a problem for the Conservatives, especially if there’s a court challenge when they fail to comply. And it’s safe to say there will be a court challenge.

So it all boils down to public opinion. Right now it’s difficult to say how public opinion will trend. Polls on the issue are all over the place, and though Kyoto gets loud and favourable press this may not count for much given that few people know—and fewer care—what the treaty actually means.

All of which is to say, we’re in for some interesting times. The government has until mid-August to come up with a plan. The Ontario provincial election campaign will be coming to life soon after that. P-Rod requires regulations by mid-October. Ontario’s election will have taken place a week before that.

How big will clean air, climate change, nuclear power be in the Ontario campaign? And how will that drive federal actions and decisions on Kyoto? Stay tuned.

2007-06-22T08:10:00.000-04:00

Dalton and W: unlikely tag-team takes on auto emissions
It’s always encouraging when a political leader mentions the right technology during a major speech. Four months ago George Bush, the mainstream environment movement’s arch-nemesis, touted plug-in hybrids during his state of the union speech. A few days ago, Ontario premier Dalton McGuinty, in announcing a $650 million green fund, said “GM is making their hydrogen fuel-cell cars here, but let’s make plug-in electrics here, let’s make the new [electric Chevrolet] Volt here.”

I hope the premier means what he says, and that the auto industry portion of that $650 million is enough to influence at least one major automaker to seriously pursue plug-ins. Plug-in hybrids, as I and others have said (see article), are by far the most viable way to dramatically cut auto emissions.

Will it have any influence? Automakers are more likely to respond to the tough new auto efficiency rules racing through the U.S. congress than to Ontario’s fund. But the end result is what counts. Right now it looks a bit iffy: Ford Canada sounds like it hasn’t decided whether to build hybrids in Ontario, GM is still wasting valuable time and money on the hydrogen red herring (see article). But that’s precisely why politicians like McGuinty and Bush talk about these things—give the automakers a public nudge in the right direction.

Notice McGuinty didn’t say anything about the grid electricity that will recharge his plug-ins. He’s still too intimidated by the loudmouth green lobby to say that it will be nuclear fission that generates most of this clean power. But that’s another story.

2007-06-20T06:51:00.000-04:00

Emissions trading: PR fallout from Europe
Last November I speculated that the low price of carbon permits in the European emission trading scheme (ETS) was a hint that European governments were not as brave about tackling climate change as their rhetoric might suggest.

The low price was the result of over-generous allocation of emission permits to power generators. The more permits on the market, the lower the price. The allocations were based on companies’, and their home countries’, estimates of emissions in upcoming trading periods. Naturally, a company and its home country would want to highball its estimate to give it more wiggle room.

None of this should be a surprise to anybody. Starry-eyed idealists might think higher operating costs for power generators will spur some giant collective effort to find a way to make wind or solar power viable. Everyone else knows it will just jack up electricity prices. In the deregulated European power markets, no company wants to be the first to bid its product out of range. Hence the pretty obvious collusion between companies, countries, and the European Commission (which approves the national permit allocation plans).

And hence the predictable result that some of the very companies whose emissions the ETS was designed to curtail continue to turn handsome profits. The price of carbon permits was not enough to make the operating costs of Drax Power, the UK’s biggest coal-based generator, higher than those of competing gas-based generators. In these favourable conditions Drax last year sold massive amounts of power, made massive profits—and emitted massive greenhouse gases (GHGs).

This is going to continue until European governments stop protecting domestic power generators. They won’t stop doing this until the truly farcical situation in Germany is resolved. The German government, the biggest supporter of Kyoto and the ETS, is phasing out nuclear power. This leaves its coal-based generators with two alternatives for cutting emissions: gasified coal or natural gas. Both types are expensive at current prices; both emit GHGs. And natural gas has security-of-supply problems. The main supplier is Russia.

I think a better model of an emission trading scheme is the Regional Greenhouse Gas Initiative (RGGI) in the U.S. northeast. Nuclear generators can flourish under the RGGI.

2007-06-11T22:19:00.000-04:00

Punching through the cellophane: how to move nukes forward in North America
On Day 1, there is one water lily in the pond. On Day 2, there are two lilies. The number of water lilies in the pond doubles each day, as follows.

Day 3 = four lilies.
Day 4 = eight lilies.
Day 5 = sixteen lilies.
…
and so on.

If on Day 31 the pond is totally choked with water lilies, on what day was it half full?

Most people say Day 15. But that’s wrong. The pond was half full on Day 30.

The nuclear industry is half-way to breaking out of the deep freeze of the last two decades. The good news is, today is Day 30. A targeted and integrated communication effort could fill up the other half of the pond and put the industry back in black.

How? The decisive ground is Ontario. The decisive event will be the Ontario Liberal government’s approval of new nuclear build at Pickering or elsewhere. Therefore, the immediate focus must be on getting the Liberals to take that decision.

I have been beating the drum for months about the massive emission reductions that have occurred in Ontario’s power system since rehabbed nuclear reactors have returned to service. And, though Kyoto and climate change are very much in the news, nobody outside the industry has noticed. It’s time to take this message into the mainstream.

2007-06-04T13:10:00.000-04:00

Canada’s emission reductions ignored by green lobby
Canada has achieved major greenhouse gas reductions in recent years (see article). This is due almost entirely to reductions in Ontario’s power generating sector, where emissions were 15 million tonnes lower in 2006 than in 2003.

It’s depressing that nobody knows about this. Professional environmental advocates pretend the reductions didn’t take place, for two reasons. First, they are partisan to a fault, and their partisan leanings are definitely not toward the federal Conservatives. So they don’t want to give any credit to a party they don’t like. Second, they don’t like the cause of the emission reductions: nuclear power.

Hence, they never mention Ontario’s stunning reversal. Nor, for the most part, do their media interlocutors. Instead, they trot out phony scorecards like the one today from the World Wildlife Federation, which puts Canada in second-last place among greenhouse gas emitters (right behind the U.S.).

Ontario’s 15 million tonne emission reduction—by far the biggest since Canada signed Kyoto in 1997—has gotten almost no media play. Nor has anyone talked about Stephen Harper’s support for Quebec’s 700 megawatt Rupert River hydro expansion. The latter, announced last winter in the midst of the furor over the Conservative environment plan, will see Quebec wheeling massive new amounts of hydro-generated power down into New England, where it will displace coal-fired power and, possibly, earn a premium under the Regional Greenhouse Gas Initiative (RGGI).

The Ontario and Quebec electricity stories were major developments on the environment file. Both have everything to do with climate change. Nobody noticed.

This reflects a general ignorance on energy and environment, especially among the professional commentators on energy and environment issues. This is just plain inexcusable. These are the same people who lambaste the prime minister over his stance on Kyoto. The same ones who insist that Canada reduce greenhouse gas (GHG) emissions but pretend Ontario hasn’t done exactly that in a huge way.

It’s time to knock these guys off the puck.

2007-05-30T08:38:00.000-04:00

Toronto and plug-in hybrids: what the future of driving WILL look like
Congratulations to Toronto mayor David Miller for his smart decision to test the viability of plug-in hybrid cars. Exhaust from motor vehicles is Toronto’s, and just about every other city’s, primary source of air pollution and smog.

As I have argued in another article in this blog, plug-in hybrids are the most promising technological route to dramatic reductions in emissions from vehicles.

And, as I have also pointed out, plug-ins in provinces like British Columbia, Newfoundland-Labrador, Manitoba, and especially Quebec, will be extremely clean. Grid electricity in these provinces already comes with uncommonly low emissions per kilowatt-hour.

In Ontario, where the emission intensity of electricity generation is around 200 grams per kilowatt hour, cars powered with grid electricity would still be far more environment friendly than cars powered with straight gasoline or diesel.

But shifting from petroleum to electricity as the primary motive fuel in motor vehicles will require a significant expansion in generating capacity.

Governments at all levels, all across the country, need to collaborate in bringing this about. The feds need to support private investment in low- or non-emitting generating capacity. Provinces need to loosen rules that prevent this and develop new rules that encourage it. And cities have to start transforming their vehicle fleets.

On this last note, it’s great to see the mayor of Canada’s biggest city taking the first right steps to deal with auto emissions.

