June 29, 1999

To:Works Committee

From:Commissioner, Works and Emergency Services

Subject:Ontario Clean Air Alliance (OCAA) - Recommended Emissions Caps for Ontario's Electricity Sector to Improve Air Quality

Purpose:

To comment on proposed greenhouse gas and other air toxics emission caps for the Ontario electricity sector and recommend endorsement of the caps as a means of improving air quality in Toronto and elsewhere in Ontario.

Funding Sources, Financial Implications and Impact Statement:

The proposed caps could result in a minor increase in electricity cost to the consumers of approximately 3% which represents $1.86 per month on an average residential Hydro Bill if the costs were fully passed on to customers.

Recommendations:

It is recommended that City Council endorse OCAA recommendations that the Government of Ontario be requested to:

1. Establish annual emission caps which will ensure that, commencing in the year 2002, Ontario's total (domestic and imported) electricity generation-related sulphur dioxide and air toxic emissions will not exceed the following levels:

Sulphur dioxide:17.5 kt

Arsenic:19 kg

Beryllium:9 kg

Cadmium:7 kg

Chromium:180 kg

Lead:24 kg

Mercury:45 kg

Nickel:228 kg

2. Establish annual emission caps and appropriate mechanisms which will ensure that starting in the year 2002 Ontario's total (domestic and imported) electricity generation-related greenhouse gas and nitric oxide emissions will not exceed the following levels:

Greenhouse Gas (CO₂)15,000 kt

Nitric Oxide (NO)25 kt

3. Issue a discussion paper and consult with the people of Ontario on the appropriate caps for Ontario's electricity generation-related greenhouse gas (CO₂) and nitric oxide emissions after the year 2002 in the context of a multi-sector strategy to reduce Ontario's greenhouse gas and nitric oxide emissions.

Background:

City Council at its meeting of July 29, 30 and 31, 1998 by adopting Clause 4 of Report No. 7 of Works and Utilities Committee endorsed the City's membership in the Ontario's Clean Air Alliance (OCAA), the recommendation of implementing air emission standards as proposed by OCAA, and that staff report further on ways to achieve additional reductions in emissions. OCAA has now proposed specific emissions caps for the Ontario electricity sector including caps for selected air toxics. The proposal is based on an emission reductions study carried out for the OCAA, dated November 9, 1998, which includes the assessment of the average cost increase to the electricity consumer in Ontario in general as well as the cost impact for the typical residential homeowner.

The Board of Health at its meeting of April 6, 1999, adopted the report from the Medical Officer of Health, entitled "Changes in Ontario's Electrical Sector and Air Quality" dated March 25, 1999, which contained a recommendation that annual air emission caps be established for the pollutants and limits as proposed by OCAA and discussed below.

Comments:

The restructuring of the electricity utility industry as a result of the Energy Competition Act 1998 poses both challenges and opportunities. One of the main challenges will be to ensure that electricity competition does not result in increased air pollution in Ontario. Competition also presents an opportunity, however, for the government to develop pollution standards (e.g. emission caps) that will actually improve air quality and create a level playing field for all electricity generators, including renewable energy generators, that sell power to Ontario consumers.

It is the process of burning fossil fuels that causes the emission of a variety of air polluting gases including the greenhouse gas carbon dioxide (CO₂). An emission cap imposed on one pollutant will, therefore, automatically result in the reduction of the emission of other pollutants, when meeting the cap is achieved by reducing the burning of fossil fuel or by substituting dirtier fuel (coal) with cleaner fuel (natural gas).

Existing restrictions for emissions of air pollutants in the electricity sector in Ontario are limited to a regulated cap for sulphur dioxide (SO₂) at 175 kilotonnes (kt) and nitrogen oxides (NOx) at 40 kt as well as a voluntary commitment by Ontario Hydro to stabilize emissions of carbon dioxide (CO₂), a greenhouse gas, at 1990 levels by the year 2000, and to reduce CO₂ emissions by 10% by 2005. Both the regulated caps and the voluntary commitment apply only to Ontario Hydro, now Ontario Power Generation. Therefore, they should be re-examined and replaced with necessary regulations covering the entire deregulated electricity sector (local generation and imports) to ensure adequate protection of Ontario's air quality.

