Construction and Analysis of
Sectoral, Regional and National Cost Curves
of GHG Abatement in Canada
Part IV: Final Analysis Report
Work done for the
Cost Curves Working Group,
Analysis and Modelling Group
National Climate Change Implementation Process
Contract No: NRCan-01-0332
File No 23313-1-0066
Financial Code: f.201.387.00000.AMGNRC.0.00.04
Submitted to Michel Francoeur of Natural Resources Canada
M.K. Jaccard and Associates
Vancouver, British Columbia
March 7, 2002
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M K Jaccard and Associates
Construction and Analysis of
Sectoral, Regional and National Cost Curves
of GHG Abatement in Canada
Part IV: Final Analysis Report
Work done for the
Cost Curves Working Group,
Analysis and Modelling Group
National Climate Change Implementation Process
Work Completed by:
Christopher Bataille – Project Manager
Alison Laurin – Principle Associate Researcher
Research Associates:
Mark Jaccard
Rose Murphy
John Nyboer
Bryn Sadownik
Maggie Tisdale
March 7, 2002
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Cost Curves Analysis
Executive Summary
Construction and Analysis of Sectoral, Regional and National
Cost Curves of GHG Abatement in Canada
Executive Summary
1. Introduction
Since 1998, governments at the national and provincial / territorial level in Canada have
embarked on a process aimed at achieving a thorough understanding of the impact, the
cost and the benefits of the Kyoto Protocol's implementation and of the various
implementation options open to Canada. This National Climate Change Implementation
Process (NCCIP) involved the establishment of more than a dozen consultative Issue
Tables composed of experts, interest groups and government officials. The general
mandate of these Issue Tables was to estimate the cost and amount of greenhouse gas
(GHG) emissions that could be prevented or captured in Canada.
Within the NCCIP, the Analysis and Modelling Group (AMG) was formed to address key
analytical needs for the work of the Issue Tables and ultimately to bring their work
together to inform Canadian policy makers. The work of most Issue Tables was
completed in late 1999.
Once the work of the Issue Tables was completed, the AMG was mandated to integrate,
or ‘roll up’, the table’s results as reported in their Options Papers. For this task, the AMG
called on the services of two teams of micro-modelling consultants, the Energy Research
Group / M.K. Jaccard and Associates (ERG / MKJA) being one of these groups. Results
were published as Integration of GHG Emission Reduction Options Using CIMS (ERG /
MKJA June 30, 2000). The results of this integration exercise, which established two
‘boundary’ estimates of the micro-economic level expenditures necessary to meet Kyoto,
were then forwarded to two macro-modelling groups who analyzed the macro-economic
level effects of the expenditures reported in the previous exercise. The cumulative results
of this analysis are reported in An Assessment of the Economic and Environmental
Implications for Canada of the Kyoto Protocol (AMG / NCCIP November 2000).
MKJA was requested by the AMG and NRCan to use the same modelling system
used for the Roll Up exercise, including subsequent improvements, to construct
and analyze a set of sectoral, regional and national cost curves of GHG abatement
in Canada based on GHG shadow prices of 10, 20, 30, 40, 50, 75, 125,150, 200
and 250 dollars per tonne of CO2 equivalent (CO2e). Like the first AMG ‘roll up’
the ‘Cost Curves’ project was to be a micro-economic exercise; to accomplish this
all of CIMS’ macroeconomic elements were shut off. This final analysis report
provides the GHG reduction curves that are established in our modelling system
at the various GHG shadow prices, and estimates the techno-economic, expected
resource and perceived private costs associated with the curves.
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2. Method
2.1. The CIMS Model
MKJA used the Canadian Integrated Modelling System (CIMS) for both the first Roll Up
and the Cost Curves analysis. CIMS is designed to provide information to policy makers
on the likely response of firms and households to policies that influence their technology
acquisition and technology use decisions.1 Thus, it is sometimes described as a
technology simulation model that seeks to reflect how people actually behave rather than
how they ought to behave.
CIMS covers the entire Canadian economy and can connect to an aggregated
representation of the US economy. It currently models six provinces and an aggregation
of the Atlantic provinces. While the model is simple in operation, it can appear complex
because it is technologically explicit and covers the whole economy. This means that all
technologies (fridges, cars, light bulbs, industrial motors, steel furnaces, buildings, power
plants, etc.) must be represented in the model, including their inter-linkages. Because
there is a great diversity of technologies in industry, the model is especially large for that
sector.
As a technology simulation model, CIMS need not focus only on energy. However, the
version of CIMS described here highlights the interplay of energy supply and demand
because energy-related GHG emissions are a key policy concern.2 Thus, the model
focuses on the interaction between sectors that use energy (the industrial, residential,
commercial / institutional and transportation sectors) and sectors that produce or
transform energy (electricity generation, fossil fuel supply, oil refining, and natural gas
processing). A policy that seeks to influence energy supply and demand may also have
indirect effects, such as impacts on intermediate and final product demands (the structure
of the economy) and on total economic output. To assess this, CIMS includes a macroeconomic feedback loop, which was turned off for this study, as per the scenario
conditions established by the AMG.
A CIMS simulation involves seven basic steps.
1.
2.
3.
4.
5.
6.
7.
Assessment of demand
Retirement
Competition
Retrofitting
Energy supply and demand equilibrium
Macroeconomic equilibrium (turned off for AMG work)
Output
1. Assessment of demand: Technologies are represented in the model in terms of the
quantity of service they provide. This could be, for example, vehicle kilometres
1
Technology is widely defined to include not just equipment but also buildings and even major
infrastructure such as transit networks.
2
GHG emissions, or any other waste stream, can be estimated by setting a value for them that corresponds
to a unit of energy service provided or a unit of energy consumed.
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Executive Summary
travelled, tonnes of paper, or m2 of floor space heated and cooled. A forecast is
then provided of growth in energy service demand.3 This forecast drives the
model simulation, usually in five year increments (e.g., 2000, 2005, 2010, 2015,
etc.).
2. Retirement: In each future period, a portion of the initial-year's stock of
technologies is retired. Retirement depends only on age.4 The residual
technology stocks in each period are subtracted from the forecast energy service
demand and this difference determines the amount of new technology stocks in
which to invest.
3. Competition for new demand: Prospective technologies compete for this new
investment. The objective of the model is to simulate this competition so that the
outcome approximates what would happen in the real world. Hence while the
engine for the competition is the minimization of annualized life cycle costs
(ALCC), these costs are substantially adjusted to reflect market research of past
and prospective firm and household behaviour.5 Thus, technology costs depend
not only on recognised financial costs, but also on identified differences in nonfinancial preferences (differences in the quality of lighting from different light
bulbs) and failure risks (one technology is seen as more likely to fail than
another). Even the determination of financial costs is not straightforward, as time
preferences (discount rates) can differ depending on the decision maker
(household vs. firm) and the type of decision (non-discretionary vs.
discretionary).The model thus allocates market shares among technolgoies
probabilistically.6
4. Retrofitting: In each time period, a similar competition occurs with residual
technology stocks to simulate retrofitting (if desirable and likely from the firm or
household's perspective).7 The same financial and non-financial information is
required, except that the capital costs of residual technology stocks are excluded,
having been spent earlier when the residual technology stock was originally
acquired.
5. Equilibrium of energy supply and demand: Once the demand model has chosen
technologies based on the base case and policy case energy prices, the resulting
demands for energy are sent to the energy supply models. These models then
choose the appropriate supply technologies, assess the change in the cost of
3
The growth in energy service demand (e.g., tonnes of steel) must sometimes be derived from a forecast
provided in economic terms (e.g., dollar value of output from the steel sector).
4
There is considerable evidence that the pace of technology replacement depends on the economic cycle,
but over a longer term, as simulated by CIMS, age is the most important and predictable factor.
5
With existing technologies there is often ready data on consumer behaviour. However, with emerging
technologies (especially the heterogeneous technologies in industry) firms and households need to be
surveyed (formally or informally) on their likely preferences. These latter are referred to as stated
preferences whereas preferences derived from historic data are referred to as revealed preferences.
6
In contrast, the optimizing MARKAL model will tend to produce outcomes in which a single technology
gains 100% market share of the new stocks.
7
Where warranted, retrofit can be simulated as equivalent to complete replacement of residual technology
stocks with new technology stocks.
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producing energy, and if it significant send the new energy prices back to the
demand models. This cycle goes back and forth until energy prices and energy
demand have stabilised at an equilibrium.8
6. Equilibrium of energy service demand: Once the energy supply and demand cycle
has stablized, the macro-economic cycle is invoked (if turned on). Currently it
adjusts demand for energy services according to their change in overall price,
based on price elasticities. If this adjsutment is significant, the whole system is
rerun form step1 with the new demands.
7. Output: Since each technology has net energy use, net energy emissions and costs
associated with it, the simulation ends with a summing up of these. The
difference between a business-as-usual simulation and a policy simulation
provides an estimate of the likely achievement and cost of a given policy or
package of policies.
2.2. Scenario conditions set by the AMG
The AMG set preconditions for the simulation of all five paths in the Roll Up. These
were continued in this Cost Curve exercise. The key preconditions are:
•
All key assumptions are based on Canada achieving the Kyoto target through
domestic actions alone. This does not prejudice the purchase of carbon emission
credits on the international market. Inherent in this scenario is that US does not
enact policies to reduce emissions, thereby altering the trade in energy commodities
between the two countries. For those familiar with the first integration exercise, this
was ‘Path 2 Canada Alone’.
•
Non-energy output or activity levels are the same as the BAU forecast. The one
exception to this assumption in the Roll Up was the demand for vehicle
transportation, which was allowed to respond to measures aimed directly at reducing
vehicle use. In our subsequent research associated with improving the transportation
model, however, we found very little willingness to reduce overall travel. There
does, however, seem to be some willingness to change the method of travel, through
mode switching from single to high occupancy vehicles and from switching to
transit, cycling and walking. Accordingly, we have increased the capacity of our
model to endogenously capture these mode shifts.
•
There is no change in output of domestic oil and natural gas. Changes in demand for
these forms of energy that arise from fuel switching and enhanced efficiency are met
through changes in exports and imports. The resulting imports and exports are
reported in the main report for each GHG price level.
•
The domestic production of coal and electricity in the paths alters to reflect changes
in demand for these fuels. Imports and exports of electricity and coal between
regions (inter-provincial and international) are held constant in all simulations.9
8
This convergence procedure, modelled after the NEMS model of the US government, stops the iteration
once changes in energy demand and energy prices fall below a threshold value. In contrast, the MARKAL
model does not need this kind of convergence procedure; iterating to equilibrium is intrinsic to its design.
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2.3. Cost Methodology
2.3.1. The techno-economic cost (TEC) estimates in this report
The AMG has expressed an interest in a measure of financial cost of the various shadow
price levels. As such, it asked in the terms of reference for an estimate of technoeconomic costs (TEC), or the change in expenditures on capital, energy and operations
between the reference and policy case. These costs have been provided disaggregated to
the level of sector / region pair (e.g., Alberta Chemical Products). While provided here
as single cost estimates, TEC costs in CIMS are probabilistic; they cannot be perfectly
represented as a single value (TEC faced by consumers are not uniform) and should
therefore be treated as a condensed estimate of a range.
The techno-economic costs throughout this report are the difference in the net present
value of techno-economic costs in 2000 (Cdn $ 1995), for the period 2000-2010 between
the reference and policy case. TEC costs are the sum of capital, energy and operations
and maintenance costs. The capital costs that are reported are the new purchase and
retrofit ‘sticker price’ expenditures over the ten year span. If, however, the life of a
piece of equipment extends beyond 2010, the capital costs include only the costs
occurring up to 2010. Operations and energy costs are yearly costs over the ten year
span. Please see the main report for details.
Techno-economic costs represent only firms and households’ financial cost of adaptation
to policy change; welfare costs may be, and usually are, much higher and are embodied
in the technology choices of firms and households. The choices made determine the
technology stock changes from which we generate our techno-economic costs.
The TEC costs have been provided for each sector / region pair with and without the
price changes from electricity. At the regional and national level TEC is always reported
without the electricity price change, as it disappears as a transfer to the electricity sector.
2.3.2. The expected resource (ERC) and perceived private cost (PPC)
estimates in this report
At the direct request of the Office of Energy Efficiency, we have included an estimate of
welfare costs with this version of the Cost Curves analysis as well as the technoeconomic costs required by the terms of reference. The welfare cost measures are
expected resource cost and perceived private cost. In order to understand these costs, we
will define them in relationship to each other.
9
In the MARKAL runs for the Roll Up and Cost Curves, inter-provincial electricity trade was allowed to
adjust in response to changing costs.
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Table 2.1: Types of costs
Type of cost:
Notes:
Perceived private cost. This is based on
the concept of private avoided costs;
firms and households were willing to
reduce X tonnes of GHGs when faced
with Y shadow price and all other taxes
and real prices in the economy
Established as direct plus indirect emissions
reductions times shadow price10.
Expected resource cost (ERC). This may
be conceived as the “real” cost or as the
perceived private cost adjusted for risk
and general inefficiency.
Costs provided in first Roll Up exercise.
ERC = (TEC+(PPC-TEC)*0.75). The
missing 0.25 is our estimate of the
‘inefficient’ resistance of the economy to
price signals. ERC is TEC plus the real risk
associated with actions.
Techno-economic costs (TEC)
Includes change in capital, energy and
operations costs (with no uncertainty, no
variability and no consumers’ surplus). Most
comparable to ‘risk-free’ financial cost. It
can be reported with or without electricity
price changes. These electricity price
changes result in a transfer to electricity,
considered neutral at the regional level.
Perceived private costs (PPC) include all costs faced by the private entity. It is the cost
the private entity would feel they are facing. This cost is what drives the consumer to
make their choices and, thus, determines the compensation required to have consumers
do something differently (i.e., move from one technology to another).
Expected resource costs (ERC) are the probabilistic financial costs the private entity
would incur, including risk and cost of capital, etc. It is generally less than PPC because
we do not include the less tangible component of consumers’ surplus. As was explained
during the Roll Up exercise, CIMS tries to capture, at the higher tax rates, even those
most reluctant to make the switch to the alternative technology / process that is lower in
GHG emissions. It would be inappropriate to include these last dollars that were spent to
convert the otherwise unconvertible - what we loosely called a "bribe" - in the ERC.
Since we have no means of determining what that "bribe" was, we made an educated
guess that it would be about 25% of the difference between the tech costs and the
perceived cost. This decision was based on substantial literature review but there is a
10
The GHG emissions reductions and costs of some of the tables’ actions were modeled exogenous to
CIMS because they were not technology-based or could not be incorporated into the model’s framework.
In this report, these exogenous emissions reductions are included in the total GHG reductions reported, and
in the calculation of perceived private and expected resource costs. At NRCan’s request, we provide a
breakout of these exogenous actions in Appendix A along with a national summary of emissions reductions
and costs that exclude these actions. See Appendix A for additional discussion.
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high degree of uncertainty surrounding this value. It requires sensitivity analysis and
additional research
All non-environmental taxes are redistributed and thus are just transfers. Welfare cost
would not include these. The GHG taxes are here deigned to be a surrogate for the value
/ benefits foregone by having chosen an alternative technology. The actual dollars
collected through the tax are also recycled and not included.
3. Canada’s Cost Curve for Emissions Reduction
The primary purpose of this exercise was to define an emissions reduction cost curve for
Canada. Figure 3.1 provides such a curve where, at any particular shadow price
associated with GHG emissions (y-axis), the quantity of emissions reduced can be
determined (x axis). It is followed by table 3.1 that defines more clearly the quantity of
energy saved, the emissions reduced and the techno-economic, expected resource and
perceived private costs associated with this reduction.
3.1. General commentary for Canada
The closest cost curve run to the Kyoto target, a reduction of 178.7 Mt based on the
CEOU used for the first roll-up, is the $150 run with a reduction of 176.6 Mt. At this
shadow price the electricity sector delivers 83 Mt (47%), mainly through sequestration
and switching to natural gas turbines in Alberta and Saskatchewan, transportation 28.7
Mt (16%), industry (excluding NG extraction) 26.2 Mt (14.8%), NG extraction 10.4 Mt
(5.9%), commercial 9.7 Mt (5.5%), residential 8.0 Mt (4.5%), agriculture 8.5 Mt (4.8%)
and afforestation 2 Mt (1.1 %). Transportation achieved its reductions through mode and
fuel switching. Industry found its reductions mainly through process changes, fuel
switching and energy efficiency. Commercial gets much of its reductions through flaring
landfill gas, from which it makes electricity in some cases. It also gets large reductions
from energy efficiency actions. Residential gets it reductions through fuel switching, as
the relative fuel prices in each region dictate, and through energy efficiency.
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Figure 3.1: Cost Curve of GHG Emissions for Canada, 2010.
Canada Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
50,000
100,000
150,000
200,000
GHG Reductions (kt)
Table 3.1 defines energy saved, GHG emissions reduced, techno-economic costs (TEC),
expected resource costs (ERC) and perceived private costs (PPC) associated with the
reductions. In this table all TEC values include the electricity sector’s techno-economic
costs but exclude the cost of changing electricity prices.
We represent costs in transportation differently than the other sectors. Transportation
reports very large negative techno-economic costs (i.e., benefits) because walking,
cycling, transit and higher occupancy private vehicles cost less than single occupancy
private vehicles. In the first TEC column in table 2.1, we exclude the financial savings in
the transportation sector in order to give a sense of the costs facing other sectors. The
second TEC column, which includes transportation, includes the negative TEC of not
buying vehicles. These “benefits” are, however, accompanied by a very large loss of
consumers’ surplus. We are uncertain about the degree to which consumers who switch
away from single occupancy vehicles continue to invest in vehicles and provide the
reader with national level TEC and ERC costs reflecting two contrasting assumptions.
The costs in columns labelled “All Sectors” assume that a change in vehicle kilometres is
accompanied by a corresponding change in vehicle ownership. The costs in columns
labelled “with Parked Vehicle Costs” assume that individuals continue to purchase
vehicles despite switching to other modes of transportation for portions of their travel.
These are extremes to the range of possibilities.
In the AMG Roll Up, a shadow price of $120 in CIMS achieved the Kyoto target. Here,
it requires at least $150. The gap can be attributed to upgrades to the transportation
model that endogenise more of the table’s actions. Overall, CIMS found a third less
reductions in transportation when compared to the first Roll Up. In research subsequent
to the Roll Up, we found that while there may be great potential for mode switching in
transportation, there is almost no indication of willingness to reduce overall distance
traveled. At this point, we cannot answer questions regarding what would happen to
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disposable income, savings, investment, trade and other macroeconomic dynamics at a
shadow price of $150. CIMS has some capability in this regard but, as with the Roll Up,
the macroeconomic portion of the model was shut off for this study.
Table 3.1:Energy, Emissions and costs associated with emissions reduction in Canada, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TEC w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(‘95$
billion)
(‘95$
billion)
(’95$
billion)
10
941
87.6
(25.2)
(30.0)
(28.7)
(5.9)
(5.6)
2.1
20
1,028
105.0
(23.6)
(30.5)
(28.0)
(2.5)
(1.8)
6.9
30
1,098
116.7
(21.3)
(30.3)
(26.5)
1.8
2.8
12.5
40
1,172
128.0
(19.1)
(29.9)
(24.8)
6.5
7.8
18.6
50
1,232
136.2
(16.4)
(29.2)
(22.9)
11.6
13.2
25.2
75
1,298
149.1
(10.7)
(28.0)
(18.7)
25.3
27.6
43.0
100
1,354
157.6
(7.1)
(28.7)
(16.4)
39.4
42.4
62.1
125
1,402
167.2
(3.7)
(28.7)
(13.5)
54.4
58.2
82.1
150
1,450
176.6
0.2
(25.9)
(7.9)
70.7
75.2
102.9
200
1,539
187.2
9.7
(22.9)
0.4
104.2
110.0
146.5
250
1,627
198.0
18.9
(17.6)
10.8
140.1
147.3
192.7
3.2. The significant actions for Canada
Table 3.2 outlines the significant actions for Canada as a whole at the $150 level; the
importance of these actions at $10 is also provided. These actions are broken down by
sector / region pair in the main report. This list was established by setting a criterion of a
minimum 1% contribution to total reductions at the $150 level. The reader should note
that the relative importance of the actions could be different for every shadow price level;
sequestration, for example, doesn’t exist at $10 but is the second most important action at
$150.
The most striking phenomenon is that the top four actions are from electricity production;
the switch from coal boilers to high efficiency NG fired turbines and combined cycle
turbines delivers the largest amount of reductions of any action. Of these actions,
sequestration presents perhaps the most questions concerning its maturity and costs.
Another striking phenomenon is the importance of exogenously specified actions such as
commercial landfill gas, truck speed controls and sequestration of CO2 produced during
hydrogen production. These actions penetrate fully once the shadow price level reaches
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its specified cost; if they were modelled in CIMS, their advent would likely be at a lower
shadow price and their penetration much more gradual.
Table 3.2: The Significant Actions for Canada
%
%
$10
of total
$150
of total
Mt
at $10
Mt
at $150
35.2
39.6%
30.0
16.9%
CIMS
Sequestration in electricity production
nil
nil
24.5
13.8%
CIMS
Switch to hydroelectric electricity production
5.0
5.6%
16.0
9.0%
CIMS
Electricity demand reductions
9.8
11.0%
7.6
4.3%
CIMS
NG transmission - Replace turbines with electric drivers
4.1
4.6%
7.4
4.2%
CIMS
Commercial landfill gas
6.0
6.8%
6.0
3.4%
EXOG
Transportation mode switching
0.4
0.5%
4.9
2.8%
CIMS
Residential high efficiency furnaces and shell improvements
1.6
1.8%
3.8
2.1%
CIMS
Switch to non-hydro renewables in electricity
2.4
2.7%
3.7
2.1%
CIMS
Personal car efficiency improvements
0.3
0.3%
3.3
1.9%
CIMS
Transportation: F2B truck speed control
nil
nil
3.2
1.8%
EXOG
Sequestration of CO2 from hydrogen plants
2.8
3.2%
2.8
1.6%
EXOG
Agricultural grazing strategies
2.6
2.9%
2.6
1.5%
EXOG
Other manufacturing: Fuel switching for water boilers
nil
nil
2.5
1.4%
CIMS
Other manufacturing: Fuel switching for space heating
0.8
0.9%
2.4
1.3%
CIMS
Transportation: F8C accelerated truck scrappage
2.2
2.5%
2.2
1.2%
EXOG
Agriculture: Increased no-till
nil
nil
2.1
1.2%
EXOG
Fuel switching in residential space heating
1.2
1.4%
2.0
1.1%
CIMS
Transportation: K1 Off road efficiency standards
nil
nil
2.0
1.1%
EXOG
Transportation: F10 truck driver training in energy eff.
1.9
2.1%
1.9
1.1%
EXOG
Residential hot water efficiency improvements
0.5
0.6%
1.8
1.0%
CIMS
All actions over 1% of total reductions at $150
Switch to high eff. boilers and gas turbines for elec. Prod.
Sum of national total reductions
86.5%
Source
74.6%
4. Discussion of the significant actions
4.1. Switch to simple and combined cycle gas turbines in the electricity
production sector
Switching from coal boilers to simple and combined cycle gas turbines for electricity
production provides 21.0 Mt on an energy efficiency basis, and 9 Mt on a fuel-switching
basis, for a total of 30.0 Mt at $150 (16.9% of national reductions at $150). The
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difficulty with implementing this action is that electricity demand falls or is stagnant in
the provinces (Alberta, Saskatchewan and Ontario) where this action will have the most
effect. The newer, cleaner equipment will have to be retrofit to older equipment, a large
cost to producers.
4.2. Sequestration in electricity and hydrogen production
Large reductions come from the sequestration of emissions from coal-fired electricity
supply (24.5 Mt, 13.8% of the national total at $150). Utilization of sequestration on this
scale will, however, require that key technologies, such as hot filtration of power plant
exhaust gases, mature very soon. Hydrogen production does not require hot filtration and
can commence using current technology; it contributes 2.8 Mt at both $10 and $150 (it is
an inexpensive exogenously defined action), or 1.6% of national reductions at $150.
4.3. Switch to hydro-powered electricity production
Choosing hydroelectric power over fossil fuel alternatives provided the third largest
reduction. There are, however, many uncertainties and issues related to other values
associated with this action.
4.4. Switch to non-hydro renewables in electricity production
Occurring mainly in Ontario, wind, solar and biomass contributes 2.4 Mt at $10 and 3.7
Mt at $10, or 2.7% and 2.1 % of national reductions.
4.5. Commercial, Residential and Industrial electricity energy efficiency
programs
While not a perfect estimate of the effectiveness of electricity efficiency programs, one
obtains an idea of how effective these programs may be in that emissions related to
demand reductions in the electricity sector drop by 7.6 Mt at $150.
4.6. Natural Gas Transmission – Replace turbines with electric drivers and
leak detection and repair programs
The issue table for natural gas identified switching from gas turbines to electric drivers
for transmitting gas. This single action saves 7.4 Mt, or 4.2% of the national reductions
at $150. Leak detection and repair was also identified as a potential action; methane, the
primary component of natural gas, is a strong greenhouse gas twenty-one times more
potent than CO2. Actions to reduce leakage contribute 1.3 Mt of reductions at $150.
4.7. Commercial landfill gas capping, flaring and cogeneration
The decomposition of garbage emits enormous quantities of the methane. If we capture
and burn this methane, it contributes 6.0 Mt of direct reductions at $150 (3.4% of $150),
not including reduced indirect emissions from electricity.
4.8. General transportation mode shifting and efficiency
While a critical analysis of transportation demand shows little willingness to travel less,
there seems to be large potential reductions via mode switching. This would be primarily
xiv
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
a movement from single occupancy to multi-occupancy vehicles; there would also be
some movement from private vehicles to transit, cycling and walking. This potential is,
however, associated with very large losses of consumers’ surplus. While we show less
potential in this area than in our earlier analysis for the Roll Up, mode shifting and
personal car efficiency improvements still contribute 4.9 and 3.3 Mt, or 2.8% and 1.9%
of national reductions, respectively.
Several important transportation measures were modelled exogenously from CIMS.
These include off-road efficiency standards (0 Mt at $10, 2.0 Mt at $150), truck driver
training in efficiency (1.9 Mt at both $10 and $150), accelerated truck scrappage (2.2 Mt
at both $10 and $150) and truck speed controls (0 Mt at $10, 3.2 Mt at $150).
4.9. Residential high efficiency furnaces, fuel switching, hot water and shell
improvements
The combined effects of high efficiency furnaces and shell improvements in the
residential sector contribute 3.8 MT, or 2.1% of the national total. Fuel switching to
natural gas and electricity contributes another 2.0 Mt, or 1.1% of national reductions.
Hot water efficiency contributes another 1.8 Mt, or 1.0 % of national reductions at $150.
4.10.
Fuel switching for water boilers and space heating in Other
Manufacturing
Switching to NG and electricity for water boilers and space heating contributed 2.5 and
2.4 Mt (1.4 % and 1.3%) respectively.
4.11.
Improving the agricultural sink
Improvements in the agricultural sink via grazing strategies, no-till, etc. contribute 5.5 Mt
at negative cost at $20 and only develop positive costs at $30. They contribute their full
8.5 Mt at $75.
4.12.
Fuel switching in general
Fuel switching from more to less carbon-intense fuels, and from fossil fuels to electricity
in general, plays an enormous part in reducing our GHG emissions. It is a difficult matter
to define the numbers because switching from one technology to another can carry both
efficiency and fuel switching characteristics with it, and allocation to these two
components is not simple.
4.13.
Final words
This analysis is an attempt to reveal the most important actions at each of the specified
shadow prices and outline the most important underlying dynamics. Among these
dynamics we have specifically drawn your attention to the importance of the relative
price of electricity against the main fossil fuels and the prices amongst these fossil fuels.
Most important among these relationships is the relative price relationship of electricity
and natural gas. As per the AMG Roll Up exercise, the price of natural gas was not
altered from the reference case. Given the importance of this fuel for GHG reductions,
this is an important caveat.
xv
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Also, as per the AMG’s instructions, inter provincial trade in electricity did not change
between the policy and reference cases. The inter-provincial sale of hydro electricity,
specifically BC to Alberta and Manitoba, and Quebec to Ontario could have far reaching
consequences. The inter-tie capacity for these sales does not yet exist.
In this vein, we have also drawn your attention to the importance of what is not modelled
endogenously by CIMS in this analysis: the large exogenous actions in commercial,
residential and transportation, demand feedbacks driven by change in product prices and
internal pricing of natural gas. Exogenous actions entered the calculation of cost and
reductions in an “all-or-nothing” way with the criterion being the cost of that action as
specified by the tables. Had it been possible to endogenise these actions, the penetration
rates would not have been as prescribed by the tables.
Regional and national sectoral output (i.e. transportation, commercial, residential and
industry) is provided below for those interested readers. Please see the main report for
sub-sector details.
5. Regional Output
In this section, we display the individual sector outputs as regional aggregates. The
regional tables define energy saved, GHG emissions reduced, techno-economic costs
(TEC), expected resource costs and perceived private costs associated with the reduction.
In this table all TEC values include the electricity sector’s techno-economic costs but
exclude the cost of changing electricity prices. In the first TEC column, we have
excluded the financial savings in the transportation sector in order to give a sense of the
costs facing other sectors. The second TEC column includes the negative financial costs
accruing in the transportation sector. These negative financial costs are, however,
accompanied by a very large loss of consumers’ surplus. A key uncertainty is the degree
to which consumers who switch away from single occupancy vehicles continue to invest
in vehicles. To aid the reader we have provided national level TEC and ERC costs
reflecting two contrasting assumptions. The TEC and ERC columns labelled “All
Sectors” are based on the assumption that a change in vehicle kilometres is accompanied
by a corresponding change in vehicle ownership. The TEC and ERC columns labelled
“with Parked Vehicle Costs” present assume that individuals continue to invest in
vehicles while utilizing other modes of transportation.
5.1. British Columbia
British Columbia is characterized by a relatively dense urban population with mild
winters, a large resource industry and electricity provided by hydropower. BC registered
a reduction of 10.7 Mt of GHG emissions at the $150 shadow price, the shadow price that
induced national reductions closest to the Kyoto target. Of this, transportation
contributed 3.57 Mt, electricity 1.59 Mt, commercial 1.6 Mt, residential 0.8 Mt and NG
extraction 0.75 Mt, for a total of 8.5 Mt. Transportation mode and fuel switching, fuel
switching to hydro from NG, energy efficiency and landfill gas actions in commercial
and residential (which reduced electricity demand) and NG extraction actions contributed
the lion’s share of reductions in this province.
xvi
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Figure 5.1: Cost Curve of GHG Emissions for British Columbia, 2010.
British Columbia Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
GHG Reductions (kt)
Table 5.1: Energy, Emissions and costs associated with emissions reduction in BC, 2010
TEC
w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
86.1
5.54
(2.8)
(3.5)
(3.3)
(0.8)
(0.7)
0.1
20
92.0
6.14
(2.7)
(3.5)
(3.3)
(0.6)
(0.5)
0.4
30
98.3
6.49
(2.5)
(3.6)
(3.3)
(0.3)
(0.3)
0.8
40
104.6
6.93
(2.4)
(3.7)
(3.3)
(0.1)
(0.0)
1.1
50
110.9
7.20
(2.3)
(3.8)
(3.3)
0.1
0.3
1.4
75
125.8
7.95
(2.1)
(4.1)
(3.3)
0.7
0.9
2.4
100
138.6
8.58
(1.7)
(4.2)
(3.2)
1.4
1.7
3.3
125
151.3
9.60
(1.3)
(4.2)
(2.9)
2.3
2.6
4.4
150
162.4
10.72
(0.8)
(3.7)
(2.2)
3.2
3.6
5.5
200
178.1
12.01
0.9
(2.8)
(0.8)
5.3
5.8
8.1
250
190.6
13.31
2.4
(1.8)
0.7
7.7
8.3
10.9
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
xvii
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
5.2. Alberta
Coal-fired electricity supply, a large agricultural sector, a very large petrochemical and
gas industry and a mixed urban and rural population characterize Alberta. It also has the
potential for sequestration. At the $150 shadow price, Alberta registers a reduction of
67.6 Mt, over a third of the Kyoto target, with approximately 7% of the population of
Canada. Of this 2 Mt is from agricultural actions, 5.31 Mt is from transportation, 3.6 Mt
is from NG extraction actions, 8.7 Mt is from upstream oil and 44.8 Mt is from the
electricity sector: reduced electricity production (5.5 Mt), high efficiency coal burners
(5.1 Mt), sequestration (20.5 Mt) and a switch to combined cycle gas turbines from coal
(13.7 Mt).
Figure 5.2: Cost Curve of GHG Emissions for Alberta, 2010.
Alberta Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
10,000 20,000 30,000 40,000 50,000 60,000 70,000
GHG Reductions (kt)
xviii
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Table 5.2: Energy, Emissions and costs associated with emissions reduction in Alberta, 2010
TEC w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
292.3
40.48
(5.4)
(6.1)
(5.9)
(0.8)
(0.7)
1.0
20
331.5
49.73
(4.8)
(5.9)
(5.5)
1.0
1.1
3.4
30
336.6
52.59
(4.4)
(5.7)
(5.1)
3.1
3.3
6.1
40
331.8
54.29
(4.0)
(5.6)
(4.8)
5.3
5.5
8.9
50
326.2
55.71
(3.7)
(5.5)
(4.5)
7.5
7.8
11.9
75
308.5
60.52
(1.8)
(4.2)
(2.7)
13.7
14.0
19.6
100
299.4
63.11
(0.8)
(3.8)
(1.9)
19.9
20.4
27.8
125
293.8
65.74
(0.1)
(3.5)
(1.1)
26.3
26.9
36.2
150
293.1
67.61
0.4
(3.0)
(0.2)
32.9
33.6
44.9
200
290.9
69.55
1.2
(3.1)
0.5
46.2
47.1
62.7
250
291.3
71.16
1.7
(3.1)
1.3
59.9
61.0
80.9
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
5.3. Saskatchewan
Saskatchewan has a mixed rural and urban economy with coal-fired electricity supply and
the potential for sequestration. At the $150 shadow price, Saskatchewan generates 17.7
Mt in emissions reductions. 10.4 Mt comes from electricity, which is mainly from
sequestration. 1.6 Mt comes from transportation, and 1.6 Mt from NG extraction as well.
Another 3 Mt come from the agricultural sinks actions.
xix
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Figure 5.3: Cost Curve of GHG Emissions for Saskatchewan, 2010.
Saskatchewan Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
5,000
10,000
15,000
20,000
GHG Reductions (kt)
Table 5.3: Energy, Emissions and costs associated with emissions reductions in Saskatchewan,
2010
TEC
w/o
Trans
Sector
TEC
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
145.7
9.49
(1.3)
(1.5)
(1.4)
(0.2)
(0.2)
0.2
20
164.8
12.83
(1.0)
(1.3)
(1.2)
0.3
0.3
0.8
30
167.7
14.44
(0.5)
(0.9)
(0.7)
0.9
1.0
1.5
40
171.0
14.78
(0.5)
(1.0)
(0.7)
1.5
1.5
2.3
50
172.8
15.15
(0.3)
(0.9)
(0.6)
2.1
2.2
3.1
75
177.6
15.99
0.1
(0.7)
(0.2)
3.7
3.8
5.2
100
184.5
16.61
0.3
(0.7)
(0.1)
5.3
5.5
7.3
125
190.0
17.27
0.4
(0.7)
0.0
7.0
7.2
9.5
150
194.2
17.68
0.5
(0.7)
0.2
8.7
8.9
11.8
200
201.2
18.05
0.6
(0.9)
0.2
12.1
12.4
16.5
250
206.9
18.39
0.6
(1.1)
0.3
15.7
16.0
21.3
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
xx
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
5.4. Manitoba
Manitoba has a mixed rural and urban economy with a hydro-based electricity production
system. At $150 Manitoba generates 5.6 Mt of reductions. Of this 1.3 are from
agricultural sinks, 1.1 Mt are from transportation, 1.1 Mt from NG transmission actions,
0.68 Mt from various industries besides NG transmission, 0.4 Mt from commercial and
0.32 and 0.31 from residential and afforestation, respectively.
Figure 5.4: Cost Curve of GHG Emissions for Manitoba, 2010.
Manitoba Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
1,000
2,000
3,000
4,000
5,000
6,000
GHG Reductions (kt)
xxi
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Table 5.4: Energy, Emissions and costs associated with emissions reduction in Manitoba, 2010
TEC
w/o
Trans
Sector
TEC
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
29.6
2.87
(0.7)
(0.9)
(0.8)
(0.2)
(0.2)
0.1
20
31.5
3.41
(0.7)
(0.9)
(0.8)
(0.1)
(0.0)
0.2
30
32.9
3.65
(0.7)
(1.0)
(0.8)
0.0
0.1
0.4
40
34.1
3.78
(0.7)
(1.1)
(0.9)
0.2
0.2
0.6
50
35.3
4.17
(0.5)
(1.1)
(0.8)
0.3
0.4
0.7
75
38.2
4.52
(0.5)
(1.2)
(0.8)
0.7
0.8
1.3
100
40.7
4.85
(0.3)
(1.2)
(0.7)
1.0
1.2
1.8
125
42.9
5.22
(0.2)
(1.2)
(0.6)
1.5
1.6
2.4
150
44.7
5.58
(0.1)
(1.1)
(0.3)
2.0
2.1
3.0
200
47.5
5.95
0.3
(1.1)
(0.0)
2.9
3.2
4.3
250
49.6
6.22
0.4
(1.1)
0.1
4.0
4.3
5.6
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
5.5. Ontario
Ontario, a populous, mainly urban and economically diverse province, generated 38.7 Mt
of reductions at $150. Electricity generates the largest reductions, with 13.6 Mt.
Transportation follows with 9.6 Mt. Industry as a whole generates 6.9 Mt, with 3.2 of
this coming from NG transmission actions and 2.2 Mt from fuel switching and energy
efficiency in Other Manufacturing. The commercial sector generates 4.5 Mt while
residential generates reductions of 2.9 Mt. It should be noted that these sectors generally
increase their use of electricity, exchanging some of their direct emissions in the BAU for
indirect emissions in the electricity sector.
xxii
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Figure 5.5: Cost Curve of GHG Emissions for Ontario, 2010.
Ontario Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
10,000
20,000
30,000
40,000
50,000
GHG Reductions (kt)
Table 5.5: Energy, Emissions and costs associated with emissions reduction in Ontario, 2010
TEC
w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
244.5
17.33
(7.3)
(8.8)
(8.3)
(1.9)
(1.8)
0.4
20
249.0
18.91
(7.0)
(9.4)
(8.3)
(1.4)
(1.1)
1.3
30
261.1
20.97
(6.7)
(9.9)
(8.4)
(0.8)
(0.4)
2.3
40
298.3
26.19
(6.0)
(9.9)
(7.8)
0.1
0.6
3.4
50
322.2
28.98
(5.1)
(9.9)
(7.3)
1.1
1.7
4.7
75
343.8
31.47
(3.9)
(10.4)
(6.6)
3.7
4.7
8.4
100
365.1
33.37
(3.1)
(11.3)
(6.2)
6.5
7.7
12.4
125
383.5
35.85
(2.0)
(11.7)
(5.4)
9.6
11.1
16.6
150
401.8
38.65
(0.5)
(10.8)
(3.5)
13.1
14.9
21.1
200
449.1
42.89
4.0
(8.8)
0.8
20.8
23.2
30.6
250
501.7
48.08
9.8
(4.5)
7.2
29.8
32.7
41.2
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
xxiii
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
5.6. Québec
Québec, like Ontario, is populous, mainly urban and economically diverse. Unlike
Ontario, its electricity sector is dominated by hydro, virtually eliminating the possibility
for reductions in that sector. It generated 16 Mt of reductions at $150. Of these, 5.4 Mt
were from transportation. 5.6 Mt were from industry, with Other Manufacturing
contributing 2 Mt. Another 2 Mt of these were from the Québec Metal Smelting
industry. NG transmission actions contribute only 0.09 Mt, unlike Ontario and westward,
where NG transmission contributes large reductions. Commercial contributes 1.6 Mt
while residential contributes 2.1 Mt.
Figure 5.6: Cost Curve of GHG Emissions for Québec, 2010.
Quebec Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
5,000
10,000
15,000
20,000
GHG Reductions (kt)
xxiv
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Table 5.6: Energy, Emissions and costs associated with emissions reduction in Québec, 2010
TEC
w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
74.4
5.95
(7.1)
(8.0)
(7.8)
(1.9)
(1.8)
0.1
20
82.3
7.26
(6.8)
(8.2)
(7.7)
(1.7)
(1.6)
0.5
30
87.9
7.95
(6.5)
(8.4)
(7.7)
(1.5)
(1.3)
0.8
40
93.0
8.83
(6.3)
(8.5)
(7.5)
(1.2)
(1.0)
1.2
50
99.4
9.55
(5.9)
(8.5)
(7.3)
(0.9)
(0.6)
1.6
75
114.6
11.31
(5.1)
(8.6)
(6.8)
(0.0)
0.4
2.8
100
127.0
12.70
(4.3)
(8.7)
(6.3)
1.0
1.6
4.2
125
136.7
14.02
(3.6)
(8.7)
(5.8)
2.1
2.8
5.7
150
144.3
15.77
(3.0)
(8.2)
(4.8)
3.5
4.3
7.3
200
156.4
17.05
(2.0)
(8.5)
(4.1)
6.1
7.2
10.9
250
166.5
18.23
(1.4)
(8.8)
(3.4)
8.9
10.3
14.8
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
5.7. Atlantic
The Atlantic provinces are a diverse economic region with a mix of energy resources
including hydro, coal and nuclear power. It generated 20.7 Mt of reductions at the $150
shadow price, 12.3 Mt of which were in the electricity sector. This drop is from an 84%
decrease in NG use and an 88% decrease in coal combined with 25 % increase in nuclear
and a 25% increase in hydro. Industry generated 3.9 Mt and transportation 2.5 Mt.
Residential is the final significant sector with 1.2 Mt.
xxv
M K Jaccard and Associates
Cost Curves Analysis
Executive Summary
Figure 5.7: Cost Curve of GHG Emissions for Atlantic, 2010.
Atlantic Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
5,000
10,000
15,000
20,000
25,000
GHG Reductions (kt)
Table 5.7: Energy, Emissions and costs associated with emissions reduction in Atlantic, 2010
TEC
w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
68.5
5.92
(0.7)
(1.2)
(1.1)
(0.2)
(0.2)
0.1
20
77.1
6.73
(0.6)
(1.2)
(1.1)
(0.1)
(0.0)
0.3
30
114.0
10.60
0.1
(0.7)
(0.4)
0.3
0.4
0.7
40
139.3
13.18
0.7
(0.2)
0.1
0.8
0.9
1.1
50
165.4
15.41
1.5
0.5
0.9
1.4
1.5
1.7
75
189.5
17.38
2.5
1.1
1.7
2.8
3.0
3.4
100
198.2
18.38
2.9
1.2
2.0
4.2
4.4
5.2
125
204.2
19.47
3.2
1.4
2.3
5.7
6.0
7.2
150
209.0
20.55
3.7
1.8
3.0
7.4
7.6
9.2
200
216.0
21.72
4.7
2.3
3.8
10.7
11.1
13.5
250
220.9
22.61
5.3
2.7
4.5
14.2
14.6
18.0
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
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Table of Contents
Executive Summary
1.
