Cap and Trade

One of the biggest arguments to support the sale of NB Power to Hydro-Quebec is that it addresses the looming issue of cap and trade or carbon taxation and helps NB reach its greenhouse gas emission targets.  I realize this argument has been mooted for some strange reason and environmentalists – at least the ones I have heard/read – are against the sale but nevertheless this is coming like a freight train and we have the highest percentage of thermal generation of any electric utility in Canada.

Has anybody seen an estimate of what the impact would be of closing all our thermal generation over the next decade?  If that was combined with a large scale efficiency effort I think NB could easily get back to well below 1990 emissions.   The province has a document on this. It says that by just closing Grade Lake and Dalhousie, GHG emissions in 2012 will besix per cent below 1990 levels.

I think this matters.  Even if you don’t believe in global warming, you can’t deny the serious cost associated with a cap and trade system.  Someone told me this week it would add $20/MW or more to the cost of electricity in New Brunswick from those sources.

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6 Responses to Cap and Trade

  1. Agreed. I write about it here: http://halfanhour.blogspot.com/2009/12/on-nb-power-sale.html

    But we need to take note, if we end up with a cap-and-trade global warming treaty, we will want to set the start date for the reductions _before_ the impending closure of our less efficient plants, not after.

  2. Rob says:

    We’re closing Dalhousie and Grand Lake even if we don’t sell NB Power, so I think that’s where the moot aspect comes in. However, with the deal as it stands, we’ll buy the replacement power from Quebec (if the transmission capability exists, which I’m not sure if it does). We’ll need to replace 357 MW of power somehow.

    As far as Coleson and Belledune are concerned, we’ll see these plants close under the current MOU as soon as HydroQuebec deems we should. They might not close at all, they could even be sold to a private interest. The only wrinkle is that while Genco will own the plants and own the decommissioning costs, Hydro-Quebec receives all carbon credits. Given the high uncertainties in any future cap-and-trade system, I think this COULD be a great cash cow for the Quebec utility.

    The biggest problem is mentioned in Roy MacMullin’s column in the TJ today: We don’t have an up-to-date energy policy for New Brunswick. I feel like a broken record, but we’re flying by the seat of our pants here. Selling NB Power is a massive change to NB’s energy portfolio, and I’m not sure we know exactly what lies ahead beyond “Oil is getting more expensive” and “Carbon trading will jack the price of power”.

  3. Frederic S. Gionet says:

    if the estimated costs of $20/MW come into play, reaching the heritage pool’s limit would translate into $290,000,000 in carbon taxes of all kind. That would be a disaster for our collective finances.

    The world seems to hover towards a $20/tonne tax, which probably does not translate into $20/MW if supplied energy originates from ‘carbon-friendly’ sources.

    Nevertheless, energy costs are on the path to large increases, which will likely mean high inflation and subdued economic activity for most sectors, unless all jurisdictions are affected equally.

  4. mikel says:

    There’s another side to that, has anybody calculated what the effect of pulp mills and oil refineries to the cap and trade system? If Irving has to pay a tax on that, you can expect them to come to the province once again for a bailout.
    Wind power ALREADY generates as much power as Dalhousie, and thats with one of the most lacklustre wind generating policies around. A recent report says that NB Power needs to OWN the turbines to get maximum benefit from them, so right there is your replacement for the thermal generators. And again, there’s been no real move at conservation in NB, and little movement towards natural gas. The REAL problem for the utility is IF people convert to gas, thats more debt for the utility (it doesn’t make as much from its customers). That’s the concern with HQ, at least NB Power is an NB public utility. If it were privatized or a different owner there’s little desire to get people to conserve.

  5. Samonymous says:

    Notwithstanding your data assumptions on GHG reductions, there are real facts to face here. And let’s be honest, our efforts pale in comparison to province’s like British Columbia whose memorandum of understanding with California takes clear steps to combat greenhouse gases emissions as well as create real steps to form a Pacific Coast Collaborative.

    Where is our climate action plan? Where is our effort to ensure coordinated action and information sharing on environmental matters of mutual concern with other provinces and states? Have we made serious steps to build better public transportation system (i.e. rail and bus services)? Have we invested in significant green technology to reduce GHG emissions?

    If you ask me, the sale of a utility will do nothing more than transfer fledgling assets in need of repair to another government jurisdiction. Will they feel the need to upgrade or close facilities like Coleson and Belledune that do not directly harm any of their citizens? It’s hard to imagine why they would.

    Plus, if we were so concerned about the environment, then why does our government consistently reward and prop up known polluters (who broke the clean air act) with millions in subsidies to continue with polluting ways. Methinks it’s a little stretch to be thinking that selling NB Power is some sort of environmental coup, especially when you still have the big three polluters still in business and on your subsidy payroll.

  6. Cod Father says:

    I’ve said it numerous times, why weren’t these assets shopped around to private interests? Atco? Enmax? Epcor/Capital Power? TransAlta? Hell, TransAlta is all ready in NB with the Kent Hills wind farm. I can’t understand what is going on in that Centennial Building. Did the A-team all pack up and leave NB and leave the B-team behind to run the show? (maybe turn the lights out?)

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