Momentum Builds Towards Coal Phase-Out as Canada, Chile Pursue Policy Changes

22 February 2018

The Canadian federal government confirmed an update to its energy regulations last week aimed at speeding up its efforts to lower its reliance on coal-fired power generation, citing the environmental and public health benefits of the move. 

The news came just weeks after Chile confirmed plans to stop building new coal plants that do not have carbon capture and storage mechanisms, amid a growing momentum at the international level among countries and sub-national governments to rework their economies towards a greater reliance on renewable energy sources. 

Canadian regulatory changes

The Canadian government issued the regulation changes on Friday 16 February, taking a two-pronged approach that officials say would speed up its transition towards greater renewables use.

Power plants using coal would be given a deadline to upgrade to certain performance standards, with the option of using biomass or carbon capture and storage to do so. This would need to occur by the end of 2029, at latest. A government backgrounder on the regulations suggests that setting such a robust standard will encourage either a move to natural gas or a complete shutdown of the plant involved, while noting that the bulk of the affected plants will be in Alberta and Nova Scotia.

Any new natural gas production or the conversion of coal units to run on natural gas would also have to meet certain efficiency criteria.

Coal is a significant energy source in the North American nation, though its use in power production varies by province. Ontario, for example, has effectively eliminated coal from its energy mix, while Alberta’s energy is derived primarily from the fuel – although the western province, known for its mining sector, will aim to phase out coal by 2030 while ensuring that nearly one-third of its energy is derived from renewables.

Government statistics indicate that coal is responsible for nearly three-quarters of the greenhouse gas emissions produced overall by the country’s electricity sector, even though the fuel is only a small portion of the energy mix.

Officials say that they are also soliciting input on how to minimise any adverse impacts on jobs in the coal sector, especially in Alberta, namely through the establishment of a multi-stakeholder task force on the subject. 

“We know the environment and the economy go hand in hand, so we’re committed to making that transition a fair one for coal workers and communities. The task force we’re launching today is a big step toward meeting that commitment,” said Catherine McKenna, Canada’s Minister of Environment and Climate Change, in a press statement announcing the regulatory changes. 

Along with the expected reductions in greenhouse gas emissions, officials note that clean energy jobs are becoming increasingly common in the Canadian economy, with those numbers expected to grow in the coming years. 

The Canadian government confirmed that the policy changes are part of their implementation efforts involving the “Pan-Canadian Framework on Clean Growth and Climate Change,” a multi-pronged approach aimed at incentivising a transition to renewables, including through the establishment of a minimum carbon price.

On the carbon price front, Canada has set a goal of national carbon price of C$10 (US$7.60) per metric tonne this year, after confirming in 2016 that eight of the country’s ten provinces would pursue either a carbon tax or emissions trading scheme to do so. All provinces have since agreed to implement some form of carbon price. (See Bridges Weekly, 15 December 2016

The federal government released last month proposed legislation and regulations that would help meet this objective, particularly for those subnational governments that do not yet have carbon pricing schemes, with officials asking for public comment as they craft the final version. The public comment period closed last week, with the timing of the final version not yet announced. 

Chile bars new coal plant construction

The momentum away from coal use has also grown in other parts of the globe, including Chile. Coal powers over one-third of Chile’s electricity, even though the South American nation does not rank as one of the world’s top coal producers.

The outgoing government of Chilean President Michelle Bachelet has confirmed that no new coal-fired plants will be built unless they have the capability for using carbon capture and storage. The announcement was made in partnership with a coalition of energy utilities. The South American nation made history a few years ago when it became the first in the region to impose a carbon tax, and the current administration has been a vocal proponent of transitioning towards cleaner energy sources.

President-elect Sebastián Piñera, who takes office next month, has proposed moving Chile towards an energy grid powered solely by renewable energy sources by the year 2040, a suggestion that would go beyond current commitments under Chile’s 2050 Energy Policy. That policy calls for reaching 70 percent power from renewables by mid-century, along with an interim goal of 60 percent by the year 2035.

The same 2050 plan notes that Chile used to rely far more on hydroelectric power as an energy source three decades ago than it does today. It also calls for Chile’s energy sector to be more integrated with that of the wider region, along with saying that Chile should reduce the length and frequency of power blackouts as part of a broader effort towards developing a higher quality energy supply.

“Powering Past Coal”

Canada is one of the founding members of the Powering Past Coal Alliance, a coalition of countries; city, state, and provincial governments; and private sector groups that was launched during last year’s UN climate talks in Bonn, Germany. 

The alliance, which was co-founded with the United Kingdom, aims to build international interest and momentum in phasing out coal. In terms of actionable commitments, its participants have pledged to both phase out coal power, along with agreeing to ban any new plants which lack carbon capture and storage technology. 

They also aim to use their new grouping as a platform for participants to share lessons learned in phasing out coal, and say that they hope to have a total of 50 participants by the time UN negotiators reconvene for their annual negotiations at the end of this year in Poland. 

France, another coalition partner, is aiming to close down its coal-powered plants in less than three years, suggesting that doing so will have economic and climate benefits, even though coal makes up only a small portion of the country’s energy mix. 

While Chile is not an official member, its recent announcement shows a similar approach to that of the coalition. Coalition lawmakers in Germany, which is also not part of the alliance, have said that they too plan to phase out coal-fired plants, though this pledge is still pending legislative action. Officials say that the European economic giant, despite its climate action efforts, is not likely to meet its previously announced goal for slashing greenhouse gas emissions by 40 percent relative to 1990 levels by the end of this decade.

Yet even with the increased efforts to disincentivise the use of coal and other fossil fuels as energy sources, analysts warn that far more work is needed to speed up the transition around the world, including through the structuring of energy taxes and other policy measures. 

For example, taxes on coal are either low or non-existent in many parts of the world, according to a new report on energy taxes from the Organisation for Economic Co-operation and Development (OECD). The report warns that this is a missed opportunity for policymakers that could have extremely harmful effects. 

“The damage to climate and air quality resulting from fossil fuel combustion can be contained, but the longer action is delayed the more difficult and expensive it becomes to tackle this challenge,” said OECD Secretary-General Ángel Gurría. 

ICTSD reporting; “Piñera propone que Chile tenga energía 100% limpia y removable para 2040,” EL CRONISTA, 22 September 2017; “Chile declares start of coal power phase-out,” CLIMATE HOME, 1 February 2018; “Chile vote: In energy, Piñera and Guillier see (mostly) eye-to-eye,” BN AMERICAS, 15 December 2017; “France to shut all coal-fired power stations by 2021, Macron declares,” THE INDEPENDENT, 24 January 2018; “Germany’s coalition negotiators agree treaty, promise coal exit date,” CLEAN ENERGY WIRE, 8 February 2018.

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