2.
3.
4.
5.
INTRODUCTION
METHOD
CANADA’S COST CURVE FOR EMISSIONS REDUCTION
DISCUSSION OF THE SIGNIFICANT ACTIONS
REGIONAL OUTPUT
IV
V
X
XIII
XVI
Final Report
1.
INTRODUCTION
1.1.
OBJECTIVES OF THE FINAL REPORT FOR THE COST CURVE ANALYSIS
1.2.
TIMELINE CHANGES
1.3.
THE CIMS MODEL
1.4.
SCENARIO CONDITIONS SET BY THE AMG
1.5.
COST METHODOLOGY
1.6.
CHANGES TO CIMS FROM THE ROLL UP
1.7.
LAYOUT OF THE REPORT
2.
CANADA’S COST CURVE FOR EMISSIONS REDUCTION
2.1.
GENERAL COMMENTARY FOR CANADA
2.2.
NG AND PETROLEUM PRODUCT TRADE EFFECTS
2.3.
THE SIGNIFICANT ACTIONS FOR CANADA
2.4.
DESCRIPTION OF DISAGGREGATED OUTPUT
3.
INDUSTRY
3.1.
GENERAL COMMENTARY FOR INDUSTRY
3.2.
THE CHEMICAL PRODUCTION INDUSTRY
3.3.
INDUSTRIAL MINERALS
3.4.
THE IRON AND STEEL INDUSTRY
3.5.
METAL SMELTING
3.6.
PULP AND PAPER
3.7.
OTHER MANUFACTURING
3.8.
MINING
3.9.
UPSTREAM OIL
3.10.
PETROLEUM REFINING
3.11.
NATURAL GAS EXTRACTION AND TRANSMISSION
3.12.
COAL MINING
4.
COMMERCIAL
4.1.
GENERAL COMMENTARY ON THE COMMERCIAL SECTOR
5.
RESIDENTIAL
5.1.
GENERAL COMMENTARY ON THE RESIDENTIAL SECTOR
6.
TRANSPORTATION
6.1.
GENERAL COMMENTARY ON THE TRANSPORTATION SECTOR
7.
ELECTRICITY PRODUCTION
7.1.
GENERAL COMMENTARY FOR ELECTRICITY PRODUCTION
8.
AGRICULTURE
8.1.
GENERAL COMMENTARY ON AGRICULTURE
9.
AFFORESTATION
9.1.
GENERAL COMMENTARY ON AFFORESTATION
10. REGIONAL OUTPUT
10.1.
BRITISH COLUMBIA
10.2.
ALBERTA
10.3.
SASKATCHEWAN
10.4.
MANITOBA
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5
5
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13
13
13
16
16
18
18
18
20
29
37
42
50
60
72
82
91
102
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199
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10.5.
ONTARIO
10.6.
QUÉBEC
10.7.
ATLANTIC
11. DISCUSSION OF THE SIGNIFICANT ACTIONS
11.1.
THE SIGNIFICANT ACTIONS
11.2.
FINAL WORDS
12. APPENDIX A: COSTS AND REDUCTIONS FOR THE EXOGENOUS ACTIONS.
13. APPENDIX B: A NUMERIC COMPARISON OF COST CURVES AND THE ROLL UP
EXERCISE
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Construction and Analysis of Sectoral, Regional and National
Cost Curves of GHG Abatement in Canada
Final Analysis Report
1. Introduction
Since 1998, governments at the national and provincial / territorial level in Canada have
embarked on a process aimed at achieving a thorough understanding of the impact, the
cost and the benefits of the Kyoto Protocol's implementation and of the various
implementation options open to Canada. This National Climate Change Implementation
Process (NCCIP) involved the establishment of more than a dozen consultative Issue
Tables composed of experts, interest groups and government officials. The general
mandate of these Issue Tables was to estimate the cost and amount of greenhouse gas
(GHG) emissions that could be prevented or captured in Canada.
Within the NCCIP, the Analysis and Modelling Group (AMG) was formed to address key
analytical needs for the work of the Issue Tables and ultimately to bring their work
together to inform Canadian policy makers. Thus, early on, the AMG established key
definitions and parameters for the work of the Issue Tables. The work of most Issue
Tables was to be completed in late 1999.
Once the work of the Issue tables was completed the AMG was mandated to integrate, or
Roll Up, the tables’ results as reported in their Options Papers. For this task, the AMG
called on the services of two teams of micro-modelling consultants, the Energy Research
Group / M.K. Jaccard and Associates (ERG / MKJA) being one of these groups. Our
results were published as Integration of GHG Emission Reduction Options Using CIMS,
(Energy Research Group/ MKJA June 30, 2000). The results of this integration exercise,
which established two ‘boundary’ estimates of the micro-economic level expenditures
necessary to meet Kyoto, were then forwarded to two macro-modelling groups who
analyzed the macro-economic level effects of the expenditures reported in the previous
exercise. The cumulative results of this analysis are reported in An assessment of the
economic and environmental implications for Canada of the Kyoto Protocol, reported by
the AMG and NCCIP in November 2000.
M.K. Jaccard and Associates (MKJA) has since been requested by the AMG and Natural
Resources Canada to use the same modelling system as was used for the Roll Up
exercise, including subsequent improvements, to construct and analyze a set of sectoral,
regional and national cost curves of GHG abatement in Canada based on GHG prices of
10, 20, 30, 40, 50, 75, 125, 150, 200 and 250 dollars per tonne of CO2 equivalent (CO2e).
Like the first AMG ‘roll-up’ the ‘Cost Curves’ project was to be a micro-economic
exercise; to accomplish this all of CIMS’ macroeconomic elements were shut off. The
original request was for techno-economic costs, or the difference in capital, energy and
maintenance expenditures between the reference case run and the shadow price run, but
subsequent requests were made to estimate the welfare costs that are likely to be
experienced by the various sectors of the economy. This final analysis report provides
both the GHG reduction curves that are established in our modelling system at the
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various GHG shadow prices, and estimates the techno-economic, expected resource and
perceived private costs associated with the curves.
1.1. Objectives of the Final Report for the Cost Curve Analysis
The terms of reference state the objectives of the final report for the Cost Curves analysis
as follows:
“The micro-modellers will each prepare a report presenting the national,
regional and sectoral results of the cost curves, the approach taken, and a
“user guide” for the interpretation of results. For each increments of the
cost curves the complete data set providing cost, energy and emissions
impacts shall be provided as appendix documents.”
As per the terms of reference, the following report presents the methodology used
as well as the national, regional and sectoral results. The complete data set is
provided as an electronic appendix provided on an accompanying data-disk.
1.2. Timeline Changes
By agreement between AMG / NRCan and MKJA, this project was to have been
implemented in early June, 2001 and completed by mid-December, 2001. Despite some
contracting delays, all runs and preliminary analysis were completed by November 2001.
The results were reviewed by the AMG and the Targeted Measures Coordinating Group
(TMCG), and discussed at the December 2001 AMG meeting. NRCan, working with
TMCG, then identified supplementary work they needed to assess the economic
resistance and other "costs" related to the selected activities from the cost curves. This
strong appetite for more cost details lead to numerous definitional issues that were
resolved, working with MKJA, by early January. The CIMS team was then charged with
re-compiling the costs with the new set of definitions. This was completed by the end of
January 2002.
1.3. The CIMS Model
MKJA used the Canadian Integrated Modelling System (CIMS) for both the first Roll Up
and the Cost Curves analysis. CIMS is designed to provide information to policy makers
on the likely response of firms and households to policies that influence their technology
acquisition and technology use decisions.1 Thus, it is sometimes described as a
technology simulation model, which seeks to reflect how people actually behave rather
than how they ought to behave.
CIMS covers the entire Canadian economy and can connect to an aggregated
representation of the US economy. It currently models six provinces and an aggregation
of the Atlantic provinces.
While the model is simple in operation, it can appear complex because it is
technologically explicit and covers the whole economy. This means that all technologies
1
Technology is widely defined to include not just equipment but also buildings and even major
infrastructure such as transit networks.
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(fridges, light bulbs, cars, industrial motors, steel furnaces, buildings, power plants, etc.)
must be represented in the model, including their linkages to each other. Because there is
a great diversity of technologies in industry, the model is especially large for that sector.
As a technology simulation model, CIMS need not focus on energy. However, the
version of CIMS described here highlights the interplay of energy supply and demand
because energy-related GHG emissions are a key policy concern.2 Thus, the model
focuses on the interaction between sectors that use energy (in the industrial, residential,
commercial / institutional and transportation sectors) and sectors that produce or
transform energy (electricity generation, fossil fuel supply, oil refining, and natural gas
processing). A policy that seeks to influence energy supply and demand may also have
indirect effects, such as impacts on intermediate and final product demands (the structure
of the economy) and on total economic output. To assess this, CIMS includes a macroeconomic feedback loop. However, this feedback loop can be shut-off if a more
elaborate macro-economic model is to be used instead. For this study, the feedback loop
was turned off to permit attaining the objectives of isolating direct emission reductions
and costs.
A CIMS simulation involves seven basic steps.
1.
2.
3.
4.
5.
6.
7.
Assessment of demand
Retirement
Competition
Retrofitting
Energy supply and demand equilibrium
Macroeconomic equilibrium (turned off for AMG work)
Output
1. Assessment of demand: Technologies are represented in the model in terms of the
quantity of service they provide. This could be, for example, vehicle kilometres
travelled, tonnes of paper, or m2 of floor space heated and cooled. A forecast is
then provided of growth in energy service demand.3 This forecast drives the
model simulation, usually in five year increments (e.g., 2000, 2005, 2010, 2015,
etc.).
2. Retirement: In each future period, a portion of the initial-year's stock of
technologies is retired. Retirement depends only on age.4 The residual
technology stocks in each period are subtracted from the forecast energy service
demand and this difference determines the amount of new technology stocks in
which to invest.
3. Competition for new demand: Prospective technologies compete for this new
investment. The objective of the model is to simulate this competition so that the
2
GHG emissions, or any other waste stream, can be estimated by setting a value for them that corresponds
to a unit of energy service provided or a unit of energy consumed.
3
The growth in energy service demand (e.g., tonnes of steel) must sometimes be derived from a forecast
provided in economic terms (e.g., dollar value of output from the steel sector).
4
There is considerable evidence that the pace of technology replacement depends on the economic cycle,
but over a longer term, as simulated by CIMS, age is the most important and predictable factor.
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outcome approximates what would happen in the real world. Hence while the
engine for the competition is the minimization of annualized life cycle costs
(ALCC), these costs are substantially adjusted to reflect market research of past
and prospective firm and household behaviour.5 Thus, technology costs depend
not only on recognised financial costs, but also on identified differences in nonfinancial preferences (differences in the quality of lighting from different light
bulbs) and failure risks (one technology is seen as more likely to fail than
another). Even the determination of financial costs is not straightforward, as time
preferences (discount rates) can differ depending on the decision maker
(household vs. firm) and the type of decision (non-discretionary vs.
discretionary).The model thus allocates market shares among technolgoies
probabilistically.6
4. Retrofitting: In each time period, a similar competition occurs with residual
technology stocks to simulate retrofitting (if desirable and likely from the firm or
household's perspective).7 The same financial and non-financial information is
required, except that the capital costs of residual technology stocks are excluded,
having been spent earlier when the residual technology stock was originally
acquired.
5. Equilibrium of energy supply and demand: Once the demand model has chosen
technologies based on the base case and policy case energy prices, the resulting
demands for energy are sent to the energy supply models. These models then
choose the appropriate supply technologies, assess the change in the cost of
producing energy, and if it significant send the new energy prices back to the
demand models. This cycle goes back and forth until energy prices and energy
demand have stabilised at an equilibrium.8
6. Equilibrium of energy service demand: Once the energy supply and demand cycle
has stablized, the macro-economic cycle is invoked (if turned on). Currently it
adjusts demand for energy services according to their change in overall price,
based on price elasticities. If this adjsutment is significant, the whole system is
rerun form step1 with the new demands.
7. Output: Since each technology has net energy use, net energy emissions and costs
associated with it, the simulation ends with a summing up of these. The
difference between a business-as-usual simulation and a policy simulation
5
With existing technologies there is often ready data on consumer behaviour. However, with emerging
technologies (especially the heterogeneous technologies in industry) firms and households need to be
surveyed (formally or informally) on their likely preferences. These latter are referred to as stated
preferences whereas preferences derived from historic data are referred to as revealed preferences.
6
In contrast, the optimizing MARKAL model will tend to produce outcomes in which a single technology
gains 100% market share of the new stocks.
7
Where warranted, retrofit can be simulated as equivalent to complete replacement of residual technology
stocks with new technology stocks.
8
This convergence procedure, modelled after the NEMS model of the US government, stops the iteration
once changes in energy demand and energy prices fall below a threshold value. In contrast, the MARKAL
model does not need this kind of convergence procedure; iterating to equilibrium is intrinsic to its design.
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provides an estimate of the likely achievement and cost of a given policy or
package of policies.
1.4. Scenario conditions set by the AMG
The AMG set certain preconditions for the simulation of all five paths in the Roll Up,
preconditions that were continued in this Cost Curve exercise.
•
All key assumptions are based on Canada achieving the Kyoto target through
domestic actions alone. This does not prejudice the purchase of carbon emission
credits on the international market. Inherent in this scenario is that US does not
enact policies to reduce emissions, thereby altering the trade in energy commodities
between the two countries. For those familiar with the first integration exercise, this
was ‘Path 2 Canada Alone’.
•
Non-energy output or activity levels are the same as the BAU forecast. The one
exception to this assumption in the Roll Up was the demand for vehicle
transportation, which is allowed to respond to measures aimed directly at reducing
vehicle use. In our subsequent research associated with improving the transportation
model, however, we found very little willingness to reduce overall travel. There
does, however, seem to be some willingness to change the method of travel, through
mode switching from single to high occupancy vehicles and from switching to
transit, cycling and walking.
•
There is no change in output of domestic oil and natural gas. Changes in demand for
these forms of energy that arise from fuel switching and enhanced efficiency are met
through changes in exports and imports. The net changes in import and exports
generated are reported in section 2.4 “NG and Petroleum Product Trade Effects”.
•
The domestic production of coal and electricity in the paths alters to reflect changes
in demand for these fuels. Imports and exports of electricity and coal between
regions (inter-provincial and international) are held constant in the BAU and the
paths.9
1.5. Cost Methodology
1.5.1. Building a cost curve and what it can tell you
Some policy analysts suggest that we can individually cost the actions that reduce GHG
emissions and then arrange these in order of ascending cost to produce a long run
marginal cost curve for greenhouse gas abatement. The assumption is that policy makers
could look to this curve in order to select policies that would cause these actions to occur
and that the cost estimates for the individual actions can be calculated from the cost curve
($/GHG * GHG reduced). In addition, the total cost of reducing a given quantity of GHG
emissions is simply the sum of the quantities times unit costs of all actions undertaken.
This analytical approach would have merit if:
9
In the MARKAL runs for the Roll Up and Cost Curves, inter-provincial electricity trade was allowed to
adjust in response to changing costs.
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1.
each action’s costs were completely independent of all other actions,
2.
actions represented something that would otherwise not occur during the forecast
(reference case) period, and
3.
the costs of actions (including getting them to happen) were only financial,
deterministic and independent of the current level of penetration.
Unfortunately, this is usually not the case, although approximation of the above
conditions may exist in some cases.
1.
The costs of actions are not independent of each other. Within a sector, the
penetration of efficient light bulbs affects the costs of more efficient furnaces or
better insulation. Between sectors, the penetration of GHG-free electricity
production affects the costs of all forms of electricity efficiency as a GHG emission
reduction measure. Because of this, an integrated model is required for costing
analysis and the cost of actions cannot be identified in isolation in the way
described above. To isolate the cost of an individual action requires running the
entire model with everything else evolving at reference case conditions except for
that required to cause a particular action to occur (e.g., changing the operating cost
of a single technology to reflect the effect of a subsidy or GHG permit price).
2.
Most actions occur to some extent over the forecast period without a policy (there
are exceptions when, for example, a new policy allows or disallows something
new). More efficient appliances are in the market and their market share is
expected to increase in the reference case. The goal of policy is to accelerate or
raise this penetration above what it would otherwise be. Because of this, a
simulation model is required (as opposed to optimization) in order to show how
policy may change the market penetration of a technology from x% to y% relative
to the reference case forecast. The cost of increased penetration that would have
occurred anyway is zero, which is not the assumption of the cost curve approach.
3.
Stavins (American Economic Review, 1999) gives a clear exposition of the reasons
why the costs of a GHG emission reducing action are more than just financial costs.
One reason is that purchasers experience (perceived and real) variability in
acquisition, installation and operating costs for what is otherwise the same
equipment and they also have different preferences. Indeed, discrete choice
research (McFadden) has consistently shown that preference-based costs are a nonlinear, probabilistic function of market penetration among other factors. Because of
this, an integrated, simulation model should treat costs in a preference-based,
probabilistic fashion. When this is done, costs are not just a function of integration
and reference case, but also of penetration level.
For these three reasons, the costs of actions should only be expressed in the following
way, after simulations with a preference-based, probabilistic, integrated model.
1.
We can provide the marginal cost for unit changes in GHG emissions from the
reference case. This is the single point (or distance travelled) on a curve that relates
GHG taxes (or permit trading prices or reduction subsidies) to Direct Reductions.
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2.
We can provide the total cost for a particular change from reference case. It is the
area under the marginal cost curve for all reductions from reference case up to the
amount that is achieved. These are provided by sector and by region / sector pair.
3.
We can estimate the cost of an action in an isolated, abstract way by running the
integrated simulation model over the reference case and only changing whatever
policy lever is used to simulate a change in that particular action. The cost of this
action will be different for different levels of penetration and, obviously, if we relax
the constraint of having that single policy lever (i.e., we do more than one thing to
reduce GHG emissions).
1.5.2. The techno-economic cost (TEC) estimates in this report
The AMG has expressed an interest in a measure of financial cost of the various shadow
price levels. As such, it asked in the terms of reference for an estimate of technoeconomic costs (TEC), or the change in expenditures on capital, energy and operations
between the reference and policy case. These costs have been provided disaggregated to
the level of sector / region pair (e.g., Alberta Chemical Products). Estimates of TEC cost
in CIMS are based on a heuristic single firm, single household or single traveler with a
probabilistic capital, energy and operations cost. In reality, however, no single firm can
produce a good or service for the same cost, no single house costs the same to build in
all locations and situations and no person has the same transportation demands and costs.
As result the changes in capital, energy and operations costs in CIMS are probabilistic;
they cannot be perfectly represented as a single value. The TEC costs produced in this
report should therefore be treated as a condensed estimate of a range, not a single value.
The techno-economic costs throughout this report are the difference in the net present
value of techno-economic costs in 2000 (Cdn $ 1995), for the period 2000-2010 between
the reference and policy case. TEC costs are the sum of capital, energy and operations
and maintenance costs. The capital costs are the new purchase and retrofit expenditures
over the ten year span. If the life of a piece of equipment extends beyond 2010, the
capital costs include only the costs occurring up to 2010. Operations and energy costs
are yearly costs over the ten year span.
For an example of how we construct our TEC cost values we provide a sample
investment of $10,000 that occurs in 2005; the new equipment will last until 2020.
There is an ongoing $500/year operations and energy charge. However, we wish to
account for only those costs that occur up to the year 2010. Therefore we calculate a
capital recovery factor (10% discount and 15 year lifespan) using the standard capital
recovery factor formula, expressed as:
CRF = R /((1 − (1 + R ) − N )
This CRF value, 0.1314, is multiplied by $10,000 to get an annual capital charge
($1314/year) for each year from 2005 to 2010.
We take this stream of capital costs for the period 2005 to 2010, add the $500/year
operations and energy charge, giving us an undiscounted annual charge of $1814, and
discount it all back to 2000 to get a single present value, $4,269.76, for costs for this
investment.
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The TEC costs are provided at the level of sector / region pair with and without the price
increases from electricity. At the regional and national level TEC is always reported
without the electricity price increase; it is simply a transfer to the electricity sector.
1.5.3. The expected resource (ERC) and perceived private cost (PPC)
estimates in this report
At the request of the Office of Energy Efficiency, we have included an estimate of
welfare costs as well as the techno-economic costs. In order to understand these costs,
we will define them in relationship to each other.
Perceived private cost (PPC) are all costs faced by the private entity. It includes technoeconomic costs, risk, option value, taxes, etc. It is the cost the private entity would feel
they are facing. This cost drives the consumer to make their choices and, thus,
determines the compensation required to have consumers to do something differently
(i.e., move from one technology to another).
Expected resource costs (ERC) are the probabilistic financial costs the private entity
would incur, including risk and cost of capital, etc. It is generally less than PPC because
we do not include the less tangible component of consumers’ surplus. As was explained
during the Roll Up exercise, CIMS tries to capture, at the higher tax rates, even those
most reluctant to make the switch to the alternative technology / process that is lower in
GHG emissions. It would be inappropriate to include these last dollars that were spent to
convert the otherwise unconvertible - what we loosely called a "bribe" - in the ERC.
Since we have no means of determining what that "bribe" was, we made an educated
guess that it would be about 25% of the difference between the techno-economic costs
and the perceived cost. This decision was based on substantial literature review but
there is a high degree of uncertainty surrounding this value. It requires sensitivity
analysis and additional research.
All non-environmental taxes are redistributed and thus are just transfers. Welfare cost
would not include these. The GHG taxes are here deigned to be a surrogate for the value
/ benefits foregone by having chosen an alternative technology. The actual dollars
collected through the tax is also recycled and not included.
For further clarification, we provide the following description of ERC and PPC, taken
from the first Roll Up report (pp.20-25).
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Table 1.1: Types of costs
Type of cost:
Notes:
Perceived private cost. This is based on
the concept of private avoided costs; firms
and households were willing to reduce X
tonnes of GHGs when faced with Y
shadow price and all other taxes / real final
and intermediate prices in the economy
Established as direct plus indirect
emissions reductions times shadow price10.
Expected resource cost (ERC). This may
be conceived as the “real” cost, or the
perceived private cost adjusted for risk and
general inefficiency.
These were the costs provided in first Roll
Up exercise. ERC = (TEC + (PPC -TEC) *
0.75). The missing 0.25 is our estimate of
the ‘inefficient’ resistance of the economy
to price signals. ERC is TEC plus the real
risk associated with actions.
Techno-economic costs (TEC)
Includes change in capital, energy and
operating costs (with no uncertainty, no
variability and no consumers’ surplus).
Comparable to ‘risk-free’ financial cost, it
can be reported with or without electricity
price changes. These electricity price
changes result in a transfer to electricity,
considered neutral at the regional level.
Perceived Private Costs
The emphasis of international efforts to develop behavioural simulation models like
CIMS has been to depict as accurately as possible the way in which firms and households
perceive costs as they make technology acquisition and use decisions. The extensive use
of consumer surveys for these kinds of models by electric utilities in the 1980s and 1990s
has provided considerable detailed research for setting parameters in CIMS. Thus, the
model includes several ‘behavioural levers’ that allow the user to adjust to particular
information about consumer product preferences, consumer attitudes to risk, consumer
emphasis on financial cost relative to other attributes, and consumer time preferences.
These levers are initially set in the model based on surveys of consumer research and
judgement from expert groups (notably in industry sectors). However, they have been
adjusted where necessary to reflect the views of the Tables with respect to perceived
costs.
10
The GHG emissions reductions and costs of some of the tables’ actions were modeled exogenous to
CIMS because they were not technology-based or could not be incorporated into the model’s framework.
In the main body of the report, these exogenous emissions reductions are included in the total GHG
reductions reported, and in the calculation of perceived private and expected resource costs. At NRCan’s
request, we provide a breakout of these exogenous actions in Appendix A along with a national summary
of emissions reductions and costs when these actions are excluded.
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When CIMS is run to simulate GHG reducing policies - regulations, taxes, tax credits,
grants, tradable permits, etc. - the financial effort required to achieve a given reduction
gives a sense of the private perceived costs. This level of effort (or GHG ‘shadow price’)
is ‘revealed’ by the model through simulating policies that achieve a particular GHG
emission reduction target (it could be the level of a tax, or the amount of subsidy
required).
Expected Resource Costs
In estimating the real resource costs to society of policies to reduce GHG emissions, the
analyst needs to correct for at least two things: the difference between perceived private
costs and expected social resource costs, on the one hand, and the net financial effect on
government on the other.
Firm and household perceptions of costs can be very different from what is typically
estimated from the technical-economic data provided about technologies. However,
when constructing the social resource cost account, it is important to acknowledge that
many of these so-called perceived costs actually represent real resource costs.
Several factors may require a change in capital cost and even operating cost estimates
from available technical-economic data.11 The factors listed below are accounted for in
the estimate of expected resource cost provided in this report. Wherever possible, these
estimates are based on information from the Tables. In several cases the Tables did not
distinguish between these factors, making it difficult to differentiate with any confidence
real resource costs from perceived resource costs, government resource costs from
transfers, and financial resource costs from intangible welfare resource costs.
New Technologies Have Higher Failure Risks and thus Higher Expected
Capital Costs
New technologies tend to have a higher risk of failure before the end of their expected
life. This increases the expected capital cost and is a real resource cost. Most of the
technologies that are looked upon to reduce GHG emissions are new technologies relative
to the average of the current stocks of technologies.
New Technologies Entail Higher Transaction Costs
New technologies tend to entail higher transaction costs because suppliers and purchasers
are less familiar with them. Therefore, advertising costs are higher for suppliers while
information, acquisition and installation costs are higher for purchasers. These are real
resource costs.
New Technologies Have Higher Risk of Increases in Operating Cost
New technologies tend to have a higher risk of increases in operating cost during their
expected life. These are real resource costs.
Technologies with Long Payback Periods Have Lower Option Values
11
See, for example, Stavins, 1999, “The Costs of Carbon Sequestration: A Revealed Preference Approach,”
American Economic Review, V.89 (4): 994-1009.
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Cost Curves Analysis
Final Analysis Report
Investment in fixed capital stock with a long payback period reduces the ability of firms
and households to respond to changing economic conditions. Research shows that firms
and households place an option value on being able to respond to change and for this
reason are reluctant to make investments with long paybacks, even where they feel the
investment may just as easily be more profitable rather than less profitable. Thus, to
some extent one might portray loss of option value as a resource cost. On the other hand,
if the likelihood is really equal that profits will be higher or lower, this should perhaps be
accounted for more as a perceived cost than an expected resource cost.
New Technology Capital Costs Have Greater Chances of Decreasing with
Greater Production
While new technologies have a greater risk of failure, they are also likely to have a
greater chance of having a significantly lower initial capital cost in five or 10 years with
economies of scale in manufacture and movement up the design learning curve for
producers. This represents a decrease in resource costs in future time periods. Firms and
households will also see it as a fall in the purchase price of a technology.
Net Changes in Government Costs
GHG emission reducing actions by firms and households have several impacts on
government. Some of these are real resource costs and some are just changes in the
amount of society's resources transferred to and from government. This needs to be
sorted out so that macro-economists can: (1) estimate the total direct costs of the actions
and (2) know the net effect on the government's accounts.
First, some policies may entail direct cost changes in terms of government tax revenue; a
policy may reduce tax revenue directly (a tax credit) or indirectly (reduced fuel tax
revenue resulting from people using their cars less because of an employer-sponsored
home work program) or increase it directly (higher motive fuel taxes). These should not
be counted as resource costs as they are just changes in levels of transfers.
Second, government may have increased personnel, facilities and other expenditures
(advertising, information brochures, labelling, etc.) to develop and implement its GHG
emission reduction policies. These must be accounted for as real resource costs, but this
accounting occurs separately from the internal operation and cost calculations in CIMS.
Third, government may incur direct costs in terms of subsidies it provides to firms and
households (grants, low interest loans, rebates, etc.). These are generally also considered
to be resource costs. However, to the extent that these are overcompensating for the
expected resource costs of firms and households, they become in part transfers, in this
case a sort of bribe paid by government to program participants. Estimating the part that
is resource cost and the part that is bribe is not easy. But to the extent that an estimate is
developed for expected resource cost, it was assumed that any excessive government
support is a transfer and not a resource cost.
1.6. Changes to CIMS from the Roll Up
As part of the agreement with the AMG / NRCan, we had proposed changes to the
analysis reflecting improvements we were incorporating in the model. The key
improvements included:
11
Cost Curves Analysis
•
Final Analysis Report
Increased endogenisation within the transportation model, including:
• Shifts between the passenger vehicle and public transit modes,
• Changes in the split between SOV use and HOV use,
• Changes in the efficiency of the freight truck fleet.
•
Upstream crude oil extraction has been separated from the refining models.
•
NG extraction, processing and transmission, which used to be one modelled
nationally, has now been regionally segregated.
In an effort to maintain the timetable as per the contract – having an interim report ready
by mid September – we were unable to complete all these changes in time for this report.
Two major changes, endogenisation of the transportation model and regional
disaggregation of the natural gas model, have been completed. The separation of the
upstream and downstream components of petroleum refining, while underway, was not
ready for simulation in time for us to attempt to meet the scheduled completion date.
Please see Table 1.2 for detail.
Table 1.2: Comparison of Roll Up and Cost Curves Methodologies
Difference
First Roll Up Exercise
Cost Curves Exercise
Time period used for
2001-2022
costing and discounting
2001-2010
Calculation
methodology for
perceived private cost.
PPC for various sectors
(Trans, Res. and Comm.) was
calculated in different ways for
different sectors due to issues
related to indirect emissions,
and how one handles actions
exogenously dealt with.
PPC cost is calculated in one
systematic way for all sectors.
(Direct + indirect emissions
reduction) times shadow
price. “Exogenous” actions
can be included or excluded
at will from the calculations.
The NG transmission
and extraction sector
The sector was exogenous to
CIMS.
The sector is now endogenous
in CIMS.
The transportation
sector
Transportation was mostly
exogenous to CIMS.
Transportation’s TEC was also
calculated differently from the
other sectors because it was
mostly exogenous.
Transportation is now mostly
endogenous to CIMS. Its
TEC is now calculated the
same as all the other sectors.
Costing of risk in
electricity production
Electricity reductions were
valued at TEC with a small
risk component.
Electricity is now valued the
same as other sectors, where
ERC is based on reductions.
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1.7. Layout of the Report
We present the data beginning with the most aggregate form (across Canada, including
energy, emissions and costs), represented in tables and accompanying graphs. Then we
show the same type of cost curve disaggregated by sector and by each region where this
sector exists. A table is then provided of the most important actions and how they
penetrate at $10, $50, $75 and $150. $10 was chosen for the cheapest actions, $50 and
$75 for reasonable midpoints, and $150 because it is closest to the Kyoto target. We then
provide the results aggregated by region, followed by a general summary of the most
significant actions and some concluding discussion.
2. Canada’s Cost Curve for Emissions Reduction
The primary purpose of this exercise was to define an emissions reduction cost curve for
Canada. Figure 2.1 provides such a curve where, at any particular shadow price ($ /
CO2e, y-axis), the quantity of emissions reduced can be determined (Mt, x axis). Table
2.1 defines more clearly energy saved, the emissions reduced and the techno-economic,
expected resource and perceived private costs associated with this reduction.
2.1. General commentary for Canada
The $150 / t CO2e simulation, which generates a reduction of 176.6 Mt, comes closet to
reaching the Kyoto target, a reduction of 178.7 Mt. At this shadow price, the electricity
sector delivers 83 Mt (47%), mainly through sequestration and switching to natural gas
turbines in Alberta and Saskatchewan, transportation 28.7 Mt (16%), industry (excluding
NG extraction) 26.2 Mt (14.8%), NG extraction 10.4 Mt (5.9%), commercial 9.7 Mt
(5.5%), residential 8.0 Mt (4.5%), agriculture 8.5 Mt (4.8%) and afforestation 2 Mt
(1.1%). Transportation achieved reductions through mode and fuel switching. Industry
found reductions mainly through process changes, fuel switching and energy efficiency.
Commercial reduced emissions through flaring landfill gas to produce, in some cases,
electricity. Reductions also came from energy efficiency actions. Residential reduced
emissions by fuel switching, as the relative fuel prices in each region dictate, and through
energy efficiency.
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Figure 2.1: Cost Curve of GHG Emissions for Canada, 2010.
Canada Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
50,000
100,000
150,000
200,000
GHG Reductions (kt)
Table 2.1 defines energy saved, GHG emissions reduced, techno-economic costs (TEC),
expected resource costs (ERC) and perceived private costs (PPC) associated with the
reduction. In this table all TEC values include the electricity sector’s techno-economic
costs but exclude the cost of changing electricity prices.
We represent costs in transportation differently than the other sectors. Transportation
reports very large negative techno-economic costs (i.e., benefits) because walking,
cycling, transit and higher occupancy private vehicles cost less than single occupancy
private vehicles. In the first TEC column in table 2.1, we exclude the financial savings in
the transportation sector in order to give a sense of the costs facing other sectors. The
second TEC column includes the negative TEC of not buying vehicles. These “benefits”
are, however, accompanied by a very large loss of consumers’ surplus. We are uncertain
about the degree to which consumers who switch away from single occupancy vehicles
continue to invest in vehicles and provide the reader with national level TEC and ERC
costs reflecting two contrasting assumptions. The costs in columns labelled “All Sectors”
assume that a change in vehicle kilometres is accompanied by a corresponding change in
vehicle ownership. The costs in columns labelled “with Parked Vehicle Costs” assume
that individuals continue to purchase vehicles despite switching to other modes of
transportation for portions of their travel. These are extremes to the range of possibilities.
In the AMG Roll Up, a shadow price of $120 in CIMS achieved the Kyoto target. Here,
it requires at least $150. The gap can be attributed mostly to upgrades to the
transportation model that endogenise more of the table’s actions. Overall, CIMS found a
third less reductions in transportation when compared to the first Roll Up. In research
subsequent to the Roll Up, we found that while there may be great potential for mode
switching in transportation, there is almost no indication of willingness to reduce overall
distance traveled. At this point, we cannot answer questions regarding what would
happen to disposable income, savings, investment, trade and other macroeconomic
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dynamics at a shadow price of $150. CIMS has some capability in this regard but, as
with the Roll Up, the macroeconomic portion of the model was shut off for this study.
Table 2.1: Energy, emissions and costs associated with emissions reduction in Canada, 2010
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
Shadow
price
Energy
Saved
Emissions
Reduced
TEC w/o
Trans
Sector
($ / t
CO2e)
(PJ)
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(‘95$
billion)
(‘95$
billion)
(’95$
billion)
10
941
87.6
(25.2)
(30.0)
(28.7)
(5.9)
(5.6)
2.1
20
1,028
105.0
(23.6)
(30.5)
(28.0)
(2.5)
(1.8)
6.9
30
1,098
116.7
(21.3)
(30.3)
(26.5)
1.8
2.8
12.5
40
1,172
128.0
(19.1)
(29.9)
(24.8)
6.5
7.8
18.6
50
1,232
136.2
(16.4)
(29.2)
(22.9)
11.6
13.2
25.2
75
1,298
149.1
(10.7)
(28.0)
(18.7)
25.3
27.6
43.0
100
1,354
157.6
(7.1)
(28.7)
(16.4)
39.4
42.4
62.1
125
1,402
167.2
(3.7)
(28.7)
(13.5)
54.4
58.2
82.1
150
1,450
176.6
0.2
(25.9)
(7.9)
70.7
75.2
102.9
200
1,539
187.2
9.7
(22.9)
0.4
104.2
110.0
146.5
250
1,627
198.0
18.9
(17.6)
10.8
140.1
147.3
192.7
As a modelling team, we are often confronted with alternative methods to calculate costs,
especially when these costs include notions of consumers’ surplus. Table 2.1 provides a
number of columns that reflect varying specific viewpoints on the issue of costs. But
issues can be much more general than this (see below). In any case, a specific
methodology is chosen and the tables, like table 2.1, report certain values. Each of these
values have surrounding them a level of uncertainty, in part due to the way they were
calculated (methodological uncertainty) and in part due to the uncertainty surrounding
input data. While we can do little in this analysis to assess the input data (the time and
resources required would be significant although probably quite valuable), we can
provide outcomes of the different broad methods applied. Appendix A provides such an
alternative.
In this analysis, an assessment of costs requires that one deal with actions from two
categories, those modelled endogenously and those added exogenously. This distinction
is not always simple in that some of the exogenous actions, when applied, actually affect
endogenous actions. A Buildings action, for example, required that the overall demand
for energy be reduced in a general way to mimic expected efficiency advancements in the
appliances. The energy demand, in effect, underwent modification by a “fuel demand
multiplier” (appendix A provides details). Obviously, this has an effect on the supply
sector models and thus, because of model integration, all demand sector models.
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Final Analysis Report
Exogenous and endogenous actions can receive differing treatment to determine
perceived private costs. Recall that the Issue Tables provided no estimate of consumers’
surplus for these actions, nor were these actions gradually introduced to the mix of
actions (i.e., they were all-or-none). Thus, endogenous reductions were assessed
consumers’ surplus losses while exogenous reductions were not in the first Roll-Up
analysis. NRCan requested some resolution of this discrepancy. We could not simply
eliminate exogenous actions; a decision was made to apply the same consumers’ surplus
to exogenous actions as endogenous actions at the relevant shadow price for the purpose
of calculating PPC. Because of the all-or-none nature of these actions, the calculation of
the costs becomes rather “lumpy” in that one suddenly sees an influx of reduction
potential for a very small change in shadow price. Accordingly, the values seen in table
2.1 contain PPC where we apply the same consumers’ surplus calculation to exogenous
actions as we did to endogenous actions. This changed all expected resource cost (ERC))
estimates from previous reports generated under this contract and increases costs
reflected in the Roll Up analysis where only certain of the exogenous actions were
attributed consumers’ surplus losses as costs. Appendix A provides a more detailed
description of these issues and a comparison of the two outcomes, the inclusion of
exogenous and the exclusion of exogenous actions from the calculation of PPC.
2.2. NG and Petroleum Product Trade Effects
As per the AMG conditions, NG and crude oil production remains the same at all shadow
prices. The following tables provide both the effect of the GHG shadow price on the
various fossil fuels ( expressed as an dollar addition per GJ to the BAU price) and a
schedule of previously consumed NG and oil volumes that are available for export under
each of the scenarios.
Table 2.3: Impact of a CO2 Tax on Price of Fuels ($/GJ) - Expressed as $ additions
Fuel \ Shadow Price
Natural Gas
Petroleum Products
Coal
10
0.47
0.70
0.90
20
0.94
1.40
1.80
30
1.41
2.10
2.70
40
1.88
2.80
3.60
50
2.35
3.50
4.50
75
3.53
5.25
6.75
100 125 150 200 250
4.70 5.88 7.05 9.40 11.75
7.00 8.75 10.50 14.00 17.50
9.00 11.25 13.50 18.00 22.50
Table 2.4: Approximate surplus gas and oil exported as per AMG Roll Up conditions (not
included in TEC for any sector)
NG exports (PJ)
Oil exports (PJ)
2001
31.8
38.4
2002
63.7
76.8
2003 2004 2005 2006 2007 2008 2009
2010
95.5 127.3 159.2 227.8 296.4 364.9 433.5 502.1
115.2 153.6 192.0 209.7 227.4 245.1 262.8 280.6
2.3. The significant actions for Canada
Table 2.2 outlines the significant actions for Canada as a whole at the $10 and $150
levels. These actions are broken down by sector / region in subsequent sections. This list
was established by setting a criterion of a minimum 1% contribution to total reductions at
the $150 level. The reader should note that the relative importance of the actions could
be different for every shadow price level; sequestration, for example, doesn’t exist at $10
but is the second most important action at $150.
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Table 2.2: The Significant Actions for Canada
$10
Mt
% total
at $10
$150
Mt
% total
at $150
Source
35.2
39.6%
30.0
16.9%
CIMS
Sequestration in electricity production
nil
nil
24.5
13.8%
CIMS
Switch to hydroelectric electricity production
5.0
5.6%
16.0
9.0%
CIMS
Electricity demand reductions
9.8
11.0%
7.6
4.3%
CIMS
NG transmission - Replace turbines with electric drivers
4.1
4.6%
7.4
4.2%
CIMS
Commercial landfill gas
6.0
6.8%
6.0
3.4%
EXOG
Transportation mode switching
0.4
0.5%
4.9
2.8%
CIMS
Residential high efficiency furnaces and shell improvements
1.6
1.8%
3.8
2.1%
CIMS
Switch to non-hydro renewables in electricity
2.4
2.7%
3.7
2.1%
CIMS
Personal car efficiency improvements
0.3
0.3%
3.3
1.9%
CIMS
Transportation: F2B truck speed control
nil
nil
3.2
1.8%
EXOG
Sequestration of CO2 from hydrogen plants
2.8
3.2%
2.8
1.6%
EXOG
Agricultural grazing strategies
2.6
2.9%
2.6
1.5%
EXOG
Other manufacturing: Fuel switching for water boilers
nil
nil
2.5
1.4%
CIMS
Other manufacturing: Fuel switching for space heating
0.8
0.9%
2.4
1.3%
CIMS
Transportation: F8C accelerated truck scrappage
2.2
2.5%
2.2
1.2%
EXOG
Agriculture: Increased no-till
nil
nil
2.1
1.2%
EXOG
Fuel switching in residential space heating
1.2
1.4%
2.0
1.1%
CIMS
Transportation: K1 Off road efficiency standards
nil
nil
2.0
1.1%
EXOG
Transportation: F10 truck driver training in energy eff.
1.9
2.1%
1.9
1.1%
EXOG
Residential hot water efficiency improvements
0.5
0.6%
1.8
1.0%
CIMS
All actions over 1% of total reductions at $150
Switch to high eff. boilers and gas turbines for Elec. Prod.
Sum of national total reductions
86.5%
74.6%
The most striking phenomenon is that the top four actions are from electricity production;
the switch from coal boilers to high efficiency NG fired turbines and combined cycle
turbines delivers the largest amount of reductions of any action. Of these actions,
sequestration presents perhaps the most questions especially in regard to its maturity and
costs. Another striking phenomenon is the importance of exogenously specified actions
such as commercial landfill gas, truck speed controls and sequestration of CO2 produced
during hydrogen production. These actions penetrate fully once the shadow price level
reaches its specified cost; if they were modelled in CIMS, their advent would likely be
earlier but much more gradual, lowering their overall effectiveness. See comments above
and Appendix A.
