{"id":593,"date":"2016-01-14T13:56:32","date_gmt":"2016-01-14T21:56:32","guid":{"rendered":"http:\/\/onlineacademiccommunity.uvic.ca\/2060project\/?p=593"},"modified":"2016-01-14T13:56:32","modified_gmt":"2016-01-14T21:56:32","slug":"what-if-albertas-new-power-system-carbon-price-was-comprehensive","status":"publish","type":"post","link":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/2016\/01\/14\/what-if-albertas-new-power-system-carbon-price-was-comprehensive\/","title":{"rendered":"WHAT IF ALBERTA\u2019S NEW POWER SYSTEM CARBON PRICE WAS COMPREHENSIVE?"},"content":{"rendered":"

The new Climate Leadership Plan<\/em> unveiled in Alberta to address greenhouse gas emissions uses a best-in-class carbon intensity standard for the electricity sector.\u00a0 Analysed in a previous post<\/a>, power plants that have a higher carbon intensity than an efficient combined cycle natural gas plant (CCGT) must pay $30\/tCO2<\/sub> on emissions above the standard.\u00a0 For example, if the standard is 0.4 tCO2<\/sub>\/MWh, and a coal plant has an intensity of 1 tCO2<\/sub>\/MWh, the coal plant pays the carbon price on 60% of its emissions, meaning the price, in effect, averages to $18\/tCO2<\/sub> over all of the plant\u2019s emissions.\u00a0 Applying the carbon price on a portion of emissions is similar to the existing SGER policy, as seen in Figure 1. \u00a0But what if fossil fuel generators in Alberta had to pay the $30\/tCO2<\/sub> on all<\/em> of the plant\u2019s emissions\u00a0(i.e. a comprehensive price), not just a fraction?\u00a0 What would be the impact on generation mix, emissions, revenue, and REC payments?<\/p>\n

 <\/p>\n

\"APA-Comp-Fig1\"<\/a><\/p>\n

Fig. 1:\u00a0 Effective carbon prices: under existing Specified Gas Emitters Regulation (SGER) for 3 years; new $30\/tCO2<\/sub><\/strong> best-in-class policy as it applies to two representative generator types; and the alternative $30\/tCO2<\/sub><\/strong> comprehensive price applied to all emissions.\u00a0 An efficient natural gas (NG) plant with an intensity of 0.4 tCO2<\/sub>\/MWh would not pay a tax if the best-in-class standard were 0.4 tCO2<\/sub>\/MWh.\u00a0 \u00a0A coal plant with an intensity of 1 tCO2<\/sub>\/MWh would effectively pay $18\/tCO2 <\/sub>if the best-in-class standard were 0.4 tCO2<\/sub>\/MWh.<\/strong><\/p>\n

 <\/p>\n

We present here an analysis of the Alberta power system to 2030, parallel to the one in the previous post<\/a>, but applying the carbon price comprehensively on all carbon dioxide emissions from coal and natural gas plants.\u00a0 The modelling is done in OSeMOSYS with the objective to minimise the overall system cost, as in the previous post.\u00a0 Results indicate that a comprehensive tax leads to a system that meets the policy goals with a generation mix very similar to the best-in-class policy.<\/p>\n

 <\/p>\n

\"APA-Comp-Fig2\"<\/p>\n

Fig. 2: Generation share by type (a) historic 2014, (b) 2030 under existing SGER policy, (c) 2030 under $30\/tCO2<\/sub><\/strong> comprehensive carbon price, (d) 2030 under $30\/tCO2<\/sub><\/strong> comprehensive carbon price and $15\/MWh<\/strong> RECs.\u00a0 The replacement of ageing coal plants with combined cycle gas natural gas plants (CCGT) is accelerated with the carbon price.\u00a0 In order for renewables to make large contributions to the generation mix, RECs are required. <\/strong><\/p>\n

 <\/p>\n

Very similar to the previous analysis, both the price on carbon and RECs are required to drive out coal and reach 30% renewables by 2030.\u00a0 Combined cycle gas plants (CCGT) are most naturally suited to replace ageing coal plants on the system.\u00a0 It is only with RECs that renewables, primarily wind power, are able to contribute significantly to the future generation mix, as seen in Figure 2.\u00a0 The comprehensive carbon price used this analysis makes gas-fired generation more expensive, and an average REC price of $15\/MWh is sufficient in the model to achieve 30% renewable penetration in 2030.<\/p>\n

