Friday, February 12, 2016

Eating wind: Carbon capped opportunity Part 2

Reading Rooftop coal: Carbon capped opportunity Part 1 will benefit readers of this post

There's a message being spread about Ontario that the expensive, but low carbon emission, electricity it produces will soon be worth big bucks due to the proposed Clean Power Plan in the United States - and trading of emissions. This was implied by one member of the Climate Action Group on television recently (I wrote on the program), and quickly expanded upon in into an article in The Toronto Star:
... the country’s power sector is prepping for a dramatic increase in U.S. demand for clean electricity.
Action on climate change is the reason — more specifically, U.S. President Barack Obama’s Clean Power Plan, which aims to slash carbon dioxide emissions from power plants by a third by 2030.
The plan is expected to triple the flow of Canadian electricity into Midwestern and northeastern border states, part of a broader U.S. effort to comply with the international climate obligations that 196 countries agreed to in Paris.
The North American Electric Reliability Corporation [NERC], which monitors and regulates grid stability in Canada and the U.S., estimated in a report last April that net Canadian electricity exports under the Clean Power Plan could grow three-fold between 2020 and 2030 as demand for renewable power grows in states such as Ohio, Michigan, New York and jurisdictions in New England.
Here we have the agreement from Paris and the U.S. Clean Power Plan discussed, so I'll briefly discuss each to communicate the value for Canada, and particularly Ontario, is limited - but an opportunity does exist.

The most relevant quote for the Paris deal comes from The New York Times' Coral Davenport back in August 2014:
...President Obama’s climate negotiators are devising what they call a “politically binding” deal that would “name and shame” countries into cutting their emissions.
...Countries would be legally required to enact domestic climate change policies — but would voluntarily pledge to specific levels of emissions cuts...
That "name and shame" strategy was advanced in Paris, primarily because the President lacked the ability to have Congress pass anything legally binding. Countries provide plans for reducing emissions, and if they don't achieve them they will be mocked by countries that are achieving their goals, should there be any.

The U.S. Clean Power Plan, if it gets enacted, will offer states a couple of methods to comply with individual emissions targets based on a subset of generators operating in the states in 2012 (I'd need to check in the volumes of text to confirm the base year) - the subset exclude generators without emissions in service prior to 2013 (most notably nuclear); it therefore basically includes almost exclusively emitting facilities.
States can target either emissions intensity, getting facilities to an average of ~20% below the intensity level of the 2012 base year (so replace coal with gas, of augment coal with wind, etc.), or they can just reduce their emissions by the requisite amount (it varies by state). Those sound the same, but the first option could actually see increased emissions. Illinois, for instance, could likely replace older nuclear units with natural gas generators and easily meet clean power plan targets by doing so.
Emissions reductions can come in state or not - by power purchase agreements with facilities outside of the state, or through the trading of cap space (such as through clean energy certificates).

How does this impact Ontario?

The North American Electric Reliability Corporation [NERC] reference in the Toronto Star article is probably Potential Reliability Impacts of EPA’s Proposed Clean Power Plan: Phase I, which does show a forecast where:
"Canada exports three times more power to the United States, mainly NPCC and MISO North."
NPCC is the Northeast Power Coordinating Council and it includes Canadian provinces/systems east of Manitoba as well as the New England and New York system operator areas (NYISO and ISONE).

The NPCC jurisdictions don't import much more juice in the NERC work:
graphically edited to most relevant data from NERC "Potential Reliability Impacts of EPA's Proposed Clean Power Plan
The "MW Interchanges No CPP" indicates, for Canada, net exports of 5,461 megawatts on average if the Clean Power Plan doesn't come into force, which works out to an annual total of about 48 terawatt-hours (TWh), and that is the average that actually occurred from 2012-2014. The best case (State level application of the Clean Power Plan) offers an export opportunity into New York and New England systems of another 691 megawatts on average, but that's little more than Ontario wasted in 2014 as generators reportedly curtailed an average of ~550 megawatts (by way of annual totals of 376 thousand MWh of wind, 1.2157 million MWh of nuclear and 3.2 million MWh of hydro-electric power). The NERC document that enthused Tyler Hamilton writing in the Star doesn't offer much hope for the U.S. northeast bailing Ontario out of its over-supply.

Rooftop coal: Carbon capped opportunity Part 1

Big topics are converging as Toronto's spinners, enthused by a new power in Ottawa, work a yarn to justify raising revenue for the government and to gloss over the massive waste in the electricity sector since 2008.
This post is longer than usual, so it is presented in two parts. My intent is to discourage contracting more excess electricity supply in Ontario, and to demonstrate a limited opportunity to steeply reduce losses on existing contracts

Climate change has been called a wicked problem, but that's usually ignored when tidy, if false, solutions get presented.
Two of those solutions are Cap and Trade everywhere, which is of particular interest to Ontarians now, and the U.S. Clean Power Plan -which Ontarians are getting told they might benefit from.

The editorial board of the New York Times has declared Proof That a Price on Carbon Works:
Lawmakers who oppose taking action to lower greenhouse gas emissions by putting a price on carbon often argue that doing so would hurt businesses and consumers. But the energy policies adopted by some American states and Canadian provinces demonstrate that those arguments are simply unfounded.
Around the world, nearly 40 nations, including the 28-member European Union, and many smaller jurisdictions are engaged in some form of carbon pricing. In this hemisphere, British Columbia, Quebec, California and nine Northeastern states have raised the cost of burning fossil fuels without damaging the economy. Alberta, Canada’s biggest oil and gas producer, and Ontario have said they will adopt similar policies.
...British Columbia, which is home to 4.7 million people, has placed the highest price on emissions in North America, taxing a ton of carbon emitted at 30 Canadian dollars, or about $21. By comparison, emission permits in California and Quebec are trading at about $13 a ton. And permits sold for $7.50 a ton in a December auction in the Northeastern trading system known as the Regional Greenhouse Gas Initiative. That system covers emissions from power plants in nine states that include Connecticut, New York and Massachusetts.
These actions deserve applause. But their real value may lie in providing a template for the rest of the world.
The New York Times editorial board is, with one exception, citing actions that have not taken place yet as evidence contrary arguments "are simply unfounded." Is there a topic outside of global warming/greenhouse gas emissions that inspires such intellectual laziness? [1]

Two Cap and Trade initiatives cited in the editorial are the California centred Western Climate Initiative (WCI) and the U.S. northeast's Regional Greenhouse Gas Initiative (RGGI).

A couple of years ago the U.S. Energy Information Administration (EIA) wrote on the RGGI. From the graphic I guess one could conclude it had been super super great as emissions were far below cap - or one might think the cap was set far too high, particularly if one reflected on why cap space continued to be held by the emitters allocated the emissions allotment (and/or traders), and not sold to somebody wanting to emit.

I thought, examining this graphic, it looked like the new lower cap was still likely to be above "business as usual" emissions, particularly as similar banked credits have been a source of contention in the European Union's Emissions Trading System (EU ETS) - so, on twitter, I asked the EIA, and was politely told who to contact for more information - but I wasn't looking for more information, I was looking for a firm "no", and not receiving one, I was not inspired to pursue study of the RGGI scheme further.