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2.4. Description of Disaggregated Output
Given there is more homogeneity within sectors across the country than between sectors
in regions, we have chosen to describe each sector, first in aggregate and then by region,
and finally we provide the combined regional effects. The graphs and tables in the
following sections define the impact of the ascending shadow prices on the energy,
emissions and costs of the various sectors. The sectors covered are industry, commercial,
residential, transportation, electricity and agriculture and afforestation. Industry is
covered as the following division of energy intense sub-sectors: chemical production,
industrial minerals, iron and steel, metal smelting, pulp and paper, other manufacturing,
mining, upstream oil, petroleum refining, natural gas extraction and transmission.
3. Industry
3.1. General commentary for Industry
Industry is composed of several technologically heterogeneous sub-sectors; the degree to
which each plays a role in the reduction of emissions varies greatly. We define here the
major industries that generated the reductions and provide the primary emissions
reduction activities in those industries. After the national aggregate industry curve and
reductions we provide the sub-sectoral curves and a brief description of what occurred in
each sub-sector. Recall, as per the AMG Roll Up, that there are no changes in production
as one moves up the curve, even though we know that both the cost of production and the
price of the commodity will likely change. The single exception is coal mining where
coal extracted is largely dependent, in all regions except BC and Alberta (all coal is
exported in BC and a large portion of it is exported in Alberta), on the demand for coal
from the electricity sector.
The various components of Industry responded according to their technologies and
structure; we provide the national cost curve for each subsector and a brief analysis of the
response of each to the sequence of shadow prices, beginning with Chemical Production.
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Cost Curves Analysis
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Figure 3.1: Cost Curve of GHG Emissions for Industry, 2010.
Canada Industry
Shadow Price ($/tonne)
250
200
150
100
50
0
-
10,000
20,000
30,000
40,000
50,000
GHG Reductions (kt)
Table 3.1: Energy, emissions and costs associated with emissions reductions in Industry, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$billion)
(’95
$billion)
(’95
$billion)
10
336
17.5
3.91
(7.3)
(1.5)
0.5
20
352
22.8
3.60
(7.6)
(0.7)
1.6
30
364
25.6
3.38
(7.5)
0.3
2.9
40
377
26.7
3.13
(7.6)
1.3
4.2
50
391
27.8
2.90
(7.5)
2.3
5.6
75
427
30.6
2.41
(6.8)
5.2
9.2
100
458
32.6
1.99
(6.4)
8.1
13.0
125
484
34.5
1.50
(5.8)
11.3
17.0
150
508
36.6
1.00
(5.1)
14.5
21.0
200
540
39.8
0.09
(3.9)
21.3
29.7
250
563
42.5
(0.73)
(2.6)
28.4
38.7
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Cost Curves Analysis
Final Analysis Report
3.2. The Chemical Production Industry
3.2.1. General Commentary for the Chemical Production Industry
The chemical products industry is heavily dependent on electricity and natural gas, both
as a feedstock and for a fuel. Thus, the opportunity to move away from carbon-intense
fuels is small, since its energy use is already fairly ‘clean’. The reduction of N20
emissions from adipic acid production substantially reduces emissions in this sector, but
this is already included in the reference case. The potential of other actions to reduce
emissions is also relatively small. The largest potential seems to be in reducing the
requirement for steam; the four main areas where this occurs is in a switch to electric or
direct NG-fired space heating, changes to chlor-alkali electrolysis and evaporation and
changes to ammonia synthesis. How the steam is produced also offers reductions; most
regions either switch to cogeneration or to high efficiency NG boilers from more carbon
dense fossil fuel boilers. Cogeneration actually increases direct emissions, while
reducing indirect emissions, and its potential differs significantly by region. It is highest
in regions where the relative price of electricity compared to other fuels increases the
most, typically in those regions where carbon dense fossil fuel is used to generate
electricity. The cost curve for the chemical products industry, whose net numbers
represent a very small proportion of overall emissions in the industrial sector, is
dominated by the increased direct emissions from cogeneration in Alberta. As the
shadow prices rise, NG-driven cogeneration becomes relatively more expensive while
other energy efficiency and fuel switching actions take effect, making the overall national
reductions of direct CO2 positive.
In the following section we provide a regional breakdown of the technological actions
with the greatest promise. Four actions provide the most reductions: 1) switching out of
caustic chlorine membrane cell and mercury cell to diaphragm processing for chlor-alkali
electrolysis, 2) a switch to electric or natural gas from steam for space heating, 3) a
switch from oil- to NG-fired ammonia (and methanol in Alberta and Ontario) synthesis
and finally 4) a switch to large chlor-alkali evaporators with enhanced computer control.
This sector has significant cogeneration potential; in Alberta cogeneration actually
increases the sector’s net emissions due to the large relative price change effects on NG
and electricity in that province. The potential for cogeneration tends to be highest at the
lower shadow prices where NG may be cheaper than utility electricity. As the shadow
price on CO2 climbs, process changes that reduce the need for steam (e.g., space heating
fuel switches and changes to ammonia and chlor-alkali production) penetrate to a greater
degree roughly uniformly with increasing shadow prices. Where actions display nonlinear tendencies with increasing shadow prices, such as cogeneration in Alberta, we
provide more detail. Please see the electronic appendices for detailed stock changes.
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Cost Curves Analysis
Final Analysis Report
Figure 3.2: Cost curve for Chemical Production for all Canada
Canada Chemicals
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
(100)
(50)
-
50
100
150
200
GHG Reductions (kt)
Table 3.2: Energy, emissions and costs associated with emissions reductions in Chemical
Production for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
0.9
(0.07)
0.37
(282.7)
(65.8)
6.5
20
1.2
(0.06)
0.35
(332.3)
(68.6)
19.2
30
1.4
(0.05)
0.33
(342.9)
(62.1)
31.4
40
1.5
(0.04)
0.31
(350.1)
(55.2)
43.2
50
1.7
(0.03)
0.29
(355.5)
(48.1)
54.4
75
2.1
0.03
0.25
(301.6)
(13.5)
82.6
100
2.4
0.07
0.22
(292.6)
10.5
111.6
125
2.6
0.09
0.20
(270.2)
38.4
141.2
150
2.9
0.12
0.19
(264.1)
62.3
171.1
200
3.2
0.14
0.16
(256.4)
109.3
231.1
250
3.5
0.16
0.14
(252.1)
155.6
291.5
21
Cost Curves Analysis
Final Analysis Report
3.2.2. BC Chemical Products
Figure 3.3: Cost Curve for BC Chemical Production
Shadow Price ($/tonne CO2e)
British Columbia Chemicals
250
200
150
100
50
0
-
2
4
6
8
10
12
GHG Reductions (kt)
Table 3.3: Energy, emissions and costs associated with emissions reductions in BC Chemical
Production, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
301.0
2.5
5.2
(6.0)
2.1
(1.4)
0.2
20
312.3
2.9
5.3
(5.9)
(3.3)
(1.1)
0.5
30
323.0
3.2
5.3
(5.9)
(8.7)
(0.8)
0.8
40
333.2
3.5
5.3
(5.8)
(14.0)
(0.6)
1.2
50
343.0
3.8
5.2
(5.8)
(19.1)
(0.3)
1.6
75
366.2
4.6
5.2
(5.7)
(31.6)
0.5
2.5
100
387.6
5.3
5.1
(5.6)
(43.6)
1.3
3.6
125
407.9
6.2
5.0
(5.4)
(55.0)
2.1
4.6
150
427.2
7.1
4.8
(5.2)
(65.5)
3.1
5.8
200
463.0
9.1
4.5
(4.5)
(83.7)
5.1
8.3
250
496.2
11.1
4.2
(3.6)
(100.4)
7.5
11.2
22
Cost Curves Analysis
Final Analysis Report
The significant actions in BC Chemical Production
Action
Chlor-alkali electrolysis: Switch out of caustic chlorine
membrane cell and mercury cell to diaphragm process
(steam) (kt)
Shadow price
$10
$50
$75
$150
1.2
1.6
1.8
2.4
44%
39%
38%
36%
1.2
1.2
1.2
1.2
42%
28%
24%
17%
Switch to electric from steam and natural gas space
heating (steam) (kt)
0.1
0.6
0.8
1.5
% of direct reductions
5%
14%
17%
22%
Switch to large chlor-alkali evaporators with enhanced
computer control (kt)
0.2
0.8
1.0
1.7
% of direct reductions
9%
19%
22%
25%
% of direct reductions
Switch from oil to NG fired combined ammonia
synthesis (direct and steam) (kt)
% of direct reductions
Most of the reductions in this sector come from decreasing requirements for process
steam via the following actions: 1) switching out of caustic chlorine membrane cell and
mercury cell to diaphragm processing for chlor-alkali electrolysis, 2) a switch to electric
from steam and natural gas space heating, 3) a switch from oil to NG fired combined
ammonia synthesis and finally 4) a switch to large chlor-alkali evaporators with enhanced
computer control. As a result of the reduced steam requirement boilers and cogenerators
produce 6,085 tonnes less of CO2 at $150 in 2010. In the BAU boilers provide all the
steam; at the $150 shadow price level, cogenerators, which increases the sector’s direct
emissions and decreases its indirect emissions, provide 7%. Cogeneration is highest at
the lower shadow prices levels, falling off a bit after $75.
3.2.3. Alberta Chemical Products
This sector is interesting because all points on the shadow price curve show negative
reductions (or increases) of direct CO2 emissions. These negative reductions increase
from $0 to $20 and then become progressively smaller with larger shadow prices as NG
increases in price compared to electricity. These small overall net increases come from
interaction between steam requirements and electricity requirements. Space heating
demands more steam than BAU at the lower shadow price levels and less than BAU
beyond about $60, while the switch from oil to NG-fired ammonia synthesis reduces
steam requirements as well.
Cogeneration is highest at $20 and then falls off as the relative price of electricity starts
falling. At $150, cogeneration has increased from 5.5 PJ in the reference case to 11.5 PJ
of a total of 27.3 PJ steam produced; in the reference case 80% of steam is produced from
boilers while at $150, it is only 38%. This move generates increased emissions of 99,000
T of CO2e at $150 and is precipitated by the relatively low price of natural gas in Alberta
23
Cost Curves Analysis
Final Analysis Report
Figure 3.4: Cost Curve for Alberta Chemical Production
Alberta Chemicals
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
(140)
(120)
(100)
(80)
(60)
(40)
(20)
-
GHG Reductions (kt)
Table 3.4: Energy, Emissions and costs associated with emissions reduction in Alberta
Chemical Production, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
(287.1)
(126.6)
296.4
(190.9)
481.5
(45.1)
3.5
20
(111.5)
(128.9)
275.4
(241.9)
1,382.4
(52.9)
10.1
30
(85.4)
(128.4)
264.5
(252.4)
1,411.2
(51.2)
15.9
40
(96.2)
(127.1)
246.6
(252.5)
1,230.2
(47.3)
21.1
50
(95.3)
(125.6)
230.6
(254.5)
1,045.6
(44.3)
25.8
75
(13.8)
(120.4)
194.9
(206.7)
986.0
(25.5)
34.8
100
27.1
(114.9)
169.5
(204.8)
808.9
(20.3)
41.2
125
91.6
(109.1)
151.6
(202.9)
791.4
(16.3)
45.9
150
237.7
(98.6)
139.1
(200.0)
538.7
(12.7)
49.8
200
357.2
(84.4)
117.1
(196.6)
215.8
(7.1)
56.1
250
454.1
(75.8)
105.7
(195.3)
57.1
(2.9)
61.2
There is also a 6.3 kt increase due to a switch from steam to NG heating in space heating.
These increased emissions must be measured against the overall emissions in this sector
of 10.7 Mt. The sector decreased its purchases of electricity by 2.3 PJ at $150,
24
Cost Curves Analysis
Final Analysis Report
representing 140 kt of indirect emissions. Note that, due to the peculiarities of the
relative prices of NG and electricity and the GHG content of electricity in the
sequestration provinces, the net reductions, including direct and indirect, are highest at
the lowest shadow prices.
The significant actions in Alberta Chemical Products
Shadow price
Action
$10
$50
$75
$150
Switching between NG and steam space heating (kt)
(3.3)
(4.4)
0.6
8.5
% direct reductions
2.6%
3.5%
(0.5)%
(8.6)%
1.8
1.8
2.8
2.8
(1.4)%
(1.8)%
(2.3)%
(2.8)%
(1.0)
(1.0)
(1.0)
(1.0)
1%
1%
0.8%
1.0%
Switch to cogenerators (direct) (kt)
(129)
(128)
(125)
(105)
% direct reductions
102%
102%
104%
106%
Switch from oil to NG fired combined ammonia
synthesis (direct and steam) (kt)
% direct reductions
Switch from oil fired to NG fired ethylene crackers
(direct) (kt)
% direct reductions
3.2.4. Ontario Chemical Products
Figure 3.5: Cost Curve for Ontario Chemical Production
Shadow Price ($/tonne CO2e)
Ontario Chemicals
250
200
150
100
50
0
-
20
40
60
80
100
120
140
GHG Reductions (kt)
25
Cost Curves Analysis
Final Analysis Report
Table 3.5: Energy, Emissions and costs associated with emissions reduction in Ontario
Chemical Production, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
766.6
50.7
66.8
(75.8)
(26.0)
(16.9)
2.8
20
861.5
56.4
64.9
(75.0)
(40.4)
(12.5)
8.4
30
964.4
61.7
62.1
(76.3)
(43.0)
(8.5)
14.1
40
1,112.8
65.9
56.3
(85.2)
6.0
(6.5)
19.7
50
1,237.4
70.0
53.1
(91.5)
44.0
(3.9)
25.3
75
1,422.3
80.5
50.5
(85.9)
39.6
8.1
39.5
100
1,548.0
89.7
47.4
(84.3)
5.8
19.6
54.2
125
1,670.9
97.0
45.7
(83.9)
(16.1)
31.2
69.5
150
1,761.0
103.3
43.5
(82.4)
(50.0)
43.3
85.2
200
1,932.3
113.1
39.8
(80.3)
(92.1)
68.1
117.5
250
2,087.7
120.6
36.6
(79.1)
(109.7)
93.2
150.6
The significant actions in Ontario Chemical Products
Action
Shadow price
$10
$50
$75
$150
Switch from oil fired to NG fired ethylene crackers
(direct) (kt)
45.4
45.4
45.4
45.4
% of direct reductions
90%
65%
56%
44%
5.8
14.7
18.5
23.6
10%
21%
23%
23%
0
8.6
14.9
30.9
0%
12%
19%
31%
Switch from oil to NG fired ammonia synthesis (direct
and steam)
% of direct reductions
Switch to large chlor-alkali evaporators with computer
control (steam)
% of all reductions
The Ontario chemical sector, because of its diverse use of fuels and the homogenous mix
of electricity sources in the provinces, follows the pattern laid out in the general
commentary. Cogeneration is highest in the lower shadow price levels and falls off as the
price of NG rises, but steam production in general does not contribute significant
reductions. Actions which reduce steam and electricity requirements rise roughly linearly
26
Cost Curves Analysis
Final Analysis Report
with the shadow prices. This sector achieves a net reduction of 103.3 kt in 2010 with the
$150 shadow price. This is primarily caused by a reduced need for process steam; chloralkali evaporation reduces its steam needs by 113.0 TJ while ammonia synthesis reduced
it needs by 68.0 TJ. As a result, 140 kt less CO2 is produced by cogenerators while 87 kt
more is produced by mainly high efficiency NG fired boilers.
3.2.5. Québec Chemical Products
Figure 3.6: Cost Curve for Québec Chemical Production
Shadow Price ($/tonne CO2e)
Quebec Chemicals
250
200
150
100
50
0
-
20
40
60
80
100
120
GHG Reductions (kt)
The Québec chemicals sector, while it follows the general commentary in penetration of
steam reduction actions and energy efficiency actions, has an interesting non-linear
response in steam production to increasing shadow prices. At the lowest shadow prices,
where NG is cheapest, the sector moves out of creating steam with electric boilers and
into cogenerators, implying cogenerated electricity is cheaper than utility electricity even
in hydro-powered Québec. The sector continues to add cogeneration, albeit at
progressively lower levels, up to just past $50. At $75 it is removing cogeneration
relative to BAU. Electric boilers, which were being removed relative to BAU at the
lowest levels, come back in between $30 and $40 and continually gains market share
thereafter. Switching oil ethylene crackers to NG produces a reduction of 6.6 kt at all
shadow prices levels, implying it may be a very cheap and effective action.
27
Cost Curves Analysis
Final Analysis Report
Table 3.6: Energy, Emissions and costs associated with emissions reduction in Québec
Chemical Production, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
147.5
4.9
0.4
(10.0)
(8.3)
(2.4)
0.1
20
156.7
6.7
0.3
(9.4)
(8.8)
(2.1)
0.3
30
169.4
9.8
0.2
(8.4)
(8.8)
(1.6)
0.6
40
189.5
15.5
0.1
(6.6)
(8.0)
(0.8)
1.1
50
221.2
25.0
(0.1)
(3.7)
(6.2)
0.5
1.8
75
343.0
63.1
(0.9)
(3.3)
3.4
3.5
5.7
100
425.7
90.1
(1.5)
2.1
10.3
10.0
12.6
125
457.1
99.9
(1.7)
22.0
11.6
21.3
21.1
150
471.1
103.5
(1.8)
23.5
10.9
28.6
30.3
200
487.3
106.0
(1.8)
25.0
8.1
43.2
49.2
250
500.2
107.1
(1.8)
25.9
4.9
57.8
68.5
The significant actions in Québec Chemical Products
Action
Switch first to cogen and then to electric boilers (steam)
Shadow price
$10
$50
$75
$150
(1.7)
17.1
54.2
91.1
(34)%
69%
86%
89%
6.6
6.6
6.6
6.6
134%
26%
10%
6%
Switch to large chlor-alkali evaporators with computer
control (steam) (kt)
0.2
0.6
0.8
1.2
% of direct reductions
4%
3%
1%
1%
Switch first to NG space heating and then to electric
from steam (direct) (steam) (kt)
(0.2)
0.6
1.2
3.6
% of all reductions
(4)%
2%
2%
3%
% of direct reductions
Switch from oil fired to NG fired ethylene crackers
(direct) (kt)
% of direct reductions
28
Cost Curves Analysis
Final Analysis Report
3.3. Industrial Minerals
3.3.1. General Commentary for the Industrial Minerals Sector
The industrial minerals sector includes cement, glass and brick production. The cost
curve for the industrial minerals sector rose steadily as the GHG shadow price rose.
Increasing shadow prices induced substitution of NG and fuel oil for petroleum coke and
coal for process heat. An important characteristic of the industrial minerals industry in
terms of fuel use and GHG reductions is its ability to burn whatever is cheapest. This
capability for fuel substitution allows large emissions reductions given the right price
incentives.
By far the two most significant actions were switching from coal to oil and mainly NG
fired burners and switching out of all other types of lime kilns into rotary NG fired (or oil
fired in the Maritimes) kilns with internal preheaters; these two actions generally provide
98% or more of the reductions.
Figure 3.7: Cost curve for Industrial Minerals for all Canada
Shadow Price ($/tonne CO2e)
Canada Industrial Minerals
250
200
150
100
50
0
-
200
400
600
800
1,000
1,200
1,400
GHG Reductions (kt)
29
Cost Curves Analysis
Final Analysis Report
Table 3.7: Energy, Emissions and costs associated with emissions reductions in Industrial
Minerals for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
(1.5)
0.28
0.005
(53.0)
(8.9)
5.8
20
(5.9)
0.48
0.004
(41.4)
5.9
21.6
30
(9.1)
0.63
0.004
(29.1)
26.1
44.6
40
(11.0)
0.72
0.004
(20.7)
49.0
72.3
50
(12.1)
0.79
0.004
(14.1)
73.8
103.1
75
(13.8)
0.91
0.003
3.1
142.6
189.2
100
(14.7)
1.00
0.003
11.2
216.8
285.4
125
(15.2)
1.06
0.003
16.2
295.6
388.7
150
(15.5)
1.10
0.003
19.6
377.5
496.8
200
(15.8)
1.14
0.003
24.2
547.2
721.6
250
(15.9)
1.17
0.003
27.5
721.9
953.4
3.3.2. BC Industrial Minerals
Figure 3.8 Cost Curve for BC Industrial Minerals
Shadow Price ($/tonne CO2e)
British Columbia Industrial Minerals
250
200
150
100
50
0
-
50
100
150
200
GHG Reductions (kt)
30
Cost Curves Analysis
Final Analysis Report
Table 3.8: Energy, Emissions and costs associated with emissions reductions in BC Industrial
Minerals, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
(1,331.7)
94.7
0.3
(7.7)
(6.4)
(0.4)
2.0
20
(1,779.7)
122.1
0.3
(9.4)
(8.8)
2.6
6.5
30
(1,989.0)
136.2
0.3
(10.2)
(10.4)
6.4
11.9
40
(2,090.9)
143.9
0.3
(10.6)
(11.5)
10.6
17.6
50
(2,144.0)
148.5
0.3
(10.8)
(12.5)
15.0
23.6
75
(2,195.6)
154.5
0.3
(10.9)
(14.4)
26.5
39.0
100
(2,208.5)
157.4
0.3
(10.9)
(16.1)
38.4
54.8
125
(2,210.4)
159.1
0.3
(10.8)
(17.6)
50.4
70.8
150
(2,208.5)
160.3
0.3
(10.6)
(19.0)
62.6
87.0
200
(2,201.3)
161.8
0.2
(10.3)
(21.3)
87.2
119.7
250
(2,193.6)
162.8
0.2
(10.0)
(23.4)
111.9
152.5
The significant actions in BC Industrial Minerals
Action
Shadow price
$10
$50
$75
$150
Burner fuel switching from coal to oil and NG (kt)
85.3
137.1
142.4
147.6
% of direct reductions
90%
92%
92%
92
Switch to rotary, NG fired and preheated kilns (kt)
8.8
10.7
11.0
11.5
% of direct reductions
9%
7%
7%
7%
The BC industrial minerals sector registers large reductions at the lowest shadow price
levels (60% of $150 at $10). Virtually all reductions at all shadow price levels come
from two actions: switching from coal- and oil- to NG-fired burners and switching out of
all other types of lime kilns into rotary NG fired kilns with internal preheaters. The first
action penetrates to almost 100% of the $150 level by $75 while the second has almost
completely penetrated by $20.
31
Cost Curves Analysis
Final Analysis Report
3.3.3. Alberta Industrial Minerals
Figure 3.9: Cost curve for Alberta Industrial Minerals
Shadow Price ($/tonne CO2e)
Alberta Industrial Minerals
250
200
150
100
50
0
-
20
40
60
80
100
120
140
GHG Reductions (kt)
Table 3.9: Energy, Emissions and costs associated with emissions reductions in Alberta
Industrial Minerals, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
(1,045.3)
106.0
3.1
(20.8)
24.1
(3.5)
2.3
20
(1,089.1)
112.9
3.4
(24.4)
84.0
(0.8)
7.1
30
(1,092.5)
116.7
3.3
(25.3)
86.0
2.7
12.1
40
(1,087.0)
119.0
3.1
(25.6)
74.1
6.5
17.2
50
(1,079.8)
120.5
2.9
(25.8)
62.2
10.3
22.3
75
(1,062.6)
122.7
2.5
(22.8)
58.6
20.8
35.4
100
(1,048.2)
123.9
2.3
(22.7)
47.4
30.8
48.6
125
(1,035.7)
124.8
2.2
(22.5)
46.7
40.8
61.9
150
(1,025.3)
125.4
2.1
(22.4)
30.7
50.8
75.2
200
(1,006.9)
126.3
1.9
(22.1)
11.0
71.0
102.0
250
(991.0)
127.1
1.9
(21.9)
2.2
91.2
128.9
32
Cost Curves Analysis
Final Analysis Report
The significant actions in Alberta Industrial Minerals
Shadow price
Action
$10
Burner fuel switching from coal to oil and NG (kt)
% of direct reductions
$75
$150
94
105
107
108
90%
88%
87%
86%
11
13
14
15
10%
11%
12%
12%
Switch to rotary, NG fired and preheated kilns (kt)
% of direct reductions
$50
Alberta Industrial Minerals registers most of its reductions at the lowest shadow price
levels (85% of $150 at $10). Virtually all reductions at all shadow price levels come
from two actions: switching from coal to oil and mainly NG fired burners and switching
out of all other types of lime kilns into rotary NG fired kilns with internal preheaters.
3.3.4. Ontario Industrial Minerals
Figure 3.10: Cost curve for Ontario Industrial Minerals
Shadow Price ($/tonne CO2e)
Ontario Industrial Minerals
250
200
150
100
50
0
-
100
200
300
400
500
600
700
800
GHG Reductions (kt)
In the Ontario Industrial Minerals sector virtually all reductions at all shadow price levels
come from two actions. 1) Switching out of all other types of lime kilns into rotary NG
fired kilns with internal; this action has almost completely penetrated at $50. 2)
Switching from coal to oil and mainly NG fired burners; this action penetrates roughly
linearly with rising shadow prices.
33
Cost Curves Analysis
Final Analysis Report
Table 3.10: Energy, Emissions and costs associated with emissions reductions in Ontario
Industrial Minerals, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
732.1
52.2
1.5
(22.8)
(14.4)
(5.0)
1.0
20
(2,898.9)
199.3
0.7
(6.9)
(0.9)
2.8
6.0
30
(5,728.6)
310.9
0.4
6.5
12.3
13.8
16.2
40
(7,310.5)
375.4
0.4
15.0
30.6
26.2
30.0
50
(8,286.9)
420.9
0.5
21.5
44.7
39.8
45.9
75
(9,759.3)
511.2
0.6
35.0
56.6
78.2
92.5
100
(10,589.1)
580.1
0.6
42.3
58.0
120.8
146.9
125
(11,063.6)
628.4
0.7
46.5
58.6
166.9
207.0
150
(11,337.3)
661.2
0.7
49.1
55.5
215.5
270.9
200
(11,597.5)
699.5
0.7
52.4
51.5
317.4
405.7
250
(11,698.5)
719.8
0.7
54.4
50.7
423.2
546.1
The significant actions in Ontario Industrial Minerals
Action
Switch to rotary, NG fired and preheated kilns (kt)
% of direct reductions
Burner fuel switching from coal to oil and NG (kt)
% of direct reductions
Shadow price
$10
$50
$75
$150
42
321
334
339
81%
76%
65%
51%
7.6
96
174
317
15%
23%
34%
48%
3.3.5. Québec Industrial Minerals
In Québec Industrial Minerals virtually all reductions at all shadow price levels come
from two actions that penetrate linearly with the increasing shadow prices: switching
from coal to oil and mainly NG fired burners and switching out of all other types of lime
kilns into rotary NG fired kilns with internal preheaters. The first action increasingly
penetrates all the way up to $150 while the second has fully penetrated by $50.
34
Cost Curves Analysis
Final Analysis Report
Figure 3.11: Cost curve for Québec Industrial Minerals
Shadow Price ($/tonne CO2e)
Quebec Industrial Minerals
250
200
150
100
50
0
-
50
100
150
200
GHG Reductions (kt)
Table 3.11: Energy, Emissions and costs associated with emissions reductions in Industrial
Minerals for Québec, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
116.6
23.7
0.0
(1.7)
(1.6)
(0.0)
0.5
20
(117.6)
47.2
0.0
(0.8)
(0.8)
1.3
2.0
30
(303.9)
66.3
0.0
(0.1)
(0.1)
3.2
4.3
40
(448.4)
82.2
(0.0)
0.4
0.3
5.6
7.4
50
(558.5)
95.3
(0.0)
0.9
0.7
8.4
11.0
75
(730.8)
118.1
(0.0)
1.7
1.4
16.7
21.8
100
(819.4)
131.8
(0.0)
2.3
1.9
26.3
34.3
125
(868.0)
140.5
(0.0)
2.8
2.3
36.6
47.9
150
(896.4)
146.3
(0.1)
3.2
2.6
47.5
62.2
200
(925.3)
153.5
(0.1)
4.0
3.2
70.1
92.1
250
(938.1)
157.6
(0.1)
4.6
3.6
93.4
123.1
35
Cost Curves Analysis
Final Analysis Report
The significant actions in Québec Industrial Minerals
Shadow price
Action
$10
$50
$75
$150
Burner fuel switching from coal to oil and NG (kt)
17.0
75.2
96.9
122.9
% of direct reductions
72%
79%
82%
84%
6.8
19.0
20.5
21.3
29%
20%
17%
15%
Switch to rotary, NG fired and preheated kilns (kt)
% of direct reductions
3.3.6. Atlantic Provinces Industrial Minerals
Figure 3.12: Cost curve for Industrial Minerals for the Atlantic Provinces
Shadow Price ($/tonne CO2e)
Atlantic Industrial Minerals
250
200
150
100
50
0
-
1
2
3
4
GHG Reductions (kt)
In the Atlantic Industrial Minerals sector virtually all reductions at all shadow price levels
come from two actions: switching out of all other types of lime kilns into rotary oil fired
kilns with internal preheaters and switching from coal to oil fired burners. Both actions
penetrate quickly from $20 to $50, and after that more slowly up to $100, by which point
they have maximised penetration. The first action penetrates a little faster, having
reached 60% of its $150 level by $50, while the second action has reached only 30% of
its $150 level by that point. These actions are basically the same as those of other
regions except that residual fuel oil is chosen instead of NG because of the lack of
availability of NG in the Atlantic provinces.
36
Cost Curves Analysis
Final Analysis Report
Table 3.12: Energy, Emissions and costs associated with emissions reductions in Industrial
Minerals for the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
11.0
0.3
0.0
(0.1)
0.3
(0.0)
0.0
20
(4.9)
1.0
0.0
0.0
0.5
0.0
0.0
30
(16.7)
1.5
0.0
0.0
1.3
0.1
0.1
40
(25.7)
1.9
0.0
0.0
1.7
0.1
0.2
50
(32.6)
2.2
0.0
0.0
2.3
0.2
0.3
75
(44.6)
2.6
0.0
0.1
2.5
0.4
0.5
100
(52.1)
2.9
0.0
0.2
2.3
0.6
0.8
125
(57.2)
3.1
0.0
0.2
2.2
0.9
1.1
150
(60.8)
3.3
0.0
0.2
1.9
1.1
1.4
200
(65.7)
3.4
0.0
0.3
1.6
1.6
2.1
250
(68.8)
3.5
0.0
0.3
1.5
2.2
2.8
The significant actions in the Atlantic Provinces Industrial Minerals sector
Action
Switch to rotary, NG fired and preheated kilns (kt)
% of direct reductions
Burner fuel switching from coal to oil and NG (kt)
% of direct reductions
Shadow price
$10
$50
$75
$150
0.4
1.5
1.8
2.1
100%
71%
68%
65%
NIL
0.6
0.8
1.1
0%
29%
32%
35%
3.4. The Iron and Steel Industry
3.4.1. General commentary for the Iron and Steel sector
The cost curve for the iron and steel industry rose steadily as the GHG shadow price rose.
The reductions from BAU come mainly from switching further to electric ladle reheating
and switching from oil to NG fired billet casting, depending on the region.
37
Cost Curves Analysis
Final Analysis Report
Figure 3.13: Cost curve for Iron and Steel for all Canada
Canada Iron & Steel
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
400
500
600
GHG Reductions (kt)
Table 3.13: Energy, Emissions and costs associated with emissions reductions in Iron and Steel
for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
6.9
0.37
(0.008)
(116.7)
(23.0)
8.2
20
7.3
0.39
(0.010)
(120.4)
(11.3)
25.1
30
7.6
0.41
(0.010)
(123.7)
1.1
42.6
40
7.7
0.42
(0.008)
(131.4)
12.6
60.6
50
7.8
0.42
(0.007)
(137.1)
24.9
78.9
75
8.0
0.44
(0.007)
(133.4)
61.0
125.8
100
8.1
0.45
(0.008)
(134.1)
96.9
173.9
125
8.2
0.46
(0.008)
(134.5)
133.5
222.8
150
8.3
0.47
(0.008)
(134.3)
170.7
272.4
200
8.4
0.48
(0.008)
(133.1)
246.7
373.2
250
8.5
0.49
(0.009)
(130.8)
324.2
475.8
38
Cost Curves Analysis
Final Analysis Report
3.4.2. Ontario Iron and Steel
Figure 3.14: Cost curve for Iron and Steel for Ontario
Ontario Iron & Steel
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
400
500
GHG Reductions (kt)
Table 3.14: Energy, Emissions and costs associated with emissions reductions in Ontario Iron
and Steel, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
6,507.4
354.8
(8.4)
(102.6)
(48.5)
(19.7)
7.9
20
6,897.0
376.1
(10.1)
(106.3)
(67.8)
(8.5)
24.1
30
7,098.0
386.6
(10.2)
(109.6)
(71.8)
3.2
40.8
40
7,228.0
394.9
(8.5)
(117.5)
(17.0)
14.1
57.9
50
7,321.5
401.4
(7.5)
(123.3)
25.0
25.7
75.4
75
7,486.3
414.1
(7.5)
(120.3)
18.4
59.7
119.7
100
7,600.9
423.6
(7.6)
(121.8)
(19.9)
93.3
165.0
125
7,688.3
430.9
(7.7)
(123.0)
(43.8)
127.4
210.9
150
7,756.0
436.7
(7.8)
(123.7)
(81.1)
162.1
257.3
200
7,854.5
445.7
(8.0)
(124.1)
(126.8)
232.4
351.2
250
7,917.0
453.1
(8.6)
(123.4)
(144.9)
303.9
446.4
39
Cost Curves Analysis
Final Analysis Report
The significant actions in Ontario Iron and Steel
Shadow price
Action
Switch from NG ladle preheating to electric ladle preheating (kt)
% of all direct reductions
Switch to reheating / rolling mills which recuperate their heat and
are NG fired (kt)
% of all direct reductions
Switch from oil to NG fired billet casting (kt)
% of all direct reductions
$10
$50
$150
227.4
249.1
249.4
62.7%
59.1%
56.1%
72.3
83.1
85.2
19.5%
20.0%
20.3%
39.9
46.5
49.4
10.6%
11.2%
11.3%
The Ontario Iron and Steel industry is characterized by large reductions at the lowest
shadow price (81% of $150 at $10), reductions that then increase linearly with the
shadow prices. The largest single reduction at all levels comes from a switch from NG
ladle preheating to electric ladle preheating. The next most effective actions are to switch
out of reheating / rolling mills which are oil fired and do not recuperate their heat into
ones that are recuperated and NG fired. The last significant action is moving out of oil
fired to NG fired billet casting.
3.4.3. Québec Iron and Steel
Figure 3.15: Cost curve for Québec Iron and Steel
Quebec Iron & Steel
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
5
10
15
20
25
30
35
40
GHG Reductions (kt)
40
Cost Curves Analysis
Final Analysis Report
Table 3.15: Energy, Emissions and costs associated with emissions reduction in Québec Iron
and Steel, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
418.5
14.6
0.2
(14.1)
(13.3)
(3.3)
0.3
20
443.5
16.8
0.1
(14.1)
(13.7)
(2.8)
1.0
30
463.7
18.7
0.1
(14.1)
(14.1)
(2.1)
1.8
40
479.9
20.4
0.1
(13.9)
(14.4)
(1.5)
2.7
50
493.0
21.9
0.1
(13.7)
(14.7)
(0.7)
3.6
75
515.6
25.1
0.0
(13.1)
(15.1)
1.3
6.1
100
528.6
27.8
(0.1)
(12.3)
(15.4)
3.6
8.9
125
535.7
30.0
(0.1)
(11.5)
(15.5)
6.1
11.9
150
539.1
31.9
(0.1)
(10.6)
(15.6)
8.7
15.1
200
540.1
35.1
(0.2)
(9.0)
(15.7)
14.2
22.0
250
537.2
37.8
(0.3)
(7.4)
(15.8)
20.2
29.4
The significant actions in Québec Iron and Steel
Action
Switch from oil to NG fired billet casting (kt)
Shadow price
$10
$50
$150
15.0
20.1
21.9
100%
80%
69%
Switch to reheating / rolling mills which recuperate their heat and
are NG fired (kt)
NIL
4.7
9.3
% of all direct reductions
NIL
19%
29%
% of all direct reductions
The Québec Iron and Steel industry, like Ontario, is characterized by large reductions at
the lowest shadow price (46% of $150 at $10), reductions that then increase linearly with
the shadow prices. The most effective action is moving out of oil fired to NG fired billet
casting. The next most effective action is switching reheating/rolling mills that are oil
fired and do not recuperate their heat into ones that are recuperated and NG fired.
41
Cost Curves Analysis
Final Analysis Report
3.5. Metal Smelting
3.5.1. General Commentary for Metal Smelting
The cost curve for metal smelting generally rises with increasing shadow prices. The
substantial emissions reductions in this sector are mostly due to actions in Québec, where
about three quarters of reductions are from fuel switching from fossil fuels to electricity.
In both Ontario and Québec, firms that produce magnesium have stated that they will
eliminate sulphur hexafluorides (SF6) from their processes before 2010. Because SF6 has
a very high CO2 equivalence (1 kg SF6 = 23,900 kg CO2), the impact of this reduction is
substantial. These reductions are included in the reference case and are not included in
the curve. Emission reductions that do occur in the policy simulations are based mainly
on the use of more efficient auxiliary systems, and from the use of different furnace
technologies: Oxy-fuel burners on furnaces and sulphur combustion furnaces. In BC,
certain newly installed technologies, such as the Kivcet lead smelter, require coal during
their operation. This reduces opportunities to move from this carbon-intense fuel to
other, less intense ones during the time period of the model simulation.
Figure 3.16: Cost curve for Metal Smelting for all Canada
Shadow Price ($/tonne CO2e)
Canada Metals
250
200
150
100
50
0
-
200
400
600
800
1,000
1,200
1,400
1,600
GHG Reductions (kt)
42
Cost Curves Analysis
Final Analysis Report
Table 3.16: Energy, Emissions and costs associated with emissions reductions in Metal
Smelting for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
4.0
0.41
0.027
(40.8)
(2.8)
9.9
20
4.3
0.47
0.025
(40.6)
12.9
30.7
30
4.6
0.51
0.024
(40.3)
30.0
53.4
40
4.9
0.55
0.020
(40.1)
48.2
77.6
50
5.1
0.59
0.017
(37.5)
67.9
103.1
75
5.9
0.70
0.011
(11.5)
127.4
173.7
100
6.8
0.85
0.000
32.1
200.2
256.3
125
7.6
1.00
(0.010)
80.8
284.7
352.6
150
8.4
1.13
(0.020)
122.8
376.9
461.5
200
9.6
1.27
(0.036)
177.2
572.1
703.7
250
10.4
1.36
(0.046)
209.6
777.3
966.5
3.5.2. BC Metal Smelting
Figure 3.17: Cost curve for BC Metal Smelting
British Columbia Metals
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
20
40
60
80
GHG Reductions (kt)
43
Cost Curves Analysis
Final Analysis Report
Table 3.17: Energy, Emissions and costs associated with emissions reductions in BC Metal
Smelting, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
60.8
9.2
1.2
(1.6)
25.5
(0.3)
0.1
20
77.6
10.8
1.4
(2.0)
7.0
(0.2)
0.4
30
95.5
12.4
1.6
(2.2)
(11.2)
(0.0)
0.7
40
117.0
14.5
1.6
(2.3)
(28.9)
0.2
1.1
50
146.8
17.4
1.5
(2.4)
(46.0)
0.6
1.6
75
286.0
31.0
0.1
0.1
(85.7)
2.7
3.6
100
451.1
47.3
(1.8)
3.3
(123.8)
5.9
6.8
125
537.5
56.1
(2.5)
4.6
(161.4)
9.5
11.1
150
577.3
60.6
(2.6)
4.9
(197.4)
13.2
16.0
200
617.6
66.0
(2.5)
4.9
(260.4)
21.3
26.8
250
641.4
70.4
(2.5)
5.2
(318.7)
30.2
38.5
The significant actions in BC Metal Smelting
Action
Shadow price
$10
$50
$75
$150
Use electric induction of melting and casting furnaces
in zinc production (kt)
Nil
2.7
13.2
34.8
% of direct reductions
0%
21%
51%
62%
Switching to centre work prebake anodes from side
work anodes in aluminium electrolysis (kt)
4.3
9.6
12.3
19.1
99%
76%
47%
34%
% of direct reductions
44
Cost Curves Analysis
Final Analysis Report
3.5.3. Manitoba Metal Smelting
Figure 3.18: Cost curve for Manitoba Metal Smelting
Manitoba Metals
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
2
4
6
8
10
12
14
16
GHG Reductions (kt)
Table 3.18: Energy, Emissions and costs associated with emissions reductions in Manitoba
Metal Smelting, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
15.3
0.4
0.0
(0.4)
0.2
(0.1)
0.0
20
16.9
1.1
0.0
(0.3)
(0.1)
(0.1)
0.0
30
19.0
1.9
0.0
(0.2)
(0.4)
(0.0)
0.1
40
21.4
2.6
(0.0)
(0.1)
(0.7)
0.0
0.1
50
23.6
3.3
(0.0)
(0.1)
(1.0)
0.1
0.2
75
27.3
4.7
(0.0)
0.1
(1.8)
0.3
0.4
100
30.6
6.1
(0.0)
0.2
(2.7)
0.6
0.7
125
34.7
7.6
(0.1)
0.3
(3.7)
0.8
1.0
150
39.5
9.2
(0.1)
0.4
(4.7)
1.2
1.5
200
48.2
12.3
(0.2)
1.1
(6.0)
2.2
2.6
250
50.9
14.6
(0.3)
2.0
(6.7)
3.5
4.0
45
Cost Curves Analysis
Final Analysis Report
The significant actions in Manitoba Metal Smelting
Shadow price
Action
$10
$50
$75
$150
Use of electric induction melting and casting furnaces
in zinc production (instead of fossil fuel) (kt)
NIL
0.7
1.0
1.0
% of direct reductions
NIL
23%
20%
11%
In copper roasting and smelting, switch away from oil
and coal flash furnaces to electric arc, fluidized bed and
NG furnaces (kt)
NIL
1.4
2.4
6.0
% of direct reductions
NIL
41%
50%
65%
Boilers - fuel switching from coal/oil to NG (kt)
NIL
0.7
0.9
1.1
% of direct reductions
NIL
21%
18%
12%
3.5.4. Ontario Metal Smelting
Figure 3.19: Cost curve for Ontario Metal Smelting
Ontario Metals
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
50
100
150
200
250
GHG Reductions (kt)
46
Cost Curves Analysis
Final Analysis Report
Table 3.19: Energy, Emissions and costs associated with emissions reduction in Ontario Metal
Smelting, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
755.3
16.9
26.0
(27.9)
(15.4)
(6.3)
0.9
20
937.7
32.5
24.7
(28.1)
(19.3)
(4.8)
2.9
30
1,097.0
45.9
22.9
(28.3)
(19.7)
(3.0)
5.4
40
1,213.4
55.2
19.2
(29.8)
(6.7)
(1.2)
8.3
50
1,296.6
61.9
16.8
(30.1)
4.3
1.0
11.3
75
1,453.4
75.9
12.9
(23.4)
8.7
8.9
19.6
100
1,613.5
91.1
7.4
(14.7)
8.5
18.0
28.9
125
1,797.3
108.4
1.1
(4.0)
13.3
28.4
39.2
150
2,015.0
129.3
(6.4)
9.1
16.6
40.3
50.7
200
2,466.8
172.5
(20.5)
36.7
29.7
67.5
77.7
250
2,842.7
209.1
(30.2)
60.0
44.7
97.7
110.2
The significant actions in Ontario Metal Smelting
Action
In copper smelting, switch to electric arc furnace and
fluidized bed and/or hearth roasting (kt)
Shadow price
$10
$50
$75
$150
2.0
7.0
16.5
67.5
% of direct reductions
12%
11%
22%
52%
In nickel smelting, switch to sinter roasting and
reverbatory furnace smelting (from Fluidized bed) (kt)
17.9
50.3
54.0
55.3
106%
81%
71%
43%
% of direct reductions
47
Cost Curves Analysis
Final Analysis Report
3.5.5. Québec Metal Smelting
Figure 3.20: Cost curve for Québec Metal Smelting
Quebec Metals
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
800
1,000
1,200
GHG Reductions (kt)
Table 3.20: Energy, Emissions and costs associated with emissions reductions in Québec Metal
Smelting, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
3,124.4
387.9
(0.9)
(10.4)
4.1
4.1
8.9
20
3,283.0
421.4
(0.9)
(9.8)
(3.8)
18.1
27.4
30
3,407.1
449.0
(0.9)
(8.3)
(10.7)
33.3
47.1
40
3,527.0
474.6
(0.9)
(5.8)
(16.7)
49.5
67.9
50
3,654.2
500.4
(1.0)
(2.5)
(21.5)
66.7
89.8
75
4,036.7
575.6
(1.6)
12.7
(26.7)
115.2
149.4
100
4,525.9
676.0
(2.9)
40.1
(19.0)
173.3
217.8
125
5,042.7
780.3
(4.3)
71.2
(6.2)
240.0
296.3
150
5,479.5
857.5
(5.3)
94.2
(0.6)
311.5
383.9
200
6,077.3
939.5
(6.0)
115.9
(11.5)
460.4
575.3
250
6,445.4
979.2
(6.1)
122.4
(35.9)
614.9
779.1
48
Cost Curves Analysis
Final Analysis Report
The significant actions in Québec Metal Smelting
Shadow price
Action
$10
Copper smelting switches to electric arc furnaces and
fluidized bed and/or hearth roasting (kt)
$50
$75
$150
12.1
57.8
87.7
170.6
4%
13%
17%
21%
307.9
319.4
319.7
319.8
90%
70%
60%
39%
Greater use of electrical boilers (kt)
7.7
40.0
72.3
239.4
% of direct reductions
2%
9%
14%
29%
15.5
38.4
51.1
88.0
5%
8%
10%
10%
% of direct reductions
Greater use of electrothermal furnace for titanium oxide
smelting (kt)
% of direct reductions
Switch out of Hall-Heroult electrolysis with side work
NG prebake anodes to mainly centre work NG prebake
anodes (kt)
% of direct reductions
3.5.6. Atlantic Metal Smelting
Figure 3.21: Cost curve for Metal Smelting for the Atlantic Provinces
Atlantic Metals
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
20
40
60
80
100
GHG Reductions (kt)
49
Cost Curves Analysis
Final Analysis Report
Table 3.21: Energy, Emissions and costs associated with emissions reductions in Atlantic
Metal Smelting, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4.3
0.2
0.2
(0.5)
5.9
(0.1)
0.0
20
7.1
0.8
0.1
(0.5)
7.0
(0.1)
0.0
30
10.5
1.4
0.0
(1.4)
17.4
(0.3)
0.1
40
15.3
2.3
(0.1)
(1.9)
23.7
(0.4)
0.1
50
21.4
3.5
(0.2)
(2.4)
30.8
(0.4)
0.2
75
52.7
10.1
(0.7)
(0.9)
35.4
0.3
0.8
100
129.7
27.1
(2.3)
3.2
36.1
2.4
2.2
125
227.4
49.0
(4.3)
8.7
41.4
6.0
5.1
150
314.8
68.8
(6.1)
14.1
42.3
10.7
9.6
200
380.6
84.1
(7.2)
18.7
40.9
20.7
21.3
250
395.8
88.0
(7.4)
20.0
40.4
31.0
34.7
The significant actions in Atlantic Metal Smelting
Action
In zinc smelting, switching from blast furnaces to
electrothermal furnaces (and some flash furnaces) (kt)
% of direct reductions
Shadow price
$10
$50
$75
$150
0.3
3.4
9.9
67.0
114%
98%
98%
97%
3.6. Pulp and Paper
3.6.1. General commentary on Pulp and Paper
The cost curve for Pulp and Paper production generally rises with increasing shadow
prices. Emission reductions in the pulp and paper industry are fairly significant. This
sector has an enormous demand for process heat, and the emissions reductions come
primarily from switching from fuel oil and coal to NG to provide this heat. A host of
process changes, such as the use of Tomlinson recovery boilers, may also be
implemented to conserve process heat. Emission reductions may also occur from the
selection of more efficient process equipment, such as the adoption of high intensity
dryers in paper mills, as well as from improvements to boilers (i.e., hog fuel boiler
50
Cost Curves Analysis
Final Analysis Report
optimization). Other actions include improved process thermal integration in pulp and
paper mills, and reduced water use. Wood waste cogeneration potential is strong.
