Report by Brattle Economists Provides Guidance on Enabling Canadian Clean Energy Imports for Clean Power Plan Compliance
Prepared for the Canadian Electricity Association, Canadian Hydropower Association, Canadian Wind Energy Association, Emera Incorporated, Government of Canada, Government of Québec, Manitoba Hydro, Nalcor Energy, and Powerex Corporation
Consultants at The Brattle Group have issued a report that provides technical guidance to U.S. state policymakers on how to enable clean energy imports from Canada for compliance with the Environmental Protection Agency’s (EPA) Clean Power Plan (CPP).
With approximately 83 percent of Canadian electricity produced by non-emitting resources in 2015, a number of U.S. states have expressed interest in facilitating clean energy imports from Canada to reduce carbon dioxide (CO2) emissions and achieve CPP compliance. Prepared for a consortium of Canadian entities, the Brattle report is intended to inform state policymakers on how they can enable clean energy imports from Canada within their State Implementation Plans (SIP) and complementary policies on a comparable basis with other CO2 abatement options.
The report offers guidance for states pursuing both mass-based compliance standards (imposing a cap on total tons of CO2 emissions from affected generators) and rate-based compliance standards (imposing a pounds per megawatt-hour limit on the rate of CO2 emissions from covered generators). The Brattle report finds that mass-based plans generally provide the most flexibility for states to incorporate clean energy imports. Under a mass-based plan, accounting for clean energy imports is straightforward: clean energy imports need to displace domestic fossil-based generation and associated CO2 emissions.
State policymakers implementing rate-based standards would need a more focused effort to ensure that the policy design does not inadvertently preclude participation of some types of clean Canadian resources. Only a subset of clean Canadian resources are eligible to create the Emission Rate Credits (ERCs) needed to achieve compliance under rate-based standards. Because the EPA provided minimal guidance on how to qualify and verify ERCs, the report presents options on how to reach rate-based compliance in a state’s plan.
“Canada is rich with clean energy resources. Even beyond the Clean Power Plan, these resources could help the U.S. reduce CO2 emissions from its power sector and be valuable to utilities and states in meeting their clean energy goals,” notes Brattle Principal Judy Chang, a co-author of the study. “We want this report to be useful for state air and environmental regulators, electricity regulators, and elected state officials as they design their SIPs and related energy policies.”
The Brattle report also provides a set of recommendations for most effectively enabling clean Canadian imports regardless of the implementation approach chosen. These include:
- Establishing a level playing field for all domestic and imported clean energy resources to reduce CO2 emissions from the power sector;
- Working with resource owners and system planners to develop the necessary transmission infrastructure to facilitate clean energy imports; and
- Structuring competitive processes to enable the efficient development of all types of clean energy resources.
The report, “Enabling Canadian Electricity Imports for Clean Power Plan Compliance: Technical Guidance for U.S. State Policymakers,” is authored by Ms. Chang, Brattle Principal Kathleen Spees, and Associate Pearl Donohoo-Vallett. It is available for download below.