Evidence of meeting #16 for Bill C-30 (39th Parliament, 1st Session) in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was carbon.
A recording is available from Parliament.
Canada Research Chair in Energy and the Environment, Department of Chemical and Petroleum Engineering and Department of Economics, Institute for Sustainable Energy, Environment and Economy, University of Calgary
No, there are some answers, because there are things being built. For example, there are gasification plants that are going forward in the U.S.—two of them—and there's BP's Carson City plant.
Let me say it this way. I think that at the prices we had a few years ago, a carbon price of $30 a tonne of CO2 would really make people move in the electrical power centre. But I think the actual cost for a relatively small facility in Edmonton right now—because 450 megawatts is small on the global scale—and given the high cost, would be substantially higher than $30 a tonne—
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So it's somewhere in that neighbourhood.
This is a question for Mr. Lewin. Does your company factor in what it costs per tonne when you make efficiency improvements, if you have a coal-fired plant that's producing electricity—how much it costs you per tonne in making an efficiency modification rather than going out and producing it and then trying to recapture it?
February 27th, 2007 / 10:10 a.m.
Senior Vice-President, Integrated Gasification Combined Cycle Development, EPCOR Utilities Inc.
One thing I should explain about a coal-fired generating plant is that over its life it's a real challenge to maintain the actual efficiency of the plant from when it was built, from its design criteria, so you're continuing to do that anyway. We're not basing the CO2 cost on any of those marginal improvements.
I would say the efficiency improvements in coal-fired power plants, generally, are extremely small. If we can get a 0.1% improvement, we're doing well.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Do you have an industry breakdown between all your emissions, fugitive versus the emissions done through combustion?
Senior Vice-President, Integrated Gasification Combined Cycle Development, EPCOR Utilities Inc.
Certainly, the CEA, the Canadian Electricity Association, would have all that broken down.
Senior Vice-President, Integrated Gasification Combined Cycle Development, EPCOR Utilities Inc.
We do, yes, for ourselves. Yes, we do.
Senior Vice-President, Integrated Gasification Combined Cycle Development, EPCOR Utilities Inc.
We could make that available, yes.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
That would be helpful.
Mr. Keith, you had a comment you wanted to throw in?
Canada Research Chair in Energy and the Environment, Department of Chemical and Petroleum Engineering and Department of Economics, Institute for Sustainable Energy, Environment and Economy, University of Calgary
Yes. People are now building coal-fired power plants in Europe, and some recently in China, that are exceeding 42% to 43% efficiency, which is much better than the fleet average in North America. But if you ask about the cost-effectiveness of pushing beyond that number, it's very cost-ineffective, many hundreds of dollars a tonne of CO2 to push to ultra-supercritical with double reheat, which would be the latest thing.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Right, which brings an interesting question as to the marketability of it, because we're often given these examples. ICON and others bring forward technological examples and say this is the absolute gold standard, with the exception of mentioning what that gold standard costs and will the market figure it out. This comes back to my question.
The industry has asked for a technology fund to be able to, so-called, offset some of their emissions. How useful a tool is the technology fund in terms of lowering Canada's overall emissions, specifically when you talk about carbon capture and sequestration? Is it an effective tool? Is it money well spent?
Canada Research Chair in Energy and the Environment, Department of Chemical and Petroleum Engineering and Department of Economics, Institute for Sustainable Energy, Environment and Economy, University of Calgary
A lot of that depends on the real details of administration, but the overall evidence from the previous experience in the electric power sector is that regulation is the most important tool to make private money do research. When we regulated sulphur emissions in the U.S. electric power sector, a huge business was created building sulphur scrubbers, and they drove the cost of scrubbers down 50% over about 10 years.
Canada Research Chair in Energy and the Environment, Department of Chemical and Petroleum Engineering and Department of Economics, Institute for Sustainable Energy, Environment and Economy, University of Calgary
The economy didn't collapse. And that wasn't mostly to do with any technology fund; it was just that we passed a law that said you must have the right number of permits at the end of the year or we lock your plant.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
That brings me to the question of investor certainty, the ability to make these massive investments that we've heard about from many witnesses.
There's an intensity regime putting out its so-called intensity targets, which I think is almost a misnomer. Does that allow that investor confidence for the companies to go out and attract the capital and to make those type of investments if there's an intensity formula being constructed by government? Is that the hard cap? Is that the certainty that worked in other areas like sulphur?
Canada Research Chair in Energy and the Environment, Department of Chemical and Petroleum Engineering and Department of Economics, Institute for Sustainable Energy, Environment and Economy, University of Calgary
This is going to sound very evasive and academic—
NDP
Canada Research Chair in Energy and the Environment, Department of Chemical and Petroleum Engineering and Department of Economics, Institute for Sustainable Energy, Environment and Economy, University of Calgary
But the answer is that the devil really is in the details. You could design an intensity-based system that achieved real reductions and did the job. The issue is where you set the intensity knob. So if you set a very long-run, clear target and really ground intensity down, you could do the job with intensity.
So the problem isn't intrinsically intensity; the issue is actually doing something, providing a real, clear carbon price. Whether it's through intensity or total caps is almost a sideshow.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
It's interesting, when you talk about a carbon price, speaking with some of the exchange groups within the country and Europe and others, some of the businesses trying to do this have said it's very difficult because it's a backcasting. To work off an intensity model, you must know and be able to predict what the overall unit production is in the forthcoming year.
Canada Research Chair in Energy and the Environment, Department of Chemical and Petroleum Engineering and Department of Economics, Institute for Sustainable Energy, Environment and Economy, University of Calgary
That's why a tax is so simple. Intensity gives governments a lot of room to hide, because they can overestimate the current emissions, and it gives industries some room to hide. That's what happened in Europe; people overestimated. But a cap and trade too. The reason the European carbon price collapsed is people had the estimates set too high, and then when the real estimates became clear, the price collapsed. That's what's neat about a tax. There's no mystery.
Conservative
The Chair Conservative Laurie Hawn
Okay.
We have to move on to Mr. Warawa for seven minutes, please.
Conservative
Mark Warawa Conservative Langley, BC
Thank you to each of the witnesses for being here today. We've really appreciated the frank discussion.
Mr. Lazar, you said to meet the Kyoto target would require massive retooling of industry to reduce greenhouse gas emissions. I'm going to replace Kyoto and say that to meet the target of a dramatic reduction of greenhouse gas emissions will still require a massive—
President and Chief Executive Officer, Forest Products Association of Canada
Absolutely. Kyoto is an international agreement that is an instrument to address climate change, a profoundly flawed instrument, the only international instrument we have. So Kyoto was shorthand for addressing climate change.
I know you guys have greater sensitivities to the word than the rest of the world, but generally in a public debate, when you say Kyoto, you're really talking not to details of an international agreement but to climate change.