Figure 3.22: Cost curve for Pulp and Paper for all Canada
Canada Pulp & Paper
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
GHG Reductions (kt)
Table 3.22: Energy, Emissions and costs associated with emissions reductions in Pulp and
Paper for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
44.0
0.97
0.99
(1,148.5)
(252.2)
46.6
20
46.3
1.16
1.02
(1,196.7)
(191.6)
143.5
30
47.4
1.29
0.94
(1,223.5)
(121.9)
245.4
40
48.1
1.40
0.86
(1,228.3)
(45.2)
349.2
50
50.6
1.63
0.79
(1,223.1)
36.8
456.8
75
57.7
2.13
0.67
(1,160.7)
276.5
755.6
100
62.9
2.47
0.59
(1,076.0)
548.6
1,090.1
125
66.2
2.70
0.50
(987.3)
838.4
1,447.0
150
68.8
2.90
0.45
(887.7)
1,143.5
1,820.6
200
71.1
3.13
0.39
(716.9)
1,773.1
2,603.1
250
73.9
3.37
0.34
(537.5)
2,432.9
3,423.1
51
Cost Curves Analysis
Final Analysis Report
3.6.2. British Columbia Pulp and Paper
Figure 3.23: Cost curve for BC Pulp and Paper
British Columbia Pulp & Paper
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
800
1,000
GHG Reductions (kt)
Table 3.23: Energy, Emissions and costs associated with emissions reductions in BC Pulp and
Paper, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
12,469.4
316.7
111.2
(248.4)
(201.9)
(53.6)
11.3
20
12,497.2
324.9
106.5
(248.9)
(227.5)
(36.8)
33.9
30
12,710.2
338.0
103.4
(249.5)
(253.1)
(19.8)
56.8
40
13,004.0
354.4
100.1
(246.1)
(273.9)
(1.5)
80.1
50
13,437.5
373.6
98.7
(247.7)
(298.8)
16.1
104.0
75
14,673.7
448.0
93.3
(245.7)
(354.7)
64.8
168.3
100
15,087.3
480.8
85.7
(244.2)
(411.1)
117.1
237.5
125
16,608.9
563.6
78.2
(228.3)
(450.7)
176.8
311.8
150
17,833.4
639.1
69.4
(199.6)
(475.1)
245.1
393.3
200
18,137.8
691.0
54.9
(176.6)
(549.7)
380.8
566.6
250
18,782.3
770.0
39.7
(119.3)
(589.4)
532.6
749.9
52
Cost Curves Analysis
Final Analysis Report
The significant actions in BC Pulp and Paper
Shadow price
Action
$10
$50
$75
$155
Thermal Integration (kt)
385.9
374.5
367.6
328.8
% of direct reductions
122%
100%
82%
51%
Lime kilns move from pure NG to combined oil and
gasified wood waste (kt)
9.8
35.1
39.4
53.8
% of direct reductions
3%
9%
9%
8%
Switch to cogen combined with boilers switching to
NG (kt)
(51.9)
(23.6)
44.5
224.9
% of direct reductions
(16)%
(6)%
10%
35%
3.6.3. Alberta Pulp and Paper
Figure 3.24: Cost curve for Alberta Pulp and Paper
Alberta Pulp & Paper
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
(80)
(60)
(40)
(20)
-
20
40
60
80
100
GHG Reductions (kt)
53
Cost Curves Analysis
Final Analysis Report
Table 3.24: Energy, Emissions and costs associated with emissions reductions in Alberta Pulp
and Paper, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,083.8
(29.8)
566.6
(186.3)
74.8
(39.4)
9.5
20
4,833.9
(53.7)
608.4
(231.5)
348.6
(36.5)
28.6
30
4,872.0
(53.0)
583.2
(235.7)
375.8
(23.5)
47.2
40
4,849.7
(50.8)
544.9
(234.5)
337.1
(9.9)
64.9
50
4,987.2
(42.1)
513.1
(234.5)
294.8
2.7
81.7
75
5,360.5
(26.4)
435.3
(242.2)
283.7
29.8
120.5
100
5,501.1
(25.3)
382.0
(236.4)
259.4
56.9
154.7
125
5,943.0
(1.4)
316.5
(226.0)
291.4
82.4
185.2
150
6,645.9
43.9
293.6
(222.0)
231.7
105.9
215.2
200
6,853.5
68.7
262.4
(225.5)
158.9
151.5
277.1
250
7,151.1
88.1
245.0
(219.3)
153.5
199.6
339.2
The significant actions in Alberta Pulp and Paper
Action
Thermal Integration (kt)
Shadow price
$10
$50
$75
$155
69.2
70.4
68.0
54.3
(232)%
(167)%
(257)%
124%
3.6
9.0
10.4
13.2
% of direct reductions
(12)%
(21)%
(39)%
30%
Tomlinson recovery furnaces shift to high efficiency
black liquor burning cogenerator units due to high price
of utility electricity in Alberta (kt)
(45.7)
(61.4)
(60.1)
(53.2)
% of direct reductions
153%
146%
227%
(121)%
Switching to cogen and improved boiler efficiency
(switch to NG) (kt)
(58.6)
(62.2)
(47.1)
26.4
% of direct reductions
197%
148%
178%
60%
% of direct reductions
Lime kilns move from pure NG to combined oil and
gasified wood waste (kt)
54
Cost Curves Analysis
Final Analysis Report
3.6.4. Ontario Pulp and Paper
Figure 3.25: Cost curve for Ontario Pulp and Paper
Ontario Pulp & Paper
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
400
500
600
700
800
GHG Reductions (kt)
Table 3.25: Energy, Emissions and costs associated with emissions reductions in Ontario Pulp
and Paper, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
7,727.7
301.4
93.1
(127.0)
(59.3)
(24.5)
9.7
20
8,252.4
342.2
90.9
(131.2)
(83.4)
(10.3)
30.0
30
8,603.2
368.6
86.6
(135.9)
(89.3)
4.7
51.5
40
8,753.5
380.9
74.9
(145.8)
(20.5)
18.7
73.5
50
9,166.2
411.0
67.9
(145.9)
39.7
35.4
95.9
75
9,959.3
466.9
62.3
(131.4)
41.7
84.1
156.0
100
12,918.4
607.0
58.0
(90.3)
35.6
147.3
226.6
125
13,274.8
631.6
53.8
(67.6)
29.0
212.8
306.2
150
13,520.9
650.8
48.8
(42.6)
6.4
280.4
388.1
200
14,121.9
689.4
40.5
1.2
(9.3)
418.2
557.2
250
14,713.3
723.3
33.1
27.3
(8.8)
556.4
732.7
55
Cost Curves Analysis
Final Analysis Report
The significant actions in Ontario Pulp and Paper
Action
Shadow price
$10
$50
$75
$150
Overall move to cogen combined with boilers
switching to NG (kt)
(41.3)
25.0
49.9
209.9
% of direct reductions
(14)%
6%
11%
32%
Thermal integration (kt)
253.2
252.9
249.8
223.0
% of direct reductions
84%
62%
53%
34%
Move to thermo-mechanical pulpers w/ high speed
refining, steam recovery and wood preheat (kt)
28.1
36.0
39.8
45.2
% of direct reductions
9%
9%
9%
7%
Thomlinson recovery furnaces - switch to cheaper,
lower pressure units1 & retrofit older units2 to save
steam-related GHG costs(kt)
Nil
Nil
8.5
36.1
% of direct reductions
0%
0%
2%
6%
Lime kilns move from pure NG to combined oil and
gasified wood waste and lignin precipitate from
recovery boilers (kt)
6.3
18.4
21.9
23.0
% of direct reductions
2%
4%
5%
4%
Switching to newspaper preparation with various mixes
of extended nip press (which reduces steam
requirements), induction heat finish and refine screen.
(kt)
45.7
44.7
44.4
41.2
% of direct reductions
15%
11%
10%
6%
1
There is a switch to cheaper, lower pressure Tomlinson recovery furnaces with less cogen capacity that
use less steam due to a relatively lower value of cogenerated electricity at higher shadow prices.
2
A retrofit kit with direct contact evaporator and pressure enhancer is added to older furnaces.
56
Cost Curves Analysis
Final Analysis Report
3.6.5. Québec Pulp and Paper
Figure 3.26: Cost curve for Québec Pulp and Paper
Quebec Pulp & Paper
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
800
1,000
1,200
1,400
1,600
GHG Reductions (kt)
Table 3.26: Energy, Emissions and costs associated with emissions reductions in Québec Pulp
and Paper, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
15,065.3
387.9
11.0
(368.1)
(361.5)
(84.6)
10.0
20
16,079.0
510.9
10.3
(371.6)
(369.0)
(68.6)
32.4
30
16,543.2
594.2
9.5
(367.6)
(368.9)
(47.6)
59.1
40
16,799.2
661.4
8.6
(358.4)
(363.8)
(22.9)
88.9
50
18,386.2
815.4
7.7
(341.8)
(351.3)
6.9
123.2
75
21,697.8
1,032.7
7.3
(316.9)
(336.2)
92.1
228.4
100
23,450.1
1,133.3
7.0
(303.5)
(332.1)
187.1
350.6
125
24,272.8
1,192.0
6.7
(282.4)
(319.6)
290.4
481.4
150
24,652.2
1,222.3
6.4
(261.3)
(306.7)
397.5
617.1
200
25,542.4
1,285.7
6.0
(190.5)
(251.3)
627.0
899.4
250
26,578.3
1,346.2
5.7
(135.1)
(210.9)
862.5
1,195.0
57
Cost Curves Analysis
Final Analysis Report
The significant actions in Québec Pulp and Paper
Action
Shadow price
$10
$50
$75
308.2
316.6
286.8
286.8
% of direct reductions
79%
39%
28%
23%
Overall move to cogen Boilers switch to NG from
oil/coal (kt)
15.4
233.8
424.4
520.3
4%
29%
41%
43%
124.7
149.4
156.3
179.6
32%
18%
15%
15%
Thomlinson recovery furnaces - switch to cheaper,
lower pressure units1 & retrofit older units2 to save
steam-related GHG emissions (kt)
Nil
Nil
7.0
63.3
% of direct reductions
0%
0%
1%
5%
18.9
50.2
53.9
55.5
5%
6%
5%
5%
Thermal integration (kt)
% of direct reductions
Switch to mechanical pulpers w/ vapour recompression
and wood preheat. (kt)
% of direct reductions
Lime kilns move from pure NG to combined oil and
gasified wood waste and lignin precipitate from
recovery boilers (kt)
% of direct reductions
$155
1
There is a switch to cheaper, lower pressure Tomlinson Recovery furnaces with less cogen capacity that
use less steam due to a relatively lower value of cogenerated electricity in Québec.
2
A retrofit kit with direct contact evaporator and pressure enhancer is added to older furnaces.
58
Cost Curves Analysis
Final Analysis Report
3.6.6. Atlantic Pulp and Paper
Figure 3.27: Cost curve for Pulp and Paper for the Atlantic Provinces
Atlantic Pulp & Paper
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
(100)
-
100
200
300
400
500
GHG Reductions (kt)
Table 3.27: Energy, Emissions and costs associated with emissions reductions in the Atlantic
Pulp and Paper, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,656.8
(3.9)
213.1
(218.8)
(116.4)
(50.1)
6.1
20
4,648.8
32.4
199.0
(213.5)
(94.0)
(39.4)
18.6
30
4,702.5
41.3
160.0
(234.8)
63.6
(35.6)
30.8
40
4,672.6
57.6
128.8
(243.6)
163.0
(29.5)
41.8
50
4,662.9
71.8
99.1
(253.2)
273.7
(24.3)
52.0
75
5,967.3
206.5
72.0
(224.6)
351.6
5.7
82.4
100
5,989.6
270.0
53.2
(201.6)
315.8
40.1
120.7
125
6,089.0
311.0
43.3
(183.0)
321.6
76.1
162.4
150
6,167.6
344.3
35.6
(162.1)
272.8
114.7
206.9
200
6,437.1
394.6
26.4
(125.5)
231.7
195.6
302.7
250
6,660.8
438.2
18.7
(91.1)
249.7
281.9
406.3
59
Cost Curves Analysis
Final Analysis Report
The significant actions in Atlantic Pulp and Paper
Action
Shadow price
$50
$75
301.0
244.2
207.5
187.0
5,683%
251%
74%
40%
(43.7)
30.2
135.9
153.0
1,120%
42%
66%
44%
6.7
21.0
23.9
28.4
(172)%
29%
12%
8%
0.7
2.9
8.5
10.0
(17)%
4%
4%
3%
Switch out of electric into steam and infrared driers (kt).
(170.2)
(144.5)
(98.6)
(0.8)
% of direct reductions
4,361%
(201)%
(48)%
0%
Thermal Integration (kt)
% of direct reductions
Overall switch to cogen combined with boilers
switching to less carbon intense fuels (kt).
% of direct reductions
Switch from pure NG lime kilns to ones driven by NG
combined with oil and gasified wood waste and lignin
precipitate from recovery boilers (kt).
% of direct reductions
Switching to RDH chemical pulping (kt).
% of direct reductions
$10
$150
3.7. Other Manufacturing
3.7.1. General Commentary for Other Manufacturing
Other Manufacturing is composed of a grouping of industries with generally minor
energy use but great economic importance (e.g., automobile manufacturing). This sector
can be characterized as exhibiting a lot of fuel switching and numerous but small energy
efficiency improvements. The electricity rich regions exhibited a lot of switching from
fossil fuels to electricity, while all regions showed a strong move out of coal and fuel oil,
where it was used, into natural gas.
In the hydro provinces, we see a shift first to NG and then electricity for space heating
and water boilers. In the non-hydro provinces, the shift is towards just NG for space
heating and water boilers. An interesting phenomenon in this sector is that there seems to
be minimal reductions until somewhere between $75 and $100, when electric, as opposed
to NG, water boilers become economic in the hydro provinces. This transition point is
dependent on the relative price of electricity and NG in each region.
60
Cost Curves Analysis
Final Analysis Report
Figure 3.28: Cost curve for Other Manufacturing for all Canada
Shadow Price ($/tonne CO2e)
Canada Other Manufacturing
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000
GHG Reductions (kt)
Table 3.28: Energy, Emissions and costs associated with emissions reductions in Other
Manufacturing for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Cost
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
18.4
0.80
0.10
(295.2)
(59.3)
19.3
20
20.5
1.01
0.11
(332.1)
(36.6)
62.0
30
21.5
1.17
0.10
(328.2)
1.5
111.4
40
22.4
1.34
0.09
(327.0)
43.1
166.5
50
23.5
1.54
0.07
(308.2)
93.7
227.6
75
27.7
2.25
0.02
(96.4)
290.3
419.1
100
32.0
3.00
(0.08)
108.3
529.6
670.0
125
37.5
4.01
(0.32)
423.8
843.8
983.8
150
43.2
5.21
(0.63)
847.1
1,239.7
1,370.6
200
50.3
7.20
(1.20)
1,650.9
2,175.6
2,350.5
250
54.1
8.84
(1.75)
2,495.5
3,293.4
3,559.4
61
Cost Curves Analysis
Final Analysis Report
3.7.2. BC Other Manufacturing
Figure 3.29: Cost curve for BC Other Manufacturing
Shadow Price ($/tonne CO2e)
British Columbia Other Manufacturing
250
200
150
100
50
0
-
500
1,000
1,500
2,000
GHG Reductions (kt)
Table 3.29: Energy, Emissions and costs associated with emissions reductions in BC Other
Manufacturing, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
5,173.0
256.1
1.9
(20.3)
(1.2)
(1.0)
5.4
20
5,203.3
259.8
1.8
(19.9)
(12.7)
7.3
16.3
30
5,235.3
263.5
1.6
(19.0)
(23.7)
15.7
27.3
40
5,271.2
267.6
1.2
(17.9)
(34.2)
24.4
38.5
50
5,314.1
272.8
0.5
(16.3)
(43.8)
33.2
49.7
75
5,486.1
296.0
(3.8)
(7.2)
(63.6)
57.4
78.9
100
6,060.6
380.2
(21.1)
24.2
(66.8)
89.7
111.6
125
7,070.4
533.7
(52.2)
83.1
(53.0)
134.8
152.0
150
8,194.7
725.5
(91.3)
161.3
(31.4)
193.4
204.0
200
9,465.5
1,246.0
(212.2)
385.8
86.1
364.4
357.2
250
10,156.0
1,663.5
(302.2)
610.2
150.5
585.8
577.6
62
Cost Curves Analysis
Final Analysis Report
The significant actions in BC Other Manufacturing
Shadow Price
Action
$10
$50
$75
253.7
263.2
272.0
411.3
99%
96%
92%
57%
Switch to mainly electric and some high efficiency NG
water boilers. (kt)
1.2
7.2
20.7
308.3
% of direct reductions
0%
3%
7%
42%
Switch into various efficiency electricity heating units
plus a switch to wood waste heating. (kt)
% of direct reductions
$150
3.7.3. Alberta Other Manufacturing
Figure 3.30: Cost curve for Alberta Other Manufacturing
Alberta Other Manufacturing
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
50
100
150
200
250
GHG Reductions (kt)
63
Cost Curves Analysis
Final Analysis Report
Table 3.30: Energy, Emissions and costs associated with emissions reductions in Alberta Other
Manufacturing, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
3,351.8
173.1
20.8
(56.3)
186.1
(11.0)
4.1
20
3,496.8
175.7
28.9
(70.2)
509.1
(8.2)
12.4
30
3,655.1
182.8
30.1
(73.1)
522.7
(2.4)
21.1
40
3,749.6
188.2
27.9
(73.9)
461.9
4.0
30.0
50
3,782.4
190.7
25.7
(74.4)
400.5
10.6
39.0
75
3,856.9
194.6
23.2
(57.7)
384.8
31.6
61.3
100
3,928.4
198.9
20.8
(56.4)
328.5
48.7
83.7
125
3,994.6
202.2
19.7
(54.6)
328.0
66.0
106.3
150
4,057.8
206.2
18.1
(53.1)
246.0
83.4
128.9
200
4,175.6
213.6
15.4
(49.8)
146.7
118.6
174.8
250
4,290.4
221.4
12.6
(45.8)
104.8
154.5
221.3
The significant actions in Alberta Other Manufacturing
Action
Shadow Price
$10
$50
$75
$150
Switch out of electricity into efficient NG heating units
plus a switch to wood waste heating. (kt)
172.7
190.7
192.3
195.4
% of direct reductions
100%
100%
99%
95%
Switch to high efficiency NG water boilers. (kt)
3.0
8.5
11.6
19.8
% of direct reductions
2%
4%
6%
10%
Switch to mainly NG cogeneration. (kt)
-3.2
-9.7
-10.8
-11.3
% of direct reductions
-2%
-5%
-6%
-6%
64
Cost Curves Analysis
Final Analysis Report
3.7.4. Saskatchewan Other Manufacturing
Figure 3.31: Cost curve for Other Manufacturing in Saskatchewan
Shadow Price ($/tonne CO2e)
Saskatchewan Other Manufacturing
250
200
150
100
50
0
-
10
20
30
40
50
GHG Reductions (kt)
The reader may note the inflections at $20 / $30; this is due to a jump in the penetration
of cogenerators between $20 and $30, which increases the sector’s direct emissions.
Table 3.31: Energy, Emissions and costs associated with emissions reductions in Saskatchewan
Other Manufacturing, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
778.3
30.8
24.4
(47.6)
178.2
(10.9)
1.3
20
821.1
25.2
30.8
(69.5)
588.0
(14.5)
3.8
30
855.7
26.7
29.8
(72.3)
610.1
(13.3)
6.3
40
881.6
29.2
27.1
(73.8)
555.0
(11.8)
8.9
50
889.6
30.7
24.3
(75.0)
511.5
(10.2)
11.3
75
906.0
31.9
20.8
(51.3)
515.1
0.2
17.3
100
922.1
33.9
18.8
(51.5)
450.2
4.5
23.2
125
937.4
34.9
17.7
(51.2)
449.3
8.9
29.0
150
950.7
36.5
16.2
(51.3)
382.6
13.2
34.8
200
977.7
39.1
14.7
(50.9)
295.3
22.1
46.4
250
1,009.4
41.8
13.6
(49.7)
258.8
31.2
58.2
65
Cost Curves Analysis
Final Analysis Report
The significant actions in Saskatchewan Other Manufacturing
Shadow Price
Action
$10
Switch to high efficiency NG heating units plus a
switch to wood waste heating. (kt)
$50
$75
$150
33.4
38.8
39.6
41.0
108%
127%
124%
112%
Switch to high efficiency NG water boilers. (kt)
0.4
1.0
1.3
2.3
% of direct reductions
1%
3%
4%
6%
(3.6)
(10.5)
(10.6)
(9.2)
(12)%
(34)%
(33)%
(25)%
Switch from large old factory shells to more efficient
shells. (kt)
0.6
1.4
1.6
2.3
% of direct reductions
2%
4%
5%
6%
% of direct reductions
Switch to mainly NG cogeneration. (kt)
% of direct reductions
3.7.5. Manitoba Other Manufacturing
Figure 3.32: Cost curve for Manitoba Other Manufacturing
Shadow Price ($/tonne CO2e)
Manitoba Other Manufacturing
250
200
150
100
50
0
-
200
400
600
800
1,000
GHG Reductions (kt)
66
Cost Curves Analysis
Final Analysis Report
Table 3.32: Energy, Emissions and costs associated with emissions reductions in Manitoba
Other Manufacturing, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
2,543.0
114.4
1.1
(38.9)
(34.5)
(7.8)
2.5
20
2,584.8
136.2
0.9
(38.3)
(37.1)
(3.6)
8.0
30
2,646.7
156.1
0.7
(37.3)
(38.8)
1.4
14.2
40
2,732.7
176.0
0.4
(35.5)
(39.8)
7.0
21.1
50
2,872.2
201.2
(0.1)
(32.2)
(39.4)
13.6
28.8
75
3,389.5
288.7
(2.2)
(15.0)
(31.1)
35.6
52.5
100
3,907.2
387.3
(5.0)
10.5
(16.4)
65.4
83.7
125
4,354.6
510.4
(9.0)
51.5
11.1
106.0
124.1
150
4,578.9
653.5
(14.2)
113.6
56.0
160.5
176.2
200
4,825.2
826.5
(20.1)
193.4
105.7
280.1
309.1
250
4,920.2
885.7
(22.0)
222.2
111.6
403.2
463.5
The significant actions in Manitoba Other Manufacturing
Action
Shadow Price
$10
$50
$75
$150
Switch into various efficiency electricity heating units
plus a switch to wood waste heating. (kt)
119.9
168.7
203.6
484.0
% of direct reductions
105%
84%
71%
74%
Switch to electric water boilers. (kt)
0.8
19.5
67.0
144.1
% of direct reductions
1%
10%
23%
22%
Switch to cogeneration, as well as a switch from fuel
oil to NG boilers. (kt)
(7.5)
10.9
15.5
20.8
% of direct reductions
(7)%
5%
5%
3%
67
Cost Curves Analysis
Final Analysis Report
3.7.6. Ontario Other Manufacturing
Figure 3.33: Cost curve for Other Manufacturing in Ontario
Shadow Price ($/tonne CO2e)
Ontario Other Manufacturing
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
3,000
3,500
GHG Reductions (kt)
Table 3.33: Energy, Emissions and costs associated with emissions reductions in Ontario Other
Manufacturing, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
1,824.4
26.3
48.7
(55.0)
97.4
(12.5)
1.7
20
2,282.4
77.8
44.6
(56.4)
52.8
(9.6)
6.0
30
2,551.2
115.8
38.5
(58.6)
49.0
(5.9)
11.7
40
2,685.3
140.4
32.0
(75.5)
208.6
(5.1)
18.3
50
2,819.0
165.0
26.0
(85.6)
333.7
(2.2)
25.6
75
3,250.1
248.9
(2.8)
(47.8)
345.1
23.2
46.9
100
4,069.0
398.8
(72.7)
4.3
290.6
56.5
73.9
125
6,351.7
770.4
(258.6)
128.5
333.5
115.9
111.7
150
9,307.5
1,270.8
(509.8)
301.7
357.0
200.5
166.7
200
13,673.2
2,153.1
(926.0)
652.1
452.6
413.6
334.1
250
16,113.0
3,133.0
(1,372.9)
1,171.2
754.9
732.8
586.6
68
Cost Curves Analysis
Final Analysis Report
The significant actions in Ontario Other Manufacturing
Shadow Price
Action
$10
Switch to efficient NG and electric heating units plus a
switch to wood waste heating. (kt)
% of direct reductions
Switch to electric and high efficiency NG water boilers.
(kt)
% of direct reductions
$50
$75
$150
31.5
123.5
160.0
354.2
120%
75%
64%
28%
5.0
29.4
70.1
885.5
19%
18%
28%
70%
3.7.7. Québec Other Manufacturing
Figure 3.34: Cost curve for Other Manufacturing in Québec
Shadow Price ($/tonne CO2e)
Quebec Other Manufacturing
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
3,000
GHG Reductions (kt)
69
Cost Curves Analysis
Final Analysis Report
Table 3.34: Energy, Emissions and costs associated with emissions reductions in Other
Manufacturing in Québec, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,622.7
195.7
1.2
(70.6)
(66.1)
(14.6)
4.0
20
5,946.7
315.3
0.5
(72.0)
(70.3)
(7.2)
14.4
30
6,305.0
394.7
(0.6)
(57.7)
(58.8)
6.9
28.4
40
6,814.3
494.7
(2.1)
(37.6)
(41.7)
24.9
45.7
50
7,584.6
632.3
(4.4)
(9.4)
(16.7)
48.1
67.3
75
10,517.9
1,119.2
(12.9)
93.5
77.0
135.8
150.0
100
12,610.2
1,488.2
(19.2)
176.6
150.2
248.5
272.5
125
14,032.8
1,762.9
(23.8)
243.0
206.7
379.7
425.3
150
14,815.1
1,994.2
(28.2)
312.4
265.9
529.5
601.9
200
15,366.5
2,288.4
(34.2)
419.4
352.7
858.5
1,004.9
250
15,640.9
2,413.9
(36.6)
467.7
382.6
1,202.9
1,448.0
The significant actions in Québec Other Manufacturing
Action
Shadow Price
$10
$50
$75
$150
180.6
360.6
474.6
999.4
% of direct reductions
92%
57%
42%
50%
Switch to electric water boilers. (kt)
12.5
233.4
594.9
925.5
6%
37%
53%
46%
Switch to electric heating units plus a switch to wood
waste heating. (kt)
% of direct reductions
70
Cost Curves Analysis
Final Analysis Report
3.7.8. Atlantic Provinces Other Manufacturing
Figure 3.35: Cost curve for Other Manufacturing in the Atlantic Provinces
Shadow Price ($/tonne CO2e)
Atlantic Other Manufacturing
250
200
150
100
50
0
-
100
200
300
400
500
600
GHG Reductions (kt)
Table 3.35: Energy, Emissions and costs associated with emissions reductions in Other
Manufacturing in the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
140.7
7.9
4.9
(6.5)
24.9
(1.4)
0.3
20
168.3
21.3
4.8
(5.7)
31.1
(0.6)
1.1
30
205.6
33.0
4.1
(10.3)
81.4
(0.8)
2.4
40
223.7
42.9
3.3
(12.8)
112.1
(0.2)
4.0
50
242.6
51.7
2.6
(15.4)
146.3
0.6
6.0
75
302.5
74.9
1.0
(10.9)
164.9
6.5
12.3
100
453.4
115.9
(3.1)
0.5
159.2
16.2
21.4
125
784.6
194.6
(11.5)
23.4
182.0
32.4
35.4
150
1,327.8
321.1
(25.2)
62.4
204.5
59.1
58.0
200
1,811.9
436.1
(36.6)
100.9
217.8
118.3
124.1
250
1,994.3
481.8
(41.8)
119.8
228.0
183.0
204.1
71
Cost Curves Analysis
Final Analysis Report
The significant actions in Atlantic Provinces Other Manufacturing
Shadow Price
Action
$10
Switch to NG and electric heating units from oil plus a
switch to wood waste heating. (kt)
$50
$75
$150
6.3
34.2
44.1
62.6
80%
66%
59%
20%
1.3
5.8
14.9
236.5
% of direct reductions
16%
11%
20%
74%
Switch to cogeneration, as well as a switch from fuel
oil to NG boilers. (kt)
(0.7)
10.0
13.6
18.4
% of direct reductions
(8)%
19%
18%
6%
% of direct reductions
Switch to high efficiency NG and electric water boilers.
(kt)
3.8. Mining
3.8.1. General Commentary on Mining
The mining industry makes a strong switch to electricity from fossil fuels by converting
mining equipment to electrical power. The two biggest actions are switching from oil to
gas sintering and pelletization in iron agglomeration and switching to conveyance
transfer of ore from diesel trucks. Please see actions tables for details specific to the
regions.
Figure 3.36: Cost curve for Mining for all Canada
Shadow Price ($/tonne CO2e)
Canada Mining
250
200
150
100
50
0
-
200
400
600
800
1,000
1,200
1,400
1,600
GHG Reductions (kt)
72
Cost Curves Analysis
Final Analysis Report
Table 3.36: Energy, Emissions and costs associated with emissions reductions in Mining for all
Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
12.4
0.93
0.06
(318.4)
(63.5)
21.5
20
12.6
0.95
0.06
(337.3)
(35.8)
64.7
30
12.8
0.96
0.05
(348.3)
(5.8)
108.4
40
13.0
0.98
0.05
(355.5)
25.5
152.5
50
13.1
1.00
0.04
(361.5)
57.3
196.9
75
13.4
1.05
0.03
(331.8)
149.8
310.3
100
13.7
1.10
0.03
(318.3)
241.4
427.9
125
14.0
1.15
0.02
(305.9)
336.0
549.9
150
14.3
1.20
0.02
(291.0)
434.3
676.1
200
14.7
1.28
0.01
(264.3)
639.2
940.4
250
15.1
1.35
0.00
(242.4)
853.2
1,218.4
3.8.2. British Columbia Mining
Figure 3.37: Cost curve for BC Mining
British Columbia Mining
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
10
20
30
40
50
60
GHG Reductions (kt)
73
Cost Curves Analysis
Final Analysis Report
Table 3.37: Energy, Emissions and costs associated with emissions reductions in BC Mining,
2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
285.4
6.9
0.004
(6.6)
6.1
(1.5)
0.2
20
280.9
9.7
0.004
(5.9)
(0.9)
(0.9)
0.8
30
276.6
12.5
0.003
(5.1)
(7.8)
(0.3)
1.4
40
273.6
15.1
0.003
(4.4)
(14.6)
0.4
2.1
50
271.9
17.7
0.003
(3.8)
(21.2)
1.2
2.9
75
273.8
23.4
0.002
(1.9)
(37.2)
3.4
5.2
100
282.1
28.5
0.001
(0.1)
(52.8)
5.9
8.0
125
294.6
33.1
0.001
1.7
(67.6)
8.8
11.2
150
309.4
37.6
0.000
3.5
(81.3)
12.0
14.8
200
341.6
46.0
(0.001)
7.3
(105.0)
19.1
23.1
250
374.4
54.0
(0.001)
11.0
(127.0)
27.4
32.8
The significant actions in BC Mining
Action
Greater use of conveyance transfer (as opposed to
diesel trucks) (kt)
Shadow Price
$10
$50
$75
$150
8.8
12.6
15.2
23.2
127%
72%
65%
62%
2.2
7.5
9.8
12.9
% of direct reductions
31%
43%
42%
34%
Switch to diesel extraction of underground ores due to
capital charge changes (kt)
(4.7)
(3.7)
(3.1)
Nil
(68)%
(21)%
(13)%
0%
% of direct reductions
Fuel switching to natural gas in metal cleaning (kt)
% of direct reductions
74
Cost Curves Analysis
Final Analysis Report
3.8.3. Saskatchewan Mining
Figure 3.38: Cost curve for Saskatchewan Mining
Shadow Price ($/tonne CO2e)
Saskatchewan Mining
250
200
150
100
50
0
-
5
10
15
20
25
GHG Reductions (kt)
Table 3.38: Energy, Emissions and costs associated with emissions reductions in Mining in
Saskatchewan, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
406.7
11.8
17.8
(33.0)
133.2
(7.8)
0.6
20
507.0
13.9
17.4
(52.7)
435.5
(11.8)
1.9
30
536.2
15.1
16.5
(55.0)
452.1
(11.3)
3.2
40
553.3
16.1
15.5
(55.4)
411.1
(10.5)
4.5
50
568.2
16.9
14.3
(55.8)
378.9
(9.6)
5.8
75
607.3
18.6
12.2
(38.0)
381.6
(2.8)
9.0
100
631.3
19.8
11.3
(37.4)
333.8
(0.2)
12.2
125
654.9
20.8
10.7
(37.0)
333.3
2.3
15.4
150
668.5
21.6
10.0
(36.5)
284.2
4.8
18.6
200
692.3
22.8
9.4
(35.6)
219.9
9.9
25.1
250
713.9
23.7
9.2
(34.9)
192.6
15.1
31.8
75
Cost Curves Analysis
Final Analysis Report
The significant actions in Saskatchewan Mining
Shadow Price
Action
$10
Use of higher efficiency boilers (kt)
% of direct reductions
$150
8.1
9.1
10.7
44%
48%
49%
49%
4.5
6.5
7.1
8.4
38%
38%
38%
39%
1.9
2.0
2.1
2.1
16%
12%
11%
10%
Greater use of conveyance instead of diesel transport
(kt)
% of direct reductions
$75
5.2
Greater use of heat recovery and dewatering in drying
and cleaning of potash (kt)
% of direct reductions
$50
3.8.4. Manitoba Mining
Figure 3.39: Cost curve for Manitoba Mining
Manitoba Mining
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-0.5
0.0
0.5
1.0
1.5
2.0
GHG Reductions (kt)
76
Cost Curves Analysis
Final Analysis Report
Table 3.39: Energy, Emissions and costs associated with emissions reductions in Manitoba
Mining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
85.6
(0.3)
0.3
(4.8)
(3.9)
(1.2)
0.0
20
85.4
(0.2)
0.2
(4.7)
(4.5)
(1.2)
0.0
30
85.3
(0.1)
0.2
(4.7)
(5.1)
(1.2)
0.0
40
85.1
(0.1)
0.2
(4.7)
(5.6)
(1.2)
0.0
50
85.0
(0.0)
0.2
(4.7)
(6.1)
(1.2)
0.0
75
84.6
0.2
0.2
(4.6)
(7.6)
(1.1)
0.0
100
84.0
0.4
0.2
(4.6)
(9.1)
(1.1)
0.1
125
83.3
0.6
0.2
(4.5)
(10.6)
(1.0)
0.2
150
82.5
0.9
0.1
(4.4)
(12.2)
(0.9)
0.2
200
81.4
1.3
0.1
(4.2)
(14.8)
(0.7)
0.5
250
80.7
1.6
0.1
(4.1)
(16.9)
(0.4)
0.8
The significant actions in Manitoba Mining
Action
Shadow Price
$10
$50
$75
$150
Greater use of conveyance transfer (as opposed to
diesel trucks) (kt)
Nil
Nil
Nil
0.3
% of direct reductions
0%
0%
0%
35%
Greater use of electricity for space heating
Nil
Nil
Nil
0.6
% of direct reductions (kt)
0%
0%
0%
65%
77
Cost Curves Analysis
Final Analysis Report
3.8.5. Ontario Mining
Figure 3.40 Cost curve for Ontario Mining
Shadow Price ($/tonne CO2e)
Ontario Mining
250
200
150
100
50
0
-
50
100
150
200
250
GHG Reductions (kt)
Table 3.40: Energy, Emissions and costs associated with emissions reductions in Ontario
Mining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
2,136.4
165.8
10.8
(49.9)
(27.7)
(9.5)
4.0
20
2,174.2
169.1
10.5
(51.0)
(36.1)
(3.8)
12.0
30
2,211.6
172.2
10.1
(52.6)
(38.7)
1.9
20.1
40
2,254.0
174.8
9.1
(56.6)
(16.6)
7.1
28.3
50
2,290.4
177.2
8.6
(59.5)
0.4
12.5
36.5
75
2,355.5
183.0
8.0
(58.8)
(4.1)
28.4
57.5
100
2,402.2
187.9
7.3
(59.8)
(21.8)
44.2
78.9
125
2,439.8
191.7
6.7
(60.7)
(33.4)
60.4
100.7
150
2,465.9
194.9
6.0
(61.0)
(50.4)
76.8
122.8
200
2,501.9
199.7
4.5
(61.1)
(71.7)
110.3
167.4
250
2,523.3
203.2
3.2
(60.8)
(80.9)
144.3
212.6
78
Cost Curves Analysis
Final Analysis Report
The significant actions in Ontario Mining
Shadow Price
Action
$10
$50
$75
121.1
121.4
121.5
121.8
% of direct reductions
73%
68%
66%
62%
Greater use of conveyance transfer (as opposed to
diesel trucks) (kt)
46.2
52.2
62.5
72.3
% of direct reductions
28%
29%
34%
37%
Iron agglomeration (switch from sintering and oil
pelletization to gas pelletization) (kt)
$150
3.8.6. Québec Mining
Figure 3.41: Cost curve for Québec Mining
Shadow Price ($/tonne CO2e)
Quebec Mining
250
200
150
100
50
0
-
100
200
300
400
500
600
GHG Reductions (kt)
79
Cost Curves Analysis
Final Analysis Report
Table 3.41: Energy, Emissions and costs associated with emissions reductions in Québec
Mining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,113.1
338.1
0.3
(58.7)
(57.8)
(9.5)
6.8
20
4,169.5
346.2
0.2
(56.8)
(56.5)
1.3
20.6
30
4,227.6
354.5
0.2
(55.0)
(55.1)
12.3
34.8
40
4,287.2
362.9
0.1
(53.1)
(53.7)
23.6
49.2
50
4,348.2
371.5
0.0
(51.1)
(52.2)
35.2
64.0
75
4,504.8
393.3
(0.2)
(46.2)
(48.6)
65.2
102.4
100
4,664.8
415.1
(0.4)
(41.2)
(44.8)
96.8
142.8
125
4,824.3
436.5
(0.5)
(36.3)
(41.0)
129.9
185.3
150
4,980.0
457.0
(0.7)
(31.5)
(37.4)
164.5
229.8
200
5,269.7
494.3
(1.0)
(22.6)
(30.6)
237.6
324.4
250
5,520.0
525.9
(1.3)
(14.8)
(25.0)
315.4
425.5
The significant actions in Québec Mining
Action
Shadow Price
$10
$50
$75
$150
305.3
321.5
332.1
361.9
% of direct reductions
90%
87%
84%
79%
Greater use of conveyance transfer (as opposed to
diesel trucks) (kt)
35.4
51.5
62.0
93.8
% of direct reductions
10%
14%
16%
21%
Iron agglomeration (switch from sintering and oil
pelletization to gas pelletization) (kt)
80
Cost Curves Analysis
Final Analysis Report
3.8.7. Atlantic Mining
Figure 3.42: Cost curve for Mining in the Atlantic Provinces
Atlantic Mining
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
400
500
600
GHG Reductions (kt)
Table 3.42: Energy, Emissions and costs associated with emissions reductions in Mining in the
Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
5,363.2
405.0
28.6
(165.5)
(124.0)
(34.0)
9.8
20
5,409.2
409.9
26.6
(166.1)
(117.8)
(19.5)
29.4
30
5,462.7
409.6
22.0
(175.9)
(54.5)
(7.2)
49.0
40
5,502.5
412.0
17.8
(181.2)
(15.7)
6.0
68.4
50
5,538.6
414.4
13.7
(186.5)
28.3
19.1
87.7
75
5,603.1
428.3
8.9
(182.2)
51.6
56.6
136.2
100
5,658.0
447.4
5.3
(175.1)
33.8
95.7
186.0
125
5,715.8
464.5
2.7
(169.1)
34.8
135.6
237.2
150
5,767.9
484.3
(0.1)
(161.1)
15.1
177.2
289.9
200
5,861.2
517.7
(4.4)
(148.0)
(2.8)
263.0
400.0
250
5,933.8
542.0
(7.2)
(138.8)
(0.0)
351.5
515.0
81
Cost Curves Analysis
Final Analysis Report
The significant actions in Atlantic Mining
Action
Iron agglomeration (switch from sintering and oil
pelletization to gas pelletization) (kt)
% of direct reductions
Greater use of conveyance transfer (as opposed to
diesel trucks) (kt)
% of direct reductions
Shadow Price
$10
$50
$75
$150
304.3
311.9
324.3
375.9
75%
75%
76%
75%
108.9
112.7
113.7
114.6
27%
27%
27%
27%
3.9. Upstream Oil
3.9.1. General Commentary for Upstream Oil
The Upstream Oil actions were incorporated in the analysis by determining GHG
emissions reductions and costs exogenously. GHG reduction data were provided
nationally and apportioned to each province based on provincial percentage of total
emissions in 2010 in the CEOU. GHG reductions increase as the shadow price rises.
