Backgrounder

Key Elements of Proposed Regulatory Approach 

The approach would apply a performance standard to new coal-fired electricity generation units, and units that have reached the end of their economic life, through regulations under the Canadian Environmental Protection Act (CEPA), 1999.  The performance standard would come into effect in mid-2015, five years after the expected announcement.  Regulated firms would be subject to enforcement and compliance requirements and penalties as specified under CEPA.

End-of-life is the longer of 45 years from the unit’s commissioning date or the expiry date of the power purchase agreement (PPA) in effect at the time of the policy announcement.

The performance standard would be set at the emissions intensity level of Natural Gas Combined Cycle (NGCC) technology, a high-efficiency type of natural gas generation^1, and would be in the range of 360 to 420 t/GWh; this is also the performance of an average coal-fired power plant employing carbon capture and storage (CCS) technology with a capture rate of approximately 70% of its emissions.

The performance standard would be applied to new and extended life coal-fired electricity generation units with a capacity of 10MW or more.

New units that incorporate technology for CCS would be exempted from the performance standard until 2025, at which point commercially viable CCS is expected to be available.  The details of these requirements would be finalized in the development of the regulation. 

Appropriate flexibilities where necessary would be considered in the process of developing the regulation, including with respect to the unique circumstances of certain units or classes of units in the determination of the end-of-life date.

The approach would establish time-limited exemptions from the performance standard in exceptional circumstances where there is significant risk of disruption to the electricity supply.

Equivalency agreements with provinces, under which the federal regulation would stand down and the provincial regime would apply, could be established under CEPA if there is an enforceable provincial regime that delivers an equivalent environmental outcome.

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¹ Natural Gas Combined Cycle (NGCC) is a type of power process whereby a gas turbine generates electricity, and the waste heat is used to make steam to generate additional electricity via a steam turbine. The process is more efficient than a simple generation cycle.