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ECC – Interim Report – Section 5

Interim Report to the Minister of Environment

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5 Initial Findings – An Integrated Approach

Industrial emissions of GHGs and CACs each account for approximately 50% of Canada’s total air emissions, and share many common sources. For these reasons, the Government of Canada is looking to coordinate its regulatory efforts to address emission reductions of GHGs and CACs in an integrated manner within the same time frame. To explore the possible effects and feasibility of an integrated approach, the NRTEE commissioned research to analyze several policy scenarios that combined efforts to reduce GHG and CAC emissions concurrently. Scenarios involving deep and shallow target emission prices for GHGs were combined with shallow target (-50%) prices on CACs (Table 7). Table 7: Scenarios modeled for integrated GHG/CAC reductions

Scenario	Long-term  goal (2050)	Medium-term  targets (2020-2025)
Deep and fast GHG reductions with 50% reductions in all CACs	-65% GHGs, -50% CACs	Fast start
Deep and slow GHG reductions with 50% reductions in all CACs	-65% GHGs, -50% CACs	Slow start

5.1 First, even without an integrated approach, there can be significant co-benefits in terms of local air pollution from policies that produce deep GHG reductions, and vice versa.

Reducing GHG emissions can affect CAC emissions – either positively or negatively – and vice versa (Tables 8 and 9). For example, GHG polices can induce:

• energy efficiency (which lowers the CACs associated with producing energy);
• fuel switching from higher CAC intense to lower CAC intense energy types (for example, coal to natural gas, or fossil fuels to biofuels); and
• the use of CCS, which virtually eliminates SO2 and PM emissions.

Policies targeting CACs, especially SO2, encourage fuel switching from relatively high sulphur (and GHG) intensive coal to less sulphur (and GHG) intensive natural gas and electricity. Table 8: Summary of the effect of actions to reduce GHG emissions on CAC emissions

Response to Climate Policy	General Effect on CAC Emissions
Improve energy efficiency	Decrease CAC emissions
Decrease output	Decrease CAC emissions
Improved maintenance (e.g., to reduce fugitive emissions)	Decrease fugitive CAC emissions (especially NOx and VOCs)
Fuel switching	Increase CAC emissions if the switch is from fossil fuels to biomass or from gasoline to diesel; decrease CAC emissions if the switch is to coal to gas or from fossil fuels to CAC-benign renewables
Change process technologies	Usually decrease CAC emissions (e.g., switch to inert anodes in aluminum production; switch to coal gasification)
Capture and sequester carbon dioxide	Decrease CAC emissions

Source: Adapted from Tisdale, M., 2003, "The Effect of Climate Policies on Local Air Pollution: Design and Application of a Canadian Modelling Tool", Simon Fraser University Resource and Environmental Management Master’s Thesis No. 317. Table 9: Summary of the effect of actions to reduce CAC emissions on GHG emissions

Response to CAC Policy	General  Effect on GHG Emissions
End-of-pipe controls (e.g., selective catalytic reduction, precipitators, baghouses)	Increase fuel consumption and GHG emissions*
Reduce pollutant content in fuels (e.g., low sulphur diesel)	Increase fuel consumption and GHG emissions at refineries
Reduce output	Reduce GHG emissions
Reduce fuel consumption	Reduce GHG emissions
Fuel switching	Increase or decrease GHG emissions
Improved maintenance	Reduce GHG emissions

Table 10 shows the effects of GHG emissions prices on CAC emissions by comparing the growth rate of CAC emissions under the BAU and four policy scenarios (a negative value indicates that the emissions fall from 2005 to 2050). The research shows that high GHG emission prices reduce the growth of most CAC emissions because many actions that reduce GHG emissions also reduce CAC emissions. For example, improvements in energy efficiency or fuel switching to low emissions fuels such as natural gas also reduce emissions of CAC. The implementation of CCS eliminates most SOx and PM emissions associated with combustion. Certain advanced types of gasification and combustion processes equipped with CCS also eliminate NOx, as nitrogen is not present during combustion. While the research shows that a high GHG emissions price will reduce SOx, NOx, and VOCs, it also shows that it may increase PM. Energy efficiency, fuel switching and CCS triggered by the GHG policy all reduce PM. At the same time, however, there is a potential for an increase in biomass consumption in the electricity generation and pulp and paper sectors when a high GHG price is implemented. The increase in biomass consumption in these sectors likely would increase PM emissions, offsetting the reductions from other actions (though it is likely that any dramatic increase in the use of biomass would be accompanied by strengthened regulations). Table 10: Interaction between GHG prices and CAC emissions

		Emissions Growth (2005-2050) Relative to 2005
		Slow & Shallow	Slow & Deep	Fast  & Shallow	Fast  & Deep
	BAU from 2005	From 2005 / From 2050 BAU	From 2005 / From 2050 BAU	From 2005 / From 2050 BAU	From 2005 / From 2050 BAU
NOX	+3%	-23%/-25%	-28%/-30%	-20%/-22%	-26%/-28%
SOX	+110%	-30%/-60%	-41%/-72%	-27%/-65%	-42%/-72%
PM10	+134%	+149%/+6%	+148%/+6%	+147%/+6%	+149%/+6%
VOC	+26%	+12%/-11%	+8%/-15%	+13%/-11%	+8%/-15%

5.2 There are important enhanced benefits that can be realized when addressing GHG and air pollutant policies at the same time, with significant opportunities for co-pollutant reductions when polices are designed and implemented concurrently.

The research concludes that an integrated approach substantially lowers the GHG price required to achieve the 65% GHG reduction target, compared to when a GHG price is implemented on its own. The reduced emission price is realized because the CAC emission prices encourage investment in higher efficiency and lower emissions technologies, and therefore the GHG price does not have to be as strong to reach the target. The preliminary research suggests that under an integrated approach, with concurrent GHG and CAC policy signals, the GHG price could be about $110/ t CO2e less than it would otherwise need to be under the "slow price" path, and about $50/t CO2e less under the "fast price" path. The research also demonstrates that greater reductions in CAC emissions may be achieved through an integrated approach, at a given emissions price. For each of the CAC emissions, the integrated simulation attains greater reductions compared to when the CAC emissions price is implemented alone. For example, the SOx price that attains a 50% reduction when implemented alone attains a reduction of 82% when implemented in conjunction with the other CAC and GHG emissions prices.