Steam from the stacks of the Portlands Energy Centre, right, drifts past the old stack of the decommissioned Richard L. Hearn Generating Station on Jan 3 2012, both located on Unwin Ave. in Toronto's easterly waterfront area. The Portlands plant uses natural gas to produce electricity and the old Hearn plant originally used coal but was using natural gas as well prior to being shut down in 1983.(Fred Lum/The Globe and Mail)Fred Lum/The Globe and Mail
The replacement of coal-fired plants by natural gas and other types of fuel, coupled by rising demand for electricity, could make a significant contribution to new investment and jobs.
Besides being a valuable source of energy, the electricity sector is a big driver of overall economic activity. The Conference Board of Canada estimated last year that power utilities will spend a total of $347.5-billion (current dollars) on generation, transmission and distribution infrastructure between 2011 and 2030.
This investment translates into an average of $13-billion a year, adjusted for inflation.
Taking into account the overall impact of these investments – for example, on household incomes and Canada's foreign-trade balance – the board forecasts the electricity sector will contribute about $10.9-billion a year to Canada's gross domestic product, or 1.2 per cent of the total. It is expected to support 156,000 jobs a year.
The report estimates that gas-fired generation capacity will grow by almost 8,900 megawatts, or 23 per cent of the total. Only hydroelectric (35 per cent) and wind power (25 per cent) are projected to attract more investment than natural gas. (The report was compiled before Ontario's recent decision to slow its "green energy" drive, of which wind power is a major component.)
The bulk of the investment in gas-fuelled generation will be split almost equally between Alberta and Ontario. Saskatchewan will gain about 350 megawatts of capacity, with much smaller amounts in British Columbia and Newfoundland and Labrador. No new gas-fired plants are envisaged in other provinces or territories.
The National Energy Board estimates that gas-fired generation will more than double between 2010 and 2035, expanding its share of total capacity to 15 per cent from 9 per cent.
"The growth of gas use for power generation could ramp up more quickly, either to replace older coal plants or if planned new nuclear plants are not built," concludes the NEB forecast, contained in a February of 2013, report on Canada's long-term energy future.
Under Canadian Environmental Protection Act regulations that take effect in July of 2015, all existing coal-fired generating units must meet the same carbon-dioxide emission standards as natural-gas plants when they reach either the normal end of their economic life or the end of their power-purchase contracts, whichever happens sooner.
If a unit cannot meet that standard, it will have to close. New coal units will also have to meet the natural-gas standard, starting in 2025.
But the future for gas is not without risk. The NEB report cautions that "domestic natural gas demand could also vary due to production or technology changes in fuel requirements for the oil sands. Changes in demand for Canadian and U.S. natural gas would have an impact on North American natural gas prices."