Nationally, this sector contributes 9.34 Mt of reductions at the $150 shadow price. Major
reductions are contributed by destruction of vent gas at drilling sites (1.3 Mt), increased
conservation / utilization of casing gas (0.9 Mt) and flaring / incineration of casing gas
and tank vapours at primary heavy oil wells (0.8 Mt). Oil sands actions including
sequestration of CO2 from H2 plants (2.8 Mt), aggressive ENCON (1.4 Mt) and
aggressive yield and recovery programs (0.5 Mt) also contribute substantially to overall
reductions. Natural gas savings also occur due to conservation of methane through
increased conservation / utilization of casing gas at primary and thermal wells during
heavy oil gathering. Electricity is conserved through utilization of venting and flaring
batteries for micro-turbines and conventional power generation sets utilizing flare gas
during light oil production. The table at the end of this section outlines the GHG
reductions associated with each action at the national and regional levels and displays the
shadow price level at which they penetrate.
Although this sector was modeled exogenous to CIMS, we have provided in this section
estimates of perceived private and expected resource costs calculated using the standard
cost curve methodology. One can debate whether exogenous actions and their emissions
reductions should be included in this curve (and thus the national total) as they penetrate
at shadow price thresholds based primarily on their techno-economic rather than
perceived costs.12 This methodology assumes that these actions should be assigned the
same level of perceived private costs as those actions that penetrated at that shadow price
endogenously in CIMS. The impact of removing the exogenous actions from the national
emission reduction and cost estimates is shown in Appendix A.
12
This too is an assumption (as we explained in the Roll Up report). We are not sure what is included and
what is excluded in the costs provided to us by the tables.
82
Cost Curves Analysis
Final Analysis Report
Figure 3.43: Cost curve for Upstream Oil for all Canada
Shadow Price ($/tonne CO2e)
Canada Upstream Oil
300
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000
GHG Reductions (kt)
Table 3.43: Energy, Emissions and costs associated with emissions reduction in Upstream Oil
for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4.8
3.52
0.13
(47.9)
60.0
96.0
20
4.9
7.43
0.11
205.4
354.7
404.5
30
4.9
8.84
0.11
455.4
750.8
849.2
40
4.9
8.84
0.10
455.4
1,108.7
1,326.4
50
4.9
8.84
0.10
455.4
1,466.1
1,803.1
75
4.9
9.34
0.08
634.8
2,347.6
2,918.6
100
4.9
9.34
0.07
634.8
3,220.9
4,082.9
125
4.9
9.34
0.07
634.8
4,149.6
5,321.2
150
4.9
9.34
0.06
634.8
5,041.5
6,510.3
200
4.9
9.34
0.06
634.8
6,899.6
8,987.9
250
4.9
9.34
0.06
634.8
8,757.8
11,465.5
83
Cost Curves Analysis
Interim Report on Data
National Upstream Oil
Action
GHG Reductions in 2010 (kt)
CAN
Seismic & Drilling
Destruction of Vent Gas
1,280
Decreased Well Test Duration
277.8
Light Oil
Increased Vapour recovery
7.2
Flaring or incineration of vented waste gas
360.6
Micro-turbines for utilization of flare gas
-Flaring batteries
45.2
-Venting batteries
226.1
Conventional power generation sets for utilization of flare gas
-Flaring batteries
29.2
-Venting batteries
218.1
Upgrade to high efficiency flares/combustors
337.2
Heavy Oil
Increased utilization / conservation of casing gas (Primary wells)
-Primary Wells
904.4
-Thermal Wells
88.2
Flaring / Incineration of Casing Gas and Tank Vapours
-Primary Wells
770.6
-Thermal Wells
6.6
Field vs. regional upgrading for new facilities
89.1
Oil Sands
Aggressive Yield and Recovery programs
500.0
Underground sequestrat’n of CO2 from H2 plants
2,800
Aggressive ENCON programs
1,400
TOTAL GHG Reduction including all actions
9,340
84
BC
AB
SK
Shadow Price
MB
ON
10
20
30
40
50
75250
20.9
4.5
1,191.3
258.5
64.0
13.9
3.1
676
1.1
.2
X
X
X
X
X
X
X
X
X
X
X
X
0.1
5.9
6.7
335.5
.4
18.0
.02
.88
.006
.31
X
X
X
X
X
X
X
X
X
X
X
.74
3.7
42.1
210.3
2.3
11.3
.11
.55
.04
.19
X
X
X
X
X
X
X
X
X
X
X
X
.48
3.6
5.5
27.2
202.9
313.8
1.5
10.9
16.9
.07
.53
.82
.03
.18
.29
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
14.8
1.4
841.4
82.0
45.2
4.4
2.2
.22
.77
.08
X
X
X
X
X
X
X
X
X
X
X
X
12.6
.11
1.5
717.0
6.1
82.9
38.5
.33
4.5
1.9
.02
.22
.66
.006
.08
X
X
X
X
X
X
X
X
X
X
X
X
X
8.2
45.7
22.9
152.5
465.2
2,605.2
1,302.6
8,690.5
24.9
139.9
70.0
466.8
1.2
6.8
3.4
22.7
.43
2.4
1.2
7.9
X
X
X
X
X
X
X
X
X
M K Jaccard and Associates
X
X
X
Cost Curves Analysis
Final Analysis Report
3.9.2. British Columbia Upstream Oil
Figure 3.44: Cost curve for BC Upstream Oil
Shadow Price ($/tonne CO2e)
British Columbia Upstream Oil
300
250
200
150
100
50
0
-
50
100
150
200
GHG Reductions (kt)
Table 3.44: Energy, Emissions and costs associated with emissions reduction in BC Upstream
Oil, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
77.6
57.4
0.3
(0.8)
0.9
1.4
20
80.2
121.4
0.3
3.4
6.0
6.8
30
80.2
144.3
0.3
7.4
12.8
14.6
40
80.2
144.3
0.3
7.4
18.0
21.5
50
80.2
144.3
0.3
7.4
23.1
28.4
75
80.2
152.5
0.3
10.4
38.8
48.3
100
80.2
152.5
0.3
10.4
52.5
66.5
125
80.2
152.5
0.3
10.4
66.1
84.7
150
80.2
152.5
0.3
10.4
79.7
102.9
200
80.2
152.5
0.2
10.4
107.0
139.2
250
80.2
152.5
0.2
10.4
134.3
175.6
M.K. Jaccard and Associates
85
Cost Curves Analysis
Final Analysis Report
3.9.3. Alberta Upstream Oil
Alberta is estimated to contribute 93 percent of the total national GHG reduction from the
upstream oil sector. At the $150 shadow price, Alberta Upstream Oil yields a direct
GHG emissions reduction of 8.7 Mt. The largest reductions are contributed through
underground sequestration of CO2 from H2 plants (30%) and aggressive ENCON
programs (15%) at oils sands. Destruction of vent gas at seismic and drilling sites
provides 13.7% of this total reduction. Increased utilization / conservation and flaring /
incineration of casing gas and tank vapours at heavy and light primary oil wells together
constitute 18% of the total reduction.
Figure 3.45: Cost curve for Alberta Upstream Oil
Shadow Price ($/tonne CO2e)
Alberta Upstream Oil
300
250
200
150
100
50
0
-
2,000
4,000
6,000
GHG Reductions (kt)
M.K. Jaccard and Associates
86
8,000
10,000
Cost Curves Analysis
Final Analysis Report
Table 3.45: Energy, Emissions and costs associated with emissions reduction in Alberta
Upstream Oil, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,421.8
3,274.1
128.2
(44.5)
56.1
89.6
20
4,571.6
6,916.6
109.0
191.1
333.6
381.1
30
4,571.6
8,225.3
104.0
423.7
708.0
802.7
40
4,571.6
8,225.3
98.4
423.7
1,044.1
1,250.8
50
4,571.6
8,225.3
93.1
423.7
1,380.1
1,699.0
75
4,571.6
8,690.5
79.5
590.6
2,197.3
2,732.9
100
4,571.6
8,690.5
71.2
590.6
3,021.1
3,831.2
125
4,571.6
8,690.5
65.2
590.6
3,895.1
4,996.5
150
4,571.6
8,690.5
61.8
590.6
4,729.9
6,109.7
200
4,571.6
8,690.5
56.5
590.6
6,474.1
8,435.2
250
4,571.6
8,690.5
53.3
590.6
8,218.2
10,760.8
3.9.4. Saskatchewan Upstream Oil
Saskatchewan contributes 5 percent of the total national GHG reduction from the
upstream oil sector. At the $150 shadow price, Saskatchewan Upstream Oil yields a
direct GHG emissions reduction of 467 kt. The largest reductions are contributed
through underground sequestration of CO2 from H2 plants (30%) and aggressive ENCON
programs (15%) at heavy oil sites. Destruction of vent gas at seismic and drilling sites
provides 13.7% of this total reduction. Increased utilization / conservation and flaring/
incineration of casing gas and tank vapours at heavy and light primary oil wells together
constitute 18% of the total reduction.
M.K. Jaccard and Associates
87
Cost Curves Analysis
Final Analysis Report
Figure 3.46: Cost curve for Saskatchewan Upstream Oil
Shadow Price ($/tonne CO2e)
Saskatchewan Upstream Oil
300
250
200
150
100
50
0
-
100
200
300
400
500
GHG Reductions (kt)
Table 3.46: Energy, Emissions and costs associated with emissions reduction in Saskatchewan
Upstream Oil, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
237.5
175.9
5.4
(2.4)
2.8
4.6
20
245.6
371.5
4.0
10.3
14.0
15.2
30
245.6
441.8
3.8
22.8
27.7
29.3
40
245.6
441.8
3.6
22.8
43.4
50.3
50
245.6
441.8
3.3
22.8
59.2
71.3
75
245.6
466.8
2.8
31.7
105.1
129.5
100
245.6
466.8
2.6
31.7
138.6
174.3
125
245.6
466.8
2.4
31.7
177.4
225.9
150
245.6
466.8
2.3
31.7
218.2
280.3
200
245.6
466.8
2.2
31.7
299.8
389.2
250
245.6
466.8
2.1
31.7
381.5
498.0
M.K. Jaccard and Associates
88
Cost Curves Analysis
Final Analysis Report
3.9.5. Manitoba Upstream Oil
Manitoba contributes 0.2 percent of the total national GHG reduction from the upstream
oil sector. At the $150 shadow price, Manitoba Upstream Oil yields a direct GHG
emissions reduction of 23 kt and associated indirect emission reductions are insignificant.
Figure 3.47: Cost curve for Manitoba Upstream Oil
Manitoba Upstream Oil
Shadow Price ($/tonne
CO2e)
300
250
200
150
100
50
0
-
5
10
15
GHG Reductions (kt)
M.K. Jaccard and Associates
89
20
25
Cost Curves Analysis
Final Analysis Report
Table 3.47: Energy, Emissions and costs associated with emissions reduction in Manitoba
Upstream Oil, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
(’95
$millions) $millions)
10
11.6
8.6
Nil
(0.1)
0.1
0.2
20
12.0
18.1
Nil
0.5
0.9
1.0
30
12.0
21.5
Nil
1.1
1.8
2.0
40
12.0
21.5
Nil
1.1
2.5
3.0
50
12.0
21.5
Nil
1.1
2.8
3.3
75
12.0
22.7
Nil
1.5
4.8
5.9
100
12.0
22.7
Nil
1.5
6.5
8.1
125
12.0
22.7
Nil
1.5
8.4
10.7
150
12.0
22.7
Nil
1.5
10.3
13.2
200
12.0
22.7
Nil
1.5
14.1
18.3
250
12.0
22.7
Nil
1.5
18.0
23.5
3.9.6. Ontario Upstream Oil
Figure 3.48: Cost curve for Ontario Upstream Oil
Shadow Price ($/tonne CO2e)
Ontario Upstream Oil
300
250
200
150
100
50
0
-
2
4
6
GHG Reductions (kt)
M.K. Jaccard and Associates
90
8
10
Cost Curves Analysis
Final Analysis Report
Table 3.48: Energy, Emissions and costs associated with emissions reduction in Ontario
Upstream Oil, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4.0
3.0
Nil
(0.0)
0.0
0.1
20
4.2
6.3
Nil
0.2
0.3
0.3
30
4.2
7.5
Nil
0.4
0.5
0.6
40
4.2
7.5
Nil
0.4
0.7
0.7
50
4.2
7.5
Nil
0.4
0.9
1.1
75
4.2
8.0
Nil
0.5
1.6
2.0
100
4.2
8.0
Nil
0.5
2.3
2.9
125
4.2
8.0
Nil
0.5
2.7
3.4
150
4.2
8.0
Nil
0.5
3.3
4.3
200
4.2
8.0
Nil
0.5
4.6
5.9
250
4.2
8.0
Nil
0.5
5.8
7.6
3.10.
Petroleum Refining
3.10.1. General Commentary for Petroleum Refining
The cost curve for petroleum refining rose steadily with increasing shadow prices. Fuel
switching is a common strategy, with all regions showing a move into electricity from the
fossil fuels. NG, diesel and fuel oil use generally drop. Petroleum coke use, a by-product
that must be burned in catalytic converters, actually rises (in relative terms) and is used to
drive cogeneration units.
Cogeneration shows great potential in most regions; national indirect emissions
reductions are greater than direct reductions all the way up to $75. It is this potential for
cogeneration that also creates the negative techno-economic costs at all tax levels;
reduced purchases of electricity become more and more valuable as the price of
electricity rises.
M.K. Jaccard and Associates
91
Cost Curves Analysis
Final Analysis Report
Figure 3.49: Cost curve for Petroleum Refining for all Canada
Shadow Price ($/tonne CO2e)
Canada Petroleum Refining
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
GHG Reductions (kt)
Table 3.49: Energy, Emissions and costs associated with emissions reductions in Canada’s
Petroleum Refining industry, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
23.3
0.55
2.12
(1,045.2)
(216.3)
60.0
20
23.6
0.75
1.83
(1,069.3)
(134.5)
177.1
30
23.8
0.92
1.74
(1,065.9)
(46.8)
292.9
40
24.1
1.06
1.64
(1,059.5)
42.7
410.1
50
24.2
1.15
1.53
(1,051.5)
132.2
526.8
75
24.7
1.31
1.30
(1,023.6)
352.3
811.0
100
25.0
1.41
1.14
(993.4)
565.1
1,084.6
125
25.2
1.50
1.02
(959.0)
773.8
1,351.4
150
25.4
1.60
0.91
(898.8)
986.4
1,614.8
200
26.1
1.88
0.70
(730.0)
1,425.2
2,143.6
250
26.8
2.19
0.51
(535.4)
1,880.5
2,685.8
M.K. Jaccard and Associates
92
Cost Curves Analysis
Final Analysis Report
3.10.2. British Columbia Petroleum Refining
Figure 3.50: Cost curve for BC Petroleum Refining
Shadow Price ($/tonne CO2e)
British Columbia Petroleum Refining
250
200
150
100
50
0
-
20
40
60
80
100
120
GHG Reductions (kt)
Table 3.50: Energy, Emissions and costs associated with emissions reductions in BC Petroleum
Refining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
214.1
13.8
2.9
(5.9)
(4.3)
(1.3)
0.3
20
230.3
15.7
2.9
(5.8)
(4.9)
(0.7)
0.9
30
249.6
17.7
2.7
(5.5)
(5.6)
(0.2)
1.6
40
284.8
20.3
2.6
(5.4)
(6.2)
0.5
2.4
50
300.2
21.9
2.5
(5.1)
(6.7)
1.2
3.2
75
335.2
26.0
2.0
(3.9)
(7.5)
3.1
5.5
100
376.1
33.0
0.7
(1.1)
(7.2)
5.8
8.1
125
459.8
47.8
(2.2)
5.2
(4.5)
9.9
11.5
150
582.5
69.7
(6.5)
14.5
(0.2)
15.8
16.2
200
745.9
100.8
(12.1)
28.5
4.0
29.1
29.3
250
797.7
110.4
(13.0)
32.9
1.5
42.3
45.5
M.K. Jaccard and Associates
93
Cost Curves Analysis
Final Analysis Report
The significant actions in BC Petroleum Refining
Shadow Price
Action
$10
Switch from LPG, oil and electricity to NG direct heating
(direct reduction). (kt)
$50
$75
$150
1.7
3.2
4.3
41.9
12%
15%
16%
60%
3.8
8.2
10.6
15.1
% of direct reductions
27%
38%
41%
22%
Switch to efficient catalytic crackers with steam
generation and new catalysts (direct reduction). (kt)
11.6
13.0
13.6
14.4
% of direct reductions
84%
60%
52%
21%
Switch to cogenerators from boilers at all levels (direct).
(kt)
(0.8)
(1.8)
(2.5)
(3.9)
% of direct reductions
(5)%
(8)%
(10)%
(6)%
% of direct reductions
Switch from sulphuric acid alkylation towers to
hydrofluoric acid alkylation towers (steam reduction).
(kt)
3.10.3. Alberta Petroleum Refining
Figure 3.51: Cost curve for Petroleum Refining for Alberta
Shadow Price ($/tonne CO2e)
Alberta Petroleum Refining
250
200
150
100
50
0
-
100
200
300
400
GHG Reductions (kt)
M.K. Jaccard and Associates
94
500
600
700
Cost Curves Analysis
Final Analysis Report
Table 3.51: Energy, Emissions and costs associated with emissions reductions in Alberta
Petroleum Refining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
15,736.4
414.9
1,968.4
(906.5)
(743.2)
(185.5)
54.8
20
15,944.0
410.2
1,708.9
(929.6)
(578.5)
(113.6)
158.4
30
16,258.5
426.2
1,633.0
(932.4)
(556.7)
(42.4)
254.3
40
16,652.1
449.1
1,538.2
(930.6)
(568.6)
27.6
347.0
50
16,829.9
461.5
1,448.0
(927.2)
(580.2)
95.2
436.0
75
17,345.9
487.8
1,233.4
(921.2)
(565.5)
251.4
642.2
100
17,696.9
513.6
1,089.7
(910.3)
(556.4)
394.7
829.7
125
17,865.4
524.9
991.1
(903.4)
(527.4)
527.6
1,004.6
150
17,912.2
539.1
919.5
(887.3)
(533.4)
656.5
1,171.1
200
18,002.1
560.4
815.1
(859.0)
(528.0)
900.8
1,487.3
250
18,050.6
574.2
750.4
(833.7)
(495.6)
1,132.1
1,787.3
M.K. Jaccard and Associates
95
Cost Curves Analysis
Final Analysis Report
The significant actions in Alberta Petroleum Refining
Shadow Price
Action
$10
Switch from sulphuric acid alkylation towers to
hydrofluoric acid alkylation towers (direct). (kt)
$50
$75
$150
11.8
32.8
41.4
52.5
3%
7%
8%
10%
(110)
(116)
(114)
(103)
(26)%
(25)%
(23)%
(19)%
28.8
55.7
70.4
101.3
7%
12%
14%
19%
(38)
(40)
(43)
50)
% of direct reductions
(9)%
(9)%
(9)%
(9)%
General efficiency improvements to light and medium oil
extraction (kt)
438.6
442.2
443.6
446.3
% of direct reductions
106%
96%
91%
83%
General efficiency improvements to heavy oil extraction
(kt)
53.9
54.4
54.5
55.0
% of direct reductions
13%
12%
11%
10%
% of direct reductions
Switch to still gas cogeneration. (kt)
% of direct reductions
Switch to high efficiency NG direct heaters. (kt)
% of direct reductions
Switch to cogeneration (kt)
3.10.4. Saskatchewan Petroleum Refining
Figure 3.52: Cost curve for Saskatchewan Petroleum Refining
Shadow Price ($/tonne CO2e)
Saskatchewan Petroleum Refining
250
200
150
100
50
0
-
2
4
6
8
10
GHG Reductions (kt)
M.K. Jaccard and Associates
96
12
14
16
Cost Curves Analysis
Final Analysis Report
Table 3.52: Energy, Emissions and costs associated with emissions reductions in Saskatchewan
Petroleum Refining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
(2,624.2)
10.8
98.1
(28.0)
54.4
(5.3)
2.2
20
(2,691.7)
14.2
77.0
(39.1)
195.1
(5.0)
6.3
30
(2,643.9)
14.0
71.4
(40.2)
205.0
(2.6)
9.9
40
(2,588.1)
13.4
67.0
(40.2)
187.8
(0.1)
13.2
50
(2,528.9)
13.4
61.4
(40.2)
174.5
2.2
16.4
75
(2,452.2)
12.4
50.5
(32.4)
178.4
9.3
23.3
100
(2,375.3)
12.0
45.7
(31.5)
159.7
14.1
29.3
125
(2,321.9)
11.7
41.8
(30.9)
162.6
18.4
34.8
150
(2,270.7)
12.0
38.2
(29.6)
142.4
22.6
40.0
200
(2,215.2)
11.6
33.8
(27.5)
117.3
30.2
49.5
250
(2,165.1)
12.5
31.3
(25.7)
109.1
37.3
58.3
The significant actions in Saskatchewan Petroleum Refining
Shadow Price
Action
$10
$50
$75
$150
Switch from sulphuric acid alkylation towers to
hydrofluoric acid alkylation towers.
0.1
0.5
0.7
1.5
% of direct reductions
1%
3%
6%
12%
Switch to still gas cogeneration
1.3
1.1
(0.2)
(1.1)
% of direct reductions
12%
9%
(2)%
(9)%
Switch to NG and LPG direct heating
(32)
(29)
(28)
(26)
(293)%
(220)%
(227)%
(216)%
13.2
14.3
13.9
12.8
122%
107%
112%
107%
27.0
25.9
25.1
23.4
250%
193%
203%
196%
% of direct reductions
Switch to steam cogeneration
% of direct reductions
General efficiency improvement to heavy oil
extraction
% of direct reductions
M.K. Jaccard and Associates
97
Cost Curves Analysis
Final Analysis Report
3.10.5. Ontario Petroleum Refining
Figure 3.53: Cost curve for Ontario Petroleum Refining
Ontario Petroleum Refining
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
(200)
-
200
400
600
800
GHG Reductions (kt)
Table 3.53: Energy, Emissions and costs associated with emissions reductions in Ontario
Petroleum Refining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,872.6
(105.2)
43.2
(55.3)
(50.9)
(15.0)
(1.6)
20
3,983.8
(54.5)
39.3
(49.9)
(45.6)
(15.5)
(4.0)
30
3,227.5
(9.4)
34.4
(45.0)
(40.0)
(14.8)
(4.7)
40
2,759.7
22.9
28.0
(42.4)
(32.5)
(13.7)
(4.2)
50
2,489.3
47.3
24.0
(40.4)
(26.8)
(12.2)
(2.8)
75
2,199.8
90.4
17.8
(33.2)
(18.8)
(5.9)
3.2
100
2,147.2
123.9
9.3
(24.3)
(11.4)
3.1
12.2
125
2,183.2
158.8
(4.1)
(10.5)
1.3
14.9
23.4
150
2,269.0
210.1
(30.2)
16.2
23.7
31.7
36.8
200
2,672.3
397.8
(130.9)
121.6
109.3
86.3
74.6
250
3,150.1
627.3
(238.9)
253.5
209.8
162.7
132.5
M.K. Jaccard and Associates
98
Cost Curves Analysis
Final Analysis Report
The significant actions in Ontario Refining
Shadow Price
Action
$10
Switch from sulphuric acid alkylation towers to
hydrofluoric acid alkylation towers (steam reduction). (kt)
$50
$75
$150
5.1
19.4
27.6
45.2
(5)%
41%
30%
22%
2.7
10.6
16.3
30.3
% of direct reductions
(3)%
22%
18%
14%
Switch out of fuel oil heaters into LPG, NG and electric
heaters. (kt)
35.0
78.6
93.1
168.1
(33)%
166%
103%
80%
Switch away from boilers to cogeneration. There is an
internal boiler switch away from NG, electricity and fuel oil
to LPG. Cogenerators mostly switch to LPG as well. (kt)
(140)
(60)
(48)
(43)
% of direct reductions
133%
(127)%
(53)%
(20)%
% of direct reductions
Switch into (10-50) and then away from (50+) catalytic
crackers with steam generation and new catalysts. (kt)
% of direct reductions
3.10.6. Québec Petroleum Refining
Figure 3.54: Cost curve for Québec Petroleum Refining
Shadow Price ($/tonne CO2e)
Quebec Petroleum Refining
250
200
150
100
50
0
-
100
200
300
400
500
GHG Reductions (kt)
M.K. Jaccard and Associates
99
600
700
800
Cost Curves Analysis
Final Analysis Report
Table 3.54: Energy, Emissions and costs associated with emissions reductions in Québec
Petroleum Refining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,594.1
197.3
(1.7)
(40.3)
(39.9)
(7.2)
3.8
20
5,743.9
328.9
(3.3)
(37.6)
(37.5)
1.1
14.0
30
6,436.2
424.1
(4.6)
(35.8)
(36.1)
12.5
28.5
40
6,829.6
489.8
(5.6)
(34.4)
(35.3)
26.1
46.3
50
7,012.0
534.7
(6.2)
(32.5)
(33.9)
41.5
66.2
75
7,169.7
597.0
(7.0)
(28.9)
(31.7)
83.8
121.3
100
7,103.6
624.5
(7.2)
(24.2)
(28.4)
129.6
180.9
125
6,987.8
640.8
(7.2)
(19.5)
(24.9)
177.1
242.6
150
6,899.5
651.9
(7.2)
(15.8)
(22.4)
225.4
305.8
200
6,797.0
662.6
(7.1)
(10.9)
(19.7)
322.9
434.1
250
6,773.6
668.6
(7.1)
(8.2)
(19.1)
421.1
564.2
The significant actions in Québec Refining
Shadow Price
Action
$10
$50
$75
$150
Switch from sulphuric acid alkylation towers to hydrofluoric
acid alkylation towers (steam reduction). (kt)
20.7
40.6
48.4
59.0
% of direct reductions
10%
8%
8%
9%
173.2
476.7
523.4
548.3
88%
89%
88%
84%
Switch out of fuel oil heaters into electric heaters (direct
reduction). (kt)
% of direct reductions
M.K. Jaccard and Associates
100
Cost Curves Analysis
Final Analysis Report
3.10.7. Atlantic Petroleum Refining
Figure 3.55: Cost curve for Petroleum Refining in the Atlantic Provinces
Shadow Price ($/tonne CO2e)
Atlantic Petroleum Refining
250
200
150
100
50
0
-
50
100
150
200
250
GHG Reductions (kt)
Table 3.55: Energy, Emissions and costs associated with emissions reductions in Petroleum
Refining in the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
503.1
15.9
8.8
(9.2)
(1.5)
(2.0)
0.4
20
353.0
33.3
8.4
(7.4)
1.9
(0.7)
1.5
30
238.8
48.9
6.3
(7.0)
15.6
0.7
3.2
40
161.3
62.2
5.0
(6.5)
24.2
2.4
5.4
50
107.7
73.0
3.8
(6.1)
33.5
4.4
7.9
75
53.6
92.3
2.8
(4.0)
39.0
10.6
15.5
100
30.4
103.9
2.3
(2.0)
36.6
17.9
24.5
125
32.4
112.5
1.9
0.0
37.9
25.8
34.3
150
46.8
121.3
1.0
3.2
36.5
34.5
44.9
200
96.7
148.7
(3.6)
17.3
45.2
55.9
68.8
250
205.4
200.2
(13.2)
45.8
70.3
85.0
98.0
M.K. Jaccard and Associates
101
Cost Curves Analysis
Final Analysis Report
The significant actions in Atlantic Provinces Refining
Shadow Price
Action
$10
$50
$75
$150
Switch from sulphuric acid alkylation towers to
hydrofluoric acid alkylation towers (steam reduction).
(kt)
0.6
4.4
6.5
11.0
% of direct reductions
4%
6%
7%
9%
40.3
39.8
39.6
39.2
% of direct reductions
253%
54%
43%
32%
Switch from LPG oil and elec direct heat production to
NG (direct reduction). (kt)
(17.0)
20.4
32.8
52.5
(107)%
28%
36%
43%
(28.0)
(13.4)
(9.5)
(6.1)
(176)%
(18)%
(10)%
(5)%
19.2
20.4
20.9
22.3
120%
28%
23%
18%
Switch to efficient catalytic crackers with steam
generation and new catalysts (direct reduction). (kt)
% of direct reductions
Switch to cogenerators from boilers at all levels.
Boilers initially switch out of NG into fuel oil and then
back into NG. (kt)
% of direct reductions
Switch away from still gas heaters and boilers to
cogenerators, accompanied by switch from fuel oil to
LPG and NG. (kt0
% of direct reductions
3.11.
Natural Gas Extraction and Transmission
3.11.1. General Commentary on Natural Gas Extraction and Transmission
Natural gas is extracted, processed (to remove CO2 and strip out natural gas liquids,
sulphur and other components) and transported via pipeline to the consumer. At each
stage in the process, emissions are released and actions can be taken to reduce these
emissions. Leak detection and repair programs are not only relatively inexpensive but
reduce significant quantities of both CO2 and CH4 emissions. Other reductions from
processing natural gas are more costly. These include the replacement of oversized
compressors for improved efficiency, recovering flare gas using electric drive
compression, and alterations to the sweetening process for sour gas.
M.K. Jaccard and Associates
102
Cost Curves Analysis
Final Analysis Report
Figure 3.56: Cost curve for Natural Gas Extraction and Transmission for all Canada
Shadow Price ($/tonne CO2e)
Canada Natural Gas Extraction & Transmission
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000
12,000
GHG Reductions (kt)
Table 3.56: Energy, Emissions and costs associated with emissions reductions in Canada
Natural Gas Extraction and Transmission, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
217.6
7.67
(0.001)
(2,249.3)
(424.6)
183.7
20
230.1
7.96
(0.001)
(2,435.2)
(190.6)
557.6
30
242.9
8.25
(0.001)
(2,525.3)
77.1
944.6
40
255.2
8.53
(0.001)
(2,593.7)
359.7
1,344.2
50
266.8
8.78
(0.001)
(2,655.6)
652.8
1,755.6
75
291.8
9.33
(0.001)
(2,658.2)
1,457.3
2,829.1
100
312.8
9.78
(0.001)
(2,756.9)
2,279.5
3,958.4
125
329.6
10.13
(0.001)
(2,834.7)
3,141.1
5,133.0
150
343.9
10.44
(0.001)
(2,899.2)
4,034.1
6,345.2
200
364.9
10.90
(0.001)
(2,995.7)
5,893.2
8,856.2
250
379.0
11.21
(0.001)
(3,062.4)
7,824.7
11,453.8
M.K. Jaccard and Associates
103
Cost Curves Analysis
Final Analysis Report
3.11.2. British Columbia Natural Gas Production and Transmission
Figure 3.57: Cost curve for Natural Gas Extraction and Transmission
Shadow Price ($/tonne CO2e)
British Columbia Natural Gas Extraction & Transmission
250
200
150
100
50
0
-
200
400
600
800
1,000
GHG Reductions (kt)
Table 3.57: Energy, Emissions and costs associated with emissions reductions in BC Natural
Gas Extraction and Transmission, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
26,045.3
454.1
(0.6)
(89.2)
(36.7)
(15.6)
8.9
20
28,747.2
483.6
(0.5)
(97.3)
(45.1)
(3.9)
27.2
30
31,463.6
512.1
(0.5)
(105.3)
(53.2)
8.7
46.7
40
34,159.8
539.5
(0.5)
(113.1)
(60.9)
22.2
67.3
50
36,804.0
565.7
(0.6)
(120.8)
(68.3)
36.5
88.9
75
43,019.1
625.2
(0.5)
(138.6)
(98.0)
75.8
147.2
100
48,473.1
675.8
(0.5)
(154.1)
(102.2)
119.6
210.9
125
53,082.2
717.8
(0.5)
(167.2)
(117.3)
167.5
279.1
150
56,890.4
752.2
(0.5)
(178.0)
(131.1)
218.8
351.1
200
62,533.1
803.0
(0.6)
(194.0)
(154.8)
329.1
503.5
250
66,284.7
837.0
(0.6)
(204.6)
(176.3)
447.0
664.2
M.K. Jaccard and Associates
104
Cost Curves Analysis
Final Analysis Report
The significant actions in BC Natural Gas Production and Transmission
Shadow Price
Action
$75
$150
284.6
360.8
536.1
35%
50%
58%
71%
217.8
191.5
168.4
105.7
% of direct reductions
48%
34%
27%
14%
Large Plant Sour production actions* (kt)
22.0
28.7
32.1
39.1
5%
5%
5%
5%
16.6
17.1
17.4
17.9
3%
3%
3%
2%
Transmission – Replace turbines with electric drivers (kt)
% of direct reductions
Transmission - Leak detection and repair programs. (kt)
% of direct reductions
Large Plant Sweet production actions** (kt)
% of direct reductions
$10
$50
159.5
*primarily conversion to MDEA sweetening from DEA sweetening.
**primarily leak detection and repair for gas batteries, replacement of oversized compressors, replacement
of gas-operated devices with electric or pneumatic versions and flare gas recovery using electric drive
compressors.
3.11.3. Alberta Natural Gas Production and Transmission
Figure 3.58: Cost curve for Alberta Natural Gas Extraction and Transmission
Shadow Price ($/tonne CO2e)
Alberta Natural Gas Extraction & Transmission
250
200
150
100
50
0
-
1,000
2,000
3,000
GHG Reductions (kt)
M.K. Jaccard and Associates
105
4,000
5,000
Cost Curves Analysis
Final Analysis Report
Table 3.58: Energy, Emissions and costs associated with emissions reductions in Alberta
Natural Gas Extraction and Transmission, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
34,660.9
2,496.3
(0.6)
(777.6)
1,081.3
(147.6)
62.4
20
36,373.0
2,585.0
(0.5)
(876.2)
3,002.6
(77.1)
189.3
30
38,148.6
2,679.6
(0.5)
(903.7)
3,068.4
14.5
320.6
40
39,996.1
2,777.1
(0.5)
(915.0)
2,708.4
113.5
456.4
50
41,843.8
2,873.1
(0.5)
(924.8)
2,345.5
216.4
596.7
75
46,001.2
3,083.5
(0.5)
(847.5)
2,255.5
512.4
965.8
100
49,899.5
3,275.4
(0.5)
(860.6)
1,923.2
803.8
1,358.5
125
53,166.6
3,432.7
(0.5)
(871.6)
1,917.1
1,111.1
1,772.0
150
56,342.1
3,582.7
(0.5)
(881.8)
1,429.1
1,432.2
2,203.5
200
61,309.6
3,812.5
(0.5)
(900.1)
829.2
2,108.6
3,111.4
250
64,778.2
3,970.1
(0.5)
(914.9)
561.9
2,820.1
4,065.0
M.K. Jaccard and Associates
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Cost Curves Analysis
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The significant actions in Alberta Natural Gas Production and Transmission
Shadow Price
Action
$10
$50
$75
181.3
173.4
163.5
131.8
7%
6%
5%
4%
854.3
1,176.1
1,371.4
1,879.6
34%
41%
44%
52%
539.9
538.8
528.3
466.7
% of direct reductions
22%
19%
17%
13%
Transmission – Use of aftercoolers. (kt)
71.6
59.6
53.3
39.6
3%
2%
2%
1%
182.6
182.6
182.6
182.6
7%
6%
6%
5%
158.7
163.2
165.5
170.5
6%
5%
5%
4%
118.3
129.2
133.5
139.3
5%
4%
4%
4%
Transmission – Increased Looping (kt)
% of direct reductions
Transmission - Replace turbines with electric drivers (kt)
% of direct reductions
Transmission - Leak detection and repair programs (kt)
% of direct reductions
Transmission – Flow efficiency actions (kt)
% of direct reductions
Large Plant Sweet production actions** (kt)
% of direct reductions
Large Plant Sour production actions* (kt)
% of direct reductions
$150
*primarily conversion to MDEA sweetening from DEA sweetening.
**primarily leak detection and repair for gas batteries, replacement of oversized compressors, replacement
of gas-operated devices with electric or pneumatic versions and flare gas recovery using electric drive
compressors.
