Regulatory Requirements for Coal-Fired Generation in the Province of Alberta Alberta Environment and Parks October 19 th, 2015

KEEPHILLS POWER PLANT

Alberta’s Electricity Industry – An Overview and Statistics (courtesy Alberta Energy website) Installed Generating Capacity in Alberta as of November 2013 –14,903 MW (includes interconnections) Peak Demand in 2012 – Climatic Year (October to September) –10,599 MW (highest demand ever was in 2011 – 10,609 MW) Generation Additions since 1998 –Greater than 7,400 MW Generation Decommissions since 1998 –Approximately 1,513 MW For more information, go to

Alberta’s Electricity Industry – Environmental Protection and Enhancement Act (EPEA) Definitions Activities Designation Regulation –“power plant” means a plant that produces steam or thermal electric power and has a rated production output of greater than one megawatt under peak load, but does not include a production facility for space heating…. AND –under Division 2 - Substance Release - Part 9: Power Plants (i) the construction, operation or reclamation of a power plant

Alberta’s Electricity Industry – EPEA Definitions Environmental Assessment (Mandatory and Exempted Activities) Regulation –Schedule 1 - Mandatory Activities The construction, operation or reclamation of ….. (k) a thermal electric power generating plant that uses non-gaseous fuel and has a capacity of 100 megawatts or greater; (l) a hydroelectric power generating plant with a capacity of 100 megawatts or greater; Purpose of Environmental Assessment –Gather information –Public involvement –Support sustainable development

Alberta’s Electricity Industry – Approval Requirements Approvals cover all environmental aspects and media affected by the operation of a power plant –Air emissions –Industrial wastewater –Groundwater –Waste –Soil –Reclamation –Domestic wastewater and waterworks Facility air approval conditions specify –allowable emission sources –operational requirements –emission limits (potentially for a number of different air contaminants) –monitoring (both source and ambient), and –reporting requirements For the coal-fired power plants, these requirements are quite significant

Why is the Electricity Sector of Environmental Significance? 2005 Criteria Air Contaminant Dataset –For Alberta, contribution to total provincial industrial inventories Sulphur dioxide - ~25% (2 nd highest total) Nitrogen oxides - ~13% (3 rd highest total) –Only 43 plants in total Coal-Fired Power Plants (Six Plants) in 2013 –SO 2 – 104,431 tonnes (almost entire contribution of the utility sector) –NO x – 63,728 tonnes (~90% of all NO x emitted from the utility sector) –Particulate – 5,533 tonnes (almost entire contribution of the utility sector)

Alberta’s Electricity Industry – Installed Capacity Coal-Fired Power Plants –as of November 2013, accounts for ~40.6% of the installed utility power generation capacity in Alberta –significant air contaminant emissions Gas-Fired Power Plants –as of November 2013, accounts for ~41.3% of the installed utility power generation capacity in Alberta

SUNDANCE POWER PLANT

Courtesy Alberta Energy website

Alberta’s Electricity Industry – Process to Move Forward Clean Air Strategic Alliance’s Electricity Project Team (EPT) –Tasked with looking at the air quality management approaches in the utility sector and setting emission requirements post 2005 for both new and existing plants –Process relies on multistakeholder representation and consensus decision making

Alberta’s Electricity Industry – Process to Move Forward Final report of the CASA EPT, entitled “An Emissions Management Framework for the Alberta Electricity Sector – Report to Stakeholders” was finished in November 2003 Dealt with all aspects of the air emissions from Alberta’s utility sector Framework is intended to be in place for the long-term Report contained 71 recommendations, including new post-2005 emission standards for both coal fired and gas fired units and a set five year frequency for technology review Specifies design life of all existing units and outlines emission expectations at the end of the original design life

Alberta’s Electricity Industry – Applicable Emission Standards Alberta Air Emission Standards for Electricity Generation – Coal Fired Power Plants –SO kg/MWh –NO x – 0.69 kg/MWh –Particulates – kg/MWh These standards for coal fired power plants came into effect on January 1, 2006 until December 31, 2010 Standards were applicable for both new units and those units which are at their “end of design life”

Alberta’s Electricity Industry – Process to Move Forward Introduced a baseline and credit emission trading system to allow companies a choice on how to achieve emission requirements for SO 2 and NO x Emission trading regulation issued and SO 2 and NO x baseline assessment now complete System has now been generating credits for some time Two coal-fired units have now reached the end of their design life (one at the end of 2012, one at the end of 2013, and one at the end of 2015) and will have to meet emission reduction obligations This can be done by installation of pollution control equipment, use of emission credits, or a combination of both

