Old King Coal

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posted March 15, 2005
The Ontario government’s pledge to shut down coal power generation in Ontario was met with enthusiasm by advocates of air pollution and greenhouse gas reductions, and with scorn by those who believe that a free-market in energy generation is likely to provide lower cost, more reliable energy for the people of Ontario.

At first, both sides had little to go on but generalities because the decision itself was purely political: the government didn’t bother to estimate either the costs or benefits of shutting down the plants, which provide about a quarter of Ontario’s electricity supply.

But a pair of publications have recently emerged to provide some of the information that Ontario government failed to, and the verdict is clear: shutting down Ontario coal offers virtually no health or environmental benefits to Ontarians, but is likely to impose significant hardship through higher energy costs, and reduced energy-reliability.

The first study, “Pain Without Gain,” authored by Ross McKitrick, Joel Schwartz and myself, shows that air pollution declines of recent decades have led to a situation where people are rarely exposed to harmful levels of air pollution, even with the emissions that coal-fired power generation adds to the mix. As for coal power’s mercury emissions, these turn out to be a tiny fraction of the mercury flows found naturally in the environment, and again, studies in the scientific literature suggest that exposure to current mercury levels from all sources is unlikely to cause significant harm to either humans or other organisms.

Some might claim shutting down the coal plants will provide some benefit in terms of reducing climate change. But even if one believes that human greenhouse gas emissions are changing the climate, Ontario coal plants account for only 1/10 of 1 percent of global greenhouse gas emissions. Shutting them down will not make a perceptible difference in greenhouse gas concentrations, particularly since any useful replacement energy source will produce significant greenhouse gas emissions as well.

The decision to shut down Ontario coal power generation doesn’t look any better from the cost side of the ledger. Coal’s abundance and lower cost make it the “price setter” for Ontario electricity costs over half the time, while using other fuels results in electricity prices more than twice as high as coal. The increase in energy prices due to retiring coal power plants might be tolerable to Ontario’s wealthier citizens, but lower-income Ontarians could find feel the bite as energy costs rise to consume more of their already- limited income, and as jobs disappear due to the impact of higher energy prices on the economy of Ontario.

The second study damning the Ontario government’s decision is a paper called “Ontario’s Energy Crunch, Why Phasing Out Coal is an Unwise Strategy” published in February by energy analysts Peter and Shirley Savage. The authors come to similar conclusions with regard to the lack of clear benefits of retiring coal power, and the likelihood that displacing coal will boost energy prices. They also extend their analysis to a discussion of “renewable energy,” such as wind power, the oft-proposed alternative to coal.

After evaluating wind-power efficiencies, however, the Savages point out that wind power is certainly not going to replace Ontario’s coal power, observing that “…to replace Nanticoke’s coal-fired effective capacity and energy generation with wind power would require…between eight thousand and twelve thousand turbines.” Even if all of the known renewable potential is developed by January 2008 (a dubious proposition for many reasons), the Savages observe that the contribution to Ontario’s electricity supply would be about 4,000 megawatts, which is 3,500 megawatts short of what is produced by Ontario’s coal power plants.

It’s easy for politicians to make promises without first looking at the costs and benefits of their actions. It’s particularly easy here in Canada, where our politicians have deftly avoided the implementation of any mechanism that would lead to more responsiveness or transparency (such as the need for a cost-benefit analysis or regulatory impact analysis). And, as politicians have limited terms of office, they’re often long gone when the public is left holding the bag for failed policies based on erroneous thinking.

The Ontario government’s decision to shut down coal-power generation has all the markings of such a decision, and is likely to leave Ontarians worse off over time, paying more for energy that is less reliable, without offering any demonstrable environmental or health benefit to justify the cost. The McGuinty government should take this decision back to the drawing board, and, if they’re bound and determined to keep it, at least they should be honest about the impact it will have on the bank accounts and lifestyles of Ontarians.

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