M.K. Jaccard and Associates
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Cost Curves Analysis
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3.11.4. Saskatchewan Natural Gas Production and Transmission
Figure 3.59: Cost curve for Saskatchewan Natural Gas Extraction and Transmission
Shadow Price ($/tonne CO2e)
Saskatchewan Natural Gas Extraction & Transmission
250
200
150
100
50
0
-
500
1,000
1,500
2,000
GHG Reductions (kt)
Table 3.59: Energy, Emissions and costs associated with emissions reductions in Saskatchewan
Natural Gas Extraction and Transmission, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
89,332.6
1,135.9
Nil
(482.2)
(63.4)
(103.4)
22.9
20
94,494.0
1,177.0
Nil
(533.0)
390.7
(81.2)
69.4
30
100,093.4
1,224.8
Nil
(562.1)
404.5
(52.2)
117.8
40
105,479.4
1,270.8
Nil
(587.8)
330.0
(20.8)
168.1
50
110,417.3
1,312.3
Nil
(611.2)
270.0
12.3
220.2
75
120,592.1
1,395.8
Nil
(631.6)
252.3
109.7
356.8
100
128,820.2
1,462.3
Nil
(669.1)
161.6
208.5
501.0
125
135,109.0
1,512.2
Nil
(697.7)
147.7
313.9
651.1
150
140,309.1
1,553.2
Nil
(721.5)
61.5
424.1
805.9
200
147,701.4
1,610.6
Nil
(755.2)
(52.5)
655.3
1,125.5
250
152,500.3
1,647.4
Nil
(777.2)
(104.3)
896.8
1,454.7
M.K. Jaccard and Associates
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Cost Curves Analysis
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The significant actions in Saskatchewan Natural Gas Production and Transmission
Shadow Price
Action
$10
Transmission – Replace turbines with electric drivers
(kt)
% of direct reductions
Transmission - Leak detection and repair programs (kt)
% of direct reductions
$50
$75
$150
751.6
1,011.6
1,139.4
1,391.7
66%
77%
82%
90%
356.2
275.4
233.6
144.5
31%
21%
17%
9%
3.11.5. Manitoba Natural Gas Production and Transmission
Figure 3.60: Cost curve for Manitoba Natural Gas Extraction and Transmission
Shadow Price ($/tonne CO2e)
Manitoba Natural Gas Extraction & Transmission
250
200
150
100
50
0
-
200
400
600
800
GHG Reductions (kt)
M.K. Jaccard and Associates
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1,000
1,200
1,400
Cost Curves Analysis
Final Analysis Report
Table 3.60: Energy, Emissions and costs associated with emissions reductions in Manitoba
Natural Gas Extraction and Transmission, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
17,745.5
943.9
Nil
(245.1)
(20.0)
(43.5)
23.7
20
18,409.7
973.9
Nil
(251.5)
(12.3)
(8.9)
71.9
30
18,999.9
1,000.2
Nil
(257.2)
(20.9)
26.7
121.4
40
19,524.2
1,023.2
Nil
(262.2)
(21.3)
63.4
172.0
50
19,990.4
1,043.5
Nil
(266.7)
(21.8)
101.0
223.5
75
20,947.5
1,084.6
Nil
(275.9)
(22.9)
198.0
355.9
100
21,677.5
1,115.3
Nil
(282.9)
(24.0)
298.6
492.4
125
22,245.5
1,138.9
Nil
(288.3)
(25.2)
401.9
632.0
150
22,696.4
1,157.5
Nil
(292.6)
(26.5)
507.3
774.0
200
23,359.5
1,184.4
Nil
(299.0)
(28.5)
722.6
1,063.1
250
23,818.6
1,202.8
Nil
(303.3)
(30.2)
942.2
1,357.4
The significant actions in Manitoba Natural Gas Production and Transmission
Shadow Price
Action
$10
$50
$75
$150
620.8
738.7
790.5
887.2
66%
71%
73%
77%
195.4
186.1
179.6
164.0
% of direct reductions
21%
18%
17%
14%
Transmission – Increased looping (kt)
63.1
57.8
55.0
49.1
7%
6%
5%
4%
42.8
42.8
42.8
42.8
5%
4%
4%
4%
Transmission - Replace turbines with electric drivers (kt)
% of direct reductions
Transmission - Leak detection and repair programs(kt)
% of direct reductions
Transmission – Flow efficiency actions (kt)
% of direct reductions
M.K. Jaccard and Associates
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Cost Curves Analysis
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3.11.6. Ontario Natural Gas Production and Transmission
Figure 3.61: Cost curve for Ontario Natural Gas Extraction and Transmission
Shadow Price ($/tonne CO2e)
Ontario Natural Gas Extraction & Transmission
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
GHG Reductions (kt)
Table 3.61: Energy, Emissions and costs associated with emissions reductions in Ontario
Natural Gas Extraction and Transmission, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
47,079.6
2,495.1
Nil
(601.7)
(25.0)
(104.1)
61.8
20
49,315.3
2,595.6
Nil
(622.9)
(26.3)
(14.9)
187.8
30
51,340.8
2,685.3
Nil
(642.2)
(26.1)
78.0
318.1
40
53,159.5
2,764.6
Nil
(660.0)
(19.8)
174.2
452.3
50
54,796.8
2,835.2
Nil
(676.0)
(14.7)
273.5
589.9
75
58,211.4
2,979.8
Nil
(707.6)
(13.7)
532.8
946.3
100
60,833.4
3,088.4
Nil
(732.3)
(16.1)
804.8
1,317.1
125
62,862.4
3,171.0
Nil
(751.4)
(17.1)
1,086.3
1,698.9
150
64,459.0
3,235.2
Nil
(766.3)
(19.7)
1,375.2
2,089.0
200
66,761.5
3,326.2
Nil
(787.8)
(22.3)
1,968.4
2,887.1
250
68,309.4
3,386.4
Nil
(802.3)
(22.7)
2,576.3
3,702.5
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Cost Curves Analysis
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The significant actions in Ontario Natural Gas Production and Transmission
Shadow Price
Action
Transmission - Replace turbines with electric
drivers (kt)
% of direct reductions
Transmission - Leak detection and repair programs
(kt)
% of direct reductions
Transmission – Flow efficiency actions (kt)
% of direct reductions
Transmission – Increased looping (kt)
% of direct reductions
$10
$50
$75
$150
1,632.5
2,040.3
2,226.7
2,576.3
65%
72%
75%
80%
504.5
469.1
442.9
378.7
20%
17%
15%
12%
145.7
145.6
145.6
145.6
6%
5%
5%
5%
157.8
137.9
127.1
104.9
6%
5%
4%
3%
3.11.7. Québec Natural Gas Production and Transmission
Figure 3.62: Cost curve for Québec Natural Gas Extraction and Transmission
Shadow Price ($/tonne CO2e)
Quebec Natural Gas Extraction & Transmission
250
200
150
100
50
0
-
50
100
GHG Reductions (kt)
M.K. Jaccard and Associates
112
150
200
Cost Curves Analysis
Final Analysis Report
Table 3.62: Energy, Emissions and costs associated with emissions reductions in Québec
Natural Gas Extraction and Transmission, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
2,750.1
144.1
Nil
(53.5)
(14.0)
(10.4)
3.9
20
2,803.6
146.5
Nil
(54.2)
(14.1)
(4.7)
11.8
30
2,852.3
148.6
Nil
(54.8)
(14.7)
1.2
19.8
40
2,896.4
150.5
Nil
(55.3)
(15.3)
7.1
28.0
50
2,936.3
152.2
Nil
(55.8)
(14.5)
13.2
36.2
75
3,019.2
155.7
Nil
(56.9)
(15.5)
28.5
57.0
100
3,082.7
158.3
Nil
(57.7)
(16.3)
44.2
78.1
125
3,131.6
160.2
Nil
(58.3)
(16.9)
60.1
99.6
150
3,169.6
161.7
Nil
(58.7)
(15.0)
76.2
121.2
200
3,223.4
163.8
Nil
(59.4)
(15.6)
108.8
164.9
250
3,258.6
165.2
Nil
(59.8)
(16.1)
141.8
209.0
The significant actions in Québec Natural Gas Production and Transmission
Shadow Price
Action
$10
Transmission - Replace turbines with electric drivers (kt)
$50
$75
$150
106.6
116.5
121.1
129.5
% of direct reductions
74%
77%
78%
80%
Transmission - Leak detection and repair programs (kt)
25.6
25.0
24.0
22.3
% of direct reductions
18%
16%
15%
14%
Transmission – Increased looping (kt)
8.7
8.1
7.8
7.2
% of direct reductions
6%
5%
5%
4%
3.12.
Coal Mining
3.12.1. General commentary on Coal Mining
While a part of coal mining demand is export driven, a great proportion of demand in
Canada is to serve the electricity sector; the two are linked endogenously in CIMS. Thus
to a great extent, the cost curves for Coal Mining in Canada simply reflect the demand for
M.K. Jaccard and Associates
113
Cost Curves Analysis
Final Analysis Report
coal from electricity supply sectors. The vertical part of the curve, where reduction stops,
represents the large scale advent of sequestration in Alberta and Saskatchewan between
50$ and $75, which actually causes a slight increase in emissions. Sequestration activity,
in essence, breathes new life into the coal industry. At higher shadow prices, the
increased sequestration activity increases the emissions of CO2 and CH4 that generates
the rather odd shift to the left in the curve. The lower part of the scale below $50
represents emission reductions from coal bed methane reduction actions (especially
methane capture from beds in the Atlantic provinces), fuel switching and energy
efficiency.
Please note that the coal bed methane reductions are as specified in the AMG Roll Up.
They penetrate at $10. It can be surmised that they should be related to overall activity,
but information relating these reductions to general activity was not available.
Figure 3.63: Cost curve for Coal Mining for all Canada
Shadow Price ($/tonne CO2e)
Canada Coal
250
200
150
100
50
0
-
500
1,000
1,500
2,000
GHG Reductions (kt)
M.K. Jaccard and Associates
114
2,500
3,000
3,500
Cost Curves Analysis
Final Analysis Report
Table 3.63: Energy, Emissions and costs associated with emissions reductions in Coal Mining
for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
(5.6)
2.11
0.10
(1,699.9)
(406.9)
24.1
20
(6.5)
2.25
0.10
(1,886.9)
(414.2)
76.7
30
(6.2)
2.68
0.08
(1,935.0)
(376.7)
142.7
40
(5.9)
2.93
0.07
(1,901.7)
(307.5)
223.9
50
(5.5)
3.12
0.06
(1,861.0)
(227.4)
317.1
75
(4.5)
3.12
0.04
(1,714.7)
(2.4)
568.4
100
(4.0)
3.09
0.03
(1,572.4)
221.9
820.0
125
(3.5)
3.07
0.03
(1,461.9)
434.2
1,066.2
150
(3.3)
3.05
0.02
(1,393.1)
633.0
1,308.4
200
(2.9)
3.03
0.02
(1,283.4)
1,018.4
1,785.6
250
(2.6)
3.01
0.01
(1,212.7)
1,388.2
2,255.1
3.12.2. British Columbia Coal Mining
Figure 3.64: Cost curve for BC Coal Mining
Shadow Price ($/tonne CO2e)
British Columbia Coal
250
200
150
100
50
0
-
10
20
30
40
GHG Reductions (kt)
M.K. Jaccard and Associates
115
50
60
Cost Curves Analysis
Final Analysis Report
Table 3.64: Energy, Emissions and costs associated with emissions reductions in BC Coal
Mining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
39.8
7.4
0.4
0.1
2.4
0.1
0.1
20
52.5
12.1
0.4
(0.7)
(0.0)
0.1
0.4
30
62.5
16.1
0.4
(1.5)
(1.7)
0.3
0.9
40
71.5
19.7
0.4
(2.0)
(2.9)
0.6
1.5
50
80.1
22.9
0.4
(2.2)
(4.0)
1.2
2.3
75
102.0
29.7
0.4
(2.5)
(6.2)
2.9
4.6
100
124.7
35.4
0.4
(2.5)
(8.1)
5.1
7.6
125
147.8
40.1
0.4
(2.4)
(9.8)
7.7
11.1
150
170.6
44.2
0.4
(2.2)
(11.4)
10.7
15.0
200
213.6
50.8
0.3
(1.9)
(13.9)
17.4
23.8
250
251.0
55.8
0.3
(1.5)
(16.3)
24.9
33.8
The significant actions in BC Coal Mining
Shadow Price
Action
$10
Cleaning: switch from coal to NG-fired spray cleaning (kt)
% of direct reductions
Transportation: switch from diesel to electric (kt)
% of direct reductions
$50
$75
$150
3.9
15.6
20.4
29.0
35%
60%
62%
62%
7.2
10.4
12.4
18.1
65%
40%
38%
38%
All of the coal mined in BC is exported. Thus no demand reduction is seen in this
province.
M.K. Jaccard and Associates
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Cost Curves Analysis
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3.12.3. Alberta Coal Mining
Figure 3.65: Cost curve for Alberta Coal Mining
Shadow Price ($/tonne CO2e)
Alberta Coal
250
200
150
100
50
0
-
100
200
300
400
500
600
700
800
GHG Reductions (kt)
Table 3.65: Energy, Emissions and costs associated with emissions reductions in Alberta Coal
Mining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4,275.9
626.5
68.5
(1,249.5)
(1,229.9)
(302.4)
13.3
20
4,948.9
696.5
68.6
(1,358.6)
(1,322.4)
(307.4)
42.9
30
4,917.2
693.2
65.0
(1,362.1)
(1,325.5)
(283.9)
75.5
40
4,654.5
665.9
57.8
(1,329.4)
(1,293.9)
(252.1)
106.9
50
4,374.0
636.7
51.1
(1,294.5)
(1,260.6)
(221.4)
136.3
75
3,514.5
547.3
33.9
(1,181.9)
(1,142.9)
(146.2)
199.0
100
2,985.0
491.6
25.8
(1,053.7)
(1,016.2)
(76.4)
249.3
125
2,575.9
448.8
20.2
(956.6)
(916.9)
(20.2)
292.0
150
2,340.4
424.7
16.9
(902.6)
(871.4)
21.7
329.7
200
1,950.2
385.3
11.8
(811.8)
(792.6)
94.5
396.6
250
1,692.6
359.8
8.4
(750.0)
(737.5)
153.2
454.3
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Cost Curves Analysis
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The significant actions in Alberta Coal Mining
Shadow Price
Action
$10
$50
$75
$150
Coal Bed Methane (kt)
165.6
165.6
165.6
165.6
% of direct reductions
27%
26%
31%
40%
450.3
460.4
371.4
245.3
73%
74%
69%
60%
Demand Effects (kt)
% of direct reductions
3.12.4. Saskatchewan Coal Mining
Figure 3.66 Cost Curve for Saskatchewan Coal Mining
Shadow Price ($/tonne CO2e)
Saskatchewan Coal
250
200
150
100
50
0
-
10
20
30
40
50
GHG Reductions (kt)
M.K. Jaccard and Associates
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60
70
80
Cost Curves Analysis
Final Analysis Report
Table 3.66: Energy, Emissions and costs associated with emissions reductions in Saskatchewan
Coal Mining, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
949.9
57.6
21.5
(399.6)
(398.0)
(98.5)
1.8
20
1,107.2
67.1
17.7
(469.3)
(468.8)
(113.0)
5.8
30
1,021.7
61.9
15.6
(448.4)
(446.7)
(104.5)
10.1
40
961.9
58.3
14.2
(432.7)
(430.3)
(97.7)
14.0
50
880.7
53.4
12.5
(411.4)
(408.1)
(89.7)
17.6
75
716.2
43.5
9.3
(368.0)
(362.8)
(73.1)
25.1
100
657.1
40.0
8.3
(352.5)
(347.2)
(64.5)
31.4
125
604.4
36.8
7.4
(338.6)
(332.8)
(56.8)
37.1
150
567.6
34.7
6.7
(323.7)
(318.2)
(49.2)
42.3
200
529.9
32.6
6.1
(304.8)
(300.0)
(37.4)
51.7
250
513.3
31.7
5.8
(296.2)
(291.7)
(28.7)
60.4
The significant actions in Saskatchewan Coal Mining
Shadow Price
Action
$10
$50
$75
$150
Coal Bed Methane (kt)
4.0
4.0
4.0
4.0
% of direct reductions
7%
8%
9%
12%
Demand Effects (kt)
53.6
49.4
39.5
30.7
% of direct reductions
93%
92%
91%
88%
M.K. Jaccard and Associates
119
Cost Curves Analysis
Final Analysis Report
3.12.5. Atlantic Coal Mining
Figure 3.67: Cost curve for Coal Mining for the Atlantic Provinces
Shadow Price ($/tonne CO2e)
Atlantic Coal
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
3,000
GHG Reductions (kt)
Table 3.67: Energy, Emissions and costs associated with emissions reductions in Coal Mining
in the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(TJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
372.3
1,422.4
14.1
(50.9)
(51.3)
(6.1)
8.9
20
394.6
1,478.0
14.1
(58.3)
(58.6)
6.0
27.5
30
182.3
1,911.1
1.8
(123.0)
(123.2)
11.4
56.3
40
186.9
2,188.5
1.0
(137.7)
(137.8)
41.6
101.4
50
190.5
2,406.7
0.5
(152.8)
(152.8)
82.5
161.0
75
192.0
2,498.5
0.3
(162.3)
(162.2)
214.1
339.6
100
192.4
2,524.9
0.3
(163.8)
(163.7)
357.7
531.6
125
192.7
2,540.8
0.2
(164.4)
(164.2)
503.4
726.0
150
192.8
2,550.3
0.2
(164.7)
(164.6)
649.9
921.4
200
193.0
2,558.9
0.2
(164.9)
(164.9)
944.0
1,313.6
250
193.0
2,561.9
0.2
(165.0)
(165.0)
1,238.7
1,706.6
M.K. Jaccard and Associates
120
Cost Curves Analysis
Final Analysis Report
The significant actions in Atlantic Coal Mining
Shadow Price
Action
Coal Bed Methane (kt)
% of direct reductions
Demand Effects (kt)
% of direct reductions
$10
$50
$75
$150
1,078.1
1,078.1
1,078.1
1,078.1
82%
45%
43%
42%
241.0
1,332.3
1,427.4
1,481.1
18%
55%
57%
58%
4. Commercial
4.1. General Commentary on the Commercial Sector
The commercial buildings sector is dominated by the landfill gas and building shell
efficiency actions from the Buildings and Municipality Tables. Fuel switching is also
significant but only in some regions. Landfill gas is flared or used for generating
electricity and penetrates at the $10 shadow price, while the shell efficiency actions,
which reduce the need for HVAC, penetrate mostly by $10 and increase penetration
gradually thereafter. Both these actions decrease the load on the electricity sector, which
mitigates the need for new investment in the electricity sector. This has significant
effects for the use of electricity in all of CIMS13.
The response of the commercial sector to increasing shadow prices was fundamentally
different for the hydro and non-hydro provinces. In the hydro provinces, there is a
consistent pattern of fuel switching from fossil fuels to electricity as the shadow prices
rise. This is mainly switching from NG to electric HVAC. In the non-hydro provinces
this pattern also occurs, but less quickly and less directly. Please see the individual
region discussions for details.14
The reader may also note the TEC (with the electricity price increase) cost pattern for
national Commercial, which starts as a huge benefit, becomes a moderate cost and then a
smaller benefit. This is mainly due to interaction between capital investment and the
effects of the burning of landfill gas to make electricity and the buildings table shell
efficiency actions. At the lowest shadow price levels the landfill gas actions register a
large benefit. As the shadow prices rise, the cost of investing in new equipment
dominates, but eventually, as the price of electricity rises, the benefit from the electricity
made from landfill gas and the saved electricity from efficiency again comes to dominate
over capital expenditures.
13
See Appendix A for additional information on the treatment of exogenous actions in the commercial
sector.
14
This may be an artifact of choices made regarding inter-regional transfer of electricity. Were transborder distribution of electricity permitted, this effect would likely have been less noticeable.
M.K. Jaccard and Associates
121
Cost Curves Analysis
Final Analysis Report
4.1.1. Canada Commercial
Figure 4.1: Cost Curve for Commercial Floorspace for all Canada
Canada Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
GHG Reductions (kt)
Table 4.1: Energy, emissions and costs associated with emissions reduction in Commercial
Floorspace for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechnoEconomic
Cost
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
99
7.3
3.1
(7,351.6)
(1,625.3)
283.5
20
100
7.4
2.9
(7,549.4)
(1,251.2)
848.1
30
101
7.6
2.7
(7,605.3)
(844.8)
1,408.7
40
102
7.7
2.4
(7,700.4)
(453.3)
1,962.4
50
103
7.8
2.2
(7,761.3)
(59.0)
2,508.4
75
107
8.2
1.9
(7,396.7)
1,055.6
3,873.1
100
112
8.7
1.7
(7,254.0)
2,129.4
5,257.1
125
116
9.2
1.5
(7,119.0)
3,220.6
6,667.1
150
121
9.7
1.3
(6,964.9)
4,337.7
8,105.2
200
129
10.7
1.0
(6,670.2)
6,633.0
11,067.5
250
137
11.5
0.7
(6,415.3)
8,997.1
14,134.5
M.K. Jaccard and Associates
122
Cost Curves Analysis
Final Analysis Report
4.1.2. BC Commercial
BC is fairly typical of a hydro powered region; the land fill gas and shell efficiency
actions have both fully penetrated by $20, while there is progressively more and more
fuel switching in HVAC from NG to electricity as the shadow prices rise. HVAC
efficiency also improves in a relatively linear fashion with increasing shadow prices.
Figure 4.2: Cost Curve for BC Commercial Floorspace
British Columba Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
GHG Reductions (kt)
M.K. Jaccard and Associates
123
1,500
2,000
Cost Curves Analysis
Final Analysis Report
Table 4.2: Energy, emissions and costs associated with emissions reduction in BC Commercial
Floorspace, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
12.5
1,114.3
168.1
(677.3)
(576.4)
(142.6)
35.6
20
12.7
1,142.2
159.5
(673.3)
(596.4)
(87.9)
107.2
30
13.0
1,171.3
150.7
(669.1)
(616.7)
(32.6)
179.6
40
13.3
1,201.7
142.1
(664.5)
(635.9)
23.4
252.8
50
13.6
1,233.3
133.5
(659.8)
(654.4)
80.1
326.8
75
14.4
1,316.0
113.3
(647.5)
(701.5)
225.0
515.9
100
15.2
1,403.0
94.3
(634.2)
(749.1)
374.9
711.2
125
16.1
1,491.2
76.4
(623.3)
(798.6)
529.1
913.2
150
16.9
1,577.3
60.3
(611.0)
(844.7)
688.7
1,121.9
200
18.4
1,735.7
32.5
(586.4)
(927.5)
1,022.4
1,558.6
250
19.6
1,866.0
12.1
(565.9)
(1,010.5)
1,372.4
2,018.6
The significant actions in BC Commercial
Action
Landfill Gas (kt)
Shadow Price
$10
$50
$75
$150
956.6
956.6
956.6
956.6
86%
78%
73%
61%
100.0
112.2
112.2
112.8
9%
9%
9%
7%
53.8
52.0
50.8
46.8
% of direct reductions
5%
4%
4%
3%
Fuel Switching (kt)
1.4
75.9
125.5
243.0
% of direct reductions
0.1%
6%
10%
15%
HVAC Efficiency (kt)
1.8
29.7
59.8
193.4
% of direct reductions
0.2%
2%
5%
12%
% of direct reductions
Shell Improvements (kt)
% of direct reductions
Buildings Table actions (kt)
M.K. Jaccard and Associates
124
Cost Curves Analysis
Final Analysis Report
4.1.3. Alberta Commercial
The landfill gas actions penetrate immediately and fully, providing at least half of the
reductions. Shell efficiency improvements also penetrate almost fully at $10, with
smaller increases thereafter. Although one might think that sequestration would
eventually make electricity a viable option in Alberta Commercial, fuel switching
contributes only marginally at all shadow price levels; most reductions after $10 come
from shell efficiency improvements.
Figure 4.3: Cost Curve for Alberta Commercial Floorspace
Alberta Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
GHG Reductions (kt)
M.K. Jaccard and Associates
125
800
1,000
Cost Curves Analysis
Final Analysis Report
Table 4.3: Energy, Emissions and costs associated with emissions reduction in Alberta
Commercial Floorspace, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
13.3
788.9
892.6
(961.4)
647.1
(207.1)
44.3
20
13.5
788.5
771.6
(1,099.7)
2,735.9
(177.3)
130.1
30
13.7
794.7
739.9
(1,129.6)
2,840.5
(123.0)
212.6
40
13.8
802.2
699.1
(1,140.6)
2,453.5
(65.0)
293.5
50
13.9
809.2
660.5
(1,148.5)
2,062.1
(7.5)
372.8
75
14.2
822.7
566.3
(1,058.1)
1,972.7
158.5
564.0
100
14.4
835.8
507.8
(1,065.0)
1,615.6
294.1
747.2
125
14.7
847.2
466.8
(1,069.0)
1,622.5
426.9
925.5
150
14.9
860.1
441.5
(1,077.2)
1,094.5
556.4
1,100.9
200
15.4
885.6
403.9
(1,096.6)
457.0
811.9
1,448.1
250
15.8
911.0
381.4
(1,120.3)
191.4
1,064.9
1,793.2
The significant actions in Alberta Commercial
Action
Landfill Gas (kt)
Shadow Price
$10
$50
$75
$150
485.9
485.9
485.9
485.9
62%
60%
59%
57%
228.5
266.7
282.3
310.0
% of direct reductions
29%
33%
34%
36%
Buildings Table actions (kt)
60.6
60.3
60.1
59.7
8%
7%
7%
7%
17.1
5.3
2.9
8.7
% of direct reductions
2%
0.6%
0.4%
1%
HVAC Efficiency (kt)
(-0.3)
(-0.1)
0.1
1.1
% of direct reductions
(0.04)%
(0.01)%
0.01%
0.13%
% of direct reductions
Shell Improvements (kt)
% of direct reductions
Fuel Switching (kt)
M.K. Jaccard and Associates
126
Cost Curves Analysis
Final Analysis Report
4.1.4. Saskatchewan Commercial
The story in Saskatchewan is almost the same as Alberta, except that at $10, fuel
switching from NG to electricity is temporarily effective due to the drop in demand for
electricity from all sectors, which lowers electricity’s relative price versus NG. Again,
the landfill gas actions penetrate immediately and fully, providing at least half of the
reductions. Shell efficiency improvements also penetrate almost fully at $10, with
smaller increases thereafter. Although one might think that sequestration would
eventually make electricity a viable option in Saskatchewan Commercial, fuel switching
(away from the BAU levels of electricity use) actually contributes negatively at all
shadow price levels, only becoming somewhat less negative with the advent of
sequestration after $75.
Figure 4.4: Cost Curve for Saskatchewan Commercial Floorspace
Saskatchewan Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
50
100
150
GHG Reductions (kt)
M.K. Jaccard and Associates
127
200
250
Cost Curves Analysis
Final Analysis Report
Table 4.4: Energy, Emissions and costs associated with emissions reduction in Saskatchewan
Commercial Floorspace, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
2.5
216.9
231.5
(387.3)
511.9
(87.8)
12.0
20
2.4
193.4
195.8
(483.9)
2,023.5
(95.0)
34.7
30
2.4
192.7
183.2
(495.0)
2,142.2
(82.0)
55.6
40
2.4
194.8
172.3
(497.6)
1,977.0
(67.3)
76.1
50
2.4
196.9
158.3
(499.3)
1,847.1
(52.8)
96.0
75
2.4
198.2
132.6
(408.4)
1,915.5
5.8
143.8
100
2.5
202.8
121.3
(405.7)
1,742.4
40.9
189.8
125
2.5
204.8
112.5
(403.9)
1,792.5
75.3
235.0
150
2.5
211.4
103.3
(400.6)
1,602.3
109.5
279.6
200
2.7
224.5
91.3
(394.0)
1,392.9
177.8
368.4
250
2.8
234.9
84.5
(388.3)
1,370.2
246.1
457.6
The significant actions in Saskatchewan Commercial
Action
Landfill Gas (kt)
Shadow Price
$10
$50
$75
$150
208.5
208.5
208.5
208.5
96%
106%
105%
99%
Shell Improvements (kt)
8.0
3.2
3.4
8.0
% of direct reductions
4%
2%
2%
4%
14.9
15.1
15.1
15.0
7%
8%
8%
7%
Fuel Switching (kt)
(9.4)
(17.9)
(17.2)
(10.9)
% of direct reductions
(4)%
(9)%
(9)%
(5)%
HVAC Efficiency (kt)
(0.2)
(0.6)
(0.3)
(0.3)
% of direct reductions
(0.1)%
(0.3)%
(0.2)%
(0.1)%
% of direct reductions
Buildings Table actions (kt)
% of direct reductions
M.K. Jaccard and Associates
128
Cost Curves Analysis
Final Analysis Report
4.1.5. Manitoba Commercial
Manitoba’s electricity production system is dominated by hydro; the commercial sector
has already used as much electricity as it can in the BAU. Almost all reductions in the
Manitoba commercial sector come from the landfill gas and shell efficiency actions.
Figure 4.5: Cost Curve for Manitoba Commercial Floorspace
Manitoba Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
GHG Reductions (kt)
M.K. Jaccard and Associates
129
400
500
Cost Curves Analysis
Final Analysis Report
Table 4.5: Energy, Emissions and costs associated with emissions reduction in Manitoba
Commercial Floorspace, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4.0
402.9
8.3
(199.7)
(195.0)
(41.1)
11.8
20
4.0
403.0
7.3
(199.1)
(196.4)
(23.2)
35.4
30
4.0
403.1
6.8
(198.7)
(197.7)
(5.5)
58.9
40
4.0
403.2
6.7
(198.6)
(199.1)
12.2
82.5
50
4.0
403.4
6.5
(198.2)
(200.4)
30.0
106.0
75
4.0
403.7
6.4
(197.8)
(204.6)
74.2
164.9
100
4.0
404.0
6.3
(197.0)
(209.1)
118.6
223.8
125
4.0
404.3
6.1
(196.6)
(214.2)
162.9
282.7
150
4.0
404.7
6.0
(196.1)
(219.7)
207.2
341.6
200
4.0
405.5
5.8
(194.7)
(227.3)
296.0
459.5
250
4.0
406.5
5.7
(193.4)
(232.5)
384.8
577.6
The significant actions in Manitoba Commercial
Action
Landfill Gas (kt)
Shadow Price
$10
$50
$75
$150
347.3
347.3
347.3
347.3
% of direct reductions
86%
86%
86%
86%
Shell Improvements (kt)
41.0
41.1
41.1
41.2
% of direct reductions
10%
10%
10%
10%
Buildings Table actions (kt)
14.0
14.0
14.0
14.0
4%
4%
4%
4%
0.00
0.02
0.04
0.16
% of direct reductions
0%
0%
0%
0%
HVAC Efficiency (kt)
0.00
0.01
0.02
0.09
% of direct reductions
0%
0%
0%
0%
% of direct reductions
Fuel Switching (kt)
M.K. Jaccard and Associates
130
Cost Curves Analysis
Final Analysis Report
4.1.6. Ontario Commercial
In Ontario, electricity is produced with a mix of resources that provide no hydro or
sequestration reduction options in electricity production. Landfill gas and shell efficiency
actions dominate up to $50. After $50, shell efficiency jumps a bit while the costly fuel
switching and HVAC efficiency actions steadily contribute reductions as shadow prices
get higher.
Figure 4.6: Cost Curve for Ontario Commercial Floorspace
Ontario Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
1,000
2,000
3,000
4,000
GHG Reductions (kt)
M.K. Jaccard and Associates
131
5,000
6,000
Cost Curves Analysis
Final Analysis Report
Table 4.6: Energy, Emissions and costs associated with emissions reduction in Ontario
Commercial Floorspace, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
41.1
3,547.1
1,581.6
(2,949.7)
(2,129.0)
(632.8)
139.5
20
41.7
3,609.8
1,535.2
(2,924.9)
(2,125.8)
(417.0)
418.9
30
42.2
3,662.2
1,451.2
(2,918.0)
(1,973.8)
(206.2)
697.7
40
42.2
3,665.9
1,244.5
(2,992.5)
(1,204.0)
(20.1)
970.7
50
42.4
3,687.1
1,125.7
(3,037.7)
(599.3)
167.9
1,236.4
75
43.9
3,850.7
1,021.6
(2,899.1)
(303.2)
698.3
1,897.4
100
45.9
4,071.0
907.5
(2,800.2)
(365.9)
1,224.4
2,566.0
125
48.0
4,290.9
796.7
(2,702.8)
(270.5)
1,757.7
3,244.5
150
50.3
4,551.4
670.4
(2,585.3)
(353.0)
2,304.4
3,934.2
200
55.0
5,068.4
422.9
(2,348.8)
(253.2)
3,425.5
5,350.3
250
59.4
5,558.7
210.3
(2,125.9)
60.5
4,579.8
6,815.0
The significant actions in Ontario Commercial
Action
Landfill Gas (kt)
Shadow Price
$10
$50
$75
$150
2,995.5
2,995.5
2,995.5
2,995.5
84%
81%
78%
66%
323.4
380.5
380.6
380.9
9%
10%
10%
8%
227.3
224.3
220.8
206.0
% of direct reductions
6%
6%
6%
5%
Fuel Switching (kt)
0.3
61.5
188.7
563.5
% of direct reductions
0.0%
2%
5%
12%
HVAC Efficiency (kt)
0.4
20.9
48.6
337.7
% of direct reductions
0.0%
0.6%
1%
7%
% of direct reductions
Shell Improvements (kt)
% of direct reductions
Buildings Table actions(kt)
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Cost Curves Analysis
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4.1.7. Québec Commercial
In Québec, commercial landfill gas immediately contributes its full 730 kt. Shell
efficiency immediately contributes 130 kt and then another 65 kt leading up to $50. Fuel
switching (NG to electricity HVAC) starts low and steadily climbs thereafter.
Figure 4.7: Cost Curve for Ontario Commercial Floorspace
Quebec Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
GHG Reductions (kt)
M.K. Jaccard and Associates
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1,500
2,000
Cost Curves Analysis
Final Analysis Report
Table 4.7: Energy, Emissions and costs associated with emissions reduction in Québec
Commercial Floorspace, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
20.2
929.5
22.9
(1,495.2)
(1,471.0)
(353.7)
26.8
20
20.8
992.6
21.7
(1,483.9)
(1,462.8)
(309.9)
81.5
30
21.3
1,053.9
20.5
(1,472.8)
(1,455.0)
(264.3)
138.6
40
21.8
1,113.2
19.4
(1,462.1)
(1,447.6)
(217.1)
197.9
50
22.4
1,170.1
18.3
(1,451.5)
(1,440.3)
(168.2)
259.5
75
23.5
1,300.5
15.9
(1,427.8)
(1,425.0)
(40.1)
422.5
100
24.5
1,412.5
13.9
(1,407.6)
(1,412.8)
95.8
597.0
125
25.4
1,506.5
12.2
(1,391.3)
(1,402.9)
238.2
781.4
150
26.0
1,584.2
10.9
(1,378.4)
(1,395.4)
385.9
974.0
200
27.0
1,699.9
9.0
(1,358.6)
(1,384.6)
693.7
1,377.8
250
27.7
1,777.4
7.8
(1,348.0)
(1,381.0)
1,013.1
1,800.2
The significant actions in Québec Commercial
Action
Landfill Gas (kt)
Shadow Price
$10
$50
$75
$150
730.5
730.5
730.5
730.5
79%
62%
56%
46%
130.1
193.8
193.8
193.8
% of direct reductions
14%
17%
15%
12%
Buildings Table actions (kt)
49.5
46.7
45.1
41.8
% of direct reductions
5%
4%
4%
3%
Fuel Switching (kt)
7.8
109.8
182.8
321.6
% of direct reductions
1%
9%
14%
20%
HVAC Efficiency (kt)
9.9
71.3
119.3
239.6
% of direct reductions
1%
6%
9%
15%
% of direct reductions
Shell Improvements (kt)
M.K. Jaccard and Associates
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Cost Curves Analysis
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4.1.8. Atlantic Commercial
The Atlantic commercial sector is typical in that landfill gas immediately contributes 237
kt, but it follows a less usual pattern thereafter. From $10 through $50, there is fuel
switching out of electricity into LFO due to the price of electricity. This situation then
reverses when the effect of the shadow price on carbon raises the price of directly burnt
LFO over the price of electricity.
Figure 4.8: Cost Curve for Atlantic Commercial Floorspace
Atlantic Commercial
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
400
500
GHG Reductions (kt)
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600
700
800
Cost Curves Analysis
Final Analysis Report
Table 4.8: Energy, Emissions and costs associated with emissions reduction in Commercial
Floorspace in the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
TechoEconomic
Costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
4.9
299.2
177.9
(681.0)
(464.7)
(160.1)
13.5
20
4.9
308.0
167.8
(684.6)
(401.3)
(140.9)
40.3
30
4.8
281.5
134.9
(721.9)
(111.4)
(131.2)
65.7
40
4.7
277.7
109.1
(744.5)
66.0
(119.4)
88.9
50
4.7
275.3
84.4
(766.4)
254.3
(108.5)
110.8
75
5.0
322.1
61.0
(758.2)
372.6
(66.1)
164.5
100
5.4
398.4
46.6
(744.2)
321.1
(19.5)
222.1
125
5.8
458.9
37.3
(732.1)
351.1
30.6
284.8
150
6.3
534.0
27.5
(716.3)
287.1
85.6
352.9
200
7.0
648.3
13.9
(691.0)
254.7
205.8
504.7
250
7.5
723.7
5.6
(673.5)
317.6
335.9
672.3
The significant actions in Atlantic Commercial
Action
Landfill Gas (kt)
Shadow Price
$10
$50
$75
$150
237.4
237.4
237.4
237.4
% of direct reductions
79%
86%
74%
45%
Shell Improvements (kt)
43.6
29.8
74.8
175.5
% of direct reductions
15%
11%
23%
33%
Buildings Table actions (kt)
31.8
31.7
30.7
26.7
% of direct reductions
11%
12%
10%
5%
Fuel Switching (kt)
(3.6)
(10.6)
(11.5)
87.5
% of direct reductions
(1)%
(4)%
(4)%
16%
HVAC Efficiency (kt)
0
0
0
(0.7)
% of direct reductions
0.0%
0.0%
0.0%
(0.1)%
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Cost Curves Analysis
Final Analysis Report
5. Residential
5.1. General Commentary on the Residential Sector
Like the Commercial sector, the Residential sector seems to have a large potential for
reductions at low shadow prices from shell improvements and HVAC efficiency. Other
actions that contribute significantly are fuel switching in space heating and water heating,
hot water efficiency, and the Multi-Residential Retrofit Program. All regions also
benefited from the combined impact of several of the Buildings Table’s commercial
actions that impact the energy efficiency of residential apartments. These actions include
increased energy efficiency through equipment labelling, education, demonstration
projects, and tax incentives. Significantly, these actions decrease the load on the
electricity sector, which mitigates the need for new investment in that sector. This has
significant effects for the use of electricity in all of CIMS, particularly in the provinces
with coal-generated electricity.
The response of the residential sector, like the commercial sector, to increasing shadow
prices was fundamentally different for the hydro versus non-hydro provinces. In the
hydro provinces fuel switching from NG to electricity and energy efficiency actions
dominate, and the actions that occur, occur to a greater degree as the shadow prices get
higher, giving monotonic cost curves. In the non-hydro provinces fuel switching also
occurs, but at slower rate and less directly.
Please see the discussions for the individual regions.
5.1.1. Canada Residential
Figure 5.1: Cost Curve for the Residential Sector for all Canada
Canada Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
GHG Reductions (kt)
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10,000
12,000
Cost Curves Analysis
Final Analysis Report
Table 5.1: Energy, Emissions and costs associated with emissions reduction in the Residential
Sector for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
93
3.6
2.2
(2,463.6)
(515.8)
133.5
20
101
4.1
2.2
(2,442.2)
(302.0)
411.3
30
106
4.4
2.1
(2,467.9)
(89.6)
703.2
40
107
4.6
1.9
(2,650.2)
85.7
997.7
50
109
4.8
1.8
(2,752.3)
280.8
1,291.9
75
117
5.6
1.4
(2,254.3)
976.4
2,053.3
100
123
6.5
1.1
(1,944.9)
1,665.0
2,868.4
125
129
7.2
1.0
(1,674.6)
2,384.0
3,736.8
150
134
8.0
0.7
(1,289.0)
3,169.6
4,655.8
200
146
9.5
0.2
(493.2)
4,859.9
6,644.3
250
160
10.9
(0.1)
295.6
6,700.7
8,835.8
5.1.2. BC Residential
The biggest stories in the BC residential sector are shell improvements and high
efficiency furnaces, which reach almost their full potential at $10 (72% at $10). Fuel
switching starts small, gradually increasing as shadow prices rise to 15% of reductions at
$150. Hot water efficiency and fuel switching contributes another 16% at $150.
M.K. Jaccard and Associates
138
Cost Curves Analysis
Final Analysis Report
Figure 5.2: Cost Curve for BC Residential
British Columbia Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
800
1,000
GHG Reductions (kt)
Table 5.2: Energy, Emissions and costs associated with emissions reduction in BC Residential,
2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
(’95
$million)
10
11.4
517.8
76.6
(99.7)
46.2
(14.6)
13.7
20
12.0
600.7
59.1
(67.1)
68.5
15.0
42.3
30
12.5
669.2
45.2
(40.2)
83.8
44.7
73.0
40
12.6
693.9
40.4
(29.3)
83.8
71.5
105.1
50
12.7
704.6
38.5
(27.3)
75.1
96.5
137.8
75
12.8
730.3
34.2
(19.9)
55.0
160.4
220.5
100
12.9
754.5
30.7
(12.9)
33.4
225.3
304.7
125
13.1
779.0
27.4
(5.2)
13.8
291.5
390.4
150
13.3
805.4
24.2
4.8
(1.6)
359.5
477.7
200
14.0
867.8
17.3
33.5
(16.9)
501.9
658.0
250
15.0
940.0
11.9
70.5
(20.7)
653.2
847.4
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Cost Curves Analysis
Final Analysis Report
The significant actions in BC Residential
Shadow Price
Action
$10
High efficiency furnaces & Shell improvements (kt)
$50
$75
$150
373.4
384.4
389.9
404.4
% of direct reductions
72%
55%
53%
50%
Fuel switching in space heating (kt)
22.3
56.0
72.9
118.0
4%
8%
10%
15%
Hot water efficiency (kt)
(8.2)
44.2
48.8
65.4
% of direct reductions
(2)%
6%
7%
8%
Fuel switching in water heating (kt)
(50.6)
51.7
54.1
61.5
% of direct reductions
(10)%
7%
7%
8%
Multi-residential retrofit actions (kt)
180.7
168.3
164.6
156.1
35%
24%
23%
19%
% of direct reductions
% of direct reductions
5.1.3. Alberta Residential
The Alberta residential sector is dominated by shell improvements, and moves to high
efficiency furnaces and water heaters. It is also interesting in that fuel switching in space
heating and water heating, due to the high price of electricity, contributes negatively to
reductions though a general switch to NG from electricity.
Figure 5.3: Cost Curve for Alberta Residential
Alberta Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
GHG Reductions (kt)
M.K. Jaccard and Associates
140
800
1,000
Cost Curves Analysis
Final Analysis Report
Table 5.3: Energy, Emissions and costs associated with emissions reduction in Alberta
Residential, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
(’95
$million)
10
16.6
508.6
779.1
(204.6)
1,006.7
(32.2)
25.2
20
18.7
483.5
936.3
(294.1)
2,327.5
(14.6)
78.6
30
19.4
498.5
935.4
(308.6)
2,428.4
24.1
135.1
40
19.6
515.4
874.6
(311.4)
2,254.7
65.4
191.0
50
19.8
532.3
813.6
(312.6)
2,073.2
105.7
245.2
75
20.8
566.2
722.5
(250.3)
2,100.0
219.0
375.5
100
21.5
600.1
646.6
(243.7)
1,973.7
314.7
500.9
125
22.3
627.4
609.2
(238.5)
2,044.2
408.4
624.0
150
22.7
663.4
561.3
(223.5)
1,834.2
503.8
746.2
200
23.8
739.7
491.6
(187.4)
1,646.9
695.9
990.3
250
25.1
810.5
454.3
(152.7)
1,669.0
891.4
1,239.4
The significant actions in Alberta Residential
Shadow Price
Action
$10
$50
$75
$150
High efficiency furnaces & Shell improvements (kt)
576.0
605.3
618.9
635.3
% of direct reductions
113%
114%
109%
96%
(123.1)
(141.3)
(137.9)
(122.0)
(24)%
(27)%
(24)%
(18)%
Hot water efficiency (kt)
94.9
116.1
132.8
190.0
% of direct reductions
19%
22%
23%
29%
Fuel switching in water heating (kt)
(90.3)
(98.3)
(97.5)
(88.6)
% of direct reductions
(18)%
(19)%
(17)%
(13)%
Multi-residential retrofit actions (kt)
51.1
50.5
50.0
48.8
% of direct reductions
10%
10%
9%
7%
Fuel switching in space heating (kt)
% of direct reductions
M.K. Jaccard and Associates
141
Cost Curves Analysis
Final Analysis Report
5.1.4. Saskatchewan Residential
The Saskatchewan residential sector, like Alberta, is dominated by shell improvements,
moves to high efficiency furnaces and water heaters and, most importantly, fuel
switching in space heating and water heating from electricity to NG. The two effects are
roughly balanced, producing net increases at lower shadow prices and net reductions at
higher prices
Figure 5.4: Cost Curve for Saskatchewan Residential
Saskatchewan Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
(60)
(40)
(20)
-
20
40
GHG Reductions (kt)
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142
60
80
100
Cost Curves Analysis
Final Analysis Report
Table 5.4: Energy, Emissions and costs associated with emissions reduction in Saskatchewan
Residential, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
(’95
$million)
10
2.6
(15.2)
287.6
(231.4)
454.0
(53.5)
5.8
20
3.7
(34.7)
323.3
(319.1)
1,396.2
(66.5)
17.7
30
3.9
(31.2)
307.2
(328.1)
1,469.5
(59.5)
30.0
40
3.9
(27.2)
288.1
(329.1)
1,376.9
(51.0)
41.7
50
3.9
(23.2)
264.1
(329.8)
1,303.2
(42.9)
52.7
75
4.1
(14.5)
226.1
(277.4)
1,347.0
(11.2)
77.5
100
4.3
(4.5)
208.1
(274.2)
1,254.5
6.8
100.4
125
4.5
4.3
196.4
(273.9)
1,292.3
23.6
122.8
150
4.6
16.9
181.0
(266.9)
1,193.7
41.9
144.8
200
4.9
47.6
160.8
(249.3)
1,108.5
79.9
189.6
250
5.4
78.5
150.4
(232.7)
1,139.4
120.0
237.6
The significant actions in Saskatchewan Residential
Shadow Price
Action
$10
High efficiency furnaces & Shell improvements (kt)
$50
$75
$150
74.6
73.5
74.0
73.2
(490)%
(317)%
(511)%
432%
Fuel switching in space heating (kt)
(45.7)
(53.1)
(51.7)
(45.7)
% of direct reductions
300%
229%
357%
(270)%
2.8
9.8
16.3
38.7
% of direct reductions
(18)%
(42)%
(113)%
229%
Fuel switching in water heating (kt)
(65.7)
(72.2)
(71.9)
(67.9)
% of direct reductions
431%
312%
497%
(401)%
18.8
18.9
18.9
18.6
(123)%
(82)%
(130)%
110%
% of direct reductions
Hot water efficiency (kt)
Multi-residential retrofit actions (kt)
% of direct reductions
M.K. Jaccard and Associates
143
Cost Curves Analysis
Final Analysis Report
5.1.5. Manitoba Residential
Shell, hot water and furnace efficiency actions dominate at lower prices in the Manitoba
residential sector, while at higher prices fuel switching from NG to electricity becomes
more and more economic.
