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Canada finalizes plan to end most coal-fired power generation by 2030

While the U.S. government continues to seek out ways to support the coal industry, Canada finalized a plan on Dec. 12 to phase out traditional coal-fired electricity, transition to cleaner energy and cut carbon pollution in a little more than a decade.

The nation's goal is to produce 90% of its electricity from nonemitting sources by 2030, cutting carbon pollution by 12.8 million tons, according regulations issued by Environment and Climate Change Canada. The regulations will require all coal-fired electricity generating units to meet an emissions performance standard of 420 tons of carbon per GWh.

Coal-fired power accounted for about 16% of the nation's electricity in 2005 and fell to 9% in 2016, according to a government news release, yet coal accounts for 72% of Canada's greenhouse gas emissions from the power sector. According to S&P Global Market Intelligence data, the largest of Canada's coal-fired power plants are all in Alberta. The new regulations are intended to encourage operators of some coal plants to convert their facilities to natural gas.

Canada imported 2.1 million tons of U.S. coal in the third quarter of 2018 and 6.9 million tons in 2017, about 5.4% of U.S. exports that year, according to data compiled by S&P Global Market Intelligence.

Implementing the plan is expected to result in C$4.7 billion of health and environmental benefits, and is estimated to cost about C$2 billion, according to an executive summary of the government's regulatory impact analysis statement.

Kenneth Green, resident scholar and chair in energy and environmental studies at the Fraser Institute, a Canadian public policy think tank, said he would prefer that the market determine which types of plants are built and operated, rather than the government. But in this instance, he said, it is important that coal-fired resources are replaced with something that is equally or less expensive and has a "better emission profile."

"It's a decision to phase out coal," he said. "The question has to be, 'but phase in what?'"

Should a more conservative government come to power before 2030, Green said, the regulations likely would remain.

"I think they would be looking at much bigger targets than trying to stick up for coal power generation," he said.

Binnu Jeyakumar, director of the clean energy program at the Pembina Institute, a nonprofit Canadian think tank that focuses on energy, said the regulations were "great news" and a "bold action" by the federal government.

Given recent climate change reports that say immediate action needs to occur to mitigate threats from climate change, Jeyakumar said the regulation prompts companies to transition coal plants to natural gas units.

The 2030 goal is "pretty attainable" given the economics of coal, she said, adding that the plan should not affect grid reliability. Canada can bring a diverse set of renewables and some natural gas online, which could improve reliability and flexibility.

"I think there's a really strong case for any government that's looking at this rationally," she said. "At the same time … because of the challenging economics of coal, you're going to have a private sector that actually is not interested in further investments in coal and wants to actually step away from the risks of coal and move into renewable assets."

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Canada had 36 coal-fired power units with a combined generating capacity of about 10,000 MW in 2017, the impact analysis statement said. Twenty of those units are expected to shut down before 2030, while one unit in Saskatchewan, Boundary Dam, is equipped with carbon capture and storage technology and will meet the new emissions standard. That leaves 15 units that will either have to shut down, implement carbon capture technology or transition to natural gas-fired power.

The provinces of Alberta, New Brunswick, Nova Scotia and Saskatchewan contribute 99.7% of the nation's coal-fired power and will feel most of the impact of the regulations, according to the impact analysis statement. The operators of some coal-fired plants in Alberta, such as Capital Power Corp. and TransAlta Corp. are already considering converting those plants to run on natural gas.

Canada launched a Task Force on the Just Transition for Canadian Coal Power Workers and Communities earlier this year to try to minimize the impacts of the regulations on coal communities and help coal workers acquire new skills.