Quebec cap and trade natural gas
Essentially, this mandates that each province and territory will have until to either institute a cap-and-trade system, or set a carbon tax. In a cap-and-trade system, the government sets a limit on the level of allowable emissions from industry.
It then issues permits to companies, specifying exactly how much carbon that company can burn. If a company wants to burn more than its share of carbon it must buy — through an auction — extra permits from other companies that have burned less. Alternately, with a carbon tax, the government sets a price per tonne on carbon, and then translates it into a tax on electricity, natural gas or oil.
British Columbia implemented this system in , and Alberta began in January Highlights of the announcement included:. Unfortunately, cap-and-trade is expected to increase certain costs for Ontarians. This includes increased costs for:. On March 22, , Ontario held its first-ever cap-and-trade auction.
The graphs below show the profile of hourly emission intensities starting on a Monday at As evident from the charts below, the emission intensity during the daytime on weekends more closely resembles the emission intensity during the daytime on weekdays.
As a result, Navigant recommended using the non-standard definition which is based on a 16 hour-per day peak period seven days a week, rather than the standard five days a week definition typically used by the Independent System Operators.
Navigant believes that this definition results in a more uniform emission factor within each period. Another methodological assumption that Navigant tested was the exclusion of highly congested zones from the calculation of the default emission factors.
From a practical standpoint, there are a number of zones within the specified jurisdictions that are transmission constrained and as a result are generally not the source of imports into Ontario, e. As such, an argument could be made that these zones should be excluded from the analysis. In both cases Navigant did not find materially differing results.
The specific zones selected for exclusion could be a matter of debate. Hence, based on the limited impact observed through the sensitivity analysis, Navigant recommends including all zones and generation units within a jurisdiction in the calculation of the emission factor for the jurisdiction. Hence, it is important to understand how the proposed emission factors for the Ontario program align with the emission factors used in California and Quebec.
For the most part, California uses specific emission factors tied to the specific generating resource from which the electricity is being imported.
For the rare unspecified imports, California applies a default emission factor of 0. Similarly, where possible, Quebec applies an emission factor tied to the specific generating resource from with the electricity is being imported. For imports into Quebec that are sourced from an identifiable facility for which the information needed to calculate specific greenhouse gas emissions is not available, and for imports from unidentifiable facilities, Quebec relies on the following calculation and default regional factors.
What does my company need to do to comply with the cap and trade regulation? In MISO and PJM, the marginal resources during the off-peak period are almost entirely coal, whereas during the peak periods the marginal resources are a mix of natural gas and coal. For these two regions, this results in a higher emission factor during the off peak than during the peak. Whereas, the during the peak period the marginal resources are a mix of natural gas plants of varying efficiencies and some oil-fired generation units.
For Manitoba, a factor of zero is appropriate as discussed in Section 2. As outlined in Section 2. The emission factors presented in Table 4 are rounded for simplicity. Navigant employs a variety of commercial and proprietary energy market modeling tools to project generating capacity retirements and additions, generating unit dispatch, fuel consumption, gas pipeline flows, and commodity prices in organized e. A schematic of these tools is shown below, followed by a brief description of each tool.
PROMOD IV is a detailed hourly chronological market model that simulates the dispatch and operation of the wholesale electricity market. This model replicates the least-cost optimization decision criteria used by system operators and utilities in the market while observing generating operational limitations and transmission constraints.
PROMOD can be run as a zonal or nodal model; although Navigant normally runs it in the full nodal model with full transmission representation. Both programs include power flow, optimal power flow, balanced and unbalanced fault analysis, dynamic simulations, extended term dynamic simulations, open access and pricing, transfer limit analysis, and network reduction. GPCM is a commercial linear-programming model of the North American gas marketplace and infrastructure.
Navigant applies its own analysis to provide macroeconomic outlook and natural gas supply and demand data for the model, including infrastructure additions and configurations, and its own supply and demand elasticity assumptions. Adjustments are made to the model to reflect accurate infrastructure operating capability as well as the rapidly changing market environment regarding economic growth rates, energy prices, gas production growth levels, sectoral demand and natural gas pipeline, storage and LNG terminal system additions and expansions.
To capture current expectations for the gas market, this long term monthly forecast is combined with near term NYMEX average forward prices for the first two years of the forecast. Navigant currently obtains the delivered coal price forecast from Energy Ventures Analysis, Inc. It simultaneously performs least-cost optimization of the electric power system expansion and dispatch in multi-decade time horizons.
Optionally POM can perform multivariate optimization, which considers other value propositions than just cost minimization, such as sustainability, technological innovation, or spurring economic development. This makes it especially suitable for modeling future renewable generation expansion. The tool reviews the historical emissions of all existing coal units, the existing emissions equipment, and unit allocations for NOx and SOx emissions in order to determine which units are economic to retrofit with pollution control technology and which should be retired.
The retirement or retrofit decision is based on the opportunity cost of replacing the coal units with natural gas generation. The Coal Retirement Forecast model summarizes the coal retirements and retrofits by state, ISO, and NERC region, and reports the retirements and retrofits as announced or economically driven. The tool will also estimate how far in or out of the money each unit is to retrofit and the emissions equipment required to be compliant with EPA regulations.
PJM Supply Stack. Government of Ontario home page Skip to content Ontario. Share Share this page on Twitter Share this page on Facebook. Sensitivities And Other Considerations 3. Season Definitions Table 2. Manitoba Installed Generation Capacity Figure 3. Introduction In April , the Province of Ontario announced its decision to establish a cap and trade program to reduce greenhouse gas GHG emissions.
Requiring imports to comply achieves two objectives, it: Levels the playing field between imported and domestically produced electricity; and Mitigates emissions leakage, which occurs when there is an increase in emissions in one jurisdiction as a result of a decrease in emissions in another jurisdiction, in this case Ontario.
Navigant was retained by the Ministry of Energy to develop and recommend a methodology to establish the default emission factors based on the emissions intensity of marginal generation resources in the following jurisdictions: Proposed Methodology Through the use of a marginal default emission factors, Ontario aims to minimize emission leakage and to create an efficient price signal for imports into Ontario relative to domestic production.
Calculated a single hourly marginal price for each jurisdiction by calculating a load-weighted average of the hourly locational marginal prices for each node within each jurisdiction. Calculated the hourly firing cost i. Grouped the generation units within each jurisdiction into deciles, based on firing cost, and calculated a capacity-weighted average emission intensity of the generation units within each decile.
For each jurisdiction, mapped the hourly marginal price to the closest decile and assigned the emission intensity of that decile to the hour. Calculate the default emission factor for each jurisdiction by time period by averaging the assigned emission intensities for each hour by season and time of day, as appropriate. The emission cost was calculated using the following formula: Manitoba Installed Generation Capacity The renewable generation facilities in Manitoba have a marginal emission intensity of zero.
Sensitivities And Other Considerations Through the course of the analysis, Navigant identified a number of methodological assumptions that could have a material impact on the results. This section discusses the results of a sensitivity analysis around three such assumptions: The choice of a single factor for peak and off peak regardless of month or season; The choice of a non-standard peak definition; and The decision to include all zones and generation units within a jurisdiction, regardless of the historical pattern of power flows.