Regulations proposed by Canada’s Ministry of Environment on Friday could force utilities, starting in July 2015, to shutter new coal-fired plants not outfitted with carbon capture and storage systems and plants reaching the end of "economic” lifespans to shut down—unless the plants’ greenhouse gas (GHG) emission levels could be reduced to those of natural gas combined-cycle plants. The federal government said the new rules could gradually phase out traditional coal units, which would have a significant impact on reducing emissions from the coal-fired generation sector.

The final rules are expected to be published in 2012. Ottawa first announced possible GHG cuts in the power sector last June, when former environment minister, Jim Prentice, proposed similar rules. The rules will be published in the Canada Gazette (Part I) on Aug. 27 for a 60-day public consultation period.

On Friday, Environment Minister Peter Kent said the government had considered input from consultations to draft rules that strike a "balance between improving environmental standards and respecting industry’s need for simple, streamlined rules and a realistic timeline."

One reason Canada is proposing the rules now is that "many electricity facilities across Canada are old and need to be replaced soon," Kent said. "We’re acting now to ensure that power companies understand today, the rules that will affect the new investments they have to make tomorrow. It allows for an orderly process—the bedrock of certainty."

Canada has an ambitious target of reducing GHG emissions by 17%  from 2005 levels by 2020 through a sector-by-sector approach aligned with the U.S. As well as other measures taken by the federal and provincial governments and utilities to reduce greenhouse gases, the rule could "result in a decline in the absolute level of GHG emissions from electricity generation by 31 megatonnes between 2005 and 2020,” the ministry said.

Kent said the proposed rules wouldn’t have an immediate economic impact on the sector because they wouldn’t be implemented until July 2015. By 2020, the average Canadian residential bill would only increase by about $5 a year and the annual impact on gross domestic product is estimated to be only 0.2%.

“That said, the consultation process isn’t over yet,” he said on Friday. “We at Environment Canada have some more listening to do during the formal comment period that follows publication of the draft regs before anything is finalized.”

“At a time of such uncertainty, there is one absolute certainty: under this Government, Canada will continue to prosper…and it will do so while embracing—and enforcing—the highest environmental standards,” he said.

The government’s announcement comes barely a week after the Alberta Utilities Commission granted its final approval to Maxim Power to build and operate a 500-MW coal-fired plant at the existing 150-MW H.R. Milner Generating Station in the Grande Cache area. That decision has been decried by Canadian environmental groups Ecojustice and the Pembina Institute, which said the approval was “blatantly timed to attempt to beat the deadline of future federal greenhouse gas regulations on coal-fired power.”

Canada’s environmental groups have criticized the new rules as being too lax. As Climate Action Network Canada and its many associate groups pointed out, the rules applying to new plants and those operating beyond their 45-year lifespans by 2015 will be required to achieve an efficiency standard equal to natural gas burning electricity plants.

“This translates to 375 tonnes of CO2 per GWh of electricity produced,” the group said. “The outstanding concern is the existing fleet of coal fired generators will NOT be impacted by these performance standards. An additional loophole is that coal-fired units built with carbon capture and storage technology will be exempt from meeting these same performance standards until 2025.”

Sources: POWERnews, Environment Canada, National Union of Public and General Employees