Despite existing regulations and commitments on SO₂ and NOx emissions in Canada and the United States (USA), studies have shown that acid rain remains a serious problem. Accordingly, the international Acidifying Task Group, established on behalf of the Environment and Energy Ministers of the Federal, Provincial and Territorial Governments of Canada concluded that in eastern Canada and the USA SO₂ emissions must be reduced by a further 75%, relative to the existing legally binding caps in order to arrest the acidification of the environment. Similarly, Ontario's Smog Plan currently stipulates a required NOx reduction target of 45% relative to 1990 levels by 2015.

In view of the above, the Ontario Clean Air Alliance has recommended the reduction, by the year 2002, of SO₂ emissions by 90% to 17.5 kt relative to Ontario Hydro's current cap of 175 kt. An Emission Reduction Study completed on behalf of OCAA determined that based on switching 83% of Ontario Hydro's coal-fired generation capacity to gas-fired capacity, this SO₂ cap and other related emission reductions can be achieved at modest cost. The average Ontario supply price would increase by approximately 3% or the typical residential customer monthly electricity bill would increase by $1.86.

Based on OCAA analysis, substituting coal-fired generation with gas-fired generation would, at no extra cost, also achieve reduction in air toxics emissions in the same order as the SO₂ reduction. In addition, CO₂ and NOx emissions would be substantially reduced, although to a lesser degree, since combustion of natural gas emits these gases as well but no SO₂ and air toxics. Cumulative reduction of CO₂ and NOx (measured as NO) emissions over the planning horizon of 2002 to 2014 would be in the order of 51% and 77% when capped at 15,000 kt and 25 kt respectively.

OCAA calculations indicate that the above noted average cost increase in the consumer supply price of 3% or an additional $1.86 per monthly bill for residential customers would be a small price to pay for the substantial environmental and health benefits. Even if these figures would double or triple, the cost increases would still be quite reasonable, and will be competitive with alternative methods of achieving equivalent reductions in emissions into the environment.

These alternative methods could be an effective emissions cleaning process for coal-fired generation or a substantial increase of the renewable energy proportion. The competitive electricity market will determine the future generation mix to maintain the recommended emission caps at least cost.

Replacing coal-fired generation with gas-fired generation has been demonstrated as an economically feasible option to achieve the following caps in the year 2002:

Sulphur dioxide17.5 ktChromium180 kg

Arsenic 19 kgLead 24 kg

Beryllium 9 kgMercury 45 kg

Cadmium 7 kgNickel228 kg

Greenhouse Gas (CO₂)15, 000 kt

Nitric Oxide (NO) 25 kt

Meeting real electricity growth in the post-2002 period with gas-fired generation will not increase SO₂ and air toxics emissions. Accordingly, a cap for SO₂ and air toxics emissions can be set at 90% reduction from the present SO₂ cap without implications on future economic growth provided increased demand for thermally generated electricity is met by gas-fired generation. However, increased gas-fired electricity generation to meet real growth rates will increase CO₂ and NO emissions. Therefore, a fixed cap for CO₂ and NO could pose constraints on economic growth , unless the Ontario Government implements these caps together with associated mechanisms such as increased investment incentives in renewable energy and energy efficiency, a carbon emission trading program and/or incremental increases of the caps after 2002.

Therefore, OCAA has recommended that the Ontario Government be requested to:

1. establish annual emission caps which will ensure that commencing in the year 2002, Ontario's total domestic and imported electricity-related sulphur dioxide and air toxic emissions will not exceed the levels shown in recommendation 1 of this report;

2. establish emission caps and appropriate mechanisms which will ensure that in the year 2002 Ontario's total (domestic and imported) electricity-related carbon dioxide (CO₂) and nitric oxide (NO) will not exceed the levels shown in recommendation 2 of this report; and

3. issue a discussion paper and consult the people of Ontario on appropriate caps for Ontario's electricity-related CO₂ and NO emissions after the year 2002 in the context of a multi-sector strategy to reduce Ontario's greenhouse gas (CO₂) and nitric oxide emissions

The attached Technical Compendium provides additional details of the Emission Reduction Caps Study which was carried out for the Ontario Clear Air Alliance with funding and guidance from government agencies and electricity related associations and corporations such as Ontario Hydro, Ontario Municipal Electrical Association, Environment Canada, Independent Power Producers' Society Ontario(IPPSO) and the Commission for Environmental Co-operation established under the North-American Free Trade Agreement.