2007-05-27T08:11:00.000-04:00

Nuclear power halts increase in Canadian greenhouse gases
With modest fanfare, Environment Canada announced the other day that Canada’s greenhouse gases (GHGs) stopped rising between 2004 and 2005. The reason? Environment Canada tries to make it look the mild winter of 2004–2005, which meant that people burned less oil and gas for space heating, played a major role. But a hard look at the numbers shows that the real reason is because previously mothballed nuclear power generating units returned to service in Ontario’s electricity system.

When Environment Canada releases the numbers for 2006, it might even show a reduction in Canada’s GHGs: 2006 was Pickering unit 1’s first full year back on the job. This 515 megawatt unit, generating baseload power, directly displaced an equivalent amount of coal generation. Preliminary data from the Independent Electricity System Operator indicate that Ontario’s electricity GHGs were 30 million tonnes in 2006. That’s 15 million tonnes less than in 2003.

A staffer to Environment Minister John Baird told the Toronto Star that Ontario’s nuclear renaissance actually began under the Mike Harris Conservatives. Of course he didn’t point out that the stunning emission reductions have all occurred during Dalton McGuinty’s premiership.

In view of this you might think that McGuinty—who came to power promising to deal decisively with electricity emissions, and who has taken it on the chin for not closing the coal plants—would blow his own horn over this. After all, Ontario’s 15 million tonne reduction is, by far, the biggest since Canada signed Kyoto. But McGuinty has shown a baffling reluctance to either acknowledge the emission reductions or to attribute them to his own decision to restart Pickering unit 1.

Is this a case of McGuinty being too afraid of the green lobbyists, who are all anti-nuclear? Or do his advisers just not know how to spin it? Either way, he’d better start taking credit for Canada’s biggest emission reduction. He’s being out-spun, right in his own backyard, by the federal Conservatives.

2007-05-24T08:40:00.000-04:00

America, climate change, and the world: misplaced rancor over Bush’s refusal to play in the Kyoto sandbox
Germany’s greenhouse gas (GHG) emissions have gone up over the past few years, in spite of its full support of the Kyoto Treaty and participation in the European Emission Trading Scheme (ETS). It demands that America, the world’s largest consumer of fossil fuels and largest emitter of GHGs, join Kyoto.

And yet Germany opposes nuclear power. Nuclear, as I have argued in this blog, is by far the best way to provide utility scale emission-free electricity.

America, on the other hand, supports civilian nuclear power. Moreover, it has proposed a roadmap for recycling nuclear fuel (the Global Nuclear Energy Partnership, or GNEP). If successful, the GNEP would extend the usefulness of nuclear fuel while strengthening global efforts against weapons proliferation.

Kyoto’s aims are admirable. However, its adherents have allowed it to degenerate into a politically correct pissing match, where lip service has become more important than actual emission reductions. Germany’s pious anti-nuclear position is a perfect example of this.

Insisting that the entire western world move in lock-step on climate change, while opposing the most promising emission-reduction technology, is simply unrealistic. Bush, for all his faults, is at least demonstrating sound leadership in resisting inane conformity. Canada doesn’t need to outright refuse Kyoto as Bush has done. But we should borrow some of his measures to expand civilian nuclear power (see article).

Nuclear weapons proliferation and climate change are the two biggest dangers facing humanity. Kyoto addresses only one. The GNEP addresses both.

2007-05-14T14:14:00.000-04:00

Lessons from America: government offer of nuclear funding spurs controversy–and one new build project
This month’s issue of the Bulletin of the Atomic Scientists lists four major obstacles to the further development of the nuclear power industry. They are (1) the question of where and how to store radioactive waste, (2) the ageing nuclear workforce, (3) low tolerance of risk on the part of prospective nuclear project financiers and utility regulators, and (4) the general psychological baggage the industry carries from the enormous costs of the nuclear construction projects that were in progress when the Three Mile Island and Chernobyl accidents occurred.

Obstacles 3 and 4 essentially boil down to the same thing: reticence among financiers and regulators. This will disappear if and when a new reactor comes on line and starts making money. Therefore, getting a project going is huge.

Nobody in America disagrees with this. This is why the nuclear financing provisions—loan guarantees, construction delay insurance, and power production tax credits—were written into the 2005 Energy Policy Act (EPAct).

However, few are thrilled with the structure of the loans the U.S. federal government agreed to guarantee. Financiers don’t like their second-class status in the event of a default. As things stand now, the Energy Department would take over a plant if its owners default. Unless the government agrees to guarantee both the debt and equity portions of project finance, the bankers could walk.

So, in light of the obstacles listed in the Bulletin, a single stillborn project could kill the nuclear renaissance.

Enter Constellation Energy. Constellation recently confirmed it would apply for a construction license to build a new reactor at its Calvert Cliffs site in Maryland. Readers of this blog will recall my speculation last August that the EPAct’s financial support, plus Maryland’s intention to join the Regional Greenhouse Gas Initiative (RGGI) and local authorities’ offer of $300 million for Constellation to build the new reactor, could help Constellation decide in favour of the Calvert Cliffs project. It looks like all these things contributed to the crucial decision.

Readers will also note that I have called for some Canadian replication of the U.S. EPAct measures. Nuclear is the best way to add new power to Canadian systems while chopping greenhouse gases on a grand scale. Ontario since 2003 is massive proof of this (see article). If the federal government really wants to fight climate change and air pollution, it has to support nuclear.

If the Canadian government decides to guarantee loans for nuclear projects, it should take heed of the early hiccups down south. And it should also set up a carbon cap-and-trade system. This, plus the local support, is why Constellation has decided to take the plunge.

2007-05-10T10:44:00.000-04:00

Ontario at the crossroads: nuclear now or forget about clean air, climate change targets
In my most recent post, I mentioned that using Ontario electricity for space heating is now slightly less emission intensive than using natural gas. Gas, I should point out, is the least emission intensive fossil fuel.

What will be the emission intensity of Ontario electricity in five years? It could be significantly less than it is today. If the government approves new nuclear reactors, Ontario could return to the 1994 mark, which was 104 grams of emissions per kilowatt-hour generated. For a highly industrialized jurisdiction, particularly one with so much heavy industry, 104 g/kWh is simply phenomenal.

This would bring Ontario’s power generating sector well below Kyoto compliance. Not only that, it would bring the province as a jurisdiction within 18 million tonnes of full Kyoto compliance.

And, because it would make space heating with Ontario electricity nearly twice as clean as space heating with natural gas, it would provide the opportunity to wipe out literally millions of tonnes of emissions from residential and commercial/institutional heating.

In concert with other developments, particularly greater uptake of hybrid gasoline-electric vehicles and the advent of commercially available plug-in hybrids, Ontario would be in easy striking distance of Kyoto targets.

None of this will be possible without more nuclear power. We face momentous decisions. We’d better make them now.

2007-05-09T09:16:00.000-04:00

Is district energy environment-friendly? It depends on what fuel and which province
A few years ago, I helped do a study on the possibilities of carbon monoxide infiltration through fresh air intakes at a Canadian government building complex in Ottawa. What was the source of the CO? The exhaust port from the gas-fired furnace at the central heating plant at the complex. After an extensive wind-tunnel simulation, we concluded that the probability of significant CO infiltration was minimal.

The heating plant is one of ten similar government-run plants in the national capital area. Nine of the plants are on the Ontario side of the Ottawa River; one is on Sacré-Coeur Boulevard in Gatineau, Quebec.

Many of these plants are linked together in what’s known as a district heating system: a network of pipes that distribute steam and sometimes cold water to individual buildings along the network.

The Sacré-Coeur heating plant has a number of furnaces, including some that are electric-powered. A few years ago, in an effort to promote clean Quebec electricity, Hydro-Quebec, the provincial utility and the biggest power generator in Canada, installed the electric units at the plant. Of course, the deal also included a power purchase agreement with Hydro-Quebec.

Then, in a bizarre twist, Hydro found an electricity buyer willing to pay more than the feds. And it must have been much more, because the utility asked the feds not to run the units at all except as backup. The feds didn’t like these terms and decided to mothball the units. Hydro has since removed the electrical connection altogether, and the Sacré-Coeur plant creates heat solely with fossil fuel.

District heating is touted as efficient and environment friendly, and in principle this sounds like a fair claim. But it is unwise to generalize. Generating heat with gas at the Sacré-Coeur plant produces nearly 25 times more greenhouse gases (GHGs) than generating it with Quebec electricity. And that’s assuming the gas-fired units are highly efficient.

