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"I think we all understand the need to phase out coal as an energy source"

Regina – Prime Minister Justin Trudeau confirmed on Jan. 11 that the federal government and the government of Saskatchewan have reached an equivalency agreement for carbon dioxide emissions from its coal-fired power fleet.

Trudeau was in Regina on Jan. 10 for a town hall session and a subsequent announcement the following day of $25.6 million in funding for the Deep Earth Energy Production Corp. (DEEP) geothermal project south of Torquay. In a press availability after the DEEP announcement, Trudeau spoke about the equivalency agreement in response to a question from Pipeline News.

Trudeau said, “We were very pleased to announce, this morning, that Saskatchewan and the federal government have come to an agreement on coal equivalency.

“It’s important. I think we all understand the need to phase out coal as an energy source, and we will be doing that by 2030. But it’s also extremely important that we’re supporting the workers and their families who are in that industry now. That agreement we’ve come to with Saskatchewan will allow for exactly that.”

Referring to the announcement of funding for the geothermal project, Trudeau said, “The announcement we’re making today is a great example of exactly how the expertise that folks have developed here in Saskatchewan, and indeed, across the country, in our resource sector is an integral part of how we move forward. We wouldn’t, as Kirsten (Marcia) said, have known about the renewable resource we’re going to being to draw on in the coming months and years, were it not for the oil industry. We need to build on the expertise and hard work the people have done to find better solutions as we move forward. That’s what folks in Saskatchewan want for their families, for their kids and grandkids. That’s what we want for our communities, and that’s exactly the kinds of things we’re going to keep innovating with and working on together.”

Saskatchewan confirms

Saskatchewan Minister of Environment and Minister Responsible for SaskPower Dustin Duncan, in his Weyburn constituency office later that day, confirmed that an equivalency agreement had been gazetted on Dec. 29.

“At the end of December, the federal government gazetted the agreement. And so that kicks off a 60 day consultation period. So basically, we’re in a 60-day period where the government can provide feedback. Provided that the federal government receives no feedback that will make them want to make amendments to it, the equivalency agreement should be ready to signed, sometime in March,” Duncan said.

The Agreement on the Equivalency of Federal and Saskatchewan Regulations for the Control of Greenhouse Gas Emissions from Electricity Producers in Saskatchewan was published in the Dec. 29 Canada Gazette, the official newspaper of the Government of Canada. Publication in the Gazette formalizes federal statutes, new and proposed legislation, administrative board decisions and public notices.

So the agreement is now public, but has not been signed yet, Duncan explained.

Agreement

The agreement puts mandatory greenhouse gas emissions limits for the electricity sector in Saskatchewan for the years 2018 to 2029. For the calendar years 2018 to 2019, the limit is not greater than 33.5 metatonnes (Mt) of carbon dioxide equivalent. For the calendar years 2020 to 2024, the output can’t be greater than 77 Mt (or 82 Mt if a carbon capture and storage (CCS) system is installed at Boundary Dam Units 4 and 5) of carbon dioxide equivalent. For the calendar years 2025 to 2029, emissions cannot be not greater than 64.5 Mt of carbon dioxide equivalent.

(SaskPower has already announced it will not be proceeding with carbon capture on Boundary Dam Units 4 and 5.)

Saskatchewan agrees to meet a commitment to have at least 40 per cent of the provinces’ electricity generation capacity be from non-emitting energy sources by 2030, by achieving an escalating, specified targets.

A long wait

The federal government didn’t expressly contact the provincial government that they would be going ahead with the agreement. Duncan said the province found out about the long-awaited agreement via the Gazette.

Saskatchewan has been waiting for this agreement for a long time. Duncan recalled speaking about an equivalency agreement to then-federal Minister of Environment Peter Kent, under the Stephen Harper Conservative government, when Duncan, himself, was in his first round as environment minister, from 2010 to 2012

In more recent months, Saskatchewan had essentially laid out all the information it felt it possibly could for the federal government and awaited a reply. That was the state of affairs when SaskPower president and CEO Mike Marsh addressed the Estevan Chamber of Commerce on Dec. 6, 2018 – no agreement had yet been reached.

