8. Other Considerations

• 8.1 Provincial SO₂ Plans and Actions
• 8.2 Pollution Prevention and Pollution Control
• 8.3 Potential for Dumping in Canada of High Sulphur Fuel Oils
• 8.4 Links with Other Federal Initiatives

Several provinces have recently announced SO₂ emission reduction targets.

Nova Scotia released an Energy Strategy in December 2001 which includes commitments to reduce emissions of SO₂ and NO_x as well as a commitment to promote renewable energy production. The province has committed to a 25% reduction of its existing SO₂ cap, to 142 000 tonnes, by 2005, and has a 2010 target of reducing SO₂ emissions from existing sources by 50% to 94 500 tonnes. The planned reduction will be achieved primarily through fuel switching by Nova Scotia Power. All new facilities will be expected to operate using best available, proven technologies to minimize emissions.

The province has also committed to a 20% reduction from 2000 NO_x levels by 2009. The Energy Strategy also includes a short term renewable energy target totaling 2.5% of Nova Scotia Power's current generation capacity. This target will be monitored for three years, at which time a longer-term mandatory renewable energy portfolio standard will be established.

New Brunswick announced in March 2001 that it will lower its provincial SO₂ emissions cap of 175 kilotonnes (kt), set under the 1985 Eastern Canada Acid Rain Program, by 30 percent to 122.5 kt by 2005 and by 50 percent to 87.5 kt by 2010. Implementation plans for the new targets will be developed over the next year to establish individual emission reduction strategies for large sources of SO₂.

Quebec announced a new reduction target for SO₂ of 50% for 2010 in April 2001. Reductions are likely to come from the major industries responsible for SO₂ emissions in Québec; namely, the copper and titanium mining operations.

Ontario has committed to reducing the province's SO₂ emissions 50% beyond the Countdown Acid Rain Program cap of 885 kilotonnes (kt) per year, by 2015. Under the Anti-Smog Action Plan (ASAP), Ontario committed to reducing NO_x and VOC emissions by 45% below 1990 levels by the year 2015.

There are several other new Ontario initiatives related to SO₂ which were announced over 2001/02, including the following:

• New regulated electricity sector emissions caps took effect January 1, 2002.
• Consultation is ongoing for a "Clean Air Plan for Industry" to develop options for addressing NO_x and SO₂ reductions from selected industry sectors. This could include emissions caps for major industrial emitters, including sectors such as pulp and paper, cement, iron and steel, petroleum refineries, chemicals, and non-iron metal smelters.
• The Ontario government has also proposed to consult on reducing the sulphur content in fuel oil and coal used by industry, commercial, institutional and residential sources to further reduce provincial SO₂ emissions.
• In 2002, Ontario revised an order to Inco and Falconbridge to reduce the allowable limits of annual emissions of SO₂ by 34% by 2007.

The announcements by Ontario, Quebec, New Brunswick and Nova Scotia are consistent with The Canada-Wide Acid Rain Strategy for Post-2000 signed by federal, provincial and territorial ministers of energy and environment. Table 8.1 shows these new targets, and the schedules for their achievement. Previous commitments (emission caps) under the Eastern Canada Acid Rain Program are provided for comparison.

In keeping with the Federal Strategy for Pollution Prevention, overall environmental benefits including impact on all emissions (such as greenhouse gases, nitrogen oxides, air toxics) will have to be taken into consideration in developing the best approach for Canada.

The European Union's directive allows for the use of technology to remove SO₂ from emissions rather than using low sulphur HFO for certain facilities. Facilities meeting an emission standard of 1700 mg SO₂/Nm³ are considered by the Commission to be " approximately the equivalent, in terms of emissions, of burning heavy fuel oil with a 1% [wt.] sulphur content." An approach that combines both sulphur in fuel oils and emissions would provide more flexibility and hence, if possible in the Canadian context might be a preferred solution.

In 1999, imports of HFO into Canada accounted for over a third (38%) of the national demand. Imports originated mostly from the United States (45%), Venezuela (35%) and Nigeria (6%)⁴². Most of the imports are directed to the Atlantic region where they meet over 60% of the demand⁴³. The sulphur levels of these imports are usually higher than the sulphur levels of HFO produced domestically.

With existing low sulphur requirements in some European countries, high sulphur fuel oils are generally exported from the European Union and low sulphur grades are imported⁴⁴.

Although imports into Canada of European fuel oils have been negligible in the past, eastern Canada could in the future become vulnerable to imports of HFO from Europe that do not meet the new European standards (i.e., 1% wt. sulphur HFO starting in 2003). In 1995, over 75% of exported volumes of HFO from the 15 countries of the EU, which represented over 14 million tonnes of fuel oils, had a sulphur content in excess of 2.8% wt.

The implementation by the European Union of the 1% wt. sulphur requirement in 2003 would most probably result in more exports of high sulphur HFO. In addition, new markets will be sought for volumes of higher-sulphur HFO presently imported into the European Union (e.g., from northern and western Africa).

In its assessment of the Directive, the European Commission also indicated that it expected "in the longer term, that the increase in low sulphur heavy fuel oil in EC would lead to an increased price differential between high and low sulphur heavy fuel oils". This situation would make it economically attractive in countries without standards for sulphur in fuel oils to purchase high sulphur fuel oils.

As most states of the U.S. northeast coast already have stringent standards for sulphur in fuels oils (e.g., generally less than 1% wt. in urban areas and less than 2% wt. in rural areas), the high sulphur fuels oils once sold in parts of the EU or exported from the EU could find a convenient market in eastern Canada. In addition to the negative effect that this would have on the Canadian environment and the health of Canadians, this could also undercut the price of HFO produced by Canada's domestic refiners, particularly in eastern Canada.

There are other federal initiatives underway that may have an impact on the fuel oil issue. The most notable is the work undertaken by the National Round Table on the Environment and Economy (NRTEE) Working Group on Sulphur in Heavy Fuel Oil under the Ecological Fiscal Reform Program.

The NRTEE is a multi-stakeholder committee that reports directly to the federal government. The NRTEE Working Group on Sulphur in Heavy Fuel Oil is composed of a variety of industries, environmental groups and federal departments (including Environment Canada). At present, the NRTEE Working Group is examining the issue of sulphur in HFO. The NRTEE plans to make recommendations to governments regarding the best available economic instrument to reduce sulphur emissions from the use of HFO.

Environment Canada's Multiple Emissions Reduction Strategy (MERS) for the power generation sector is also examining the issue of sulphur emissions from thermal generating stations that combust HFO.

Finally, there are synergies between this initiative and the on-going work on the federal climate change and acid rain programs.

⁴⁰ Ontario has proposed and is consulting on the proposal to advance this timeline to 2010.
⁴¹ Ninety-four and a half kilotonnes is a reduction target and not a cap. Nova Scotia's commitment is to reduce SO₂ emissions by 25% from the existing cap by 2005 and to further reduce emissions to achieve a cumulative reduction goal of 50% by 2010 from existing sources.
⁴² Environment Canada, Potential to Reduce Emissions of Sulphur Dioxide through Reducing Sulphur Levels in Heavy and Light Fuel Oils, 22 March 2001.
⁴³ Statistics Canada, Publication 45-004 for 2000 and Environment Canada, Potential to Reduce Emissions of Sulphur Dioxide through Reducing Sulphur Levels in Heavy and Light Fuel Oils, 22 March 2001
⁴⁴ European Commission, Explanatory Memorandum to the Proposal for a Council Directive relating to a reduction of the sulphur content of certain liquid fuel and amending Directive 93/12/EEC, 12 March 1997.