The Fraser Institute

The Fraser Institute

January 31, 2005 08:00 ET

Ontario government in the dark on coal plant closings: shutting down coal-fired power plants will do more harm than good

TORONTO, Jan. 31 - Ontario's decision to close the province's
coal-fired power plants by 2007 will jeopardize economic growth in Ontario,
increase energy costs, and reduce the reliability of the electricity supply,
according to a new paper "Pain Without Gain: Shutting Down Coal-Fired Power
Plants Would Hurt Ontario", released today by The Fraser Institute.
There is no question that coal-fired power plants contribute to Ontario's
air pollution emissions. However, the authors point out that the effect has
often been overstated and that the key question is whether the harm associated
with these emissions exceeds the social and economic benefits of the
electricity they provide. Surprisingly, despite the large potential impacts of
closing the plants, there has been no systematic evaluation of this question.
Coal-fired power plants operated by the Ontario Power Generation
Corporation account for about 25 percent of Ontario's electricity supply.
"The ill-advised decision to shut down the plants comes at a time of
rising power consumption in Ontario, high oil and gas prices, and considerable
investor uncertainty regarding generating capacity in Ontario," says Dr.
Kenneth Green, the Institute's Director of Risk, Regulation and Environment
Studies and co-author of the paper.
Shutting down the plants will also impose other costs, including job
losses at the plants themselves, a need to rapidly develop replacement
capacity, increased use of higher-cost fuels, and scrapping the installed
plants.
"Our review of the evidence suggests that the coal-fired plants have a
relatively small environmental impact and that closing them will have large,
adverse economic consequences that fall disproportionately on low-income
households," says Green. "Before phasing out the coal-fired plants, the
Government of Ontario has a public duty to exercise due diligence by carefully
evaluating the overall welfare effects of its electricity generation plans."

Key points:

- Despite the continued operation of coal-fired power plants, air
quality in Ontario is good and much improved since the 1970s.

- Coal-fired power plants play a small role at present in pollution and
smog formation.

- Scientific investigation of links between air pollution and increased
health or mortality risk suggests that air pollution at current
levels, including emissions from coal-fired power plants, is not
harming Ontarians' health.

- Reducing coal-based mercury emissions will have little or no effect on
environmental mercury levels, and mercury at current levels from all
sources is unlikely to represent a source of harm to Ontarians'
health.

- Closing Ontario's coal plants is not part of Canada's plan for
implementing the Kyoto Protocol.

Power from coal-fired plants is an abundant, low-cost, and reliable
electricity source. The increased prices for electricity that will result from
shutting the coal-fired plants will cause reductions in household incomes that
fall disproportionately on the poor.
Low-cost, abundant, electricity is a key factor in creating economic
growth and measures that raise costs or restrict electricity supply will have
long-term negative consequences for the economy.
It is a fundamental duty of government to avoid enacting policies that
will make people worse off. The burden of proof rests on the Government of
Ontario to show that its electricity plan would improve Ontarians' overall
welfare. This could best be met by setting aside plans to shut the coal plants
until a proper objective benefit-cost analysis has been completed.

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Established in 1974, The Fraser Institute is an independent public policy
organization with offices in Vancouver, Calgary, and Toronto.

The media release and study (in PDF) can be viewed on the web site at
www.fraserinstitute.ca


Contact Information

  • Dr. Kenneth Green
    Director, Risk, Regulation and Environment Studies
    The Fraser Institute
    Tel: (604) 714-4547
    or mobile (604) 753-1163
    Email: keng@fraserinstitute.ca

    Suzanne Walters
    Director of Communications
    The Fraser Institute
    Telephone: (604) 714-4582
    Email: suzannew@fraserinstitute.ca