Duncan said it was “great to hear” the prime minister make the announcement, so long as nothing comes up during the consultation period.

“It provides for the ability of SaskPower to manage the coal-fired fleet, as a fleet, not as individual facilities. So under federal regulations, all facilities cannot exceed 420 tonnes of carbon dioxide per gigawatt hour (GHw) of production. So basically, rather than looking at each individual unit facility by facility, SaskPower is able to manage it on a fleetwide basis,” he said.

That will allow SaskPower, rather than having to shut down Boundary Dam 4 and 5 by the end of this year (2019) to continue to operate them until 2021 and 2024, respectively.

“That’s really the only effect that it has. Anything that doesn’t have carbon capture and storage attached to it is mandated to close, by the federal government by the end of 2029,” Duncan said.

The key element in this agreement is the reduction of emissions of carbon dioxide by the Boundary Dam Unit 3 Integrated Carbon Capture and Storage project. Since it captures nearly all the carbon dioxide that would otherwise be emitted through the burning of coal, SaskPower can take those reductions and average it across its other units to hit federal targets.

So what changed?

Asked what changed to finally bring this about, Duncan said there had been several minor agreements to get to this point.

“This was a long time in the making. There were serious discussions back and forth going back to the summer, early fall, that were making me feel not really confident that we were going to get an equivalency agreement,” he said.

He didn’t know for sure about the agreement until it was seen in the Gazette.

“Why it took this long, people can have all sorts of opinions,” Duncan said.

Carbon capture and storage

With SaskPower foregoing CCS on BD4 and BD5, the remainder of the coal fleet, Shand Power Station and Poplar River Units 1 and 2 (PR1 and PR2) are the next under consideration. Shand is the newest power station, with a life expectancy going to 2042. But the federal regulations will not allow operation of Shand beyond 2030 without carbon capture and storage.

Recently gazetted federal regulations do allow for continued coal-fired power generation beyond 2030, like Boundary Dam Unit 3, if carbon capture is employed. A recent high-level study was released by the Regina-based and SaskPower-affiliated International CCS Knowledge Centre saying that the cost of the next generation of CCS would cost 67 per cent less, per tonne of CO2 captured, than the BD3 operation.

“So (Boundary Dam Unit) 6 and Poplar River are possibilities,” Duncan said. “Shand has been the focus, at this point, just because it is the newest of the units.”

It’s also the least-congested site to work on.

“What’s probably the best case scenario at this point? Likely, it would be Shand. There’s nothing in the equivalency agreement that says we can’t retrofit Poplar River 1 and 2, Shand, BD6, with CCS. It (the equivalency agreement) acknowledges the provincial government will now regulate coal-fired electricity, that the federal government sees our regulations as equivalent to the federal regulations, even though theirs are unit-specific, and ours are fleetwide,” Duncan said.

Regarding Boundary Dam Unit 6, their deadline is Dec. 31, 2027, according to Duncan. The shutdown deadline for Shand, Polar River Unit 1 and Unit 2 is Dec. 31, 2029, without CCS.

The decision is still being made to extend the life of BD4 and BD5 beyond what its normal retirement date is. Keeping BD3 operating in the mix allows SaskPower to offset emissions at other units.

“We’re not ruling out CCS on any of our units, going forward. We have made the decision on BD4 and BD5. That’s based on a lot of things. We were at the point where we had to make a decision and the economics on it didn’t work. Dealing with 50 year-old units that were going to require a couple hundred million dollars, each, before you spend the money to do the CCS. So BD4 and BD5, that decision has already been made. But BD6, Shand, Polar River 1 and 2, no decision has been made,” Duncan said.

Size matters, according to Duncan. Units the size of BD4 and BD5, their generation are being retired in the United States despite President Donald Trump’s support of coal. They are 150 megawatts each, whereas the remaining SaskPower units, except BD3, are all 300 megawatts apiece.

? Copyright Pipeline News

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