Power sector air emission control: winning and losing approaches

Tom Adams

November 29, 2001

  Presentation to Air and Waste Management Association Canadian Clean Air Policy ConferenceThe Fairmont Chateau Laurier, Ottawa

Air emission management is a lot like combining the children’s games of hide and seek with snakes and ladders. In moving through the steps of the game, we should aim to climb up the most ladders and slide down the fewest snakes. A principal challenge is that the ladders and snakes can be obscured or disguised. In air emission control policy ladders are often mistaken for snakes and there are some nasty snakes disguised as ladders.

My presentation will address two ladders – international environmental agreements and international trade agreements – and several snakes, including nuclear power, subsidized conservation programs, and subsidized renewable energy production promotions.

Wider communities mean better emission rules

Air emission control represents a political challenge because often a particular emitter or emitting region receives only a small portion of the total impact of its emissions. Without exception, emitters have to be persuaded by down-winders to take action. Multi-jurisdictional agreements are the environment’s best hope. The Canada-U.S. Acid Rain Agreement of early 1980s that gave rise to Ontario’s Countdown Acid Rain and the Ozone Annex Agreement signed a year ago are two wonderful examples.

Ontario’s new NOX emission control rules for the power sector are unlikely to result in Ontario complying with the Ozone Annex Agreement. Where environmental activists in Ontario have failed to get respectable rules installed, pressure from neighboring jurisdictions and the federal government may be more successful. Ontario’s big excuse for lax emission rules is that half of Ontario’s smog comes from the United States. The bulk of the smog in places like Buffalo and Montreal comes from Ontario. Hopefully, the United States’ EPA, environmental authorities in New York, the Quebec government and the federal government will stay engaged or increase the pressure on Ontario to clean up. Multi-jurisdictional and particularly international environmental agreements are one of the best ladders we have to achieve environmental protection.

Orderly trade can help

International trade agreements, though opposed by economic nationalists, have great potential to benefit air quality. The softwood lumber complaint raised by U.S. lumber interests provides a powerful model. The American countervails against the blatant subsidies conferred by provincial governments on local timber extraction interests and their associated unions are the single most effective force for forest habitat protection in Canada currently. The official Canadian position in the softwood lumber dispute is not motivated by a desire for free trade, as claimed, but out of a desire for free trees for timber extractors.

As the lumber example shows, Ontario’s lax emission rules may be viewed as targets of opportunity by the kind of U.S. litigators that Canadian environmentalists should be cheering for in the softwood lumber dispute.

Although sometimes unappreciated or under-recognized, international environmental and trade agreements can be key ladder for environmental protection. But what of those slippery, back-sliding snakes?

Snakes

Some snakes are obvious. Subsidies to fossil fuel extraction and government infrastructure programs to promote urban sprawl are two egregious examples. Canada has no credibility on GHG control while our governments are pursuing these emission promoting policies. Some snakes are more difficult to recognize.

Nuclear power

From a carbon and acid gas emissions perspective, nuclear power is effectively emissions free. In a world where we need for be concerned about emissions of these substances, does the favorable conventional emissions profile from nuclear power prove that people in the developed and developing world must sustain those that we have or even build more?

The answer is no for at least three reasons. CANDU reactors have proven to be so unreliable a means of generating power that the two Canadian jurisdictions relying on them as principle means of cutting emissions from conventional fossil stations have found themselves putting out far more emissions than expected, in some cases beyond prevailing emission limits. Second, the cost of nuclear generated power relative to other available low emission energy options is so unattractive that, if we accept that the funds available for environmental amenities are limited, diverting scarce funds into nuclear options effectively increases emissions. Finally, even if nuclear power could magically become reliable and cost-effective, there would still be the problem of its inherently insecure nature in an insecure world.

Nuclear scrubbers prove unreliable

The nuclear industry has long promoted the concept of nuclear power as a substitute for coal, the idea being that nuclear output would displace coal and thereby effectively represent "a nuclear scrubber." In the real world, it turns out that coal is a compliment for nuclear rather than a substitute.

People concerned by the approximately 60% rise in OPG’s NOX emissions in Ontario since 1994 might be mindful of the findings of a sub-committee of the Canadian House of Commons Standing Committee on Fisheries and Forestry on acid rain issued in 1984.

The committee analyzed Ontario Hydro’s strategy of achieving emission control targets by nuclear displacement of coal-fired power production. The committee saw the consequences of this strategy – unplanned nuclear outages were causing the utility to significantly overshoot its fossil emissions targets, just like the increase that has occurred since 1994. The committee argued for scrubbers as a more reliable solution than assuming nuclear offsetting.

"The Sub-committee feels that Ontario Hydro’s stated acid rain control strategy is imprecise and undependable. This Crown corporation, the largest and most powerful electrical utility in the country, situated in Canada’s industrial heartland, has the responsibility to lead the way in acid rain control, to set an example for other industries to emulate. That it has not done so but instead has forfeited its leadership role, is at best unworthy and, at worst, irresponsible.

What if costs mattered?

Environmental protection is an amenity. Society’s willingness to pay for environmental amenities must compete for resources with other priorities of the community. Those who care about environmental protection are therefore well advised to ensure that the protection they seek to promote is delivered on a least-cost basis.

Environmentalists have been complaining for decades that nuclear is uneconomic and now thanks to liberalization trends in electricity markets the market evidence to prove this claim just keeps rolling in. The Bruce lease revealed that the value of the Bruce nuclear complex is approximately equal not to its cost of construction – all of which must be written off – but to the cost of cleaning it up.

Another recent blow to nuclear power’s economic credibility is British Energy’s demand for a major injection of public capital from the UK government before it will undertake new nuclear construction.

To appreciate just how abject nuclear’s cost effectiveness is, keep in mind that such market tests that are applied to nuclear do not internalize its accident liability costs, since the industry worldwide is shielded by law from third party liability in the event of accidents.

Nuclear power is not the only high cost/low emission energy strategy. Environmentalists have too often damaged their own cause by pursuing other wasteful protection strategies. Examples include promotion of subsidies to wind power and conservation in the hope that their use will displace the use of non-preferred technologies.

There is no need to get stuck with high cost/low emission energy sources. We have lots of opportunity for low cost/low emission energy sources. Gas-fired cogeneration and pellatized switchgrass used in close-coupled gasifiers for distributed low temperature thermal applications are two good examples.

Implementing policies that internalize the costs of pollution in the direct business costs of polluters, like the US has done with sulfur dioxide through its cap and trade program, would let the low cost, low emission options take their proper role in meeting our energy needs.

In terms of its economic contribution, the "nuclear industry" is no more an industry than the east coast ground fishery is an industry. In business terms, these activities are not so much industries as they are a device for extracting subsidies from the rest of the wider community.

The security problems inherent with nuclear technology are so intractible and the downside of failing to control the technology are so grave that even if nuclear was capable of generating cheap, reliable power that could really offset coal, a rational society would opt out of it. At a time when we are all wondering whether nuclear weapons are available to terrorists, we ought to recognize that the nuclear weapon Osama bin Laden claims to have might well be a reactor located near a major Western population centre.

Notwithstanding Energy Probe’s concerns about air quality, we have requested that the three provinces relying on nuclear power take their reactors off-line in off-peak periods where they can meet their electricity needs by conventional sources as a means of lowering the threat represented by terrorist highjackings of operating power reactors.

Conclusion

Air emission control policy needs to fasten onto reliable ladders and avoid the snakes, whether obvious or disguised.

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