Anyone looking to create a district heating system in Quebec, Newfoundland-Labrador, Manitoba, or British Columbia should take this into account—especially if climate change and clean air are important project considerations. Electric heat in these provinces produces 6–25 times less GHGs than natural gas (see Environment Canada’s Electricity Intensity tables).

And in Ontario, GHGs per BTUH of electric-generated heat are now slightly less than those of high-efficiency gas. As more nuclear units come on line, Ontario electricity will become much less emission intensive.

Needless to say, electric heat is also far cleaner with respect to bona fide pollutants, like the CO in the study I mentioned at the beginning. Had that building complex been heated with electricity, there would have been no issue with CO from heating exhaust.

Federal and provincial energy policymakers should take this into account.

(Note: I hope to see you all at the Canadian District Energy Association’s conference in Toronto on June 13–15. For more info, see www.cdea.ca.)

2007-05-02T08:30:00.000-04:00

Flatulent hydrogen puffery: what the future of driving WON’T look like
Every once in a while, the over-subsidized and under-performing hydrogen transportation industry suckers some gullible reporter into doing a story about how one day our cars will all be powered with hydrogen.

What a bunch of flatulent puffery. A couple of years ago, a client asked me to review a funding proposal from a company that wanted to build the hydrogen highway. Here’s what I said (don’t worry, I won’t name names).

“It is about time someone shone some light on the real prospects of hydrogen becoming the primary motive fuel for cars. Maybe then some scales will fall from some star-struck eyes. I simply cannot see hydrogen displacing even the most obnoxious fossil fuels, unless there is a major—and I mean MAJOR—scientific breakthrough that enables us to cheaply produce hydrogen from a source other than natural gas.

“Steam Methane Reformation (SMR) and other ways of getting it from natural gas won’t do, because as long as natural gas is the feedstock to the process, hydrogen will always be more expensive. Besides, North American gas reserves are dwindling, which is why gas prices have spiked in recent years.

“Forget about methane from waste. This is negligible: in Canada, just over a million tonnes per year. And biomass gasification technologies remain highly unreliable and unproductive [see my article on the dubious waste-to-power prospects of the Ottawa plasma gasification project].

“Absent SMR, the only other viable means of renewable hydrogen production remains electrolysis from water. However, to be truly sustainable this would require vast amounts of renewable electricity—and I mean VAST, because if renewable electricity ever were to become available in sufficient quantities to make large-scale hydrogen production via electrolysis viable [and it never will], we would of course also want to use it to displace non-nuclear thermal electricity generation, which currently accounts for a fifth of Canada’s generating capacity and a fifth of its anthropogenic greenhouse gases (GHGs).

“In other words, hydrogen via electrolysis depends on a major and fundamental restructuring of the current power industry. Good luck with that.

“As things stand now the hydrogen economy is a distant-future proposition, so far distant that you need the Hubble telescope and a science fiction writer’s imagination—not to mention some good hallucinogenic drugs—to see it with any coherence. We should steer clear of this red herring.”

2007-04-29T15:32:00.000-04:00

Fishin’ for suckers: Richard Branson lands Liberal whopper in Toronto
This week, the Ontario Liberals jumped onto Richard Branson’s latest campaign to save mankind and the planet.

Called Flick Off, the campaign is yet another attempt to convince people that electricity is bad for the environment. This notion is laughably spurious (see article), but common sense vanishes in the presence of celebrity. Hoping some of the cool shine would rub off on them, the McGuinty Liberals elbowed their way into the Green Living Show to announce their new partnership with Branson.

It has been clear for some time that McGuinty & co. have run out of ideas about how to peddle their environmental record to bored Ontario voters. And their enthusiasm for Flick Off suggests they’re more than a little star struck by Sir Richard—hey, it happens to teenagers all the time. But are they really going to hang their environmental “repositioning” on a pseudo-edgy ad campaign commissioned by a zillionaire celebrity? Why don’t they just point to the massive emission reductions that have occurred under their watch (see article)?

Flick Off is an obvious attempt to divert attention from the exhaust emissions that spew out of the jet engines of Virgin Airlines planes during every flight. Branson, desperate to remain both super-rich and super-cool, wants to avoid the same bad publicity that plagues the predominantly coal-fired British power generation sector.

Greenhouse gases (GHGs) from aviation, already significant, are projected to rise dramatically, and the European Union wants to include them in the Emission Trading Scheme (ETS). This would add costs to airlines, forcing more consolidation in the industry. So Flick Off is Branson’s way of pre-empting the bad publicicity, by handing responsibility for lowering GHGs to ordinary electricity consumers.

If Branson is really worried about GHGs, maybe he should curtail his own jet-setting and get out of the airline business. Or at least look at an electricity system before exhorting people to use it less. As I have pointed out in this blog, the environmental effects of electricity consumption have everything to do with where you get your electricity from. Ontario Environment Minister Laurel Broten apparently still doesn’t understand that most electricity in this province comes from non-emitting sources. Ever eager to please the radical greens who have taken over her ministry, she lunged at Branson’s cheap lure and swallowed it hook, line, and sinker.

That’s just one of the howlers that occurred at the Green Living Show this week. Others included the David Suzuki and Al Gore tag-team berating federal Environment Minister John Baird with yet more righteous green blather (and Baird pretending to listen respectfully). I hope Simpsons and Family Guy writers attended the Toronto celebrity-fest; they would have gotten plenty of new material.

2007-04-20T11:03:00.000-04:00

Who’s to blame for Canada’s Kyoto impasse?
Canada’s environment minister, John Baird, said yesterday that implementing the Kyoto Treaty in its current form will harm the economy. The opposition and green lobby insist that Canada implement the treaty anyway, in the name of living up to our international commitments.

This is Baird’s way of telling the green lobbyists—who have had a decade to put forth a climate change implementation plan that doesn’t amount to economic penance—that they’re becoming irrelevant in the debate. These lobbyists captured the Liberals, who during the Chrétien and Martin years dithered on Kyoto implementation for exactly the same reason Baird scoffs at the Treaty today: because the greens’ policy advice is geared more to punishing emitters than actually reducing greenhouse gas emissions.

The Conservatives are gambling that (1) Canadians’ affection for Kyoto is not as strong as the opposition and greens want us to think, and (2) the plan they release next week will position them as more serious and practical about climate change than the opposition.

Is it a smart gamble? The first part, heralded by Baird’s dustup with Liberal senators yesterday, hasn’t produced too much of a storm in the media. So unless next week’s green plan is a complete fiasco, it looks like the answer is yes: it’s a smart gamble.

The greens essentially have themselves to blame for this. They’ve been the most vocal advocates of Canada’s involvement in Kyoto. And they’ve achieved impressive success: both in getting climate change front and centre on the public agenda, and in framing it as a zero-sum economy-versus-environment issue. But the success comes at the price of damage to their credibility. They’ve had a decade to produce a workable alternative to the status quo, and their prognostications are the same today as they were in 1997—stop driving, stop using electricity, put on a sweater, and turn down the thermostat.

2007-04-15T11:55:00.000-04:00

Nuclear renaissance in California? Prospect puts pressure on B.C. regulator to approve Alcan-Hydro deal
Back in February, I mentioned the juicy opportunities open to low- or zero-emission electricity generators who aspire to sell power to California. The utility regulator in British Columbia had shot down a power purchase deal between Alcan and BC Hydro because, it said, Alcan’s price was too high.

Ironically, the regulator’s decision could end up proving just the opposite: that Hydro got an excellent price from Alcan. And this proof could come in the form of a deal between Alcan and a California buyer.

A proposal to reverse a legislative ban against nuclear power in California recently went to the state legislature. Its immediate chances of success are not good, but nuclear proponents might find another way of breaking through the ban. Nuclear generation may again be permitted in the Golden State.

This leaves other purveyors of zero-emission power with a small window of opportunity to set up long-term power supply deals before nuclear generators figure out a way to market the atom to skeptical left coast power consumers. They’d better get a move on. More and more polls in California show increasing public support for nuclear power as a way to fight climate change.

Don’t think that the long lead-time for nuclear construction means no power sales until a plant is built. Imaginative nuclear proponents could finance new nuclear construction projects, at least partially, with future power sales. They would likely begin lining up sales the minute new nuclear build gets the go-ahead, which could come either in the form of the just-mentioned legislative proposal or a successful ballot initiative in next year’s election.

Alcan knows that the time is ripe to market clean, green hydro power from pristine British Columbia. So does BC Hydro. Does the regulator?