 <\/p>\n

\"APA-Comp-Fig3\"<\/p>\n

Fig. 3:\u00a0 Installed capacity in each scenario: current; 2030 under existing SGER policy; 2030 under $30\/ tCO2<\/sub><\/strong> comprehensive carbon price; 2030 under $30\/<\/strong> tCO2<\/sub><\/strong> comprehensive carbon price and $15\/MWh RECs<\/strong>.\u00a0 A system with extensive variable renewables, such as wind power, still requires firm\u00a0generation capacity, here\u00a0in the form of various\u00a0natural gas plants.<\/strong><\/p>\n

 <\/p>\n

The capacities corresponding to the generation mix are shown in Figure 3.\u00a0 Alberta maintains a large portion of cogeneration to support heat and steam demands in the oilsands.\u00a0 The extensive wind capacity in 2030 under the $30\/tCO2<\/sub> comprehensive carbon price is backed up by a large amount of dispatchable generation, most notably open cycle natural gas plants (OCGT).<\/p>\n

 <\/p>\n

\"APA-Comp-Fig4\"<\/p>\n

 <\/p>\n

Fig. 4:\u00a0 (a) Annual emissions in each scenario. (US CPP is a stylised 32% emission reduction outlined by the US EPA.), (b) Cumulative 2015-2030 emissions for each scenario. \u00a0The comprehensive <\/strong>$30\/<\/strong>tCO2<\/sub> carbon price with REC ($15\/MWh average) policy (red line) reduces annual emission in 2030 by 56% compared to 2015.\u00a0 This modelled policy reduces cumulative 2015-2030 emissions (red bar) by 32% compared to the reference SGER scenario (blue bar). <\/strong><\/p>\n

 <\/p>\n

Both the \u201ccarrot\u201d and the \u201cstick\u201d contribute to emissions reductions.\u00a0 Applying a comprehensive carbon price of $30\/tCO2<\/sub> reduces annual emissions by 25% over the next 15 years, despite increasing electricity demand.\u00a0 \u00a0Subsidising renewables through\u00a0an average REC of $15\/MWh reduces 2030 emissions by an additional 31% when implemented on top of the carbon price, as seen in Figure 4 (a).<\/p>\n

 <\/p>\n

\"APA-Comp-Fig5\"<\/p>\n

Fig. 5:\u00a0 (a) Approximate annual revenue from a comprehensive carbon price on the electricity sector covering all CO2<\/sub> emissions and REC payments ($15\/MWh average), (b) Approximate cumulative revenue from carbon price and REC payments from 2016-2030.\u00a0 A comprehensive carbon price appears to generate enough revenue to support REC payments.<\/strong><\/p>\n

 <\/p>\n

A comprehensive price on carbon that covers all CO2<\/sub> emissions from power plants generates significant revenue, even after coal plants are phased out.\u00a0 This is because natural gas remains a major source of generation on the system in 2030 and rather than taxing only the incremental emissions above the intensity by a best-in-class natural gas generator, gas plants pay $30\/tCO2 <\/sub>on all emissions.\u00a0 At the same time, this makes natural gas generation more expensive so renewables require lower REC payments to be competitive in the system.\u00a0 As seen in Figure 5, revenue from the carbon price appears to exceed REC payments through 2030.<\/p>\n

Alberta\u2019s 2030 goals of phasing out coal and being 30% renewable are achievable with a comprehensive carbon price that covers all CO2<\/sub> emitted from coal- and natural gas-fired plants.\u00a0 While this makes natural gas plants more expensive to operate, RECs are still required to achieve the target of supplying 30% of electricity from renewables.<\/p>\n","protected":false},"excerpt":{"rendered":"

The new Climate Leadership Plan unveiled in Alberta to address greenhouse gas emissions uses a best-in-class carbon intensity standard for the electricity sector.\u00a0 Analysed in a previous post, power plants that have a higher carbon intensity than an efficient combined cycle natural gas plant (CCGT) must pay $30\/tCO2 on emissions above the standard.\u00a0 For example, […]<\/p>\n","protected":false},"author":3747,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[7,6],"tags":[],"class_list":["post-593","post","type-post","status-publish","format-standard","hentry","category-alberta","category-policy"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/posts\/593","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/users\/3747"}],"replies":[{"embeddable":true,"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/comments?post=593"}],"version-history":[{"count":8,"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/posts\/593\/revisions"}],"predecessor-version":[{"id":620,"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/posts\/593\/revisions\/620"}],"wp:attachment":[{"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/media?parent=593"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/categories?post=593"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/onlineacademiccommunity.uvic.ca\/2060project\/wp-json\/wp\/v2\/tags?post=593"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}