How much does it cost to not dump carbon dioxide into our air? an extreme cautionary tale from Ontario

In 2003 a new Ontario government came into power on a pledge to, among other things, eliminate coal from the provincial electricity generation mix. This was for health and environmental reasons. While the health reasons were long on syrupy think-of-the-children moral posturing and short on anything resembling credible science and statistics, the environmental reasons that focused on carbon dioxide—the main constituent of coal-fired electricity generation waste—were based on the kind of solid science that governments should consider when setting policy.

Having decided to do the right thing—cut carbon from electric power generation—the next step was to figure out how. This is where the plan got into the weeds. The “how” turned into a popularity contest, fanned by the green lobby. Based on what the Liberals recognized was the choice of the green lobby, the initial idea was to replace coal with a new mix of natural gas and renewable “green” sources like wind and solar.

That plan fell apart even while it was being put forth before the election. Natural gas prices, after a decade of holding below $5 per million British thermal units (1.7 cents per kilowatt-hour), suddenly spiked up to over $7 (2.4 cents/kWh) in early 2003. They began erratically spiking in the following months.

Given the amount of gas that would have to replace coal, and the worry about raising electricity prices,¹ the new government began to wonder how else it could replace coal. It knew that the “green” sources couldn’t do the job, no matter what green advocates claimed. The question was: what else could affordably replace coal, a 24/7 baseload-capable source, without throwing carbon into the atmosphere? There was only one answer. That answer was to bite the bullet and refurbish the nearly 5,000 megawatts of laid up nuclear capacity. Only a baseload source can replace a baseload source. It’s the Iron Rule of Power Generation.

So the government did that. Or rather, the government continued doing that: the previous Conservative government had already begun to head off Ontario’s skyrocketing carbon emissions by approving the refurbishment of one of the laid up units, Pickering unit 4 (515 megawatts).

Under intense pressure from the “green” lobby groups that had supported the Liberals, the government after 2003 continued trying to find a way to go back, or at least be seen to go back, to the original gas-renewables plan. In 2009 it enacted the Green Energy Act, which forced “green” sources and natural gas into the system, at huge expense.

The purpose of green energy is, ostensibly, to provide energy without carbon. For this reason, we are supposed to pay more for it—essentially to pay to reduce carbon. In that vein it is perfectly legitimate to ask if we are getting value for money. Because the allegedly “green” sources are not the only ways to make electricity without carbon.

Here’s a comparison by generation type of the cost of avoiding dumping one ton of carbon into our air.

The Displacing Coal chart is fairly straightforward. As you would expect, the cost of reducing carbon by way of using each generation type increases in direct proportion with the cost of producing a kilowatt-hour using that type (see my article on the cost of electricity in August 2016). So, because solar is by far the most expensive zero-carbon source per kilowatt-hour of electrical energy, it also by far the most expensive way to avoid dumping a ton of CO₂ into our air when it is used to make electricity instead of coal.²

But the Displacing Gas chart is interesting. Why the negative values for avoiding one ton of CO₂ when displacing gas with wind, nuclear, and hydro respectively?

The answer is because the cost per kilowatt-hour of each of those fuels is less than that of gas.

So if those generation types that are less expensive than gas are used to displace gas, we would actually save money en route to avoiding dumping CO₂ into our air.

The cost of solar energy is greater even than that of gas, so the cost of avoiding a ton of CO₂ using solar is an actual cost. That is why the solar value is on the positive side of the scale.

Here’s how I arrived at the numbers.

This data only shows the cost of avoiding dumping CO₂. It says nothing explicit about the ability of the compared electricity sources to provide the energy that society needs.

But it says plenty that is implicit about that ability. Of the zero-carbon sources—nuclear, hydro, wind, solar—wind and solar are the most expensive precisely because of their inability to provide the energy that society needs.

That inability is due to the inherent inefficiency of wind and solar. Their inherent inefficiency is what drives up their prices. Nobody would run a wind or solar generation company if they received prices for their electricity that were anything similar to those of nuclear or hydro. They simply could not make a profit. More to the point, they would lose money and go bankrupt.

The question is, why do they get such high rates? The answer is, because they are zero-carbon. That implies that it is worth while to pay more for zero carbon electricity.

The charts and table above illustrate that it is not necessary to pay huge prices for zero-carbon electricity. We can have electricity that is both zero-carbon and affordable. There is just a glaring double standard in how we value avoiding dumping carbon into our air.

We should not be playing favourites when it comes to putting zero carbon electricity into our system. We should be choosing zero carbon sources based on their cost and reliability.

The charts and table above should be a warning to those who want to cut carbon without bankrupting society.

1. In today’s circumstance of enormous electricity price hikes, it does seem difficult to believe that affordability of electricity was once an important criterion for governments considering how to produce clean electricity.
2. I am not saying it is actually possible to replace coal-fired electricity with solar electricity; that is most assuredly not possible. But if it were possible, these cost estimates illustrate how expensive it is.