Environmental Challenges and Opportunities of the Evolving North

American Electricity Market

Presentation for UNFCCC Workshop on Cleaner GHG Emitting Energy

8 May 2002

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The Electricity Sector Now - Generation

Figure 1 - North American Electricity Generation by Fuel Source

Natural Gas14%

Water14%

Coal47%

Uranium18%

Oil5%

Other2%

Total: 4,700 TWh

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The Electricity Sector Now - Emissions

CO2

equivalent

Annual

SO2

Annual

NOx

Annual Hg

(tonnes) (tonnes) (tonnes) (kg)Canada 122,000,000 650,195 290,211 1,975

Mexico 90,095,882 1,683,199 280,931 1,117

United States 2,331,958,813 12,291,107 5,825,982 39,241

Emissions of Selected Air Pollutants from the Electricity

Country

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Where are we going?

• North American electricity demand is expected to increase to 2010:

– 14% in Canada

– 21% in US

– 66% in Mexico

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Possible Air Implications

Possible new emissions in 2007 pose challenge in meeting environmental and health objectives in North America*

» Canada: Hg (0 to 11%); CO2 (3 to 15%), SO2 (-1 to 0%), NOx (4 to 14%)

» Mexico: Hg (19 to 24%); CO2 (29 to 53%), SO2 (2 to 2%), NOx (40 to 63%)

» US: Hg (3 to 15%), CO2 (14 to 38%), SO2 (-1 to 1%), NOx (3 to 8%)

*(%) = new emissions relative to 1998-2000 electricity sector emissions (varies by pollutant)

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North American Integration – Effects on Trade

Three scenarios:

1. The extent of trade increases with similar distribution of generation

– Interregional trade increases (models for EMF #17 estimates inter NERC trade to increase to 4-6% of total generation)

– Transboundary trade (DOE estimates 35% increase in total electricity trade by 2007)

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North American Integration – Effects on Trade

2. Increased trade from changes in distribution of generation (construction of capacity to serve foreign markets e.g. Baja California)

3. A combination of 1 and 24. Status QuoEach has different environmental

implications.

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Green Electricity – Current Status and Potential

Estimates of potential vary:• small increase over current production• An increase to 10% within 10 years • 50% of energy needs by 2050

Contribution of Renewable Electricity in North AmericaElectricity Source Canada Mexico United StatesNon-Hydro Renewable 2% 3% 2%All Renewable 63% 19% 8%Source: IEA 2001

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Promising Policies for Expansion ‘Clean’ Electricity

• Tradable Renewable Energy Certificates (TRECs)

• Renewable Portfolio Standards

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Challenges Facing TRECs, RPSs

• Quantification of effects of their implementation

• Definitional Issues: what is clean energy?– Different jurisdictions have different definitions

of what is ‘clean’ and ‘renewable’– Different organizations have different

definitions (e.g. Green-E and EnviromentalChoice)

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Working on these Challenges

• Possible calcuation of emissions displacement • CEC Electricity and Environment database

www.cec.org/electricity• Online keyword searchable database• Designed to be clearinghouse for information on

energy efficiency or “green” energy schemes and legislation

• Its purpose is to increase transparency and comparability of criteria

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Electricity Database Example - RPS

22 states - database includes records on states that have passed or proposed RPS legislation

22 different eligibility criteria (e.g. wind, <80 MW) with 16 forms of generation identified

all states’ RPS legislation include solar, biomass and wind

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Electricity Database Example - RPS

Most allow for some hydro, geothermal and landfill gas

Fewer than half allow for new hydro, fuel cells, municipal solid waste, tidal, digester gas

Tire waste, fuel cells and cogeneration are allowed for in only one RPS