Canadian electricity producers are positioning themselves to benefit from U.S. efforts to reduce reliance on coal-fired power, and are lobbying the U.S. Environmental Protection Agency for its seal of approval.
Utility executives have been regular visitors to Washington as they aim to ensure that their American customers can take full credit for imported hydro power as a way of reducing greenhouse gas (GHG) emissions. Their push comes even as Republicans in Congress vow to block President Barack Obama's off-coal initiative.
The EPA is due to release its final rules this summer on how states can comply with new carbon regulations announced by Mr. Obama as part of his government's effort to reduce GHG emissions. Its inclusion of imported power from hydroelectric projects would represent a major boost for utilities such as Manitoba Hydro and Hydro-Québec, which are already increasing their exports to the U.S.
But that's not a sure bet.
"It's definitely not clear that the EPA will accept hydro power imported from Canada in the same way it accepts domestic renewables or hydro power," said Kyle Aarons, senior fellow with the Washington-based think tank, Center for Climate and Energy Solutions. The group presented a paper on Canadian hydro power at a conference in the U.S. capital this week.
"I think there are a lot of reasons why the EPA should treat Canadian hydro power similarly," Mr. Aarons said in an interview. "We don't seen why there should be a distinction and we're not alone in that view, but at this point, it's impossible to say what the EPA is going to do."
Canadian electricity exports have more than doubled since a recent low in 2003, rising from 30 million megawatt-hours to 60 million in 2013. Although the pictures differs widely among provinces, Canada gets 80 per cent of its electricity from non-emitting sources, primarily water power but also nuclear, wind and solar. The U.S., by contrast, relies on coal for 40 per cent of its electricity generation.
Under a clean energy plan announced by Mr. Obama, U.S. states must reduce carbon emissions in their power sector by 30 per cent from 2005 levels by 2030, an aggressive target that can only be met by shuttering coal plants and using more non-emitting sources. Senior Republicans such as Senate Majority Leader Mitch McConnell of Kentucky decry the administration's "war on coal" and are seeking every means at their disposal to thwart it, including encouraging states to simply not comply with the EPA rules.
The Harper government has urged the Obama administration to ensure that electricity trade is seamless across the border and that Canada's non-emitting power be considered a key part of the solution in the U.S. climate effort.
Mr. Aarons said the EPA has outlined three possible options: fully crediting any increase in imports of hydro power imports, not crediting them at all, or providing credit only for imports from newly built projects. Imports of nuclear-generated power would only be credited if they come from new plants, and there are no plans to build reactors in Canada.
Quebec and Manitoba are in the forefront of the growth in exports, although provinces such as Ontario and British Columbia have also increased sales to the United States. American regulators recently approved the Champlain Hudson Power Express, a 1,000-megawatt transmission line that will deliver power form Hydro-Québec to New York City.
Approval was also given for the Great Northern Transmission Line, a 1,883-megawatt line that will bring electricity from Manitoba to Minnesota. That line has the added benefit of allowing Minnesota more leeway to fully utilize its wind and solar power by having access to electricity from the province that can be called on when the state's intermittent generation is unavailable.
In its submission to the EPA, the Canadian Electricity Association said the imported electricity from Canada will help states reduce the cost of compliance with the climate rules while ensuring the reliability of the grid.