Figure 5.5: Cost Curve for Manitoba Residential
Manitoba Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
GHG Reductions (kt)
M.K. Jaccard and Associates
144
400
500
Cost Curves Analysis
Final Analysis Report
Table 5.5: Energy, Emissions and costs associated with emissions reduction in Manitoba
Residential, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
(’95
$million)
10
3.3
105.6
3.4
(57.4)
(42.6)
(12.7)
2.2
20
3.6
144.9
1.8
(40.7)
(29.4)
(4.5)
7.5
30
3.7
158.2
1.2
(34.2)
(25.6)
1.8
13.8
40
3.8
168.2
0.9
(29.5)
(23.6)
8.1
20.6
50
3.8
179.1
0.5
(24.2)
(21.2)
14.7
27.7
75
4.0
210.3
(0.5)
(8.4)
(14.6)
33.6
47.6
100
4.2
245.6
(1.6)
10.2
(7.2)
55.5
70.6
125
4.4
282.6
(2.7)
30.1
(0.4)
80.3
97.0
150
4.7
318.2
(3.7)
49.8
4.1
107.6
126.8
200
5.0
368.4
(5.1)
78.1
10.2
165.6
194.8
250
5.1
395.8
(5.8)
94.1
12.2
226.3
270.4
The significant actions in Manitoba Residential
Shadow Price
Action
$10
$50
$75
$150
High efficiency furnaces & Shell improvements (kt)
58.2
61.0
62.9
67.9
% of direct reductions
55%
34%
30%
21%
Fuel switching in space heating (kt)
10.8
49.0
77.2
177.7
% of direct reductions
10%
27%
37%
56%
Hot water efficiency (kt)
24.1
32.8
33.8
36.2
% of direct reductions
23%
18%
16%
11%
0.4
25.0
25.4
26.4
0.4%
14%
12%
8%
Multi-residential retrofit actions (kt)
12.0
11.3
11.0
10.0
% of direct reductions
11%
6%
5%
3%
Fuel switching in water heating (kt)
% of direct reductions
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Cost Curves Analysis
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5.1.6. Ontario Residential
Because of the mixed nature of Ontario electricity production, the main actions for
Ontario change their magnitude and even direction with increasing shadow prices. Please
see the actions table for details.
Figure 5.6: Cost Curve for Ontario Residential
Ontario Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
1,000
2,000
3,000
GHG Reductions (kt)
M.K. Jaccard and Associates
146
4,000
5,000
Cost Curves Analysis
Final Analysis Report
Table 5.6: Energy, Emissions and costs associated with emissions reduction in Ontario
Residential, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
(’95
$million)
10
33.2
1,158.0
757.7
(963.3)
(84.3)
(204.7)
48.2
20
36.1
1,439.7
599.4
(815.2)
93.8
(93.6)
147.0
30
38.1
1,614.1
501.7
(747.1)
355.8
0.4
249.6
40
38.4
1,586.2
493.4
(893.3)
1,090.2
41.2
352.8
50
39.3
1,625.9
466.6
(955.3)
1,707.4
102.6
455.2
75
44.0
2,033.4
303.7
(661.0)
2,263.7
377.6
723.8
100
47.5
2,329.4
174.4
(485.3)
2,357.7
637.9
1,012.3
125
50.7
2,595.2
66.3
(317.3)
2,604.7
907.9
1,316.4
150
54.5
2,928.4
(79.2)
(80.8)
2,716.8
1,207.8
1,637.3
200
62.9
3,673.1
(357.9)
451.5
3,257.1
1,870.0
2,342.8
250
72.9
4,544.8
(602.4)
1,056.6
4,086.1
2,629.2
3,153.4
The significant actions in Ontario Residential
Shadow Price
Action
$10
High efficiency furnaces & Shell improvements
(kt)
$50
$75
$150
(54.1)
45.5
90.8
1,260.3
% of direct reductions
(5)%
3%
5%
43%
Fuel switching in space heating (kt)
997.5
1,051.6
1,179.2
774.8
86%
65%
58%
27%
101.2
240.7
334.4
446.3
9%
15%
16%
15%
(252.9)
(61.3)
90.4
133.4
% of direct reductions
(22)%
(4)%
4%
5%
Multi-residential retrofit actions (kt)
366.2
349.4
338.5
313.6
32%
22%
17%
11%
% of direct reductions
Hot water efficiency (kt)
% of direct reductions
Fuel switching in water heating (kt)
% of direct reductions
M.K. Jaccard and Associates
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Cost Curves Analysis
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5.1.7. Québec Residential
Shell, furnace and hot water efficiency actions, with fuel switching to electricity at the
higher shadow prices, are the dominant actions in Québec. Please see the actions table.
Figure 5.7: Cost Curve for Québec Residential
Quebec Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
GHG Reductions (kt)
Table 5.7: Energy, Emissions and costs associated with emissions reduction in Québec
Residential, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
(’95
$million)
10
17.1
838.4
11.6
(417.1)
(372.8)
(88.7)
20.8
20
18.4
994.8
9.4
(403.0)
(363.6)
(51.7)
65.4
30
19.5
1,130.2
7.4
(390.2)
(355.9)
(10.9)
115.6
40
20.5
1,247.7
5.8
(378.7)
(349.7)
33.3
170.7
50
21.4
1,349.8
4.3
(368.8)
(344.9)
80.3
230.0
75
23.2
1,552.4
1.5
(348.4)
(338.0)
207.6
392.9
100
25.1
1,813.1
(1.6)
(313.8)
(316.1)
354.9
577.8
125
26.5
1,985.9
(3.6)
(292.9)
(305.0)
514.2
783.2
150
27.5
2,093.5
(4.7)
(284.6)
(304.4)
680.3
1,001.9
200
28.8
2,211.1
(5.7)
(289.1)
(320.6)
1,023.5
1,461.0
250
29.7
2,277.2
(5.9)
(305.7)
(345.0)
1,377.1
1,938.0
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The significant actions in Québec Residential
Shadow Price
Action
$10
$50
$75
382.6
531.6
580.1
864.7
46%
39%
37%
41%
284.4
671.8
835.4
1,118.1
% of direct reductions
34%
50%
54%
53%
Fuel switching in water heating (kt)
17.2
26.0
29.5
33.1
2%
2%
2%
2%
37.6
132.1
160.1
410.0
5%
10%
10%
20%
171.5
146.5
136.9
110.7
21%
11%
9%
5%
High efficiency furnaces & Shell improvements (kt)
% of direct reductions
Hot water efficiency (kt)
% of direct reductions
Fuel switching in space heating (kt)
% of direct reductions
Multi-residential retrofit actions (kt)
% of direct reductions
$150
5.1.8. Atlantic Residential
Atlantic Residential follows the same pattern as Atlantic Commercial. There are large
initial direct reductions from shell improvements, followed by a fuel switch to LFO as
electricity become relatively more expensive than directly burnt LFO, followed by switch
back to electricity at higher shadow prices.
Figure 5.8: Cost Curve for Residential in the Atlantic Provinces
Atlantic Residential
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
GHG Reductions (kt)
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2,000
Cost Curves Analysis
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Table 5.8: Energy, Emissions and costs associated with emissions reduction in Residential in
the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Indirect
Emissions
Reduced
Technoeconomic
costs
TEC w/
elec price
increase
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
(’95
$million)
10
8.9
446.8
286.0
(490.0)
(142.9)
(109.4)
17.5
20
8.7
481.0
274.9
(502.9)
(37.2)
(86.1)
52.9
30
8.5
397.1
253.8
(619.6)
336.6
(90.3)
86.1
40
8.3
386.1
217.2
(678.9)
573.4
(82.9)
115.8
50
8.1
380.2
176.4
(734.2)
820.5
(76.1)
143.3
75
8.0
564.8
121.3
(688.9)
1,058.3
(10.7)
215.4
100
7.6
776.0
84.6
(625.2)
1,063.4
69.9
301.6
125
7.3
956.0
60.9
(577.0)
1,168.2
158.1
403.2
150
7.0
1,191.5
28.7
(487.9)
1,173.1
268.8
521.1
200
6.6
1,596.8
(21.0)
(330.6)
1,297.0
523.2
807.8
250
6.5
1,873.7
(49.8)
(234.6)
1,497.3
803.5
1,149.6
The significant actions in Atlantic Residential
Shadow Price
Action
$10
$50
$75
289.5
243.4
369.2
630.5
65%
64%
65%
53%
138.7
117.1
176.8
545.2
% of direct reductions
31%
31%
31%
46%
Hot water efficiency (kt)
25.1
30.4
49.6
62.9
6%
8%
9%
5%
(269.5)
(381.2)
(310.4)
(139.7)
(60)%
(100)%
(55)%
(12)%
1.0
(5.2)
(9.8)
(21.6)
0.2%
(1)%
(2)%
(2)%
High efficiency furnaces & Shell improvements (kt)
% of direct reductions
Fuel switching in space heating (kt)
% of direct reductions
Fuel switching in water heating (kt)
% of direct reductions
Multi-residential retrofit actions (kt)
% of direct reductions
M.K. Jaccard and Associates
150
$150
Cost Curves Analysis
Final Analysis Report
6. Transportation
6.1. General Commentary on the Transportation Sector
We have developed a new version of the CIMS-T model in which the following actions
occur automatically in response to changes in tangible as well as intangible costs:15
•
•
•
•
•
•
Changes in efficiency of the gasoline passenger vehicle fleet.
Fuel switching within the passenger vehicle market.
Shifts between the passenger vehicle and public transit modes.
Mode switching between single occupancy (SOV) and high occupancy
(HOV) vehicles.
Changes in efficiency of the freight truck fleet.
Changes in activity levels.16
This increase in the model’s capabilities will change the results obtained during the AMG
Roll Up work. We feel that the results are more reflective of the actual condition and
responsiveness of the transportation sector to shadow prices tested in this model. In all
other conditions, we followed the procedure used in the Roll Up Path 2 analysis.
As was the case in our study of transportation in the original Roll Up analysis, cost issues
have again come to the fore - transportation reports very large negative techno-economic
costs because walking, cycling, transit and higher occupancy private vehicles cost less
than single occupancy private vehicles if one expects reduced numbers of automobiles
with reduced vehicle kilometres traveled. These negative financial costs are, however,
accompanied by a very large loss of consumers’ surplus.
A key uncertainty in assessing the techno-economic cost for transportation is the degree
to which consumers who switch away from single occupancy vehicles continue to invest
in vehicles. We have provided national level TEC and ERC costs reflecting two
contrasting assumptions. The first columns for techno-economic and expected resource
costs are based on the assumption that a change in vehicle kilometres is accompanied by
a corresponding change in vehicle ownership. The second columns reflect the costs when
one assumes that individuals continue to purchase vehicles despite switching to other
modes of transportation for portions of their travel.
The transportation industry is much more homogenous across the country than the other
sectors. Given this homogeneity and the general availability of all major transport fuels
across the country, the response of Ontario to a $150 shadow price, the price that brings
us closest to Kyoto, is indicative. At $150, single occupancy private vehicle use falls
19%, multi occupancy private vehicle use rises 8% and transit use rises 28%. In terms of
transportation fuels, NG use rises 2%, methanol 11%, ethanol 30%, electricity 28%,
while gasoline falls 15%. Walking as transportation mode rises 28%. Overall energy use
rises 15% while emissions fall 8% compared to BAU.
15
The first, second, and last actions were already endogenised in the model used during the NCCIP.
Changes in activity levels are actually produced through an interaction between the CIMS Transportation
Model and the CIMS Macro-Economic Model.
16
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Cost Curves Analysis
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6.1.1. Canada Transportation
Figure 6.1: National Cost Curve for Transportation for all of Canada
Canada Transportation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
10,000
20,000
30,000
40,000
GHG Reductions (kt)
Table 6.1: Energy, Emissions and costs associated with emissions reduction in Transportation
for all Canada, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Technoeconomic
costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(Mt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
15
10.1
(4,778.0)
(3,427.9)
(1,045.2)
(707.7)
199.0
20
28
11.3
(6,918.4)
(4,368.0)
(1,214.7)
(577.1)
686.5
30
41
12.2
(9,005.0)
(5,189.6)
(1,286.7)
(332.8)
1,286.1
40
53
14.1
(10,831.6)
(5,765.1)
(1,253.0)
13.6
1,939.8
50
65
15.0
(12,796.6)
(6,492.5)
(1,203.0)
373.1
2,661.6
75
93
17.6
(17,328.1)
(7,988.2)
(814.2)
1,520.8
4,690.5
100
119
19.5
(21,671.8)
(9,376.8)
(178.3)
2,895.5
6,986.2
125
144
23.9
(25,009.9)
(9,838.4)
938.6
4,731.5
9,588.1
150
166
28.7
(26,033.3)
(8,061.7)
2,898.2
7,391.1
12,542.0
200
206
31.6
(32,621.9)
(9,269.4)
6,353.0
12,191.2
19,344.7
250
240
35.6
(36,534.7)
(8,080.0)
11,349.2
18,462.9
27,310.5
*Energy saved does not include energy savings associated with exogenous measures.
M.K. Jaccard and Associates
152
Cost Curves Analysis
Final Analysis Report
6.1.2. BC Transportation
Figure 6.2: Cost Curve for BC Transportation
British Columbia Transportation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
1,000
2,000
3,000
4,000
5,000
GHG Reductions (kt)
Table 6.2: Energy, Emissions and costs associated with emissions reduction in Transportation,
BC, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Technoeconomic
costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
1.5
1,472.8
(650.3)
(539.0)
(140.1)
(112.3)
30.0
20
2.8
1,595.0
(880.4)
(668.2)
(144.5)
(91.4)
100.8
30
4.0
1,685.6
(1,107.1)
(788.8)
(138.0)
(58.4)
185.0
40
5.2
1,915.1
(1,301.7)
(877.9)
(119.1)
(13.2)
275.1
50
6.4
2,001.6
(1,517.8)
(989.3)
(99.7)
32.4
373.0
75
9.3
2,281.5
(2,019.8)
(1,232.4)
(23.2)
173.6
642.3
100
12.0
2,475.2
(2,509.3)
(1,467.2)
77.6
338.1
939.8
125
14.5
2,986.6
(2,878.0)
(1,585.5)
233.8
556.9
1,271.0
150
16.8
3,588.7
(2,941.4)
(1,402.9)
497.0
881.6
1,643.1
200
21.1
3,896.7
(3,737.2)
(1,719.2)
933.6
1,438.1
2,490.5
250
24.8
4,369.1
(4,218.8)
(1,738.1)
1,551.8
2,171.9
3,475.3
M.K. Jaccard and Associates
153
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Final Analysis Report
The significant actions in BC Transportation
Shadow Price
Action
$10
F2B Truck speed control to 90 km/hr (kt)
$50
$75
$150
0
0
0
432.2
0%
0%
0%
12%
29.2
127.3
182.0
317.9
2%
6%
8%
9%
386.4
386.4
386.4
386.4
26%
19%
17%
11%
316.0
316.0
316.0
316.0
% of direct reductions
21%
16%
14%
9%
Mode switching (kt)
38.7
187.7
275.4
487.9
3%
9%
12%
14%
20.6
91.2
130.5
228.5
1%
5%
6%
6%
273.5
273.5
273.5
273.5
19%
14%
12%
8%
0
0
0
273.2
0%
0%
0%
8%
213.7
213.7
213.7
213.7
15%
11%
9%
6%
% of direct reductions
Personal car gasoline, efficiency improvements (kt)
% of direct reductions
D1 Short term aviation actions (kt)
% of direct reductions
F8C Accelerated truck scrappage (5 yrs)
% of direct reductions
Personal truck gasoline, efficiency improvements (kt)
% of direct reductions
F10 Truck driver training in energy efficiency (kt)
% of direct reductions
K1 Off-road efficiency standards (kt)
% of direct reductions
K3 Off-road voluntary actions (kt)
% of direct reductions
British Columbia transportation experiences large reductions at the $10 tax due to 5 key
actions including short-term aviation actions, accelerated truck scrappage, offroad
voluntary programs and truck driver training in energy efficiency. From $50 to $75,
emissions reductions are due to mode switching, and personal car and truck efficiency
improvements. Significant emissions reductions are apparent between $75 and $150 due
to the adoption of off-road efficiency standards at the $125 shadow price and truck speed
control to 90 km/hr at the $150 shadow price as well as continued mode switching.
Please see Appendix A for additional information on actions modeled exogenously in this
sector.
M.K. Jaccard and Associates
154
Cost Curves Analysis
Final Analysis Report
6.1.3. Alberta Transportation
Figure 6.3: Cost Curve for Alberta Transportation
Shadow Price ($/tonne CO2e)
Alberta Transportation
250
200
150
100
50
0
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
GHG Reductions (kt)
Table 6.3: Energy, Emissions and costs associated with emissions reduction in Alberta
Transportation, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Technoeconomic
costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
2.3
1,965.9
(760.3)
(541.1)
(163.0)
(108.2)
36.1
20
4.4
2,139.3
(1,057.6)
(659.9)
(168.3)
(68.9)
128.1
30
6.4
2,280.9
(1,341.3)
(746.3)
(152.6)
(3.9)
243.6
40
8.3
2,592.9
(1,579.5)
(788.9)
(119.3)
78.4
367.5
50
10.1
2,724.4
(1,842.1)
(857.9)
(83.9)
162.2
502.2
75
14.4
3,120.6
(2,441.4)
(981.0)
44.9
410.0
873.7
100
18.3
3,402.9
(3,014.8)
(1,089.7)
210.2
691.5
1,285.2
125
21.9
4,494.7
(3,397.5)
(1,019.1)
466.1
1,060.7
1,754.0
150
25.2
5,272.2
(3,428.7)
(608.4)
859.2
1,564.3
2,288.5
200
31.2
5,698.3
(4,305.8)
(635.5)
1,571.6
2,489.2
3,530.8
250
36.3
6,301.0
(4,805.1)
(329.0)
2,540.3
3,659.4
4,988.8
M.K. Jaccard and Associates
155
Cost Curves Analysis
Final Analysis Report
The significant actions in Alberta Transportation
Shadow Price
Action
$10
K1 Off-road efficiency standards (kt)
$50
$75
$150
0
0
0
761.6
0%
0%
0%
14%
66.7
320.0
467.4
804.1
3%
12%
15%
15%
595.7
595.7
595.7
595.7
% of direct reductions
30%
22%
19%
11%
Personal truck gasoline, efficiency improvements (kt)
49.6
213.4
293.5
457.2
3%
8%
9%
9%
0
0
0
538.7
0%
0%
0%
10%
393.9
393.9
393.9
393.9
% of direct reductions
20%
14%
13%
7%
Personal car gasoline, efficiency improvements (kt)
25.4
106.6
151.5
261.6
1%
4%
5%
5%
340.9
340.9
340.9
340.9
17%
13%
11%
6%
252.3
252.3
252.3
252.3
13%
9%
8%
5%
% of direct reductions
Mode switching (kt)
% of direct reductions
K3 Off-road voluntary actions (kt)
% of direct reductions
F2B Truck speed control to 90 km/hr (kt)
% of direct reductions
F8C Accelerated truck scrappage (5 yrs) (kt)
% of direct reductions
F10 Truck driver training in energy efficiency (kt)
% of direct reductions
D1 Short term aviation actions (kt)
% of direct reductions
Alberta transportation experiences large reductions at the $10 tax due to 5 key actions
including short-term aviation actions, accelerated truck scrappage, off-road voluntary
programs and truck driver training in energy efficiency. From $50 to $75, emissions
reductions are due to increased penetration of the mode switching, and personal car and
truck efficiency actions. Significant emissions reductions occur between $75 and $150
due to the adoption of off-road efficiency standards at the $125 shadow price and truck
speed control to 90 km/hr at the $150 shadow price. Mode switching and increased car
and truck fuel efficiency continue to achieve higher penetration at higher shadow prices.
M.K. Jaccard and Associates
156
Cost Curves Analysis
Final Analysis Report
6.1.4. Saskatchewan Transportation
Figure 6.4: Cost Curve for Saskatchewan Transportation
Saskatchewan Transportation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
2,000
GHG Reductions (kt)
Table 6.4: Energy, Emissions and costs associated with emissions reduction in Saskatchewan
Transportation, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
TechnoEconomic
Costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
0.7
534.5
(211.1)
(141.9)
(45.9)
(28.6)
9.2
20
1.4
586.6
(312.9)
(189.7)
(52.9)
(22.1)
33.8
30
2.0
632.2
(412.4)
(228.1)
(54.0)
(7.9)
65.5
40
2.7
721.0
(500.4)
(255.5)
(50.2)
11.0
99.8
50
3.2
763.6
(594.0)
(289.2)
(45.5)
30.7
137.3
75
4.6
882.3
(812.1)
(359.4)
(21.9)
91.3
241.5
100
5.9
974.5
(1,016.3)
(419.0)
14.5
163.9
358.1
125
7.1
1,333.3
(1,125.1)
(386.3)
88.6
273.3
493.2
150
8.2
1,549.9
(1,180.5)
(303.8)
191.5
410.7
648.8
200
10.2
1,691.3
(1,494.7)
(352.3)
388.1
673.7
1,015.7
250
11.9
1,891.4
(1,684.2)
(289.7)
667.5
1,016.1
1,451.4
M.K. Jaccard and Associates
157
Cost Curves Analysis
Final Analysis Report
The significant actions in Saskatchewan Transportation
Shadow Price
Action
$10
K1 Off-road efficiency standards (kt)
$50
$75
$150
0
0
0
255
0%
0%
0%
16%
18.9
90.9
133.0
238.8
4%
12%
15%
15%
199.8
199.8
199.8
199.8
% of direct reductions
37%
26%
23%
13%
Personal truck gasoline, efficiency improvements
(kt)
87.3
87.3
87.3
87.3
% of direct reductions
16%
11%
10%
6%
0
0
0
137.9
% of direct reductions
0%
0%
0%
9%
Personal car gasoline, efficiency improvements
(kt)
9.8
42.6
60.7
105.3
% of direct reductions
2%
6%
7%
7%
100.8
100.8
100.8
100.8
% of direct reductions
19%
13%
11%
7%
F10 Truck driver training in energy efficiency (kt)
87.3
87.3
87.3
87.3
% of direct reductions
16%
11%
10%
6%
% of direct reductions
Mode switching (kt)
% of direct reductions
K3 Off-road voluntary actions (kt)
F2B Truck speed control to 90 km/hr (kt)
F8C Accelerated truck scrappage (5 yrs) (kt)
At the $10 shadow price, Saskatchewan transportation achieves emission reductions from
5 large actions: short term aviation actions, accelerated truck scrappage, off-road
voluntary programs and truck driver training in energy efficiency. From $50 to $75,
emissions reductions are due to increased penetration of the mode switching, and
personal car and truck efficiency actions. Another large increase in reduction is apparent
between the $100 and $150 shadow prices resulting mainly from the adoption of off-road
efficiency standards at the $125 shadow price and truck speed control to 90 km/hr at the
$150 shadow price. Mode switching and increased car and truck fuel efficiency continue
to increase also.
M.K. Jaccard and Associates
158
Cost Curves Analysis
Final Analysis Report
6.1.5. Manitoba Transportation
Figure 6.5: Cost Curve for Manitoba Transportation
Manitoba Transportation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
GHG Reductions (kt)
Table 6.5: Energy, Emissions and costs associated with emissions reduction in Manitoba
Transportation, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Technoeconomic
costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
0.6
376.9
(180.2)
(120.2)
(39.5)
(24.5)
7.4
20
1.1
422.5
(269.3)
(157.9)
(48.0)
(20.1)
25.8
30
1.7
460.1
(356.1)
(189.7)
(52.5)
(10.9)
48.7
40
2.2
529.2
(433.8)
(212.8)
(53.2)
2.0
73.7
50
2.7
564.4
(515.6)
(240.6)
(53.0)
15.8
101.2
75
3.8
669.6
(704.7)
(297.1)
(42.0)
59.9
178.9
100
4.9
745.7
(885.3)
(348.5)
(20.8)
113.4
267.4
125
5.9
931.8
(1,020.1)
(357.4)
21.3
187.0
368.4
150
6.8
1,096.3
(1,077.7)
(292.5)
92.9
289.2
483.1
200
8.4
1,209.9
(1,343.8)
(323.1)
225.1
480.3
748.0
250
9.7
1,367.1
(1,506.9)
(263.2)
417.4
728.3
1,058.8
M.K. Jaccard and Associates
159
Cost Curves Analysis
Final Analysis Report
The significant actions in Manitoba Transportation
Shadow Price
Action
$10
Personal car gasoline, efficiency improvements (kt)
$50
$75
$150
11.3
49.4
70.1
120.0
3%
9%
10%
11%
17.6
84.3
122.8
200.3
% of direct reductions
5%
15%
18%
18%
Personal truck gasoline, efficiency improvements (kt)
8.8
38.4
53.5
86.3
% of direct reductions
2%
7%
8%
8%
F2B Truck speed control to 90 km/hr (kt)
0.0
0.0
0.0
100.3
% of direct reductions
0%
0%
0%
9%
K3 Off-road voluntary actions (kt)
80.7
80.7
80.7
80.7
% of direct reductions
21%
14%
12%
7%
F8C Accelerated truck scrappage (5 yrs) (kt)
73.3
73.3
73.3
73.3
% of direct reductions
19%
13%
11%
7%
D1 Short term aviation actions (kt)
71.1
71.1
71.1
71.1
% of direct reductions
19%
13%
11%
6%
F10 Truck driver training in energy efficiency (kt)
63.5
63.5
63.5
63.5
% of direct reductions
17%
11%
9%
6%
% of direct reductions
Mode switching (kt)
At the $10 shadow price, Manitoba transportation attains the majority of its emission
reductions from short-term aviation actions, accelerated truck scrappage, off-road
voluntary programs and truck driver training in energy efficiency. From $50 to $75,
emissions reductions are due to increased penetration of the mode switching, and
personal car and truck efficiency actions. The adoption of off-road efficiency standards
at the $125 shadow price and truck speed control to 90 km/hr at the $150 shadow price
yield a large portion of the emission reductions achieved between the $75 and $150
shadow prices. At $150, mode switching is responsible for the largest share of emission
reductions.
M.K. Jaccard and Associates
160
Cost Curves Analysis
Final Analysis Report
6.1.6. Ontario Transportation
Figure 6.6: Cost Curve for Ontario Transportation
Shadow Price ($/tonne CO2e)
Ontario Transportation
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000 12,000 14,000
GHG Reductions (kt)
Table 6.6: Energy, Emissions and costs associated with emissions reduction in Ontario
Transportation, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Technoeconomic
costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
5.8
2,965.3
(1,541.4)
(991.3)
(340.2)
(202.7)
60.2
20
11.1
3,426.9
(2,383.5)
(1,327.2)
(441.3)
(177.2)
206.1
30
16.2
3,792.7
(3,206.3)
(1,626.8)
(511.5)
(116.6)
386.7
40
21.1
4,443.0
(3,948.6)
(1,852.4)
(546.2)
(22.2)0
587.9
50
25.9
4,787.7
(4,723.3)
(2,116.7)
(571.0)
80.6
813.1
75
37.2
5,864.6
(6,498.8)
(2,643.2)
(528.4)
435.5
1,461.7
100
47.6
6,616.1
(8,202.9)
(3,135.2)
(386.5)
880.4
2,219.0
125
57.3
7,877.8
(9,623.8)
(3,379.4)
(91.3)
1,469.8
3,086.2
150
66.1
9,420.6
(10,312.4)
(2,925.4)
474.7
2,321.4
4,070.4
200
81.8
10,553.7
(12,808.8)
(3,233.2)
1,549.0
3,942.9
6,334.9
250
95.2
12,088.6
(14,297.1)
(2,653.1)
3,166.7
6,077.7
8,987.9
M.K. Jaccard and Associates
161
Cost Curves Analysis
Final Analysis Report
The significant actions in Ontario Transportation
Shadow Price
Action
$10
Personal car gasoline, efficiency improvements
(kt)
$50
$75
$150
152.1
659.6
934.9
1,589.9
5%
14%
16%
17%
155.1
735.9
1,065.8
1,936.1
% of direct reductions
5%
15%
18%
21%
F2B Truck speed control to 90 km/hr (kt)
0.0
0.0
0.0
903.9
% of direct reductions
0%
0%
0%
10%
60.6
267.2
379.7
650.1
2%
6%
6%
7%
660.8
660.8
660.8
660.8
22%
14%
11%
7%
572.0
572.0
572.0
572.0
19%
12%
10%
6%
547.0
547.0
547.0
547.0
18%
11%
9%
6%
K1 Off-road efficiency standards (kt)
0.0
0.0
0.0
450.0
% of direct reductions
0%
0%
0%
5%
352.0
352.0
352.0
352.0
12%
7%
6%
4%
% of direct reductions
Mode switching (kt)
Personal truck gasoline, efficiency improvements
(kt)
% of direct reductions
F8C Accelerated truck scrappage (5 yrs) (kt)
% of direct reductions
F10 Truck driver training in energy efficiency
(kt)
% of direct reductions
D1 Short term aviation actions (kt)
% of direct reductions
K3 Off-road voluntary actions (kt)
% of direct reductions
In the Ontario transportation sector, accelerated truck scrappage, short-term aviation
actions, off-road voluntary actions, and truck driver training in energy efficiency
penetrate immediately yielding substantial emissions reductions. Mode switching and
gasoline car efficiency improvements penetrate strongly between $50 and $150 yielding
over 30% of the total reductions. Off-road efficiency standards and truck speed control
to 90 km/hr also penetrate between $125 and $150 contributing substantial reductions.
M.K. Jaccard and Associates
162
Cost Curves Analysis
Final Analysis Report
6.1.7. Québec Transportation
Figure 6.7: Cost Curve for Québec Transportation
Quebec Transportation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
GHG Reductions (kt)
Table 6.7: Energy, Emissions and costs associated with emissions reduction in Québec
Transportation, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Technoeconomic
costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
2.7
1,844.4
(996.0)
(745.6)
(220.6)
(158.0)
37.8
20
5.1
2,060.2
(1,420.1)
(936.5)
(259.0)
(138.2)
128.0
30
7.4
2,227.8
(1,835.5)
(1,112.0)
(281.2)
(100.4)
236.9
40
9.7
2,640.0
(2,193.4)
(1,232.7)
(281.0)
(40.8)
356.4
50
11.9
2,798.9
(2,586.5)
(1,391.3)
(279.1)
19.7
490.0
75
17.1
3,285.9
(3,498.5)
(1,728.3)
(223.8)
218.8
867.8
100
21.9
3,637.6
(4,373.8)
(2,044.4)
(121.9)
460.4
1,295.4
125
26.4
4,196.9
(5,090.5)
(2,217.0)
57.3
775.7
1,773.3
150
30.6
5,265.2
(5,210.0)
(1,806.7)
433.6
1,284.4
2,314.8
200
38.1
5,811.1
(6,552.3)
(2,130.0)
1,025.2
2,130.8
3,551.1
250
44.6
6,568.2
(7,345.6)
(1,955.1)
1,909.3
3,257.0
4,994.3
M.K. Jaccard and Associates
163
Cost Curves Analysis
Final Analysis Report
The significant actions in Québec Transportation
Shadow Price
Action
$10
Personal car gasoline, efficiency improvements
(kt)
$50
$75
$150
67.1
293.2
418.0
724.1
% of direct reductions
4%
10%
13%
14%
F2B Truck speed control to 90 km/hr (kt)
0.0
0.0
0.0
764.2
% of direct reductions
0%
0%
0%
15%
558.7
558.7
558.7
558.7
% of direct reductions
30%
20%
17%
11%
Mode switching (kt)
80.6
386.0
561.3
934.0
4%
14%
17%
18%
483.6
483.6
483.6
483.6
26%
17%
15%
9%
F6 Truck lubricants (kt)
0.0
249.0
249.0
249.0
% of direct reductions
0%
9%
8%
5%
16.1
69.9
100.0
176.1
1%
2%
3%
3%
212.7
212.7
212.7
212.7
12%
8%
6%
4%
193.4
193.4
193.4
193.4
10%
7%
6%
4%
F8C Accelerated truck scrappage (5 yrs) (kt)
% of direct reductions
F10 Truck driver training in energy efficiency
(kt)
% of direct reductions
Personal truck gasoline, efficiency improvements
(kt)
% of direct reductions
D1 Short term aviation actions (kt)
% of direct reductions
F12 Trucking preventative maintenance (kt)
% of direct reductions
In Québec transportation, accelerated truck scrappage, truck driver training in energy
efficiency, short-term aviation actions and trucking preventative maintenance yield
emissions reductions at the $10 shadow price. At the $40 shadow price, the truck
lubricants action contributes reductions. Mode switching, and gasoline car and truck
efficiency improvements penetrate increasingly between $50 and $150. At $150 shadow
price, truck speed control to 90 km/hr penetrates and is the second largest contributor to
overall reductions after mode switching.
M.K. Jaccard and Associates
164
Cost Curves Analysis
Final Analysis Report
6.1.8. Atlantic Transportation
Figure 6.8: Cost Curve for Transportation in the Atlantic Provinces
Atlantic Transportation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
3,000
3,500
GHG Reductions (kt)
Table 6.8: Energy, Emissions and costs associated with emissions reduction in Transportation
in the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Direct
Emissions
Reduced
Technoeconomic
costs
TEC w/
Parked
Vehicle
Costs
Expected
Resource
Costs
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
1.1
967.8
(438.7)
(348.8)
(95.9)
(73.4)
18.4
20
2.0
1,042.3
(594.6)
(428.6)
(100.7)
(59.2)
63.9
30
3.0
1,108.6
(746.2)
(498.0)
(96.8)
(34.8)
119.7
40
3.9
1,273.7
(874.2)
(544.8)
(84.0)
(1.6)
179.5
50
4.7
1,335.7
(1,017.1)
(607.6)
(70.7)
31.7
244.8
75
6.8
1,500.3
(1,352.6)
(746.8)
(19.8)
131.7
424.5
100
8.7
1,635.2
(1,669.2)
(872.8)
48.6
247.8
621.3
125
10.4
2,075.5
(1,874.7)
(893.6)
162.8
408.1
842.1
150
12.0
2,501.7
(1,882.4)
(722.0)
349.3
639.5
1,093.3
200
14.9
2,709.9
(2,379.1)
(876.2)
660.4
1,036.2
1,673.7
250
17.5
3,013.8
(2,676.7)
(851.7)
1,096.3
1,552.6
2,354.0
M.K. Jaccard and Associates
165
Cost Curves Analysis
Final Analysis Report
The significant actions in Atlantic Transportation
Shadow Price
Action
$10
$50
$75
$150
F2B Truck speed control to 90 km/hr (kt)
0.0
0.0
0.0
310.4
% of direct reductions
0%
0%
0%
12%
K1 Off-road efficiency standards (kt)
0.0
0.0
0.0
274.6
% of direct reductions
0%
0%
0%
11%
Mode switching (kt)
24.7
118.1
172.2
309.8
% of direct reductions
3%
9%
11%
12%
Personal truck gasoline, efficiency improvements (kt)
23.5
102.7
142.6
228.4
% of direct reductions
2%
8%
10%
9%
F8C Accelerated truck scrappage (5 yrs) (kt)
226.9
226.9
226.9
226.9
% of direct reductions
23%
17%
15%
9%
K3 Off-road voluntary actions (kt)
214.8
214.8
214.8
214.8
% of direct reductions
22%
16%
14%
9%
F10 Truck driver training in energy efficiency (kt)
196.4
196.4
196.4
196.4
% of direct reductions
20%
15%
13%
8%
Personal car gasoline, efficiency improvements (kt)
16.8
71.7
102.8
181.5
% of direct reductions
2%
5%
7%
7%
D1 Short term aviation actions (kt)
132.7
132.7
132.7
132.7
% of direct reductions
14%
10%
9%
5%
At the $10 shadow price, accelerated truck scrappage, offroad voluntary programs, truck
driver training in energy efficiency and short term aviation actions provide emissions
reductions for Atlantic transportation. Mode switching and gasoline car and truck
efficiency improvements penetrate increasingly between the $50 and $150 shadow prices.
Offroad efficiency standards penetrate at $125 and together with truck speed control to
90 km/hr yields over 20% of total reductions at $150.
7. Electricity Production
7.1. General Commentary for Electricity Production
Today most electricity in Canada is generated from sources that have negligible GHG
emissions in operation: hydro generates 63%, nuclear 14% and other renewable sources
(wind, biomass, solar) 1%. Nevertheless, the remaining generation from the combustion
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of fossil fuels—coal (14%) natural gas (3%) and oil (1%)— produces 99 Mt CO2e, 15%
of Canada’s total emissions and has great potential for emissions reductions.
There are significant regional variations in production technology and emissions
reduction potential. Conventional thermal generation (coal) accounts for the majority of
installed capacity in Alberta, Saskatchewan and New Brunswick while Newfoundland,
BC, Québec and Manitoba are hydro-based. Ontario has a heterogeneous system.
Electricity exchange between provinces is limited but Manitoba, BC and Québec do have
significant exports to the U.S. (around 8% of electricity generated). Much of Canada’s
generating capacity—hydro, thermal and nuclear—has come into service since 1970 and
has significant life remaining, thus influencing generating choices into the future, and
constraining some GHG emission reductions. The CIMS reference case predicts that
existing coal generation will first be replaced and supplemented by gas generation, and
then by advanced coal plants. Nuclear generation will decline overall, while hydro will
increase.
Because of the regions’ strongly differing electrical resources, it is difficult to make
general comments beyond the observation that the cost curve for electricity rose steadily
as the GHG shadow price rose in all regions. It masks, for example, some strongly
contrasting responses in the regions with access to sequestration. While in both Alberta
and Saskatchewan the curves rise continually, this steadiness hides significant changes in
demand for utility-produced electricity, as opposed to that which is cogenerated or
generated from landfill gas. The significant reductions in demand in the commercial and
residential sectors from $0-$10 are due to a large and inexpensive potential capacity for
demand reduction through land use changes, energy efficiency actions and the use of
landfill gas for generation of electricity. This initial reduction in the demand for
electricity makes it relatively less expensive than NG, a change that prompts a significant
move into electricity up to $30. At this point, however, coal-generated electricity
becomes more expensive than NG, leading to a switch to NG technologies. This situation
continues until somewhere between $75 and $100, where electricity generated with coal
whose emissions are sequestered underground becomes cheaper than NG, whose price
continually rises with the shadow price on GHGs.17
There are a couple of important points of difference between the electricity sector and the
other sectors that the reader should keep in mind. Electricity production and pricing is an
endogenous variable in CIMS; production is the summed electricity demand from the
industrial, commercial, residential and transportation sectors in Canada, as well as
exports to the US. Exports to the US are fixed and based on “Canada’s Energy Outlook”,
published by NRCan. Electricity pricing in CIMS can be either marginal cost or average
cost; for this analysis it is average cost to reflect the near term pricing of electricity in
Canada. This average price is established by ratio of the production costs, including a
risk element, between the reference and policy case. To aid the reader we have provided
a table of relative price changes from the base case.
17
One of the constraints of the initial Roll Up analysis included retaining constant inter-provincial trade
across all shadow price levels. More recent, post Roll Up analysis using CIMS indicates that the impacts of
inter-provincial trade are not insignificant (see D’Abate, R. 2001. Modelling Greenhouse Gas Abatement
Strategy in the Canadian Electricity Sector. Masters Project, Simon Fraser University) but, by request,
these were not tested here.
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Electricity Price Change Ratios (Policy/BAU) from Forecast by Region and GHG Price
GHG Price
BC
Alberta
Sask.
Manitoba
Ontario
Québec
Atlantic
10
1.03
1.07
1.11
1.01
1.06
1.00
1.06
20
1.04
1.13
1.16
1.01
1.08
1.00
1.08
30
1.05
1.18
1.24
1.01
1.09
1.00
1.11
40
1.06
1.25
1.30
1.01
1.11
1.00
1.13
50
1.07
1.32
1.37
1.01
1.12
1.00
1.16
75
1.09
1.49
1.51
1.01
1.14
1.01
1.18
100
1.11
1.61
1.58
1.01
1.17
1.01
1.19
125
1.12
1.71
1.65
1.01
1.19
1.01
1.20
150
1.14
1.79
1.71
1.00
1.21
1.01
1.21
200
1.16
1.93
1.80
1.00
1.24
1.01
1.23
250
1.18
2.05
1.88
1.01
1.27
1.01
1.25
Another important point is that the techno-economic costs for electricity are already
added into the techno-economic costs for the demand sectors through the changed price
of electricity (where columns are labelled “w/ elec price increase”). The change in price
reflects the change in the cost of producing electricity at the various shadow price and
production levels, including the carbon shadow price, which is summed out of total costs
as it is assumed to be a transfer. The reader should therefore be careful not to add the
costs of electricity to the rest of the sectors in such cases, as this would double-count
electricity’s costs. We have provided TEC with and without the increase electricity price
for the demand sectors to clarify this for the reader.
Finally, we noted that electricity was not given an ERC in the first roll-up analysis like
other sectors. Its costs, valued at TEC with a directly derived risk component, were
assumed to pass through the price to the demand sectors. Such costs are valid if we
assume the electricity sector to have lower comparable risks than other sectors when they
make technology and process decisions due to its market structure and ability to spread
costs through many consumers, and in some regions through all taxpayers. Given the
move to deregulation of electricity production, and as a part of our general direction of
standardizing cost and valuation across the economy, we have provided an ERC for
electricity in this analysis (the impact of this change is documented in appendix B). It is
calculated in the same way as other sectors from electricity’s reductions. To do this,
however, we removed the price increase from TEC for all other sectors for calculating
their ERCs. So, in effect, we have a provided a measure of the risk that must be borne by
someone to make the substantial changes in electricity. Who bears this risk? This is a
policy and market structure question.