2007-04-13T06:23:00.000-04:00

Ottawa waste pilot project: greens don’t know from plasma
Some environmentalists, including the Pembina Institute and Sierra Legal, are opposed to Ottawa’s new high-tech waste disposal pilot project on the grounds that incineration is as dirty as coal combustion.

Right off the bat, they’re wrong. The technology underpinning the Ottawa project is not incineration. It is thermal plasma gasification/vitrification. Pembina and Sierra have been loudly advising the government about how it should meet Kyoto targets. Their position on the Ottawa project makes you wonder how far off the mark their Kyoto advice is. (Hint: it’s pretty far.)

A thermal plasma furnace does use heat to dispose of waste, but the heat is far more intense than what is involved in conventional incineration—so intense that it turns the matter to which it is subjected into gas and glass.

The gaseous byproduct of thermal plasma treatment, which in the case of carbon feedstocks is predominantly a mixture of hydrogen and carbon monoxide, can, theoretically, be further processed or burned in a combined-cycle generator. The emission intensity of this combustion is, again in the case of gasified carbon feedstocks, similar to that of natural gas–fired combustion.

But bear in mind that the Ottawa pilot project won’t necessarily be dealing with predominantly carbon-based feedstock. Municipal waste is heterogeneous. This means the process gas will vary in composition, making it difficult to generalize about its performance as combustion fuel in a CC generator.

Nevertheless, supporters of the Ottawa plasma project tout it as a waste-to-power project. This is an unnecessary claim. Even if it did work, the system would dispatch such a minuscule amount of power to the grid that it wouldn’t even warrant a mention on the IESO’s monthly generator reports.

Rather, the project’s proponents will make their main money from the tipping fee—i.e., what they charge Ottawa to dispose of the waste. If the fee is comparable to what Ottawa currently pays to simply landfill an equivalent amount of waste, and if the proponents can make a profit on that amount, then it’s a good deal.

Instead of chasing the waste-to-power red herring, it may prove more economical to separate the process gas into its constituents and sell them to an industrial gas company. After all, the major players in this field—Praxair and Air Products, especially—have over the past few years been on a patent-filing binge to protect processes that do just that.

Has this led anywhere? In 2003, Praxair teamed up with a plasma furnace manufacturer to test the viability of purifying gas from municipal waste. So far the company has been coy about the results. This suggests that the results have been less than impressive, and that the main value of plasma gasification is the clean disposal of waste.

But regardless of the useful value of the gas, the mainstream greens’ loud opposition to the Ottawa project proves they need to do more homework.

2007-04-10T09:25:00.000-04:00

Combined heat and power: friendly to the environment, or just the gas industry?
Two weeks ago, on The Agenda with Steve Paikin, I participated in a debate on the pros and cons of nuclear power expansion in Ontario. One of the other debaters, Dave Martin of Greenpeace, suggested that industrial power users could reduce their environmental footprint by using combined heat and power. Also called cogeneration, combined heat and power (CHP) involves using heat from one source to provide both electricity and space heating to the same facility.

The concept of combined heat and power appeals to some people because it implies efficiency. We use the same heat to do two jobs: wouldn’t this produce less emissions than separate processes? It sounds like a no-brainer.

Well, it’s a brainer. CHP almost invariably means using natural gas. Emission intensity from generating power solely with natural gas is more than double that of the power coming from Ontario’s grid (550 grams per kWh for gas, versus 222 from the grid; see Environment Canada’s GHG Inventory).

This means that for CHP to work in Ontario, a facility would have to reduce space heating requirements drastically in order to reduce the total emissions that result from separate processes. These requirements would have to be reduced even more drastically if and when Ontario adds power from new nuclear or hydro plants to its system.

So CHP looks good at first glance, but falls down in jurisdictions where the emission intensity of electricity is already low. You still need way more fuel in CHP than you would if you generated power or heat separately. This means that gas-based CHP is only favourable, emission-wise, when you compare it with power or heat generated separately entirely with fossil fuel.

Which means in turn that CHP might work in jurisdictions like Alberta or Ohio, where electricity is generated primarily using coal. But as I have stressed on this blog, this doesn’t apply to Ontario. More than three-quarters of our electricity comes from emission-free sources. And CHP would be an obvious non-starter in Quebec, British Columbia, Manitoba, or Newfoundland-Labrador—none of these provinces has power emission intensity over 31 grams per kWh.

Nice try, gas industry.

2007-04-01T12:09:00.000-04:00

Should Ontario trade carbon with the U.S.?
There has been speculation recently that Ontario is mulling over the prospect of joining an emission trading scheme. The scheme in question, the Regional Greenhouse Gas Initiative (RGGI), covers power generation in nine northeastern states, and is America’s first mandatory cap-and-trade system.

Should Ontario join the RGGI? It is definitely worth looking into. Let’s set aside for a moment the financial opportunities (though they are significant, as I pointed out last week), and focus on the legal ramifications. It is just a matter of time before an emissions-related lawsuit against an emitting company is successful in the U.S. Some of those recently before the courts—e.g., Connecticut v. American Electric Power and California v. General Motors; see article—rested on the tort doctrine of public nuisance. Don’t let the innocent-sounding phrase “public nuisance” fool you into thinking these actions are frivolous. The implications of a successful public nuisance lawsuit will be profound (see article).

Most big American coal-based generating companies understand this, which is why they’re demanding federal leadership on the issue, including carbon caps through either taxation or a carbon market (see article). They want a framework in place so they can respond, in both legal and PR terms, when the inevitable verdict comes down.

What does this have to do with Ontario? Our biggest coal-fired generating plant, the 3,900-megawatt behemoth at Nanticoke, sits on the north shore of Lake Erie. Its emissions often drift south and east, i.e., right into New York State. New York’s current governor, Elliot Spitzer, was the attorney general before he won the gubernatorial election last November. In that capacity he filed numerous legal complaints against power companies, some of which were directed at Ontario. Nanticoke is one of his favourite targets. He knows exactly what he’ll do if and when a public nuisance complaint succeeds in the U.S.

Spitzer is also a big RGGI supporter. He believes in making life harder for emitters by forcing them to purchase carbon permits rather than granting permits for free (as the European Emission Trading Scheme did in its first year of operation; see my post). If this is the case, then he and his fellow RGGI governors might agree to favourble terms on which Ontario could sell its low-emission power into the northeastern power markets.

Such an agreement would have to acknowledge that Ontario’s power-sector emissions have dropped, sharply, in recent years. This would help our legal case, and wouldn’t hurt in the PR department either.

2007-03-30T12:19:00.000-04:00

Sugar-crazed Official Opposition overlooks flaw in Clean Air amendments
Yesterday’s giant cake in the Bill C-30 committee room generated a bit of media attention, but probably not as much as some opposition members had hoped. Just as well. Most opposition members and onlookers failed to notice a fundamental flaw in the amendments the opposition offered up to the Canadian government’s Clean Air Act.

The amendments call for both a $20 levy (why don’t we just call it a tax) for every tonne of carbon a company emits above a pre-determined cap, and for Canada’s participation in an international carbon market.

I know some opposition members hate big business, but this is piling on. Carbon levies and carbon markets are two ways of accomplishing the same thing, which is to impose a cost on emissions that rise above a cap. We have to pick one or the other. If we choose both, then we’re essentially billing twice for the same tonne of carbon.

I doubt any of this matters to the drafters of the bill C-30 amendments. Why quibble over the fine points when you can zing the government with hyperbolic brain candy. The trouble (for the opposition) is, few people know—or care—what any of these stunts are supposed to mean.

Which means that, after all, the government could still roll out an emission trading scheme and successfully position itself as friendly to the environment.

2007-03-25T09:58:00.000-04:00

Conservatives leaning toward emission trading
Will Canada participate in emissions trading? Judging from recent public comments, the prospects for Canada’s participation in some scheme or other seem to depend on the day of the week. Senior Conservatives have changed their tune on this issue more times than a Barry Manilow song. Well, at least they’re thinking about it.

Readers will note that I have advocated emission trading as one way (among many) of reducing capital costs in projects to build capital-intensive low- or zero-emission electricity generation plants based on nuclear and coal gasification technology. A structured market would enable quantification of financial risk, and thereby enable prospective financiers to divide prohibitively lengthy construction periods into more manageable increments at the ends of which they could exercise options.

Together with incentives like construction delay insurance, loan guarantees, and power production tax credits—which only the federal government could offer—an emission trading scheme could channel private investment into these capital-intensive technologies.

