A $15-per-ton tax on carbon dioxide (CO2) emissions from Ontario power plants would add 0.8 cents to the cost of natural gas-fired power generation. Natural gas is generally regarded as the “cleanest” fossil fuel; that is because it emits roughly 550 grams of CO2 for every kilowatt-hour it generates, whereas coal—the “dirtyest” power generation fuel—emits between 900 and over 1,00 grams. Here is the arithmetic for gas-fired generation when CO2 emissions are taxed at $15 per ton:
|Carbon tax per ton of CO2 emitted:||$15|
|CO2 emitted by natural gas-fired power generation, in grams per kWh:||550|
|Grams per metric ton:||1,000,000|
|Tons of CO2 per kWh emitted by natural gas-fired plants:||0.00055|
|$15 x 0.00055 tons per kWh = $0.0083 per kWh|
|To convert to cents, multiply $0.0083 by 100 = 0.83 ¢ per kWh|
Those who follow the Ontario electricity debate know that the infamous Debt Retirement Charge on your electricity bill is 0.7 ¢ per kWh. That is regularly ascribed to the cost of building the Darlington nuclear generating station, a project that began in 1979 and finished in 1994. Darlington ended up costing $14 billion, twice the original estimate.
Those who ascribe the entire DRC to Darlington do so with a fair amount of outrage. To them, that 0.7 ¢ per kWh represents an increase to the cost of electricity that is simply unacceptable.
It is ironic that most of those who ascribe the DRC entirely to Darlington and feel the 0.7 ¢ per kWh is unacceptable are perfectly fine with the Feed-In Tariff (FIT) program, which forces Ontario rate payers to pay wind farms 13.5 cents per kWh for wind-powered electricity. It must be pointed out that rate-payers only have to pay 5.5 cents per kWh for Darlington’s electricity.
It is doubly ironic that most of those who complain about the exorbitant 0.7-cent DRC almost all advocate the replacement of Ontario’s nuclear fleet with natural gas-fired plants. As I have shown above, gas-fired power would cost an extra 0.8 cents per kWh if there were a modest $15-per-ton tax on CO2 emissions.
In other words, these people oppose the 0.7 cent DRC, but support a 0.8 cent increase for their favourite power source.
If there were a $15 per ton carbon tax, the most we could ever expect from a major nuclear cost overrun would be an extra 0.7 cent per kWh increase. That is LESS than what we would pay for gas-fired power.
And if the carbon tax were made truly meaningful, say $30 per ton? Then gas-fired power would cost an extra 1.6 cents per kWh. Nuclear would stay at, at most, 0.7 cents. It does not emit any CO2.