Ottawa backtracks on coal emissions – by Shawn McCarthy (Globe and Mail – January 6, 2012)

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The federal government is offering the provinces a way to avoid tough new regulations that would eventually force power companies to shut down the country’s fleet of coal-fired power plants.

Environment Minister Peter Kent and Prime Minister Stephen Harper have privately indicated they are willing to provide flexibility in how new power-plant emissions rules are implemented, provincial and industry sources said Thursday. Mr. Kent is expected to release the final version of the long-promised regulations in the coming months.

The change in stance by the federal government provides relief for some of the country’s biggest utilities. Alberta-based power generators such as TransAlta Corp.,  Capital Power Corp. and Atco Ltd.  – as well as Nova Scotia’s Emera Inc.  – have warned that a rigid approach to Ottawa’s plant-by-plant rules would increase costs, drive up electricity prices for consumers, and strand valuable assets by imposing arbitrary deadlines for power plant closings.

The Conservative government has long touted its proposed coal regulations as evidence it is serious about cutting the country’s greenhouse-gas emissions, even as it faced international condemnation for withdrawing from the Kyoto Protocol, which set specific reduction targets for Canada. Coal-fired generation accounts for roughly 16 per cent of Canada’s electricity.

Now the federal government is willing to cede regulation of power-sector emissions to the provinces – as long as they have rules in place that would achieve equivalent reductions. The new approach would allow provinces to set overall emissions targets, rather than adhere to strict targets for each individual power facility as set out by the government’s original approach.

Mr. Kent has said he will follow the coal regulations with new rules on the broader power sector, and on the oil and gas industry. Energy industry executives are closely watching the rollout of the coal regulations for indications of what to expect. Typically, the sector prefers a more flexible approach that allows companies to manage their emissions across their entire operations, and to purchase credits to meet the targets.

Alberta, Saskatchewan and Nova Scotia – which rely most heavily on coal for electricity – have received assurances that Ottawa will not saddle them with cumbersome regulations in a sector that is primarily under their jurisdiction, the provincial and industry sources said.

A spokesman for Mr. Kent said the government is still reviewing submission on its draft coal regulations, which were issued last August, and that “it would be premature to comment.”

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