In my view, it’s time to put money on the right horse. Nuclear is a proven emission-reducer (as witness Ontario’s dramatic million-tonne power-sector emission reductions in recent years; see Ontario Liberals admit they’ve reduced power emissions). And coal gasification is a no-brainer. North America has zillions of tonnes of cheap coal. Public concern over climate change and air quality makes pulverized coal combustion—the most emission-intensive kind of electricity generation—less and less attractive.

Those who fear increased electricity prices as a result of emission trading, need not worry. As I pointed out in Talk meets reality, the much-vaunted European Emission Trading Scheme is, at present, more about public relations than emission reductions. This is as it should be, because major emitters need time to incorporate the costs of carbon and governments need time to prepare the electricity consuming public for higher prices.

Therefore, emissions trading is another relatively risk-free way for the Conservatives to outflank the chattering green opposition.

2007-03-17T12:32:00.000-04:00

Public relations vs. public policy: how will renewables and conservation solve our power problems?
There is so much information and misinformation swirling through the public debate on Ontario electricity that a casual observer might get the impression that renewables and conservation will play a major role in the solution to our supply problem. They will, but not in the way many of their proponents think.

Let’s be clear up front. In terms of kilowatt-hours, renewables and conservation, combined, won’t close the looming gap between electricity supply and demand. They won’t even come close. Here’s why.

Renewables. In Could windmills replace Nanticoke? I pointed out that we’d need 7,700 giant-size windmills to generate as much power as the Nanticoke coal-fired station generated in 2003 (roughly 20 billion kilowatt-hours). Anyone who thinks it is remotely possible to build even a fraction of the required 7,700 turbines in this province is dreaming in colour. And if they also think the turbines’ owners would find enough buyers of intermittent power to cover the costs of building the turbines and connecting them to the grid... well, they should submit this fantasy to the Jungian society’s Dream-of-the-year contest.

Conservation. Conservation proponents point to Ontario’s high per capita electricity consumption relative to that of New York and California as proof that Ontarians are power hogs. This comparison is simply facile. New York and California don’t have major nickel processing, steelmaking, or pulp and paper manufacturing, all of which are extremely electricity intensive. Ontario does. Take major power consumers out of the mix, and Ontario’s per capita consumption is nearly identical to New York’s or California’s.

This means that for conservation to play a major role in closing the supply–demand gap in electricity, big power consumers like Inco, Dofasco, Falconbridge, and Stelco would have to curtail or cease operations. Those stuck in the electricity-is-bad mindset might encourage this. Thousands of Inco or Stelco employees would take a different view.

So what role will renewables and conservation play? Public relations. Windmills are visible evidence that somebody is going green. All you need is one or two to create a landmark. Same thing with conservation: install a few compact fluorescent lightbulbs in prominent places, and everybody will be able to tell—from the lousy quality light—that you’re saving electricity.

Carefully crafted public policy that supports the real solution to our power supply problem—nuclear and gasified coal—while paying the proper lip service to conservation and renewables could both solve the problem and manage public expectations. Good policy is good politics. In Conservatives go big on wind power, I suggest a way of combining the two.

But let’s just not fool ourselves into thinking we can nickel-and-dime our way to solving our power supply problems.

2007-03-07T08:54:00.000-05:00

Feds focus funds on foul air in 416: Toronto transit expansion attacks real source of pollution
Of all the ways to deal with the pall of smog that hangs over Toronto in the summertime, expanding the city’s transit system is one of the smartest. Motor vehicles are the primary source of all that smog. The federal, provincial, and city governments should be congratulated for recognizing this, and for collaborating on extending the Spadina subway. Toronto transit provides a more efficient way for people who would otherwise drive light-duty vehicles to get into and around the city.

Most important, it shifts the primary motive fuel from gasoline to electricity (in the case of subways and streetcars). This is where we’ll make stunning gains on air quality. As I have pointed out, Ontario electricity is relatively clean for the size of the provincial economy: provincial generators collectively emit 272 grams of carbon dioxide for every kilowatt-hour. That’s three times better than electricity in Alberta and Saskatchewan, more than twice as good as in Nova Scotia, and one-and-a-half times as good as in New Brunswick.

And when Ontario’s nuclear generating fleet is back to its 1994 level in terms of dispatchable capacity, Ontario electricity emission intensity will be around 104 grams of emissions per kWh—more than twice as clean as it already is.

Those who claim that coal-fired power generating plants are the source of Toronto’s air quality problems need to look at publicly available information. If they did, they might find out that in 2002, Ontario transportation sources—mainly light-duty cars and trucks—collectively produced more than 167 times as much carbon monoxide as Ontario coal plants. Carbon monoxide (CO) is the world’s most prolific toxic killer.

Moreover, cars and trucks are far more efficient at distributing this deadly gas: they cover every street in the GTA, emitting CO from tailpipes literally meters from where humans inhale it. By contrast, of the two provincial coal plants that could conceivably affect Toronto’s airshed, one (Nanticoke) is 125 kilometers due south from the Big Smoke. The other (Lambton) is 286 kilometers southwest. Don’t tell me their emissions magically settle to the ground in Toronto.

So supporting transit expansion in Toronto was a good move for Harper. Next, he should introduce tax breaks for hybrid cars.

2007-03-05T08:33:00.000-05:00

Hybrid cars vs. compact fluorescents: how not to nickel and dime our way to Kyoto
Last week I talked about the proposed ban on incandescent lights that is sweeping across the country. I said that the energy savings from replacing incandescent bulbs with energy efficient compact fluorescents are negligible. Let me quantify that statement.

I have 16 100-watt incandescent lights. If I replaced them today with 29-watt compact fluorescents (the package says that is equivalent to a 100-watt incandescent), it would cost me $292 including tax. At the rate they save energy, it would take me more than 8 years to pay off the $292.

(Here’s how I arrived at that number. The federal government estimates that household lighting accounts for 11 percent of residential electricity use in Canada. According to my most recent power bill, I used 614 kilowatt-hours over two months. So, by the federal government’s estimate, 67 of those 614 kWh went to lighting. That works out to 33 kWh per month for lighting.

If I were to replace all my 16 incandescent lights with compact fluorescents—which I won’t do, because their light quality is inferior—I would cut those 33 kWh to 11. This would save 22.5 kWh per month, shaving less than $3 per month off my power bill. Each 29-watt compact fluorescent costs $18.24, including tax; sixteen of them would cost $292. To pay off $292 with the energy savings—$3 per month—it would take 8.1 years.)

What emission reductions would result from replacing incandescents with compact fluorescents? It depends on where you get your electricity. I live in Ontario, where according to Environment Canada the average annual emission intensity of electricity generation is 272 grams per kilowatt-hour. Over those eight years, my $292 investment in inferior-quality lighting will prevent 587 kilograms of greenhouse gases (GHGs) from going into the atmosphere. If I live in British Columbia, the same $292 investment would prevent 52 kg over 8 years; in Quebec, just over 17.

The Ban-the-incandescent movement appears to have taken hold in Nova Scotia, and other provincial governments including Ontario are also talking about it like it is a serious measure against climate change. How much money and time will they spend in the effort to achieve such meager savings? In my opinion, any amount is too much.

Rather, they should focus where they can achieve truly dramatic emission reductions. I showed in Taking the giant step that you could cut 1,200 kilograms of GHGs in a single year by driving a Toyota Camry Hybrid rather than its non-hybrid counterpart.

If you live in British Columbia, getting a hybrid would result in GHG reductions more than 180 times as big over the 8-year payoff period as what you’d get by nickel-and-diming with a bunch of sub-standard lightbulbs. And if you live in Quebec, the hybrid option would achieve a reduction more than 560 times as big.

Governments should focus their efforts on getting more hybrids on the road. A break on the GST would help.

2007-02-28T13:47:00.000-05:00

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.

2007-02-22T22:25:00.000-05:00

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.

2007-02-17T12:05:00.000-05:00

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.

2007-02-14T08:17:00.000-05:00

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.

2007-02-12T07:12:00.000-05:00

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.

2007-02-04T10:14:00.000-05:00

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?

2007-02-01T22:18:00.000-05:00

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.

2007-01-28T09:12:00.000-05:00

Bush touts nuclear, plug-in hybrids in state of the union
Most of the commentary on Bush’s state of the union speech centred on his rather subdued delivery, and on the symbolic significance of various sections of the live audience’s applause after this line and silence after that one. Few commented on the fact that, for a president who has been criticized for being anti-environment (largely because he has strong connections to the “oil industry” and has shown no interest in the Kyoto treaty), Bush was explicit in his support for two technological approaches to reducing air emissions: nuclear power and plug-in hybrid vehicles.