Contact Name and Telephone Number:

K. Hemmerich, P.Eng.

Manager, Air Quality Improvement

Environmental Services Section

Technical Services Division

Tel: (416) 392-7702

Fax: (416) 392-0816

E-mail "khemmeri@toronto.ca"

Tom G. Denes, P.Eng.Barry H. Gutteridge

Executive DirectorCommissioner

Technical Services DivisionWorks and Emergency Services

Technical Compendium

1. General

The restructuring of the electricity utility industry as a result of the Energy Competition Act 1998 poses both challenges and opportunities. One of the main challenges will be to ensure that electricity competition does not result in increased air pollution in Ontario. Competition also presents an opportunity, however, for the government to develop pollution standards (e.g. emission caps) that will actually improve air quality and create a level playing field for all electricity generators, including renewable energy generators, that sell power to Ontario consumers.

It is the process of burning fossil fuels that causes the emission of a variety of air polluting gases including the greenhouse gas carbon dioxide (CO₂). An emission cap imposed on one pollutant will, therefore, automatically result in the reduction of the emission of other pollutants, when meeting the cap is achieved by reducing the burning of fossil fuel or by substituting dirtier fuel (coal) with cleaner fuel (natural gas).

Presently, Ontario Hydro (Ontario Power Generation) has a virtual monopoly on the generation of electricity in Ontario. The company produces approximately 94% of the electricity consumed in this province. Existing air emission cap regulations were written on the assumption that the fossil fuel generation of electricity in Ontario would be produced predominantly by Ontario Hydro. Regulation 355 under the Environmental Protection Act states that beginning in 1994 Ontario Hydro will not emit more than 175 kilotonnes (kt) of sulphur dioxide (SO₂) per year. The same regulation limits the sum of SO₂ and Nitrogen oxides (NOx) emission to 215 kt per year. In other words, Ontario Hydro's maximum NOx emissions cannot exceed 40 kt per year unless its SO₂ emissions are less than 175 kt per year. This regulation applies only to the existing Crown Corporation and not to any other current or future electricity generator in Ontario.

No regulations are in place for greenhouse gas emissions. However, Ontario Hydro has made a voluntary commitment to stabilize its emissions of carbon dioxide at 1990 levels by the year 2000, and to reduce them by 10% by 2005. Ontario Hydro also made a voluntary commitment to limit net emissions of NOx to 38 kt per year by the year 2000. Again, these commitments apply only to Ontario Hydro and do not include emissions from any other electricity generators in the province or beyond. Therefore, commitments and regulations that apply only to Ontario Hydro must be re-examined. The Energy Competition Act 1998 takes a step in this direction by amending the Environmental Protection Act and the Ontario Energy Board Act to permit environmental issues to be addressed through regulations. However, no specific regulatory caps have been identified as yet.

Despite existing regulations and commitments on SO₂ and NOx in Canada and the United States (USA), studies have shown that acid rain remains a serious problem. Accordingly, the international Acidifying Emission Task Group concluded that in eastern Canada and the United States SO₂ emissions must be reduced by a further 75%, relative to the existing legally binding caps. Similarly, Ontario's Smog Plan stipulates a required NOx reduction target of 45%, relative to 1990 levels by 2015.

Currently no regulations address the emissions of greenhouse gas (GHG) from the electricity generating sector and air toxics, although the need for substantial reduction of current emissions has been identified by, amongst others, the Ontario Medical Association.

In view of the above, The Ontario Clean Air Alliance (OCAA) recommended in their report on Electricity Competition and Clean Air, April 1998, updated July 1998, that caps be implemented for greenhouse gas and air toxics emissions associated with the production or purchase of electricity in Ontario, and that existing caps on SO₂ and NOx be reduced below current levels. In November 1998, OCAA completed an Emission Reduction study to determine the cost and emission impacts for achieving specific SO₂ caps and associated reductions in other air emissions by replacing coal-fired electricity with natural gas-fired generation. Based on that report, OCAA recommends that specific caps on emissions of SO₂, NOx, GHG and carcinogenic air toxics be established as discussed below.

2. OCAA Emission Reduction Study

(a)Study Objective

The objective of the Study was to determine the cost and emission impacts of replacing coal-fired with natural gas-fired electricity generation for a range of SO₂ reductions below Ontario Hydro's current SO₂ emission cap of 175 kt.

The costs of establishing electricity-related SO₂ emissions caps at 25%, 50%, 75% and 90% below the current cap of 175 kt were assessed and the associated reductions in emissions of CO₂, NOx and air toxics were determined in order to provide adequate information in support of setting economically and environmentally sustainable emission caps.

