Promoting Green Power in Canada - Centre for Human Settlements

More documents

Recommendations

Info

Promoting Green Power in Canada Pollution Probe2005, in conjunction with a renewableportfolio standard [SCAFS 2002, p. 19].4.2.3 Voluntary Emissions ReductionTradingTwo kinds of “credits” have so far been thefocus of trading in voluntary schemes: CO 2offsets and green tags. The US Department ofEnergy established a Climate ChallengeProgram in collaboration with the electricutility industry as a mechanism to implementthe voluntary reporting of greenhouse gasemissions guidelines of the Energy Policy Actof 1992 for identifying and implementingactivities that can reduce, avoid or sequestergreenhouse gases. Canada’s KEFI Exchangehas been established to trade carbon dioxideemissions in anticipation of implementationof the Kyoto Protocol. Canada’s GreenhouseGas Emissions Reductions Trading pilot project(www.gert.org) is another such platform.TransAlta and other utilities, such as OntarioPower Generation and BC Hydro, have postedrequests for proposals for projects yieldingCO 2offsets. BC Hydro’s RFP specifies astandard offer of $2 per ton of CO 2.Green pricing (in regulated markets) andgreen marketing (in deregulated markets) aremeans to find customers who are ready to paya premium for renewable power. Currentpremiums range from (US) $1.50 to $4.00per MWh of electricity (see Appendix E).Unless renewable power is sold through longtermbilateral contracts to utilities, it isgenerally sold as generic energy (nullelectricity) and “green tags,” which representthe combined environmental benefits ofrenewable power production, including anyemissions offsets or credits. Green tags aresold at prices equivalent to green powerpremiums and their value can be assessed bylooking at wholesale market platforms, suchas the Automated Power Exchange (APX).Green tags were offered on the APX platformfor prices between (US) $1.25 and $12 perMWh in 2001. 20 In general, existingrenewable power facilities obtained prices atthe lower end of the scale, whereas newfacilities (built within the past 2 years) soldtheir tags for $5 per MWh or more.Table 4.4 — Potential Revenues for Renewable Power Producers from EmissionsTrading (adapted from [REPP 2000])Emission Credit Market Emissions Avoided per EmissionsReduction Value MWh of Renewable Value [C$/MWh][C$/short ton] Energy (short tons) 1CO 22 0.6 1.20NO x1,200 0.00075 0.38SO 2320 0.006 1.921Estimates for CO 2are based on the average CO 2emissions/MWh associated with fossil fuel electricitygeneration in the United States, discounted by one-quarter to reflect the likely effect of a CO 2cap onretirement of older coal-fired generation capacity (an allocation based on today’s generation andemissions would be about 0.8lbs/MWh), with no allocation of allowances to nuclear and hydro facilities.NO xestimates are based on the proposed allocation of allowances under EPA’s NO xSIP Call in theeastern US. The SO 2allowance allocation rate is based on that used to assign emission allowances tofossil generation under Phase II of the Clean Air Act acid rain program. This program began in 2000, butwill not be fully effective until 2010.76
Promoting Green Power in Canada Pollution Probe4.2.4 Trading as Additional Revenue forRenewable Power ProducersThe total possible trading revenue shown inTable 4.4 (C$3.50/MWh) is only a smallpercentage of the generation cost forrenewable power, which is at least $50-60(see chapter 2.2.6). This means that tradingcan only reduce the generation cost by about7%. Some caution is warranted with respectto CO 2credits: while a price of $2 per ton ofCO 2is a conservative number, the actualrevenue created depends on whether or not abuyer can be found. Since there is, as yet, noregulatory framework, CO 2emissionreductions may have to be establishedagainst a changing background electricity mix.On the other hand, CO 2offset prices areexpected to rise over the coming years and mayattain values of up to (US) $15, a ton even inthe absence of an obligatory internationaltrading framework, which may make up forsome of the uncertainties linked to CO 2emissions.It is also striking that the revenues from NOxallowances may well be the smallest sourceof income if other pollutants are regulated— mainly because of the seasonal nature ofsome of the NOx markets. These numbersare very similar to current market prices ofthe green attributes of renewable electricity,which range from (US) $1.50 to $4.00 perMWh (see chapter 5).4.2.5 Ontario’s Emission AllowanceSet-AsidesOntario’s emission trading system went intoeffect for electricity generators on December31, 2001. Based on Regulation 397/01 andthe Ontario Emission Trading Code, emissioncaps for both NOx and SO 2have been in placesince January 2002. One thousand tons(2.8% of the total) of NOx emissionallowances and 4,000 tons (2.5% of the total)of SO 2allowances are set aside to supportrenewable power generation and energyconservation measures. The Regulationallows for a maximum of 33% (NOx) or 10%(SO 2) of emissions to be covered by extraallowances from emission reduction credits(including on-site measures, such as fuelswitching or upgraded burners). The allowancesystem is managed through the OntarioEmission Trading Registry [APCC 2002].The Emission Trading Code specifies thatallowances from renewable power generatorswill be treated in the same way as emissionreductions. Applicants have to submit threedocuments before they can be allocatedallowances: a Protocol, an Emission ReductionReport, and a Verification Report. Emittingtechnologies, such as electricity generationfrom biomass and landfill gas, are excludedfrom the scheme [OETC 2001, pp. 13f.]. Theconstruction of eligible renewable powerprojects must have started after January 24,2000, be located in Ontario, and be based onwind, solar PV, run-of-river hydro, or hydrogeneration from existing dams. A project iseligible for allowances until seven years aftercommissioning and allowances can only beclaimed after one full year of operation [ibid.,p. 27]. Allowance allocations are calculatedbased on seasonal emission intensities, whichare different for day and night, and are relatedto a MWh of electricity generation. Both NOxand SO 2allowances are traded throughoutthe year. Annual average emission factors are:NOx: 1.17 kg/MWh and SO 2: 3.79 kg/MWh.As the Ontario trading regime contains aclause admitting the introduction of U.S.allowances into Canada, US prices could havea strong influence on allowance prices inOntario, and similar values as in the US canbe assumed for Canadian allowances [OPG2002b]. While it may not be necessary evenfor smaller renewable electricity generatorsto use brokerage services at this point in time(the only buyer of allowances is currentlyOntario Power Generation), allowances aresubject to income tax (40%) requirements(unless for utilities that are tax exempt Crown77
Page 1 and 2:
Promoting Green Power in Canada Pol
Page 3 and 4:
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34: Promoting Green Power in Canada Pol
Page 83: Promoting Green Power in Canada Pol
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 204:
Page 207 and 208:
Page 209:
show all

Promoting Green Power in Canada - Centre for Human Settlements

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?