Most of those who did notice Bush’s conflation of energy and environment policy tended to focus on his support for ethanol. There aren’t many American politicians, especially among those who seek a high national profile, who oppose subsidies for ethanol. There is a practical political reason for this. It’s not a good idea to alienate the farm vote (most U.S. ethanol is made from corn); doing so could cost a Presidential aspirant the Iowa Caucus.

It might sould a bit odd for the president to get this specific in a general speech. Nuclear energy, plug-in hybrids, and ethanol mean little to anyone other than policy wonks. Why mention them at all? Were Bush’s references to these specific technologies a political gesture? Of course they were. As I mentioned in my November 4 post, influential Democrats like Hilary Clinton, Tom Carper, and Bill Richardson have become strong vocal supporters of nuclear energy. This signals a major shift in the partisan dynamics surrounding this issue.

It is significant that other influential Democrats, like House Speaker Nancy Pelosi (who sat stone-faced while Bush touted nuclear and plug-ins) are less enthusiastic about these technologies. Bush knows this, and his references to nuclear and hybrids were an attempt to divide and rule.

But this political maneuver is justified because it is in the service of sound policy. Bush has chosen to support two technological approaches that, combined, represent by far the best way to reduce emissions in the medium and long term. Nuclear is one of the two proven ways to dispatch huge amounts of emission-free electricity to a modern power grid (conventional hydro is the other). And plug-in hybrids (which improve on existing hybrids like the Toyota Prius by allowing you to keep the battery charged with power from the grid; see the California Cars Initiative and HybridCars.com) are the most likely technological route to reducing auto emissions.

It’s good to see Canada’s federal government supporting at least one of these technological approaches. Natural Resources Minister Gary Lunn has been talking up nuclear power in nearly every speech and interview since last week’s flurry of Conservative environment announcements. Support for hybrid vehicles, or at least an acknowledgement that they are the technological pony to bet on, would put Canada on exactly the right course to major emission reductions.

What form should this support take? I have been pushing the case for sales tax credits for hybrid cars, and a range of measures (including power production tax credits) for nuclear power and clean coal. I’ll take this up again in my next post. Stay tuned.

2007-01-21T22:43:00.000-05:00

Lunn’s 4,000 megawatts: is nuclear renewable?
The media are busy trying to interpret the ream of Conservative environmental announcements this week. As I have mentioned, it looks like Harper and company finally learned how to talk the green talk. That should worry professional green groups and the opposition—their exclusive copyright on feel-good buzzwords like “renewable” and “conservation” just expired.

The Conservative announcements included a promise to increase Canada’s supply of renewable electricity by 4,000 megawatts. Someone should ask: are the Conservatives particular about where those 4,000 megawatts of electricity generating capacity will come from? Surely they’re not expecting them to come from wind or tidal or a combination of the two. If they are, they won’t reach the 4,000 megawatt target without a lot of parallel investment in fossil generation, which, unlike most renewables, is dispatchable to a real-world power grid. At the end of the day, we still need reliable electricity.

The government’s press releases have been short on these critical details. But comments by Natural Resources Minister Gary Lunn, during his media blitz on Sunday, might give a clue. Lunn is by far the most overtly pro-nuclear federal minister in recent memory. It could be that the bulk of the government’s investment will go to nuclear. It certainly would be the only way Lunn can make good on his 4,000 megawatt promise.

Unless there is a further announcement down the road (don’t forget about the $538 million Martin–McGuinty deal of May 2005), this would require re-classifying nuclear so that it qualifies as “renewable.” I support nuclear, but calling it renewable would require some interesting taxonomical gymnastics. We might credibly pull this off if Canada were to begin recycling spent reactor fuel, à la George Bush’s Global Nuclear Energy Program (GNEP). Help me out, nuclear experts: could Canada be part of the GNEP?

2007-01-20T13:57:00.000-05:00

Harper Conservatives finally play the Kyoto PR game
This week’s series of federal announcements on renewables, wind power, tidal power, etc., sounded a lot like Liberal redux. To be fair to the government’s critics, that’s because a lot of it was Liberal redux. But this accusation has an extremely limited shelf-life. The Conservatives have finally realized the value of genuflecting to wind and tidal power as a way of pacifying professional green critics, and their announcements this week might dull the roar.

And there’s one major difference between last week’s Conservative announcements and those the Liberals trotted out in the eight years after they signed Kyoto: Natural Resources Minister Gary Lunn’s insistence that nuclear energy must play a vital role in Canada’s future.

This is the first time in a long while that we’ve had this kind of candour from a federal minister. It’s also the first time the blowback from the usual anti-nuclear suspects has been so faint. This in itself is interesting. Why so faint? Was it because the Conservatives are finally playing the PR game?

Or was it because the greens themselves have finally gotten serious about emission reductions? As I and others have pointed out, emissions from Ontario electricity generation were 12 million tonnes less in 2006 than in 2000, chiefly because 4 nuclear reactors have come back into service since 2003. Did the anti-nuke crowd weigh these massive emission reductions against the relatively small and totally manageable radioactive waste problem and decide to abandon their theological opposition to nuclear power?

John Bennett of the Climate Action Network, normally a relentless critic of nuclear, was uncharacteristically quiet on the nuclear part of Lunn’s announcement. Bennett is a smart guy and I have always wondered if his position on nuclear wasn’t just a bit laboured and doctrinaire. Perhaps he read the writing on the wall and decided to focus his talent and energy on battles he can win.

Another interesting development was International Trade Minister David Emerson’s visit to China. Lunn’s recent admonitions that the Ontario government choose CANDU reactors in its upcoming nuclear expansion ties in with this. As I mentioned on January 10, the feds are trying to boost AECL’s value to a prospective private sector buyer. It’s not just Ontario that might buy new CANDUs. You can bet that Emerson, in between the obligatory bouts of lip service to red-herring environmental technologies like hydrogen fuel cells, was pitching AECL’s flagship heavy water reactors to his Chinese hosts.

Imagine what AECL would be worth if it could nail new sales in Canada and China.

2007-01-16T22:02:00.000-05:00

Hybrid cars and the GST: taking the giant step
How can Canada reduce emissions from transportation vehicles? These emissions account for twenty-five percent of the country’s greenhouse gases (GHGs), most of the carbon monoxide, and big proportions of volatile organic compounds and nitrogen oxides. The latter, combined with warm air and sunlight, are a big source of smog.

The answer is actually very simple: we have to use less gasoline and diesel to move us around. One of the most important ways of doing this, without giving up cars, is by buying and driving more hybrid electric vehicles.

Some governments both recognize this and are prepared to do something about it. Ontario is one. The province offers a sales tax rebate of up to $2,000 for the purchase of a hybrid.

Is the rebate spurring greater interest in hybrids? The Ontario Ministry of Finance says the province issued about 4,100 rebates for hybrid cars from 2004 to 2006. The rebates were valued at more than $4 million.

What effect have the rebates had so far? According to the federal government’s Fuel Consumption Ratings, if you were to drive a 2007 Toyota Camry Hybrid instead of the non-hybrid 4-cylinder Camry, you would save 1,200 kilograms of CO2 per year. For the sake of illustration, let’s say the 4,100 hybrid rebates in Ontario were for Camry Hybrids. Compared with the non-hybrid Camry, these 4,100 vehicles are offsetting roughly 4,920 tonnes of CO2 every year—not to mention significant carbon monoxide, nitrogen oxides, and volatile organic compounds.

How many more hybrids would join Canada’s fleet of passenger vehicles if the federal government were to match Ontario’s move by offering a GST rebate? Is it worth finding out? I think it is.

The former Liberal federal government didn’t agree. Its position was that (1) it would be too difficult to administer such a rebate, because the GST is applied in different ways depending on whether you buy or lease a vehicle; (2) it would narrow the tax base, making it difficult to apply a low sales tax rate equitably to all consumers; and (3) it’s too technology-specific—the Liberals thought that purchase incentives should be based on fuel efficiency, not a particular technology.

The first and second of these reasons are a bit weak. Ontario obviously found a way to administer a sales tax rebate, and no one is complaining about how unfair it is.

The third reason has some merit, though the former government contradicted itself by giving a direct subsidy to wind power, via the Wind Power Production Incentive—proving it actually had no problem with betting on particular technologies.

