2. BACKGROUND INFORMATION

To understand the Draft CERs and the changes proposed in the Public Update, it is helpful to have some background in certain concepts and terminology.

2.1 The Electrical Grid

The electrical grid is the system that provides electricity from its generation to the customers that use it. The grid consists of countless complex interconnections across three main functions:  electricity generation, transmission and distribution.^[5] Electricity can be generated by burning fossil fuels (eg, coal, oil, gas), from nuclear power, and from renewable sources (eg, hydro, wind, solar, geothermal, etc.).

The demand for electricity fluctuates vastly throughout a day, week, or season. The minimum amount of electricity needed to be supplied to the electrical grid at any given time is called the base load, whereas the highest amount of electricity demanded from the grid is called peak load or peak demand. For example, more electricity is required on hot days when air conditioners are used, or on cold days when more home heating is needed. On a daily basis, peak demand occurs in the afternoon when businesses are busy, and in the evenings when home appliances are in use.^[6]

Baseload power must be supplied by constant and reliable sources of electricity. Power plants that provide baseload power are often high-capacity and run year-round, only being turned off for maintenance. They usually use non-renewable fuel such as coal or nuclear power.^[7]

Peaker plants and load-following plants that generally run only when there is a high demand, or peak demand, are used to supplement baseload power. These plants, “ramp up and down to fill in when renewable plants are not producing or when demand is very high. This almost inevitably results in a facility operating at a higher emissions intensity than if the same unit were operated on a continuous steady-state basis”^[8] (i.e., for baseload power). Natural gas power plants are the most common peaker power plants as they can be turned on or off and their output can change quite quickly.^[9]

2.2 Abating Greenhouse Gas (GHG) Emissions – CCS and CCUS

While the CERs are designed to be technology-neutral, they implicitly rely on carbon capture and storage (CCS) technology to allow fossil-fuel-fired power plants to meet emissions limits.

CCS is a process that prevents greenhouse gasses from the combustion of fossil fuels from entering the atmosphere and permanently stores them underground or in the ocean. Carbon dioxide can be removed from the fossil fuel prior to combustion, or a solvent can be used to absorb carbon dioxide post-combustion.

Carbon capture utilization and storage (CCUS) is the same as CCS, but with the option for the captured carbon to be “used” rather than stored. The carbon can be used directly (i.e. not chemically altered) or indirectly (i.e. transformed), for example to produce fertilizer, CO2-based synthetic fuels, chemicals, and building aggregates.^[10] The fossil fuel industry has used CCUS processes for years as a way to enhance the yield of their oil and gas wells.^[11] 

The International Energy Agency notes some benefits of CCUS:

CCUS can tackle emissions in hard-to-abate sectors, particularly heavy industries like cement, steel or chemicals. CCUS is an enabler of least-cost low-carbon hydrogen production, which can support the decarbonisation of other parts of the energy system, such as industry, trucks and ships. Finally, CCUS can remove CO2 from the air to balance emissions that are unavoidable or technically difficult to abate.^[12]

That said, CCUS has considerable drawbacks:

• Ineffective – The International Energy Agency notes, “CO2 use does not necessarily lead to emissions reduction.”^[13] When the captured carbon is used instead of stored, it is often eventually released into the atmosphere (i.e., not “captured” at all). Even when the carbon is stored, “the transport of the captured CO2 likely relies on fossil fuels.”^[14] And the idea that CCUS could potentially fix the whole problem of GHG emissions, could prevent industry from taking the necessary steps to reduce CO2 emissions, “as it can just be “grabbed” later.”^[15]

• Expensive – The United Nations Intergovernmental Panel on Climate Change has demonstrated that CCS is one of the most expensive and least effective options to mitigate GHG emissions from the energy sector.

Source:  United Nations Intergovernmental Panel on Climate Change, Working Group III contribution to the Sixth Assessment Report, Summary for Policy Makers, 2022, p 38.

In 2017, the Saskatchewan government admitted the province’s ratepayers were paying an “implicit” carbon tax of nearly $60 per tonne to support a CCS project.^[16]

• Energy-intensive – The capture and compression of carbon requires 330–420 kWh per tonne of CO2 captured, with additional energy needed for transportation and storage. CCS projects increase the energy demand of the facility they capture carbon from by 15%–25% on average, which stands to increase emissions given that the energy used to capture CO2 is often natural gas-powered electricity. In general, the technology is highly energy inefficient and generates its own emissions.^[17]
• Unproven – There are seven CCS projects operating in Canada, capturing about 0.5% of national emissions. Approximately 70% of the carbon captured is used to increase the production of even more fossil fuels from aging oil fields.^[18] One noteworthy CCS project is Boundary Dam in Saskatchewan. It had an original target of capturing 90% of a coal plant’s emissions; however, it has never achieved this rate, and a spokesperson for the project called the target unrealistic. On average, the project captures approximately 50% of the plant’s emissions.^[19] Furthermore, “since the process of carbon storage is so new, the long-term effects cannot be properly assessed.”^[20]
• Risky – “The biggest concern with carbon capture and storage is the environmental risk, mainly associated with the possibility of carbon dioxide release.^[21] This means leaks of carbon dioxide into the atmosphere, where it will contribute to climate change, or into the ocean, where it will increase ocean acidification. Also, concentrated CO2 leaks in populated areas can be lethal. In 1986, the release of poisonous CO2 due to natural processes killed 1,800 people and 3,500 livestock near Lake Nyos in Cameroon.^[22]