(b)Study Methodology

The SO₂ reduction caps set at 25%, 50%, 75% and 90% of the current cap level were translated into an upper limit for SO₂ emissions. This upper limit along with emission coefficients applicable to Ontario Hydro's coal-fired plants determined the required reductions, if any, in coal-fired electricity generation. In turn, this required decrease in kilowatt-hours (kWh) generated from existing coal-fired plants defined the quantity of electric energy "deficit" to be met by new gas-fired plants using high efficiency combined cycle technology. Based on the energy deficit and the relevant annual gas capacity factors, as provided by Ontario Hydro, the absolute annual capacity, measured in megawatts, of new gas plants required was determined for each year.

The Planning Horizon selected was 2002 to 2014 taking into account the minimum lead time of 4 years for the design and construction of a combined cycle gas-fired power plant, and Natural Resources Canada's (NRCan) assumption that in about 2015 a new "low-pollution" coal plant would be commissioned to meet Ontario's load growth. For the base case analysis NRCan's "business as usual" inputs on natural gas prices, load growth and generation mix were applied.

Gas fuel cost and coal cost savings were calculated using heat rates and fuel price projections. The annual net gas substitution costs were discounted to 1998 and expressed in terms of (i) the net present value (NPV) of costs and (ii) the levelized costs, also known as the supply price, per unit of electric energy consumption in Ontario.

Emissions of SO₂, NOx, CO₂ and the air toxics (Arsenic, Beryllium, Cadmium, Chromium, Lead, Mercury and Nickel) were calculated in absolute terms, in terms of changes from the business as usual case, and as cost per cumulative (2002-2014) tonne of emissions savings using specific emission coefficients for each Ontario Hydro fossil fuel plant. Sensitivity analyses as to cost were carried out for lower and higher gas prices and with respect to emissions for lower and higher growth rates as well as lower nuclear generation.

(c)Findings

The required new gas-fired generating capacities replacing coal-fired plant capacity in order to meet the SO₂ reduction scenarios in 2002 under the business as usual case were determined. Only the 75% and 90% reduction scenarios require new gas-fired capacity in 2002 of approximately 1300 MW and 2600 MW respectively, while for the 50% and 25% reduction scenarios new gas-fired capacity is only required in the years 2008 and 2012 respectively.

The corresponding 1998 NPV cost of meeting the low SO₂ cap of 25% reduction and the high end of 90% reduction range from $282 million to $1.82 billion. The supply cost as levelized across all generation types range from about 0.03 cents/kWh for the 25% SO₂ reduction scenario to about 0.2 cents/kWh for 90% reduction. In terms of the impact on the supply price as percent of the average retail electricity price in Ontario, the cost increase of meeting the SO₂ reduction targets range from 0.5% (-25%) to 3.0% (-90%). The respective cost increases for the typical residential hydro customer would range from $0.28 (-25%) to $1.86 (-90%) per month throughout the planning period.

The following Table identifies the estimated gas emissions from Ontario Hydro's operation for the year 2002 under the 90% SO₂ reduction scenario as well as the corresponding figures for the year 2014, the last year of the planning period. The 2014 estimates are based on the assumption that increased electricity demand due to economic growth is met by gas-fired generation. In addition, estimates for CO₂ and NOx (NO) emissions from current Non-Utility Generation (NUG) operations (all gas-fired), which are assumed to be constant over the planning period, are shown for the year 2002. The last column contains the proposed caps set to achieve compliance in the year 2002 under the 90% reduction scenario.

Relationship of Estimated Emissions vs Proposed Caps

* measured in NO

As can be seen from above figures, the caps proposed for CO2 and NOx for the year 2002 could not be met in the latter part of the planning horizon (2008-2014) without additional measures such as investments in renewable energy and energy efficiency, emissions trading with other section of the economy and/or raising the proposed cap by 2008.

The generating mix (nuclear, hydro, coal, gas) fluctuates from year to year due to the availability/use of nuclear power and new gas-fired plants. Accordingly, the cumulative emission reductions were calculated. The cumulative reduction for each of the pollutants was about ten times greater for the 90% reduction target than the 25%. In terms of emission quantities, nearly 99 percent of the total reduction is attributed to CO₂ - an important consideration in the context of global climate change and the Kyoto Protocol. The cumulative reductions between 2002 and 2014 in the emissions of SO₂, CO₂, NOx and carcinogenic air pollutants were calculated as 83, 51, 77 and 83 percent respectively for the 90% SO₂ cap relative to the NRCan "business as usual" scenario.