I would argue that hybrids are worth similarly favouring, because they are the only mass-produced vehicles whose manufacturers have shifted any percentage of their motive fuel from gasoline or diesel to electricity. Forget about hydrogen for mass transportation. Compared with grid electricity (which will top up the batteries of plug-in hybrids, the next generation of electric vehicles) hydrogen is far too expensive.

We’re at a critical point with transportation emissions. They account for roughly a quarter of Canada’s total greenhouse gas (GHG) inventory. Running vehicles on electricity more than gasoline and diesel is the most likely and most practical way to reduce transportation GHGs.

Will the Harper Conservatives read the writing on the wall and match Ontario’s forward-thinking sales tax rebate for hybrid vehicles? I can’t see it would do them any harm.

2007-01-10T21:56:00.000-05:00

Are federal Conservatives set to support Ontario Liberals’ nuclear expansion?
Word has it that the prime minister and Ontario premier have been talking about heavy water and uranium. Specifically, they have discussed the prospect of the feds providing financial support for the purchase and commissioning of at least two CANDU reactors, probably at the Darlington generating station on Lake Ontario east of Toronto.

The Conservatives apparently think that a major sale will make the crown corporation Atomic Energy Canada Limited, and its CANDU technology, attractive to a prospective buyer. Better to use public money to facilitate a lucrative sale (presumably the windfall would outweigh whatever dollars Harper promised McGuinty) than to stand back and let deeper-pocketed light water competitors Areva or General Electric underbid AECL.

If the rumour is true, then Stephen Harper and Dalton McGuinty will make Ontario’s power generating sector better than Kyoto compliant, and put the entire province within easy reach of becoming the first advanced industrial economy to achieve the critical Kyoto target. Eat your heart out, California.

No doubt this will expose the federal Conservatives and Ontario Liberals to vicious tongue-lashings from most of the mainstream environmental movement. But if they present their deal properly, Harper and McGuinty should be able to fend off this criticism. The greens will have a hard time arguing against the sheer size of the emission reductions nuclear will bring about.

And now that the anti-nuclear tide is finally receding in Europe (where the latest go-around between Russia and its former satellites has convinced everyone that relying on Siberian natural gas is not the best energy policy), Canada should lead the way to putting nuclear energy back into the Clean Development Mechanism. This would boost AECL’s overseas prospects, especially in China and India.

Who knows, Harper might rethink his conviction that Kyoto targets are unattainable.

2007-01-09T07:51:00.000-05:00

Star offers bizarre energy policy
Today’s Toronto Star carries an editorial criticizing Dalton McGuinty for “dragging his feet on global warming with a plan that would be likely to see [the humungous coal-fired generating station at] Nanticoke replaced by a new, clean nuclear generating facility a decade or more from now.”

McGuinty is dragging his feet all right, but not in failing to roll out a climate change policy. He’s dragging his feet in presenting its results to the public. As I have pointed out in previous posts, Ontario’s nuclear renaissance, in which McGuinty has played a major positive role, has wiped out millions of tonnes of emissions.

Well, if you don’t paint your own picture someone else will paint it for you. This is what the Star is now doing. After accusing McGuinty of dragging his feet on global warming, the editorial’s next sentence bizarrely suggests that Nanticoke be converted to natural gas. This in spite of the fact that the price of gas has skyrocketed in recent years, making gas-fired power generation a bad deal for everyone but the gas industry.

Suggestions like these almost make you wonder where Canada’s biggest newspaper gets its information and ideas from. Converting Nanticoke to gas has long been a dream of the gas industry–funded Ontario Clean Air Alliance, an Astro-Turf organization whose founding impetus came when eight of Ontario’s nuclear reactors were laid up in the 1990s, forcing the province to increase electricity generation from its coal-fired generators. (See my July 23 post.) When power sector emissions accordingly doubled, the OCAA, sensing a huge business opportunity for its clients, advocated that the coal plants be replaced by—guess what—natural gas.

But now that four of those nuclear reactors are back in service, offsetting nearly 18 million tonnes of emissions every year, the OCAA sees a threat to its plan. The very last thing it wants is for people to notice how far power sector emissions have plummeted as a result of the return of nuclear.

Is the Star playing along with this? Or does it just not know the numbers?

2007-01-04T12:30:00.000-05:00

Baird steps back into Ontario nuclear minefield: Harper assembles his election lineup
Now that John Baird is the new Environment minister he gets to revisit the Ontario electricity file, over which he recently presided as Ernie Eves’s Energy Minister. This will be interesting.

As the most recent Ontario Conservative to hold that job, Baird inherited the Pickering unit 4 near-fiasco from his predecessor Jim Wilson. The unit 4 project signaled Ontario’s recommitment to nuclear energy, and while intensely uncomfortable for all concerned, provided invaluable lessons for the unit 1 rehab, approved by the McGuinty Liberals in 2004 and completed on time and within budget in late 2005.

The return of units 1 and 4 has played a pivotal role in reducing Ontario’s electricity-sector greenhouse gas (GHG) and smog emissions by 12 million tonnes a year since 2000. As I have pointed out, this is a major achievement: it is by far the biggest emission reduction since Canada signed the Kyoto accord in 1997. Only a very few alert reporters have noticed.

Now the McGuinty government is looking to add to Ontario’s nuclear fleet. This will cost billions. Might it be time for someone at the provincial or federal level to tie the fiscal balance and environmental issues together? McGuinty has played the fiscal balance card endlessly, and has environmental vulnerabilities of his own (i.e., his promise to shut Ontario’s coal plants). Could nuclear power, by virtue of its high capital cost and proven track record of offsetting emissions on a grand scale, enter into the fiscal balance debate? Would Baird, as federal Environment Minister, support Ontario’s nuclear expansion? He is intimately familiar with Ontario electricity, and knows how politically risky it is to step through the nuclear minefield.

As a strong partisan Conservative, Baird would want to play the issue so that it hurts McGuinty and helps Harper, both of whom will lead their parties into elections in 2007. But, as I have pointed out in my October 4 post, it may be difficult to avoid helping McGuinty.

This is going to be a crazy year.

2006-12-28T22:29:00.000-05:00

“Conservatives go big on wind power”
Imagine it’s Monday, April 2, 2007. The Wind Power Production Incentive (WPPI), a federal government subsidy that pays wind power producers 0.8 cents for every kilowatt hour they feed into any Canadian power grid, wrapped up last Friday. It wasn’t renewed.

But rather than ending federal financial support for zero- and low-emitting electricity generation technology, the Conservative government ramped it up, big time.

The Conservatives announced a billion dollars worth of power production tax credits. Not a direct subsidy like the WPPI, but a major incentive nevertheless to any power company looking to quickly buy down the capital cost of an expensive generating plant. It’s a major boost for the Canadian wind power industry.

After skimming the Conservatives’ press release, power experts will surely point out that there’s no way wind generators in Canada will ever earn so much from electricity sales that they owe a billion dollars in taxes. But when the experts read the fine print in the press release, they’re impressed.

The press release puts wind at the forefront of its message, but in reality wind is just one of the technologies that qualify for the tax credit. Nuclear and gasified coal also qualify.

As I have pointed out in this blog, nuclear is where we will get the biggest greenhouse gas (GHG) reductions in the electricity generation sector. And since every modern power system needs the ability to turn some generators off and others on in order to manage minute-by-minute transmission congestion problems and maintain system stability, every power system needs some form of generation capacity it can turn on and off at a moment’s notice. I.e., some of its generators must be gas-fired. Hence the government’s desire to also encourage investment in gasified coal generation: it provides the needed system flexibility while cutting the GHGs of conventional pulverized coal by two-thirds.

Therefore the government’s tax credit ensures major new investment in proven GHG-reducing technologies. This is no bet; it’s a sure thing.

From today (April 2, 2007) forth, every Conservative stump speech trumpets the Canadian government’s support for wind power, “and other low- or zero-emission technologies,” as the way forward on climate change.

That’s how I’d approach it if I were the Prime Minister. Good policy is good politics. But he’s the one who won the election, and it is his decision.

2006-12-20T17:46:00.000-05:00

Industrial strategy and Kyoto implementation in Canada
Earlier this week Prime Minister Harper linked, for the first time in public, progress on climate change with a comprehensive national industrial strategy. He’s thinking big, and he’s on the right track.

