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Surprise! Canada is a world leader in phasing out coal-fired electricity

March 15, 2017

On November 19, 2016, Canada filed a “Mid-Century Strategy” report to the United Nations Framework Convention on Climate Change (UNFCCC) that included a new commitment to phase-out coal in electricity production by 2030. It is important to realize that this commitment is based on solid progress in putting Canada among world leaders in having coal-free electricity. In particular, as European countries begin to take stock of their efforts to clean up their electricity supply systems by phasing out coal, it is becoming clear that Canada is well ahead of them all.  In fact, Ontario is the only system in the OECD that has eliminated coal completely, which it did two years ago.

Denmark, recognized for its aggressive implementation of wind power which now accounts for about half its electricity supply, still has coal-fired generating stations in operation that supply almost a quarter of needs.  While these are combined heat and power (CHP) plants which supply district heating systems and therefore are higher efficiency than electricity-only generating stations, coal-like emissions also come from burning municipal waste – some of it imported due to insufficient local supplies - which accounts for a further 15% of electricity supply.  Much of the coal-fired capacity already taken out of service has in fact been converted to biofuel, basically wood chips.  But Danish carbon tax policy challenges further progress because coal (and gas) used for electricity generation is tax exempt.  The carbon tax incentive to convert to biomass therefore only applies to the district heating share of the fuel used at a combined heat and power plant.

Germany too has made major investments in wind and solar power and renewables now account for about 30% of electricity energy production. But coal still accounts for more than 40% and nuclear, while being phased out, shares the balance of supply with natural gas. The prospects for further reductions in coal’s share are not encouraging as communities, organized labour and companies in the coal industry have established persuasive political opposition.  Even without political opposition the way forward is uncertain because there is no clear alternative to coal for electricity supply.  Nuclear has a defined end-date and natural gas comes with security of supply concerns as it is imported from Russia.  Meanwhile, German exports of coal-fired electricity are rising because its price is attractive internationally.

Coal-fired electricity exports from countries like Germany and Poland in particular are stalling coal phase-out in neighbouring countries because it represents a low cost import to them.  But the international electricity trade in coal-fired electricity appears to an importer as cross-border “leakage” of the benefits that their own costly and disruptive efforts at eliminating coal create.  This is the logic behind Denmark not taxing fuel used for generating electricity – coal-fired electricity would still be used but its production would no longer be contributing to the Danish economy.  While the EU government has become known for its ability to regulate minutiae like the shape of vegetables, it apparently hasn’t found authority to coordinate coal-phase out such that one country’s efforts aren’t undermined by another’s exports.

Back to Canada, the federal government’s Mid-Century Strategy’s commitment on eliminating coal from electricity generation is coupled with increasingly aggressive federal regulations on coal emissions.  As importantly, the federal strategy also builds on several provincial initiatives. Ontario’s coal phase-out is now complete.  Alberta’s coal phase-out is newly underway.  Saskatchewan has new initiatives on carbon capture and storage (CCS).  Both Nova Scotia and Newfoundland are actively building the infrastructure that will displace fossil fueled generation in both provinces with hydroelectric power from the new Muskrat Falls development on the lower Churchill River. 

International data supports the conclusion that Canada is a global leader in reducing emissions from electricity generation.  International Energy Agency data for 2014 show Canada’s ratio of CO2 production (from all combustion of fossil fuels, including electricity generation) to electricity consumption to be 1 Mt/TWh. Denmark is slightly worse at 1.04 while Germany is at 1.27, about where Netherlands, UK and US are.

Overall, with a defined path ahead as well as many “shovels in the ground”, Canada’s further progress on coal phase-out is a lot more certain than Europe’s.


NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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