Sensitivity analysis was undertaken using assumption of a 4 percent per year real growth in gas prices rather than 0.25% price increase for NRCan's base case, to reflect the volume of increased demand for gas relative to current provincial demand. In this high price scenario, the NPV costs of achieving the SO₂ reduction targets range from $370 million (0.04 cents/kWh) to $2.7 billion (0.32 cents/kWh) as the SO₂ reduction targets are raised from 25 to 90 percent. This is an approximate increase in the supply cost (cents/kWh) over the base case of 33 and 60 percent respectively for the low and high SO₂ reduction targets.

(d)Implementation of Emission Caps

Meeting a SO₂ emission cap for a 90% reduction through the switching from coal to natural gas fired-electricity generation would not only reduce annual SO₂ and air toxics emissions up to 90% (83% cumulative 2002-2014) but also substantially reduce Ontario's electricity-related greenhouse gas and nitric oxide emissions. Based on figures in the above Table, Ontario's electricity generation-related greenhouse gas and nitric oxides emission could be capped in 2002, at no extra cost, at 15,000 kt and 25 kt respectively.

These caps would reduce Ontario's electricity-related greenhouse gas and nitric oxide emissions by approximately 48% and 72% respectively in 2002 relative to the business as usual forecast.

According to the study, post 2002 increases in the demand for electricity will be met by additional gas-fired generation. Since gas-fired generation does not emit sulphur dioxide or air toxics, the proposed 2002 sulphur dioxide and air toxics emission caps can be maintained post 2002 at no additional cost.

However, gas-fired generation does produce greenhouse gas (CO₂) and nitric oxide emissions. Therefore, Ontario's post-2002 electricity-related greenhouse gas and nitric oxide emissions will rise unless the demand and supply for electricity is balanced by increased investments in renewable energy and/or energy efficiency.

There are a number of options that should be considered by the Ontario government for controlling Ontario's electricity-related greenhouse gas and nitric oxide emissions post 2002, such as:

1. Maintaining the 2002 cap and requiring the supply and demand for electricity to be balanced by increased investments in renewable energy and energy efficiency;

2. Maintaining the 2002 cap and permitting new gas-fired electricity generators to achieve compliance by purchasing excess emission quotas from other sectors of the economy. As the Provincial Market Design Committee has noted "an emissions trading program would be more efficient if it included emitters outside the electricity industry; allowing trading across a broader group would decrease the average cost of compliance". (Second Interim Report, p. 5-5); and

3. Raising the cap after 2002 to permit additional gas-fired generation to meet Ontario's electricity needs.

Despite the apparent need for additional analysis to determine the appropriate cap and/or trading mechanisms to control Ontario's electricity-related greenhouse gas (CO₂) and nitric oxide (NO) emissions after 2002, it is suggested that:

1. The Government of Ontario establish annual emission caps which will ensure that, commencing in the year 2002, Ontario's total (domestic and imported) electricity-related sulphur dioxide and air toxic emissions will not exceed the following levels:

Sulphur dioxide:17.5 kt

Arsenic:19 kg

Beryllium:9 kg

Cadmium:7 kg

Chromium:180 kg

Lead:24 kg

Mercury:45 kg

Nickel:228 kg

2. The Government of Ontario establish annual emission caps and appropriate mechanisms which will ensure that in the year 2002 Ontario's total (domestic and imported) electricity-related greenhouse gas and nitric oxide emissions will not exceed the following levels:

Greenhouse Gas (CO₂)15,000 kt

Nitric Oxide (NO)25 kt

3. The Government of Ontario issue a discussion paper and consult the people of Ontario on the appropriate caps for Ontario's electricity-related greenhouse gas and nitric oxide emissions after the year 2002 in the context of a multi-sector strategy to reduce Ontario's greenhouse gas and nitric oxide emissions.

(e)Stakeholder Comments

Staff of both Ontario Hydro and the Ontario Ministry of Energy, Science and Technology commented on the Emissions Reduction Study prepared for OCAA. Their main concern was that the cost impact of 0.2 cent/kWh or an additional $1.86 per month for the typical residential consumer for the 90% SO₂ reduction scenario may be understated. They argued, amongst other things, that the annual escalation of the gas price, assumed at 0.25 percent in the business as usual case, is too low, and that the cost for switching from coal-fired to gas-fired plants should have been averaged only over electricity produced by the new gas-fired plants instead of the total electricity generation in the Province.

