There has been lots of talk recently about “greening Alberta’s grid” — and for good reason. While there is a lot of focus on greenhouse gas emissions from the oilsands, burning coal for power in Alberta produces almost as much CO2 every year.
For this reason, a group of thought leaders came together in Edmonton recently to discuss how Alberta could take a new approach — implementing a clean electricity standard that would create market-based incentives to encourage lower-emissions energy technologies.
Alberta's emissions in context
Alberta’s electricity system is responsible for just over half of the greenhouse gas (GHG) emissions from all of the electricity generated in Canada — producing more emissions than all the cars, houses, buildings, refineries, off-shore oil rigs and garbage dumps in all of Atlantic Canada put together.
The good news is we have the technology today to significantly reduce emissions from the electricity sector. The question is: Will we do it? While new federal regulations will require much of the existing coal fleet to retire over the next 20 to 30 years, there remain significant barriers to lower-emissions alternatives such as hydro, solar, wind, combined heat and power systems and other low carbon options. Wind energy, for example is one of the lowest cost options for new generation in Alberta, and the rapid declines in the cost of solar have put it on the cusp of parity, However, the volatility of Alberta’s market and the absence of long-term contracts makes financing clean energy projects challenging.
Looking for a new approach
At the Pembina Institute, we’ve been looking at this question for quite a few years, and in 2009 we held a forum to examine how Alberta could seize low-carbon opportunities within its electricity system. There are numerous policy options that exist to support clean energy, including carbon pricing, direct incentives and standards that require minimum amounts of renewable energy. The last is common in the United States (see Figure 2), while Feed-in Tariffs are the most common tool in Europe. But we aren’t in Europe, or the United States, so we set out to find a solution tailor-made to the Alberta market.
After years of research, dialogue and analysis, a consensus has begun to build around the concept of a “Clean Electricity Standard” as a model that could work in Alberta’s unique electricity market. In essence, the Clean Electricity Standard places a limit on the emissions intensity of the electricity that is sold to consumers. Over the years, this limit is lowered, creating a long-term market for lower-emitting technologies, but allowing the market to decide which technologies it prefers, as well as how to balance existing high-emitting sources like coal with cleaner options like natural gas, wind or solar.
The made-in-Alberta policy is designed to be market based, technology neutral, flexible and effective in ensuring emission reductions, while creating some market certainty for clean energy investment. The idea, however, is a new one, and there aren’t working models out there as there are for other policies.
Thought leaders weigh in
So, on May 21, 2013, we hosted another forum to examine if it’s possible to operationalize and implement such a policy. The forum included — among others — representatives from industry, government, non-governmental organizations, consumer groups, retailers and municipalities. A white paper was circulated before the forum to set the stage, and the event kicked off with presentations on the context for reductions from Alberta’s electricity system, the rationale for a Clean Electricity Standard, and how it is possible to implement such a system in Alberta’s market.
Policy changes are always complicated, especially when there are so many different stakeholders, and so we certainly weren’t expecting to get consensus after just one day. We also intentionally only put one policy option on the table so we could dig into the details and uncover where some of the difficulties and hurdles lie, and if there are possible creative solutions to solving them.
We asked participants to discuss the following topics:
- Priorities for a clean electricity policy in Alberta
- How to set an emissions standard
- Interactions with existing policies
- Potential unintended consequences of a Clean Electricity Standard
- Compliance and operationalization
- Alternative options
Our summary report presents the highlights of the discussions.
Highlights of the discussion
We tried to capture as much of the input as we could from participants and present it as it was collected. While some participants were concerned that the policy may not be aggressive enough to meet climate change targets or to foster social license for Alberta’s industries, others worried about upsetting the current electricity market. While there was a general agreement that the Clean Electricity Standard model was an attempt to address Alberta’s unique market, it is also clear that any such changes will not happen overnight.
The strongest feedback we got from the forum, however, was that it was an important start of a long-overdue dialogue — because doing nothing is not an option.
