Reducing the Impact of Coal on the Environment

The largest use of coal is in the production of electricity.  Reducing the impact of coal on the environment means using less electricity.

1 - Markets

Electricity should function as a market as much as possible.  Consumers should pay the replacement cost of electricity.

Customers have a zero tolerance for system failure.  Security requires back up supply that is hard to finance by markets.   Electricity pricing must pay for underused capacity so that it is available as insurance of a major system interruption.

1.1 - Electricity Productivity Financing

Carbon taxes imposed on coal generation must be used to fund reductions in electricity load through improvements in efficiency and fuel substitution.

Regulations should allow a Local Distribution Company (LDC - the retail electricity grid) to invest in the replacement of electric hot water and electric stoves. 

Example - an LDC pays to replace an electric hot water heater with a gas water heater.  The utility is allowed to recover the cost of this activity from the rate base as if it had invested in any other infrastructure improvement.

If electricity can be saved by investors at a lower cost than generating new electricity, then the regulations should encourage such activities.

Rather than assume LDCs should carry the sole responsibility for investing in electricity productivity improvements, regulators should facilitate contract structures that permit private, long-term investors (the same entities that finance generation such as wind farms) to finance energy productivity improvements at many sites in a manner that allows the investment to be recovered from the rate base. 

Example - Investors, working with the LDC and regulators could invest in the deployment of regenerative electric braking in elevators.

Contract and regulatory structures should allow investors to deploy high efficiency motors throughout industry under Energy Service Contracts. 

2 - Reduce the use of electricity for low temperature heat

A BTU delivered at 1000’ C can create electricity, melt steel or heat bath water.  A BTU delivered at 100’C can only heat bath water, but it is much cheaper to produce.

Electricity is most valuable for those tasks that can only be done with electricity - captive markets - communications, motors, electronics, lights.

Electricity can also be used to provide low temperature heat - competitive markets such as hot water, cooking, space heat.  Electricity should be replaced in any low temperature heat application where there is another, less expensive, way of providing the same service.

1 -Stoves

Wherever possible, electric stoves (which run most often on-peak - dinner time) should be replaced with gas stoves.  Since gas is the peak fuel in Ontario, an electric stove running at dinner time is actually being powered by electricity generated at a gas generator.

If an electric stove is replaced by a gas stove the amount of natural gas used goes down rather than up.  If the gas is burned on site in a gas stove instead of in a generator and transmitted to an electric stove, the amount of gas burned to cook dinner decreases by the conversion inefficiencies and line losses.

2 -Water heaters

Electric hot water should be replaced by gas hot water wherever possible.  Preference should be given to tankless, electrically ignited, gas fired, point of use hot water systems.

3 -Space Heat

In general, subsidies can’t have a long term impact.  One time subsidies to replace electric heat would work if part of the heat system replacement included in a substantial home renovation.

3 - Codes, Standards, and Taxes

3.1 - Building code

Restrict electric heat, hot water, and tungsten lighting

3.2 - Industrial motors

In Ontario more than 40% of electricity is used by industry, largely for electric motors.

Industries that replace motors with higher efficiency motors should get accelerated depreciation of these assets for tax purposes.

Accelerated depreciation for energy management investments such as lighting sensors.

3.3 - Appliance efficiency

Restrictions on sale of tungsten lights, instant on TVs.

Mandate the use of rechargeable batteries for timers in devices like PVRs instead of having them operate standby while drawing full power.