An industry perspective on the Ontario Government’s Environment Plan
By Dave Butters, President of APPrO
Amid the frequently heated debate over energy and climate policy in Ontario, there is one element upon which all the divergent voices can agree: the electricity generation sector has made a massive contribution to reducing our province’s greenhouse gas emissions. It is a success story that is the envy of the world.
Phasing out Ontario’s coal-fired generation remains the largest single action to combat climate change in North America. The last coal plant in was closed in 2014 and now 96 per cent of our energy is generated without emissions, making us one of the cleanest electricity systems anywhere. Smog days have virtually disappeared, allowing us to breathe easier and undoubtedly saving the lives of many people.
Generators are encouraged that the government of Ontario recognized this significant achievement in the fight against climate change when it unveiled its “Made-in-Ontario” Environment Plan.
Clean, reliable electricity is essential to our province’s social and economic well-being and the province’s power producers are proud to do their part. APPrO supports a stable, transparent and meaningful framework that will ensure ongoing investment in our crucial electricity sector, while avoiding undue costs and stranded assets.
APPrO believes that Ontario should leverage our clean energy advantage to support reducing greenhouse gases in other sectors where emissions continue to grow, notably transportation and buildings. To give one salient example: if we are to start driving more electric cars, then we need sufficient, low-emission generation to power those vehicles. Ontario’s power producers stand ready to deliver.
APPrO commends the Ontario government for the commitment to reduce the province’s emissions by 30 per cent below 2005 levels by 2030, a target that aligns with the national government’s commitment under the Paris Agreement.
APPrO also supports the plan to start with meaningful consultation and then set emission performance standards for large emitters, a system which would replace the federal government’s Output Based Pricing System (OBPS).
The proposed Ontario plan could avoid some of the mistakes of the federal OBPS. It more realistically reflects the diversity of roles that gas fired generating plants play in the system. All of them deliver electricity, but they vary in sizes and serve different needs.
For example, the federal OPBS would penalize “peaker” plants. Because they emit lower annual volumes of CO2 than larger units they are not able to access the OBPS, but rather must pay the carbon tax. Yet they are needed just as much as larger combined cycle gas turbine (CCGT) plants to maintain system flexibility and reliability. We believe the system should not discriminate — all gas fired plants should be treated the same.
Ontario is considering a border carbon adjustment which would lessen the risk that low-emission power generated in Ontario could be displaced by cheaper electricity from a jurisdiction that has higher emissions. APPrO supports this.
APPrO is also in support of the proposed Ontario Carbon Trust, which will use public funds to offer incentives to private investment in commercially-viable clean technologies, as well as the Ontario Reverse Auction, which is designed to attract the lowest-cost emission reduction projects. We caution that both of these initiatives should be administered independently of the government, shielded from political considerations and committed to investment processes that are rigorous, transparent and evidence-based.
We welcome the commitment to prepare an impact assessment to identify where and how the effects of climate change are most likely to be keenly felt in Ontario. An important element is the vulnerability assessment for the energy distribution sector, and we recommend including electricity generators in the study. It is crucial to maintain ongoing investment in the electricity sector in order to mitigate the effects and costs of extreme weather and to continuously improve the resilience of the system.
These are all important policy debates with far-reaching implications for both the electricity system and our environment. APPrO is committed to continuing to be a positive contributor to the collective conversation on climate change policy.