Canada’s premiers disagree on cap and trade: Saskatchewan likes it, Alberta hates it

Another year, another disagreement on a pan-provincial approach to climate change. You can almost set your watch to what Ontario and Alberta will say at the annual premier-fest (a.k.a. Council of the Federation meeting). Ontario will talk about closing its coal-fired generating plants, Alberta about its opposition to any plan to put a price on carbon emissions.

True to the prediction, that’s exactly what both said this year. However, Saskatchewan premier Brad Wall also said maybe Canada should look at “what the Americans are proposing, maybe it can work.” He’s referring to the Waxman-Markey climate bill which squeaked through the U.S. House in June and now faces an uncertain future in the Senate.

Saskatchewan gets almost all its electric power from coal-fired generators operated by SaskPower, the provincial crown utility. Coal is the most carbon-intensive way to make electricity. Why would a Saskatchewan premier show any sign of agreeing with cap and trade, a policy that, on its surface, would hurt the revenues of one of his province’s most important crown corporations?

Wall told the Globe and Mail why: Waxman-Markey “which is supported by the Obama administration, is going to provide significant concessions to coal-based economies.” He may be right: as I pointed out a month ago the bill’s centrepiece cap and trade provision, paradoxically, actually favours coal-fired generation over gas-fired in electricity markets where both generation types are present. This is because of the Dark Green Spread, which is the difference in the marginal costs of coal versus gas generation. Historically coal has been much cheaper than gas, so much so that coal generators have profited in carbon-constrained markets like the European Emission Trading Scheme (see article).

Wall understands this, indicating a perspicacity which is surprising only if you haven’t paid attention to his other statements on energy. Times have changed in Saskatchewan, and the premier is now free to voice support for nuclear power, which has long been a difficult subject for politicians to talk about. Wall’s statements in support of nuclear power have been refreshing and encouraging.

Does Alberta premier Ed Stelmach’s opposition to cap and trade mean he doesn’t get it? Absolutely not: Alberta’s economy and emissions profile are different from Saskatchewan’s. Wall’s primary carbon problem is Saskatchewan electricity; Stelmach’s is electricity and the oilsands, both of which put over 50 million tonnes of carbon into the atmosphere every year. Alberta electricity is coal-fired, but its oilsands are gas-fired. Any Dark Green Spread advantages Alberta might derive from electricity exports could be neutralized if and when the North American price of natural gas goes back up.

Stelmach is also worried, justifiably, about other parts of Waxman-Markey—especially those that deal with energy imports to the U.S. I have mentioned section 526 of the 2007 Energy Independence and Security Act, which prohibits U.S. federal agencies from buying fuel whose lifecycle emissions are higher than those of conventional petroleum.

Well, the author of s. 526 is none other than Henry Waxman (D-CA)—i.e., the Waxman in Waxman-Markey. Waxman has said the intent of s. 526 is to prevent emissions-heavy coal-to-liquids (CTL) fuels from entering the mainstream (see article); oilsands are not the target. But Waxman-Markey does contain provisions that target the lifecycle emissions of imported products. Presumably “products” includes petroleum products. And with oilsands petroleum lifecycle emissions weighing in at levels far above those of conventional fuel, Stelmach is right to worry.

Stelmach is also looking at nuclear power, though he hasn’t been as enthusiastic as Wall. Like Saskatchewan, Alberta commissioned a report on the viability of introducing nuclear to the province (see Reactors Canada’s assessment of both reports). Both reports emphasized large reactors, though there’s room for probably only one 1,000+ MW reactor in all of western Canada. Only the Saskatchewan report talks about small reactors.

As I have pointed out, people should take a hard look at small reactors (see article). Though the big machines get all the attention these days, and carry major economies of scale in central-station electricity systems, small reactors have advantages too. Craig Smith, writing in the current issue of Mechanical Engineering Magazine, outlines four such advantages:

1. Factory fabrication and mass production. Though big reactors have factory-made components, they are built on-site, and this almost always requires expensive and time consuming site-specific modifications. Mass production of entire self-contained units would introduce efficiencies in this area.
2. Simplicity of design. Lower power ratings give designers of small reactors freedom from the costly and complex core cooling systems, by allowing convection circulation. Autonomous operation, in which reactor core power adjusts to match heat removal, thereby obviating control rod operations, are another upshot.
3. Simplicity of operation. The small designs that incorporate autonomous load following introduce the ability to provide energy to a distributed system that includes power and heat at varying levels. It also enables easy incremental capacity increases as power and heat demands rise over time. Such systems would require less operator input, an important consideration at remote or developing country sites.
4. Small physical footprint. Creating a secure site would be much easier with a small, sealed, self-contained, tamper-proof machine which could be encased in a thick concrete vessel highly resistant to direct attack. This would also preserve the option of incremental capacity increases.

Smith, who helped develop the Secure Transportable Autonomous Reactor (STAR), a lead-cooled fast neutron machine with passive safety features, thinks that the above four factors could overcome the economies of scale of large reactors.

Moreover, if small reactors incorporated the features of STAR, they could replace fossil heat and power sources in industrial plants, such as ones that manufacture synthetic hydrocarbon fuel. The whole reason behind Henry Waxman’s s. 526 is the heavy lifecycle emissions associated with CTL processes. Current CTL processes use fossil fuels as both feed and energy source. Replacing fossil energy with nuclear would eliminate much of the emissions.

Alberta’s economy is already based on non-conventional hydrocarbon fuel. Introducing nuclear power to provincial power generation and oilsands operations, and entering the low-carbon hydrocarbon fuel game, would eliminate Alberta’s emissions problems.