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North American Power Needs Bring Environmental Challenges by Staff Environmental News Network, November 29, 2001

Increasing cooperation between electricity providers in the United States, Canada, and Mexico is boosting trade, competition, and cross-border investment in electricity, a new report shows.

But the changing market does not include efforts to coordinate environmental policies around electricity's impact on human health and the environment, according to the North American Commission for Environmental Cooperation (CEC).

The electricity sector is the single largest source of nationally reported toxics in the United States and Canada and a large source in Mexico, the CEC report finds. Power plants in the United States and Canada released 436.1 million kilograms of toxics in 1998, 43 percent of the two countries' total toxic air releases.

In the United States, the electricity sector emits about 25 percent of all nitrogen oxide emissions, about 35 percent of all carbon dioxide emissions, 25 percent of all mercury emissions, and almost 70 percent of sulfur dioxide emissions.

These emissions impact air quality, watersheds, and migratory species corridors that are often shared between the three North American countries, notes the CEC report.

"We want to discuss the possible outcomes from greater efforts to coordinate federal, state, or provincial environmental laws and policies that relate to the electricity sector," said Janine Ferretti, executive director of the CEC. "How can we develop more compatible environmental approaches to help make domestic environmental policies more effective?"

The draft report, "Environmental Challenges and Opportunities in the Emerging North American Electricity Market," was released in anticipation of a symposium sponsored by the CEC to be held Nov. 29 and 30 in San Diego, Calif.

The symposium will address the environmental implications of the North American energy market, including prospects for renewable sources of energy, electricity conservation, and energy efficiency as well as cross-border environmental planning. The meeting will feature environmental and electricity industry experts from Canada, Mexico, and the United States.

The CEC hopes to prompt public discussion about the need to coordinate environmental policies around the North American electricity market's impact on human health and the environment.

"Our goal is to highlight key environmental issues that must be addressed as the electricity markets in North America become more and more integrated," said Ferretti. "We want to stimulate discussion around the important policy questions being raised so that countries can cooperate in their approach to energy and the environment."

The CEC, an international group created under a side agreement to the North American Free Trade Agreement (NAFTA), was established to address regional environmental concerns, to help prevent potential trade and environmental conflicts, and to promote the effective enforcement of environmental law. It was formed under the North American Agreement on Environmental Cooperation, an addendum to NAFTA.

The CEC believes that greater cooperation on environmental policies regarding the North American electricity market is needed to protect air quality and reduce emissions of greenhouse gases such as carbon dioxide. Cooperation would also help minimize the possibility of environment-based trade disputes and ensure a dependable supply of reasonably priced electricity across North America, the report says.

The working paper profiles the rapidly changing North American electricity market. For example, in 2001, the United States is projected to export 13,100 gigawatt hours (GWh) of electricity to Canada and Mexico. By 2007, this export figure is projected to grow to 16,900 GWh of electricity.

In the United States, the Bush administration's national energy plan predicts that North America will need about 255,000 more miles of new electricity transmission lines by the year 2020 to help move power within and among the three nations.

"Over the past few decades, the North American electricity market has developed into a complex array of cross-border transactions and relationships," said Phil Sharp, former U.S. Congress member and chair of the CEC's electricity advisory board. "We need to achieve this new level of cooperation in our environmental approaches as well."

The Bush energy plan also predicts that energy demands in the United States will grow by 25 percent by 2010 and by 45 percent by 2020. The increased demand will require between 1,300 and 1,900 new power plants by 2020, or about one new power plant per week from now until 2020.

There are current plans for 2,063 new electric power plants in North America by 2007, including 1,708 in the United States. A majority of those plants will run on relatively clean-burning natural gas, but the United States in particular also continues to promote the use of coal for electricity generation.

Coal, the principal source of energy production in North America, emits more pollutants per kilowatt-hour of electricity produced than any of the other fossil fuels.

One key issue raised in the paper is the effect of market integration on the ability of renewable energy sources to compete with fossil fuels such as coal and natural gas. The type of fuel burned by a particular power plant largely determines the plant's environmental impacts. Other factors include the plant's pollution-control technologies, environmental performance standards, and government regulations.

The paper highlights other impacts of a highly competitive market, including concerns about "pollution havens" created when significant differences in environmental laws or enforcement practices prompt power companies to locate their plants in areas with lower standards.

"The CEC is exploring what additional environmental policies will work in this restructured market and how these policies [should] be adapted to ensure that they enhance competitiveness and benefit the entire region," said Sharp.

The draft report also addresses fuel choices, pollution-control technologies and strategies, and subsidies for renewable fuel sources. The CEC will use the information gathered during this week's symposium — which will be broadcast live on the Web at CEC — to develop a final report that will be submitted to the Council in early 2002.