Alberta’s Electricity Industry – Applicable Emission Standards Previously mentioned standards document specified for the first time the concept of “end of design life” for existing units and listed those dates in the document When a unit arrived at the specified date, it must meet the “standard of the day” via physical modifications or via emission trading If a unit chose physical modifications to meet the emission standards, a new design life was allowed If a unit chose to comply via emission trading, they could only do so for a specified period before they would have to upgrade or shut down

Coal Unit Capacity (MWs) Unit OwnerCommissioned Federally Mandated End-of-Life (Dec. 31) Years of Operation CASA End-of-Design- Life (Dec. 31) Battle River 3149 ATCO Power Sundance 1280 TransAlta HR Milner Maxim Power Sundance 2280 TransAlta Battle River 4155 ATCO Power Sundance 3353 TransAlta Sundance 4406 TransAlta Sundance 5406 TransAlta Sundance 6401 TransAlta Battle River 5385 ATCO Power Keephills 1395 TransAlta Keephills 2395 TransAlta Sheerness 1390 ATCO Power Genesee 2400 Capital Power Sheerness 2390 ATCO Power Genesee 1400 Capital Power Genesee 3466 CP and TA* Keephills 3463 CP and TA*

Alberta’s Electricity Industry – Applicable Emission Standards Standards were to be reviewed on a 5 year basis to prevent them from becoming “stale-dated” Review started in May 2007 and was to be a focused one year review Process actually took more than three years Final report with both consensus and non-consensus recommendations was forwarded to the Government of Alberta for final decision This decision was deferred

Alberta’s Electricity Industry – Process to Move Forward First 5-Year Review of the framework was completed in May 2010 but a final decision has been deferred –Proposed emission standards for new coal-fired units were agreed upon –Proposed emission standards for new gas-fired units, both for electricity generation and cogeneration, were NOT agreed upon The second 5-Year Review was started in May 2013 even though a final decision has yet to be made on the first review. The review was completed by April 2015.

Alberta’s Electricity Industry – Consensus Coal Unit Emission Standards Proposed coal-fired power plant standards –SO 2 – 0.65 kg/MWh or 90% removal, whichever is less stringent –NO x – 0.47 kg/MWh (but design specification of 0.40 kg/MWh which implies certain control equipment installation) –PM – kg/MWh –Mercury - 75% capture design target with optimization plans to meet 80% capture by 2013

Alberta’s Electricity Industry – Potential Pollution Control Technologies for Coal-Fired Power Plants Sulphur Dioxide Control –Flue Gas Desulphurization – Wet/Dry Nitrogen Oxides Control –Low NO x burners/staged combustion/overfire air –Selective catalytic reduction unit Particulate Matter –Fabric filter baghouse

Alberta’s Electricity Industry – Previously an Emerging Issue Mercury Emissions –1 tonne annual emission from Alberta utilities –Mercury is both persistent and bioaccumulative in the ambient environment –CCME CWS Process and CASA EPT –Difficulty in controlling emission of mercury based on its form (i.e. elemental vs. oxidized) –Alberta issued a regulation that will require the control of mercury from power plants –Different actions have been implemented rather than first proposed (use of activated carbon as an adsorbent with no replacement of the ESPs) –Mercury emissions must also be continuously monitored Mercury removal is now actively occurring!

Alberta’s Electricity Industry – Ongoing Issues Greenhouse Gas Emissions –53 Mt annual emissions in 2005 (23% of manmade emissions in Alberta) –Specified Gas Emitters Regulation proclaimed in early 2007 (updated earlier this year) –Coal-fired power plants are the most significant source of GHG emissions in Alberta! –EC GHG emission intensity regulation requires physical compliance with the standard at end of design life –This will likely lead to the shutdown of existing coal-fired units –This regulation has now been published in Canada Gazette Part 2 and is the “norm”

Alberta’s Electricity Industry – Ongoing Issues CASA Electricity Emission Management Framework - Expected Emission Reductions from a 2003 Baseline –SO % reduction by 2025 –NO x – 32% reduction by 2025 –Primary Particulate Matter – 51% reduction by 2025 –Mercury – 50% reduction Will the CASA Framework be relevant in the near future?

Alberta’s Electricity Industry – Ongoing Issues Interaction between CASA Framework, Federal GHG Emission Intensity Regulation, and Multiple Other Policy Considerations –Conflicting end-of-life dates –Existing Frameworks ignored –Concerns over stranded capital due to large scale pollution control equipment installation with short remaining life of a generating unit –Who pays for any unit retrofits? –Potential disruption to the Alberta Electricity System –Split view of the affected industry sector How will this situation be resolved?