The conflation of environmental progress with industrial strategy need not be overly complex. Electricity generation represents a fifth of Canada’s greenhouse gases (GHGs), transportation a quarter, and heat generation (particularly in Alberta’s oil sands) more than 5 percent. Together, these three broad activities pump over 312 million tonnes of GHGs into the atmosphere—over 40 percent of Canada’s annual total.

How can we reduce those emissions? By shifting more electricity generation toward low- and zero-emitting technologies, and by spurring consumer interest in hybrid gasoline-electric vehicles. The government’s strategy should be to encourage these developments.

I have argued in these posts that the way to do this is to emulate the American approach in electricity generation (see Backing the winners), and emulate the Ontario approach with respect to hybrid vehicles (see Suing the automakers).

Ontario is an excellent example of what to shoot for with U.S.-style incentives in nuclear generation. This province has chopped 12 million tonnes per year from its power generation sector since 2000, by returning laid-up nuclear power reactors to service.

If the government of Canada were to follow this route and support Ontario and other nuclear provinces, it would achieve major emission reductions—guaranteed. But would it reap the political benefits? As things stand now, not likely. The media has been climbing all over the Conservatives’ apparent confusion regarding Kyoto. Two days ago Harper announced federal support for a major hydroelectric project in Quebec. Not a single story linked this to climate change.

Which means it’s as much about communication as about policy. But it is possible to successfully combine the two. I’ll elaborate in upcoming posts. Stay tuned.

2006-12-16T09:38:00.000-05:00

Epic battle shapes up over power-sector emission caps in U.S.
Will a national cap-and-trade system be established in the U.S.? The answer depends on whom you ask. The two areas of the U.S. where a cap-and-trade system is either planned or about to be implemented—California, and the seven northeastern states that formed the Regional Greenhouse Gas Initiative (RGGI)—say yes. Fitch Ratings, a ratings service, says a national cap-and-trade system is imminent. So do a number of high profile senators, congressmen, and governors. And some observers of the public nuisance lawsuits against big emitters predict there will be a landmark ruling against a big emitter sooner or later.

But the devil is in the details, and that’s where those in the power industry who oppose cap-and-trade have the upper hand. Few prospective players agree on the basic rules of the game, even in cap-and-trade areas like the RGGI—although New York has said it wants to sell emission permits at auction rather than handing them out for free. (According to some, freely allocated permits are the reason the European Union’s Emission Trading Scheme had such a bad first year; see my November 12 post).

For example, to whom should emission permits be allocated: electricity distributors or generators? It is far from clear whether this market incentive would be more effective if targeted at one or the other. Who would—more to the point, who should—suck up the cost of permits? How quickly would this de facto carbon tax speed investment in nuclear and/or IGCC? Faster than the incentives the U.S. federal government has already provided, through the EPAct? Why not wait to see those results?

We in Canada need to pay attention to this. In fact, we should be actively involved: we trade electricity with the Americans. Emissions from their generating plants enter our airshed, and vice versa. There could be major commercial opportunities.

This question—allocating permits to generators or distributors of electricity—applies to deregulated electricity markets, where distributors and generators are usually separate companies. But the problem of how best to organize for-profit companies using understandable cost and service incentives has dogged deregulated markets everywhere. One of the biggest problems of deregulation has been figuring out the costs of transmission and distribution. A cap-and-trade system will add a further dimension of complexity. Opponents of cap-and-trade argue, fairly in my view, that governments need to really game these issues through before plunging headlong into creating an emission market.

Complexity becomes an even more powerful card in the case of regulated markets, where generators and distributors are different parts of the same company. Though the Federal Energy Regulatory Commission (FERC) could set rules that favour sales of low-emitting power across state or international boundaries (assuming the current or subsequent administration directed FERC to do so), state governments in regulated areas might have other ideas.

Lobbyists for coal-based utilities are working their federal and state government contacts furiously, sensing a shift in the political balance as a result of the November mid-terms. You can bet one of their main arguments is that cap-and-trade will drive retail power prices up. If this happens (they will surely point out), everyone will blame the government. Does any elected politician want to risk that?

2006-12-08T08:32:00.000-05:00

Sunsetting wind power program spells opportunity for major emission reductions in Canada
In previous posts I have suggested extending the Wind Power Production Incentive (WPPI) to include other low- and non-emitting forms of electricity generation, including nuclear and coal gasification. But now I wonder if instead of a subsidy like the WPPI, a tax credit might be a more effective way of spurring investment. A tax credit would certainly be more palatable to the current federal government.

In terms of politics, framing this tax credit in a way that emphasizes that it is for clean electricity—including wind—would take some of the edge away from the fact that its chief beneficiaries would surely be nuclear and coal generators. In this way it might soften the criticism from the anti-nuclear, anti-coal crowd. As I have said, putting wind at the forefront of a government incentive program would be smart optics: windmills would provide gigantic physical evidence of our commitment to reducing emissions.

And if we take a good look at the very recent tax credit selection process in the U.S. (see the DOE’s press release, as well as recent posts in the Gasification and IGCC Forum), we could avoid some of the glitches that have muddied the debate in that country over whether gasification is still uneconomical.

To qualify for the WPPI, a project must be commissioned before this coming March. Does this mean the WPPI will sunset in March? If so, all the more reason to replace it with something more wide-ranging. The Kyoto debate will continue to rage between now and then, with the Conservatives working hard to come up with a workable and palatable plan to reduce industrial emissions. A move like this could bring the opposition into agreement.

2006-12-03T14:06:00.000-05:00

Backing the winners: how can Canada jumpstart capital investment in electricity infrastructure?
Faced with a massive turnover in capital stock in the electricity sector, together with growing environmental concerns regarding the use of coal as the primary generation fuel in North America, the U.S. government decided, in the Energy Policy Act of August 2005, to provide financial incentives for investment in low-and zero-emitting industrial technologies, especially in power generation. The intent of the EPAct is, in part, to spur investment in nuclear and coal gasification.

The incentives include loan guarantees and tax credits (for power production and advanced gasification; see the DOE’s press release), as well as construction delay insurance for nuclear generators.

Has it worked? Yes in some cases, no in others. The Internal Revenue Service has approved applications for projects totaling $1 billion in gasification tax credits. But the loan guarantee program is stalled as various players in and out of government argue over what the EPAct actually guarantees.

Some might argue that the gasification projects—whose generation industry proponents include the Southern Company and Duke Energy, favorite piñatas of the environmental movement—are yet more government handouts to profitable major emitters.

That might be true if coal gasification suffered from the same technological hurdles as biomass gasification (the Moby Dick of government-sponsored energy research all over the world). But it doesn’t. Coal gasification is miles ahead. And while its potential as a power-generation technology might still be somewhat over-stated—there are still economic and technological considerations impeding scale-up of gasification reactors to the 12,000 tons-per-day range, which they would have to reach in order to be competitive with modern pulverized coal generation systems—there is no denying gasification’s potential as a solution to the natural gas supply problem in North America. Most of the tax credit applications came from companies that use natural gas as a manufacturing feedstock, not as a fuel for power generation.

(A suggested solution to the economic impediments of gasification for power generation is polygeneration—i.e., converting gasified coal to chemicals and liquid fuels, in addition to electricity. This would help investors get more use out of their gasifiers, and could make the overall proposition more profitable.)

Moreover, when you have companies like General Electric, ConocoPhillips, Shell, and Siemens rolling out gasification reactors and power turbines—and big electricity market players like American Electric Power applying for licenses to build gasification plants for commercial power production—you know that gasification in power generation is a serious technology whose time may have come.

But the big question is will the gasification industry work out the scale-up problems before generation companies decide to go with what they know and replace ageing pulverized coal plants with new pulverized coal plants? And will this happen before the RGGI cap-and-trade system takes effect in the U.S. northeast, or the U.S. federal government imposes national emission restrictions on power generation?

In Canada, where we have similar investment/environment problems—and, thanks to our massive western coal reserves, similar opportunities—we could and should offer incentives similar to those under the EPAct. Alberta’s oilsands get all the bad press from the environmentalists but the province’s power generation sector is its biggest single emitter. Those emissions can only drop if generators build nuclear and/or low-emitting coal plants. If we want that to happen, let’s make it worth their while.

What form should these incentives take? Should they mirror those offered in the EPAct? Given that our federal finance minister, Jim Flaherty, has indicated he wants more private investment in infrastructure in Canada, this is becoming a hot topic. So I’ll take it up in subsequent posts. Stay tuned.