Ministry staff, based on their initial interpretation of Natural Resources Canada's (NRCan) forecast, suggested real growth in gas prices of about 3%. However, NRCan confirmed that their official gas price forecast is still at only 0.25% annual increases for the real gas price. This forecast is supported by the fact that the North American gas market is in the process of becoming fully integrated. While the switch from coal to gas-fired plants increases Ontario's gas consumption by 19%, this increase is less than 1% of the integrated North American market, and therefore, should have little impact on gas prices.

Notwithstanding the above, the study assessed the cost impact of a 4% real annual growth rate of the gas price. The impact on the consumer price of electricity under the 90% SO₂ reduction scenario was a monthly electricity cost increase of $2.75 for the typical residential consumer instead of $1.86 calculated for the base case. Even such a monthly increase is still a reasonable cost impact considering the environmental benefit of substantially reduced air emissions.

With respect to the incremental cost resulting from the operation of the new gas-fired plants it can be assumed that in a competitive electricity market there will be only one market clearing price for electricity at any point in time. The owners of gas-fired generation will receive the same price per kWh for their output as the owners of nuclear and hydraulic generation. Therefore, if lower emission caps push up the price of fossil generation, they will simultaneously push up the price of nuclear and hydro power, that is the increased cost would still be reflected in a levelized supply price.

In a deregulated electricity market, assuming stricter emission caps, the new average price of electricity cannot rise by more than the incremental cost to Ontario of obtaining the new supplies unless some suppliers are earning excess profits. The only supplier that has a potential to earn excess profits is Ontario Hydro as a result of its ownership of nuclear and hydraulic generating stations which have very low incremental fuel and operating costs. As a result, the Market Design Committee, set up by the Ontario Government for advice on creating and implementing a competitive electricity market, has recommended that Ontario Hydro be subject to a revenue cap of 3.8 cents per kWh. If the Government of Ontario adopts a 3.8 cents per kWh revenue cap for Ontario Hydro, Ontario Hydro will not be able to earn excess profits and hence the Study's estimates of the average price impact of stricter emission caps is reasonable.

Lakeview New Generation, a joint venture of CU Power Canada, Ontario Hydro, Mississauga Hydro and Toronto Hydro, has proposed an additional natural gas generating capacity (550 MW) for the Lakeview site (approximately 20% of the capacity required by 2002 under the 90% SO₂ reduction scenario). Their answer as to the consumer price implications of the proposed gas-fired generating plant was that "The Lakeview New Generation facility will provide reliable electric energy at a price that is both stable and competitive." This would confirm the OCAA's study conclusion that substituting coal-fired with gas-fired generation has a very limited impact on the consumer electricity price.

Conclusion:

The Emission Reduction Study for the Ontario Clean Air Alliance (OCAA) has demonstrated that setting a Sulphur Dioxide (SO₂) cap for the future Ontario electricity sector at 10% (90% reduction) of Ontario Hydro's current cap of 175 kilotonnes (kt) can be accomplished through the substitution of coal-fired generation with gas-fired generation at modest cost increases to consumers; i.e. 3%-5% average price increases to all consumers or monthly bill increases of $1.86 to $2.75 for the typical residential customer.

Replacing coal-fired generation with gas-fired generation to meet a 90% reduction in the current SO₂ emission cap during the study period of 2002 wo 2014 and beyond will indirectly result in a 78% reduction of air toxics, 48% reduction of carbon dioxide (CO₂, a greenhouse gas), and 72% nitric oxide (NO) in the year 2002. The equivalent cumulative reductions over the study period are 83%, 51% and 77% respectively.

Meeting real electricity growth in the post-2002 period with gas-fired generation will not increase SO₂ and air toxics emissions. Accordingly, a cap for SO₂ and air toxics emissions can be set at 90% reduction from the present SO₂ cap without implications on future economic growth. However, increased gas-fired electricity generation to meet real growth rates will increase CO₂ and NO emissions. Therefore, a fixed cap for CO₂ and NO could pose constraints on economic growth, unless the Ontario Government implements these caps together with associated mechanisms such as increased investment incentives in renewable energy and energy efficiency, a carbon emission trading program and/or incremental increase of the caps after 2002.

Contact Name and Telephone Number:

K. Hemmerich, Manager, Air Quality Improvement

Environmental Services Section

Technical Services Division

Works and Emergency Services

Phone: (416) 392-7702

Fax: (416) 392-0816

E-mail "khemmeri@toronto.ca"

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