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7.1.1. Canada Electricity Production
Figure 7.1: Cost Curve for Electricity for all Canada
Canada Electricity
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
20,000
40,000
60,000
80,000
100,000
GHG Reductions (kt)
Table 7.1: Energy, Emissions and costs associated with emissions reduction in Electricity
Industries for all Canada, 2010
Shadow
price
Energy
Saved
Emissions
Reduced*
Nondemand
related
TEC
TEC incl.
Demand
Changes
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(Mt)
(’95
$billions)
(’95
$billions)
(’95
$billions)
(’95
$billions)
10
398
45.4
(7.6)
(15.0)
(1.2)
0.9
20
447
52.7
(5.8)
(13.2)
0.8
3.0
30
487
58.5
(3.9)
(11.2)
3.2
5.5
40
533
66.3
(1.4)
(8.6)
5.9
8.4
50
564
71.9
1.3
(5.6)
9.0
11.6
75
554
77.4
5.1
(0.9)
16.6
20.5
100
541
80.1
7.6
2.6
24.4
30.0
125
530
82.0
10.0
6.0
32.4
39.9
150
521
83.0
12.5
9.8
40.6
50.0
200
518
85.0
19.6
17.1
58.0
70.8
250
528
86.9
26.5
24.2
75.8
92.2
*Includes demand-related emissions reductions.
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7.1.2. BC Electricity Production
British Columbia’s base electricity production is dominated by hydropower, with
shoulder and peaking power provided by NG. A small amount of power comes from
other sources. The first graph below provides the cost curve for BC electricity
production. The second graph depicts how electricity production in BC and its emissions
varied with the increasing shadow prices.
Figure 7.2: Cost Curve for the BC Electricity Production Industry
Shadow Price ($/tonne CO2e)
British Columbia Electricity
250
200
150
100
50
0
-
500
1,000
1,500
2,000
GHG Reductions (kt)
Figure 7.3: Electricity Production and Emissions in BC in 2010
310
6000
300
5000
290
4000
280
Production
270
Emissions
260
3000
2000
250
1000
240
0
0
10
20
30
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GHG Shadow Price
170
GHG Emissions (kt)
Production (TJ)
BC Electricity Production and Emissions
Cost Curves Analysis
Final Analysis Report
Table 7.4: Energy, Emissions and costs associated with emissions reduction in British
Columbia Electricity Industries, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
Nondemand
related
TEC
TEC incl.
Demand
Changes
Expected
Resource
Costs
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
17.4
853.3
(1,638.2)
(2,923.2)
(395.3)
19.0
20
18.8
920.0
(1,529.2)
(2,774.0)
(338.6)
58.3
30
20.3
991.2
(1,408.7)
(2,616.7)
(277.4)
99.7
40
21.9
1,072.1
(1,307.4)
(2,490.3)
(219.4)
143.3
50
23.6
1,152.8
(1,222.2)
(2,389.6)
(163.7)
189.1
75
26.9
1,318.5
(998.7)
(2,113.3)
(15.3)
312.5
100
29.4
1,436.5
(714.1)
(1,743.8)
157.0
447.4
125
31.1
1,523.5
(377.7)
(1,294.4)
350.2
592.8
150
32.5
1,589.7
(4.5)
(788.9)
560.2
748.4
200
34.2
1,674.3
1,389.2
639.0
1,165.7
1,091.2
250
35.5
1,734.7
2,609.7
1,889.8
1,756.6
1,472.2
The significant actions in British Columbia Electricity Production
Shadow price
Action
$10
$50
$75
402.7
332.5
301.2
87.7
47%
29%
23%
6%
1.2
1.4
1.6
1.9
% of direct reductions
0.1%
0.1%
0.1%
0.1%
Switch out of combined cycle gas to large hydro (kt)
449.4
818.9
1,015.7
1,500.1
53%
71%
77%
94%
Demand reductions (kt)
% of direct reductions
Switch out of renewables to large hydro (kt)
% of direct reductions
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Cost Curves Analysis
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7.1.3. Alberta Electricity Production
In terms of emissions reductions this is probably the single most important sub-sector in
Canada because the Alberta electricity production industry is primarily coal-fired and
Alberta has the appropriate geology for deep aquifer sequestration. Sequestration
gradually penetrates through the shadow prices, providing 20 Mt at $150, while a switch
to high efficiency combined cycle gas turbines provides 8 Mt at $10, increasing to 13 Mt
at $50 and 14 Mt at $150.
Figure 7.4: Cost Curve for the Alberta Electricity Production Industry
Shadow Price ($/tonne CO2e)
Alberta Electricity
250
200
150
100
50
0
-
10,000
20,000
30,000
40,000
50,000
GHG Reductions (kt)
Figure 7.5: Electricity Production and Emissions in Alberta in 2010
Alberta Electricity Production and Emissions
265
70000
Production
Production (PJ)
255
Emissions
250
60000
50000
245
40000
240
30000
235
20000
230
10000
225
220
0
0
10
20
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40 50 75 100 125 150 200 250
GHG Shadow Price
172
GHG Emissions (kt)
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Cost Curves Analysis
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Table 7.5: Energy, Emissions and costs associated with emissions reduction in Alberta
Electricity Industries, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
Nondemand
related
TEC
TEC incl.
Demand
Changes
ERC
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
194.9
29,307.9
(661.5)
(1,479.5)
315.9
641.7
20
225.9
34,179.8
185.6
(785.3)
1,626.3
2,106.6
30
225.9
35,340.1
471.6
(520.1)
2,965.4
3,796.7
40
216.9
36,597.3
817.9
(166.6)
4,380.2
5,567.6
50
207.2
37,774.0
1,166.0
191.5
5,848.0
7,408.7
75
179.5
40,868.4
2,230.8
1,245.5
9,795.5
12,317.1
100
161.6
42,711.8
2,956.3
1,979.1
13,923.5
17,579.3
125
147.8
44,047.6
3,544.7
2,573.3
18,186.2
23,066.7
150
139.2
44,793.4
3,928.0
2,977.9
22,505.2
28,697.6
200
124.4
45,941.4
4,566.6
3,618.8
31,304.7
40,217.4
250
114.1
46,671.2
4,950.7
4,003.5
40,237.2
51,999.3
The significant actions in Alberta Electricity Production
Shadow price
Action
$10
Demand reductions (kt)
$50
$75
$150
4,722.2
5,697.9
5,769.6
5,522.1
16%
15%
14%
12%
16,523.6
12,805.6
8,925.3
5,079.7
56%
34%
22%
11%
8,014.9
13,462.9
14,176.3
13,734.0
% of direct reductions
27%
36%
35%
31%
Switch to sequestered coal (kt)
NIL
5,807.5
11,997.2
20,457.6
0.2%
15%
29%
46%
% of direct reductions
Switch to more efficient coal and gas burners (kt)
% of direct reductions
Switch out of all coal techs to combined cycle gas
turbines (kt)
% of direct reductions
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7.1.4. Saskatchewan Electricity Production
Like Alberta, we see strong responses in the electricity demand in Saskatchewan. See the
graph below and the residential and commercial sectors for details.
Figure 7.6: Cost Curve for the Saskatchewan Electricity Production Industry
Saskatchewan Electricity
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000
12,000
GHG Reductions (kt)
Figure 7.7: Electricity Production and Emissions in Saskatchewan in 2010
Saskatchewan Electricity Production and Emissions
14000
70
Production
12000
68
Emissions
10000
66
8000
64
6000
62
4000
60
2000
58
56
0
0
10
20
30
40
50
75
100 125 150 200 250
GHG Shadow Price
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Production (PJ)
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Cost Curves Analysis
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Table 7.6: Energy, Emissions and costs associated with emissions reduction in Saskatchewan
Electricity Industries, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
Nondemand
related
TEC
TEC incl.
Demand
Changes
ERC
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
50.7
6,739.5
496.9
155.1
236.9
150.3
20
62.8
8,480.0
994.9
537.1
642.9
525.5
30
59.3
8,796.2
1,132.3
664.9
1,023.3
986.9
40
56.5
8,998.4
1,215.5
754.7
1,403.8
1,466.6
50
52.8
9,276.6
1,328.6
874.1
1,804.1
1,962.5
75
45.8
9,867.2
1,561.9
1,104.1
2,845.4
3,273.2
100
42.9
10,063.6
1,643.4
1,194.1
3,897.0
4,648.2
125
40.7
10,253.0
1,719.0
1,266.5
4,971.2
6,055.2
150
38.4
10,382.9
1,775.8
1,337.4
6,060.8
7,489.2
200
35.5
10,514.7
1,861.8
1,425.5
8,269.5
10,405.4
250
34.0
10,568.4
1,907.9
1,472.8
10,495.4
13,358.0
The significant actions in Saskatchewan Electricity Production
Shadow price
Action
$10
$50
$75
$150
1,072.5
1,440.9
1,455.8
1,392.6
16%
16%
15%
13%
3,674.7
2,094.0
1,413.7
916.8
55%
23%
14%
9%
1,992.2
3,946.1
4,036.4
4,018.5
30%
43%
41%
39%
Switch to sequestered coal (kt)
Nil
1,795.5
2,960.8
4,055.0
% of direct reductions
0%
19%
30%
39%
Demand reductions (kt)
% of direct reductions
Switch to more efficient coal and gas burners (kt)
% of direct reductions
Switch out of all coal techs to combined cycle gas
turbines (kt)
% of direct reductions
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7.1.5. Manitoba Electricity Production
Manitoba’s electricity production is dominated by hydropower, with some peaking power
provided by coal and NG. A minor amount of power comes from other sources. The
graph below depicts how electricity production and it emissions varied with the
increasing shadow prices.
Figure 7.8: Cost Curve for the Manitoba Electricity Production Industry
Shadow Price ($/tonne CO2e)
Manitoba Electricity
250
200
150
100
50
0
-
50
100
150
200
250
300
GHG Reductions (kt)
Figure 7.9: Electricity Production and Emissions in Manitoba in 2010
130
600
125
500
120
400
115
300
110
200
Production
105
Emissions
100
100
0
0
10
20
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30
40 50 75 100 125 150 200 250
GHG Shadow Prices
176
GHG Emissions (kt)
Production (PJ)
Manitoba Electricity Production and Emissions
Cost Curves Analysis
Final Analysis Report
Table 7.7: Energy, Emissions and costs associated with emissions reduction in Manitoba
Electricity Industries, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
Nondemand
related
TEC
TEC incl.
Demand
Changes
ERC
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
1.3
181.6
63.2
(114.8)
17.6
2.4
20
1.6
220.0
66.6
(94.5)
22.3
7.6
30
1.7
236.3
68.2
(85.2)
27.1
13.4
40
1.8
243.3
71.2
(75.2)
32.5
19.6
50
1.8
246.6
76.6
(60.3)
38.5
25.9
75
1.8
249.3
109.9
11.2
58.9
41.9
100
1.9
250.0
160.7
112.5
83.8
58.2
125
1.9
250.3
229.5
250.7
113.5
74.9
150
1.9
250.4
317.1
429.9
148.2
91.9
200
1.9
250.6
538.4
661.4
229.8
126.9
250
1.9
250.6
624.1
751.1
277.9
162.5
The significant actions in Manitoba Electricity Production
Shadow price
Action
$10
Demand reductions (kt)
$50
$75
$150
13.1
7.2
3.8
(11.9)
% of direct reductions
7%
3%
2%
(5)%
Switch out of renewables to mainly small hydro (kt)
0.6
1.0
1.1
1.1
% of direct reductions
0.3%
0.4%
0.4%
0.4%
Switch out of pulverized fluidized bed coal and
integrated gasification combined cycle coal into
optimal small hydro (kt)
168.0
238.4
244.4
261.2
93%
97%
98%
104%
% of direct reductions
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7.1.6. Ontario Electricity Production
Ontario is different from the other regions in that, due to a lack of hydro or significant
coal resources, it has a more diversified electricity production portfolio. The graph below
depicts how electricity production and it emissions varied with the increasing shadow
prices.
Figure 7.10: Cost Curve for the Ontario Electricity Production Industry
Shadow Price ($/tonne CO2e)
Ontario Electricity
250
200
150
100
50
0
-
5,000
10,000
15,000
20,000
GHG Reductions (kt)
Figure 7.11: Electricity Production and Emissions in Ontario in 2010
40000
660
35000
640
30000
620
25000
600
20000
580
15000
560
540
520
Production
10000
Emissions
5000
500
0
0
10
20
30
40
50
75 100 125 150 200 250
GHG Shadow Prices
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GHG Emission (kt)
Production (PJ)
Ontario Electricity Production and Emissions
680
Cost Curves Analysis
Final Analysis Report
Table 7.8: Energy, Emissions and costs associated with emissions reduction in Ontario
Electricity Industries, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
Nondemand
related
TEC
TEC incl.
Demand
Changes
ERC
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
92.0
5,968.7
(2,235.5)
(4,339.6)
(506.3)
70.1
20
88.4
5,920.6
(2,193.1)
(4,158.2)
(388.7)
212.7
30
93.3
6,832.3
(2,001.2)
(3,881.4)
(215.5)
379.8
40
124.8
10,951.3
(1,024.4)
(2,958.0)
246.3
669.8
50
141.5
13,122.3
(53.1)
(1,983.9)
837.9
1,135.0
75
142.1
13,503.9
680.3
(994.2)
2,091.7
2,562.2
100
141.5
13,599.3
1,118.5
(276.4)
3,347.7
4,090.7
125
140.4
13,619.9
1,735.7
698.7
4,679.7
5,661.1
150
138.7
13,575.6
2,656.4
2,097.0
6,119.0
7,273.2
200
149.0
14,115.3
5,939.5
5,462.3
9,491.1
10,674.9
250
168.2
15,030.0
10,235.7
9,855.9
13,341.4
14,376.6
The significant actions in Ontario Electricity Production
Shadow price
Action
$10
Demand reductions (kt)
% of direct reductions
Switch out of base fossil fuels into renewables (kt)
% of direct reductions
Switch out of base fossil fuels into hydro (kt)
% of direct reductions
Base thermal fossil fuel energy efficiency (Switch
to gas and combined cycle gas turbines) (kt)
$50
$75
$150
2,596.1
2,475.7
2,096.1
218.0
22%
20%
18%
2%
2,402.4
2,455.5
2,653.6
3,748.8
20%
20%
23%
28%
1,874.9
2,266.6
2,194.6
2,398.1
16%
19%
19%
18%
(3,188.7)
3,219.2
3,648.9
3,861.0
% of direct reductions
-52.4%
25.0%
27.5%
29.2%
Base thermal fossil fuel switching (coal to NG) (kt)
2,402.5
2,455.5
2,653.6
2,974.3
20%
20%
23%
23%
% of direct reductions
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7.1.7. Québec Electricity Production
Québec’s electricity production is dominated by hydropower, with some other
alternatives including natural gas, fuel oil and diesel. Please see the graph below to see
how electricity production and it emissions varied with the increasing shadow prices.
Figure 7.12: Cost Curve for the Québec Electricity Production Industry
Quebec Electricity
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
20
40
60
80
100
120
GHG Reductions (kt)
Figure 7.13: Electricity Production and Emissions in Québec in 2010
Quebec Electricity Production and Emissions
Produciton (PJ)
700
Production
840
Emissions
820
800
680
780
660
760
740
640
720
620
700
600
680
0
10
20
M.K. Jaccard and Associates
30
40 50 75 100 125 150 200 250
GHG Shadow Prices
180
GHG Emissions (kt)
860
720
Cost Curves Analysis
Final Analysis Report
Table 7.9: Energy, Emissions and costs associated with emissions reduction in Québec
Electricity Industries, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
Nondemand
related
TEC
TEC incl.
Demand
Changes
ERC
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
(0.6)
69.8
(4,496.9)
(6,165.8)
(1,123.8)
0.6
20
(0.5)
73.9
(4,307.0)
(5,840.3)
(1,075.3)
1.9
30
(0.4)
77.2
(4,104.3)
(5,493.6)
(1,023.3)
3.7
40
(0.4)
79.7
(3,883.4)
(5,116.2)
(966.4)
5.9
50
(0.3)
81.6
(3,637.4)
(4,699.3)
(903.0)
8.4
75
(0.2)
85.0
(2,972.9)
(3,568.9)
(731.0)
16.3
100
(0.1)
88.0
(2,362.4)
(2,529.4)
(571.1)
26.0
125
(0.1)
90.7
(1,881.8)
(1,710.2)
(442.6)
37.2
150
(0.0)
93.0
(1,488.2)
(1,039.2)
(334.9)
49.6
200
0.1
96.2
(641.5)
(161.4)
(102.7)
76.9
250
0.1
98.1
(246.4)
248.1
18.1
106.3
The significant actions in Québec Electricity Production
Shadow price
Action
$10
Switch out of renewables to large hydro (kt)
99.7
$50
113.1
$75
117.9
$150
128.7
Please note that electricity demand in Québec rises, but as electricity in this province is
virtually devoid of GHG emissions the increased demand generates no significant new
emissions. Hydro is so preponderant in Québec that it also reduces the use of more
expensive renewables.
7.1.8. Electricity Production in the Atlantic Provinces:
The Atlantic provinces are like Ontario in that they have a diversified set of production
assets, mainly coal fired, but including NG, hydro and nuclear assets as well. There are
interesting differences between the BAU and policy worlds for Atlantic electricity
production. In the BAU world fluidized bed coal meets new demand; in the policy world
demand initially drops, leaving an older, dirtier coal system. As shadow prices rise,
however, new demand is met by hydro, which gradually reduces the carbon content of
M.K. Jaccard and Associates
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Atlantic electricity. Please see the graph below to see how electricity production and its
emissions varied with the increasing shadow prices
Figure 7.14: Cost Curve for the Atlantic Electricity Production Industry
Shadow Price ($/tonne CO2e)
Atlantic Electricity
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000 12,000 14,000
GHG Reductions (kt)
Figure 7.15: Electricity Production and Emissions in the Atlantic Provinces in 2010
Atlantic Electricity Production and Emissions
18000
340
Production
16000
335
Emissions
14000
330
12000
325
10000
320
8000
315
6000
310
4000
305
2000
300
0
0
10
20
30
40
50
75
100 125 150 200 250
GHG Shadow Prices
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GHG Emissions (kt)
Production (PJ)
345
Cost Curves Analysis
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Table 7.10: Energy, Emissions and costs associated with emissions reduction in Electricity
Industries in the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
Nondemand
related
TEC
TEC incl.
Demand
Changes
ERC
Perceived
Private
Costs
($ / t
CO2e)
(PJ)
(kt)
(’95
$millions)
(’95
$millions)
(’95
$millions)
(’95
$millions)
10
42.6
2,321.5
915.1
(141.0)
252.8
32.0
20
50.5
2,887.4
1,004.1
(46.3)
330.9
106.4
30
87.0
6,272.9
1,931.8
770.4
676.2
257.7
40
111.7
8,347.1
2,696.2
1,500.1
1,064.3
520.3
50
137.2
10,271.7
3,654.8
2,431.8
1,570.3
875.4
75
157.7
11,560.3
4,498.1
3,392.0
2,600.1
1,967.5
100
164.1
11,953.0
4,810.1
3,895.7
3,577.1
3,166.0
125
167.8
12,172.6
5,019.0
4,264.3
4,551.9
4,396.1
150
170.0
12,297.4
5,287.6
4,770.4
5,554.9
5,644.0
200
172.7
12,441.0
5,990.1
5,502.1
7,626.8
8,172.4
250
174.1
12,508.6
6,430.5
5,960.5
9,654.6
10,729.3
The significant actions in Atlantic Provinces Electricity Production
Shadow price
Action
$10
$50
$75
$150
1,411.7
2,889.2
2,435.1
476.7
61%
28%
21%
4%
2,422.5
6,670.4
8,781.3
11,768.1
104%
65%
76%
96%
(2,142.3)
773.3
386.6
57.8
% of direct reductions
(92)%
8%
3%
1%
Base thermal fossil fuel switching (coal to NG)
(kt)
629.6
(61.2)
(42.7)
(5.2)
% of direct reductions
27%
(1)%
(0)%
0%
Demand reductions (kt)
% of direct reductions
Switch out of base fossil fuels into hydro (kt)
% of direct reductions
Base thermal fossil fuel energy efficiency
(Switch to gas turbines and combined cycle gas
turbines) (kt)
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8. Agriculture
8.1. General Commentary on Agriculture
The Agricultural actions were incorporated in this analysis by adjusting GHG emissions
and costs exogenously. The data were obtained from spreadsheets provided by the
Agriculture table and were added in based on the cost information provided therein. As
these are not endogenous, the graph shows a smooth function where actually the inputs
are very stepwise – i.e., once a certain threshold has been reached, the action receives
100% penetration.
National GHG reductions rise steadily as the shadow price increases. At the $150
shadow price, the agricultural sector contributes 8.5 Mt of emissions reductions.
Roughly three-quarters of these emissions reductions are from three actions, including the
grazing strategies action (2.6 Mt), increased no-till (2.0 Mt) and decreased utilization of
summer fallow (1.7 Mt).
Saskatchewan contributes the largest portion (2.96 Mt) of national emission reductions
from the agricultural sector due to its prominent contributions to the increased no-till (1.1
Mt) and decreased use of summer fallow (1.1 Mt) actions. Alberta contributes 2.0 Mt of
reductions, largely from increased no-till (0.6 Mt) and grazing strategies (0.7 Mt). The
rest of the reductions from improved grazing strategies are the result of modest
reductions (approx. 0.3 Mt per province excluding Atlantic) in the other provinces
indicating that it is a broadly effective action. Some anomalous results are apparent
where the data templates provided show that emissions increase as the shadow price rises
(e.g., Atlantic, British Columbia, Québec). These are highlighted below.
Although this sector was modeled exogenous to CIMS, we have provided in this section
estimates of perceived private and expected resource costs calculated using the standard
cost curve methodology. One can debate whether exogenous actions and their emissions
reductions should be included in this curve (and thus the national total) as they penetrate
at shadow price thresholds based primarily on their techno-economic rather than
perceived costs.18 This methodology assumes that these actions should be assigned the
same level of perceived private costs as those actions that penetrated at that shadow price
endogenously in CIMS. The impact of removing the exogenous actions from the national
emission reduction and cost estimates is shown in Appendix A.
18
This too is an assumption (as we explained in the Roll Up report). We are not sure what is included and
what is excluded in the costs provided to us by the tables.
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Cost Curves Analysis
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8.1.1. Canada Agriculture
Figure 8.1: Cost Curve for Agricultural Actions for all Canada
Canada Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
10,000
GHG Reductions (kt)
Table 8.1: Energy, Emissions and costs associated with emissions reduction in Agricultural
Actions for all Canada, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(Mt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
3.6
(556)
(69.1)
93.1
20
NA
5.5
(349)
116.2
271.2
30
NA
7.0
54
445.6
576.2
40
NA
7.3
123
723.5
923.5
50
NA
7.6
229
1,022.3
1,286.6
75
NA
8.3
518
1,896.0
2,355.3
100
NA
8.4
591
2,615.3
3,290.0
125
NA
8.4
603
3,329.5
4,238.2
150
NA
8.5
692
4,111.3
5,251.2
200
NA
8.5
692
5,614.5
7,255.3
250
NA
8.5
692
7,125.1
9,269.6
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8.1.2. BC Agriculture
Figure 8.2: Cost Curve for BC Agriculture
British Columbia Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
400
GHG Reductions (kt)
Table 8.2: Energy, Emissions and costs associated with emissions reduction in BC Agriculture,
2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
359.1
(3.1)
6.0
9.1
20
NA
359.1
(3.1)
14.4
20.3
30
NA
359.1
(3.1)
26.5
36.4
40
NA
359.1
(3.1)
39.3
53.5
50
NA
359.1
(3.1)
52.2
70.6
75
NA
348.8
(8.1)
80.8
110.5
100
NA
348.8
(8.1)
112.0
152.1
125
NA
348.8
(8.1)
143.2
193.7
150
NA
348.8
(8.1)
174.4
235.3
200
NA
348.8
(8.1)
236.8
318.4
250
NA
348.8
(8.1)
299.2
401.6
The significant actions in British Columbia Agriculture
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Shadow Price
Action
$10
Improved nutrient management (kt)
$75
22.9
22.9
% of direct reductions
6%
7%
Increase No-Till (kt)
(0.3)
(0.3)
(0.1)%
(0.1)%
Decrease Utilization of Summer Fallow (kt)
Nil
(35.7)
% of direct reductions
0%
(10)%
28.4
28.4
% of direct reductions
8%
8%
Grazing strategies (kt)
308.1
308.1
% of direct reductions
86%
88%
Combined Grazing strategies (kt)
Nil
25.4
% of direct reductions
0%
7.3%
% of direct reductions
Increase Permanent Cover Program (high cattle increase) (kt)
The majority of British Columbia’s agricultural emissions reductions come from the
grazing strategies action that penetrates at the $10 shadow price. At the $75 shadow
price, two actions in this region, increased no-till and decreased utilization of summer
fallow, penetrate and result in higher emissions. It is not clear if the data provided are
incorrect or if the emission increases are in fact the result of biological processes.
M.K. Jaccard and Associates
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Cost Curves Analysis
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8.1.3. Alberta Agriculture
Figure 8.3: Cost Curve for Alberta Agriculture
Alberta Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
GHG Reductions (kt)
The grazing strategies action contributes the largest percentage of Alberta agricultural
GHG reductions and penetrates immediately at the $10 shadow price. In between the $20
and $50 shadow price levels, improved nutrient management and decreased utilization of
summer fallow each contribute roughly 20% of total emissions reductions. At $75, the
increased no-till action penetrates and together with the grazing strategies action yields
66% of total reductions in Alberta agriculture.
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Table 8.3: Energy, Emissions and costs associated with emissions reduction in Alberta
Agriculture, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
971.2
(104.9)
(6.3)
26.6
20
NA
1,191.6
(101.1)
24.0
65.7
30
NA
1,302.5
(86.4)
73.7
127.1
40
NA
1,302.5
(86.4)
127.0
198.1
50
NA
1,302.5
(86.4)
180.2
269.0
75
NA
1,936.3
177.2
501.0
608.9
100
NA
1,936.3
177.2
684.5
853.6
125
NA
1,936.3
177.2
879.2
1,113.2
150
NA
2,038.5
267.8
1,141.8
1,433.1
200
NA
2,038.5
267.8
1,550.9
1,978.6
250
NA
2,038.5
267.8
1,960.0
2,524.1
The significant actions in Alberta Agriculture
Shadow Price
Action
$10
$20
$30
$75
$150
245.5
245.5
245.5
245.5
245.5
% of direct reductions
25%
21%
19%
13%
12%
Increase No-Till (kt)
Nil
Nil
Nil
633.7
633.7
% of direct reductions
0%
0%
0%
33%
31%
Decrease Utilization of Summer Fallow (kt)
Nil
220.3
220.3
220.3
220.3
% of direct reductions
0%
19%
17%
11%
11%
Increase Permanent Cover Program (high cattle
increase) (kt)
Nil
Nil
Nil
Nil
102.2
% of direct reductions
0%
0%
0%
0%
5%
Grazing strategies (kt)
725.7
725.7
725.7
725.7
725.7
% of direct reductions
75%
61%
56%
38%
36%
Combined Grazing strategies (kt)
Nil
Nil
111.0
111.0
111.0
% of direct reductions
0%
0%
9%
6%
6%
Improved nutrient management (kt)
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Cost Curves Analysis
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8.1.4. Saskatchewan Agriculture
Figure 8.4: Cost Curve for Saskatchewan Agriculture
Saskatchewan Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
3,000
3,500
GHG Reductions (kt)
Table 8.4: Energy, Emissions and costs associated with emissions reduction in Saskatchewan
Agricultural, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
594.2
(183.3)
(34.2)
15.5
20
NA
1,708.0
(35.7)
30
NA
2,831.5
305.5
43.5
217.3
70.0
187.9
40
NA
2,831.5
305.5
318.3
322.6
50
NA
2,831.5
305.5
419.3
457.3
75
NA
2,854.1
319.3
673.8
792.0
100
NA
2,962.4
392.6
927.6
1,106.0
125
NA
2,962.4
392.6
1,173.4
1,433.6
150
NA
2,962.4
392.6
1,432.4
1,779.0
200
NA
2,962.4
392.6
1,950.4
2,469.7
250
NA
2,962.4
392.6
2,468.5
3,160.5
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The significant actions in Saskatchewan Agriculture
Action
Improved nutrient management (kt)
Shadow Price
$10
$20
$30
$75
$100
241.7
241.7
241.7
241.7
241.7
% of direct reductions
41%
14%
9%
9%
8%
Increase No-Till (kt)
Nil
Nil
% of direct reductions
0%
0%
Decrease Utilization of Summer Fallow (kt)
Nil
1,113.8
% of direct reductions
0%
65%
39%
39%
37%
Grazing strategies (kt)
352.6
352.6
352.6
352.6
352.6
% of direct reductions
59%
21%
13%
12%
12%
Combined Grazing strategies (kt)
Nil
Nil
Nil
22.6
22.6
% of direct reductions
0%
0%
0%
1%
1%
Expand Shelterbelts on Prairies (kt)
Nil
Nil
Nil
Nil
108.3
% of direct reductions
0%
0%
0%
0%
4%
1,123.5 1,123.5 1,123.5
40%
39%
38%
1,113.8 1,113.8 1,113.8
In the Saskatchewan agricultural sector, the largest emissions reductions come from the
increased no-till action and the decreased use of summer fallow action that penetrate at
$20 and $30 respectively. These two actions account for roughly 80% of total reductions
at shadow prices above $30. Improved nutrient management and grazing strategies
contribute most of the remaining 20% and penetrate at the $10 shadow price.
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8.1.5. Manitoba Agriculture
Figure 8.5: Cost Curve for Manitoba Agriculture
Manitoba Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
GHG Reductions (kt)
Table 8.5: Energy, Emissions and costs associated with emissions reduction in Manitoba
Agriculture, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
735.8
(241.9)
(46.9)
18.2
20
NA
857.5
(229.1)
(21.1)
48.3
30
NA
979.0
(214.1)
15.6
92.1
40
NA
979.0
(214.1)
49.1
136.8
50
NA
1,278.6
(108.4)
120.3
196.5
75
NA
1,354.9
(91.5)
239.3
349.5
100
NA
1,354.9
(91.5)
339.0
482.5
125
NA
1,354.9
(91.5)
453.5
635.2
150
NA
1,354.9
(91.5)
568.0
787.8
200
NA
1,354.9
(91.5)
797.0
1,093.1
250
NA
1,354.9
(91.5)
1,025.9
1,398.4
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The significant actions in Manitoba Agriculture
Shadow Price
Action
$10
$20
$30
251.5
251.5
251.5
% of direct reductions
34%
29%
26%
Increase No-Till (kt)
Nil
Nil
Nil
% of direct reductions
0%
0%
0%
Decrease Utilization of Summer Fallow (kt)
Nil
121.7
121.7
% of direct reductions
0%
14%
12%
127.6
127.6
127.6
% of direct reductions
17%
15%
13%
Grazing strategies (kt)
356.7
356.7
356.7
% of direct reductions
49%
42%
36%
Combined Grazing strategies (kt)
Nil
Nil
121.5
% of direct reductions
0%
0%
12%
10%
9%
Expand Shelterbelts on Prairies (kt)
Nil
Nil
Nil
Nil
76.4
% of direct reductions
0%
0%
0%
0%
6%
Improved nutrient management (kt)
Increase Permanent Cover Program (high cattle
increase) (kt)
$50
$75
251.5 251.5
20%
19%
299.6 299.6
23%
22%
121.7 121.7
10%
9%
127.6 127.6
10%
9%
356.7 356.7
28%
26%
121.5 121.5
In Manitoba agriculture, increased nutrient management, increased permanent cover and
improved grazing strategies penetrate immediately at the $10 shadow price. Decreased
utilization of summer fallow and combined grazing strategies occur at the $20 and $30
shadow prices respectively. The increased no-till action yields the next large increase in
emissions reductions at the $50 shadow price.
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8.1.6. Ontario Agriculture
Figure 8.6: Cost Curve for Ontario Agriculture
Ontario Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
800
1,000
1,200
GHG Reductions (kt)
Table 8.6: Energy, Emissions and costs associated with emissions reduction in Ontario
Agriculture, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
331.5
3.2
7.1
8.5
20
NA
506.9
22.0
23.0
23.3
30
NA
722.0
53.4
53.4
53.5
40
NA
957.6
116.7
99.7
94.1
50
NA
957.6
116.7
131.1
135.9
75
NA
957.6
116.7
209.4
240.3
100
NA
957.6
116.7
287.8
344.8
125
NA
957.6
116.7
338.2
412.0
150
NA
957.6
116.7
413.8
512.9
200
NA
957.6
116.7
565.1
714.6
250
NA
957.6
116.7
716.4
916.3
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The significant actions in Ontario Agriculture
Shadow price
Action
$10
$20
$30
$40
Improved nutrient management (kt)
Nil
150.6
150.6
150.6
% of direct reductions
0%
30%
21%
16%
Increase No-Till (kt)
Nil
Nil
7.2
7.2
% of direct reductions
0%
0%
1%
1%
Decrease Utilization of Summer Fallow (kt)
Nil
Nil
Nil
243.5
% of direct reductions
0%
0%
0%
25%
Increase Permanent Cover Program (high cattle increase) (kt)
Nil
24.8
24.8
24.8
% of direct reductions
0%
5%
3%
3%
Grazing strategies (kt)
331.5
331.5
331.5
331.5
% of direct reductions
100%
65%
46%
35%
Combined Grazing strategies (kt)
Nil
Nil
207.9
207.9
% of direct reductions
0%
0%
29%
22%
Expand Shelterbelts on Prairies (kt)
Nil
Nil
Nil
7.9
% of direct reductions
0%
0%
0%
1%
A $40 shadow price achieves all of the emissions reductions available from the actions
presented. Improved grazing strategies penetrate immediately at the $10 shadow price
and produce the largest proportion of total reductions at all shadow prices. At the $40
shadow price, decreased utilization of summer fallow and combined grazing strategies
each contribute over 20% of the total reductions as well.
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8.1.7. Québec Agriculture
Figure 8.7: Cost Curve for Québec Agriculture
Quebec Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
200
400
600
800
1,000
GHG Reductions (kt)
Table 8.7: Energy, Emissions and costs associated with emissions reduction in Québec
Agriculture, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
576.5
(17.3)
6.5
14.4
20
NA
800.6
6.9
32.6
41.1
30
NA
800.6
6.9
59.6
77.2
40
NA
800.6
6.9
86.7
113.3
50
NA
800.6
6.9
113.8
149.4
75
NA
800.1
6.7
181.4
239.6
100
NA
800.1
6.7
249.0
329.8
125
NA
800.1
6.7
316.6
420.0
150
NA
798.3
4.6
349.5
464.4
200
NA
798.3
4.6
479.2
637.4
250
NA
798.3
4.6
608.9
810.3
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The significant actions in Québec Agriculture
Shadow price
Action
$10
Improved nutrient management (kt)
$20
$75
$150
(0.9)
(0.9)
(0.9)
(0.9)
(0.2)%
(0.1)%
(0.1)%
(0.1)%
Increase No-Till (kt)
Nil
Nil
Nil
(1.8)
% of direct reductions
0%
0%
0%
(0.2)%
50.5
50.5
50.5
50.5
% of direct reductions
9%
6%
6%
6%
Grazing strategies (kt)
526.9
526.9
526.9
526.9
% of direct reductions
91%
66%
66%
66%
Combined Grazing strategies (kt)
Nil
224.2
224.2
224.2
% of direct reductions
0%
28%
28%
28%
Expand Shelterbelts on Prairies (kt)
Nil
Nil
(0.5)
(0.5)
% of direct reductions
0%
0%
(0.1)%
(0.1)%
% of direct reductions
Increase Permanent Cover Program (high cattle increase) (kt)
Grazing strategies are the largest source of emissions reductions in Québec agriculture
and penetrate at the $10 shadow price. At the $20 shadow price, combined grazing
strategies provide the majority of additional emissions reductions. Several agricultural
actions in this region cause emissions to increase. It is not clear if the data provided are
incorrect or if the emission increases are in fact the result of biological processes.
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8.1.8. Atlantic Provinces Agriculture
Figure 8.8: Cost Curve for Agriculture in the Atlantic Provinces
Atlantic Agriculture
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
20
40
60
80
100
GHG Reductions (kt)
Table 8.8: Energy, Emissions and costs associated with emissions reduction in Agricultural in
the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
37.0
(8.6)
(1.5)
0.9
20
NA
37.0
(8.6)
(0.2)
2.6
30
NA
37.0
(8.6)
(0.6)
2.1
40
NA
66.8
(2.2)
3.4
5.3
50
NA
66.8
(2.2)
5.4
8.0
75
NA
66.1
(2.5)
10.3
14.6
100
NA
66.1
(2.5)
15.3
21.3
125
NA
78.7
9.7
25.4
30.6
150
NA
78.7
9.7
31.4
38.7
200
NA
78.7
9.7
35.0
43.4
250
NA
78.7
9.7
46.1
58.3
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The significant actions in Atlantic Provinces Agriculture
Shadow price
Action
$10
$40
$75
$125
Improved nutrient management (kt)
Nil
Nil
Nil
12.6
% of direct reductions
0%
0%
0%
16%
Increase No-Till (kt)
Nil
Nil
(0.6)
(0.6)
% of direct reductions
0%
0%
(1)%
(1)%
Decrease Utilization of Summer Fallow (kt)
3.6
3.6
3.6
3.6
% of direct reductions
10%
5%
5%
5%
Increase Permanent Cover Program (high cattle increase) (kt)
13.6
13.6
13.6
13.6
% of direct reductions
37%
20%
21%
17%
Grazing strategies (kt)
19.8
19.8
19.8
19.8
% of direct reductions
54%
30%
30%
25%
Combined Grazing strategies (kt)
Nil
29.8
29.8
29.8
% of direct reductions
0%
45%
45%
38%
Expand Shelterbelts on Prairies (kt)
Nil
Nil
(0.1)
(0.1)
% of direct reductions
0%
0%
(0.2)%
(0.1)%
In Atlantic agriculture, grazing strategies and increased permanent cover penetrate at the
$10 shadow price and yield over 40% of total reductions at all tax levels. Combined
grazing strategies penetrate at the $40 shadow price and constitute approximately 40% of
total reductions. At the $125 shadow price, improved nutrient management yields the
majority of the additional reductions. Two actions in this region yield increases in GHG
emissions. It is not clear if the data provided are incorrect or if the emission increases are
in fact the result of biological processes.
9. Afforestation
9.1. General Commentary on Afforestation
The Afforestation actions were incorporated in the analysis by adjusting GHG emissions
and costs exogenously. At the $150 shadow price, afforestation actions yield emissions
reductions of 2 Mt. Plantations of fast growing species (e.g., hybrid poplar) on private
land in each province penetrate at shadow prices of $30 or less, contributing 1.3 Mt.
Prairie plantations, prairie shelterbelts, and plantations in Ontario and Québec provide the
remaining emissions reductions.
Although this sector was modeled exogenous to CIMS, we have provided in this section
estimates of perceived private and expected resource costs calculated using the standard
cost curve methodology. One can debate whether exogenous actions and their emissions
reductions should be included in this curve (and thus the national total) as they penetrate
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at shadow price thresholds based primarily on their techno-economic rather than
perceived costs.19 This methodology assumes that these actions should be assigned the
same level of perceived private costs as those actions that penetrated at that shadow price
endogenously in CIMS. The impact of removing the exogenous actions from the national
emission reduction and cost estimates is shown in Appendix A.
9.1.1. Canada Afforestation
Figure 9.1: Cost Curve for Afforestation for all Canada
Canada Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
500
1,000
1,500
2,000
2,500
GHG Reductions (kt)
19
This too is an assumption (as we explained in the Roll Up report). We are not sure what is included and
what is excluded in the costs provided to us by the tables.
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Table 9.1: Energy, Emissions and costs associated with emissions reduction in Afforestation
for all Canada, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
1.3
114
76.6
64.0
30
NA
1.3
120
115.3
113.6
40
NA
1.3
120
158.0
170.6
50
NA
1.3
120
199.0
225.2
75
NA
1.3
120
308.3
370.9
100
NA
1.8
285
598.4
702.8
125
NA
2.0
349
821.5
978.8
150
NA
2.1
390
1,038.3
1,254.6
200
NA
2.1
410
1,413.6
1,748.2
250
NA
2.1
410
1,778.2
2,234.4
9.1.2. BC Afforestation
In British Columbia, planting of fast growing species (e.g. hybrid poplar) on private land
with a target of 1000 hectares per year for 5 years occurs at the $20 shadow price.
Figure 9.2: Cost Curve for BC Afforestation
British Columbia Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
50
100
GHG Reductions (kt)
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Table 9.2: Energy, Emissions and costs associated with emissions reduction from BC
Afforestation, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
161.5
12.0
9.8
9.1
30
NA
161.5
12.0
15.3
16.4
40
NA
161.5
12.0
21.1
24.1
50
NA
161.5
12.0
26.8
31.8
75
NA
161.5
12.0
41.4
51.2
100
NA
161.5
12.0
55.8
70.4
125
NA
161.5
12.0
70.3
89.7
150
NA
161.5
12.0
84.7
109.0
200
NA
161.5
12.0
113.6
147.5
250
NA
161.5
12.0
142.5
186.0
The significant actions in British Columbia Afforestation
Action
Shadow Price
$20
Hybrid Poplar Species (kt)
161.5
% of direct reductions
100%
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9.1.3. Alberta Afforestation
Figure 9.3: Cost Curve of GHG Emissions for Alberta Afforestation
Alberta Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
400
500
GHG Reductions (kt)
Table 9.3: Energy, Emissions and costs associated with emissions reduction from Alberta
Afforestation, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
231.3
22.1
15.1
12.7
30
NA
231.3
22.1
22.4
22.6
40
NA
231.3
22.1
31.9
35.2
50
NA
231.3
22.1
41.3
47.8
75
NA
231.3
22.1
60.1
72.7
100
NA
471.8
108.8
183.2
208.0
125
NA
471.8
108.8
230.6
271.2
150
NA
471.8
108.8
276.0
331.7
200
NA
471.8
108.8
370.6
457.9
250
NA
471.8
108.8
465.3
584.1
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The significant actions in Alberta Afforestation
Shadow Price
Action
$20
$100
Hybrid Poplar Species (kt)
231.3
231.3
% of direct reductions
100%
49%
Plantations (kt)
Nil
161.8
% of direct reductions
0%
34%
Shelterbelts (kt)
Nil
78.7
% of direct reductions
0%
17%
In Alberta, planting of fast growing species (e.g. hybrid poplar) on private land occurs at
the $20 shadow price. We assumed a rate of 10,000 ha over 5 years (one-third of the
table’s estimate for the three prairie provinces). At the $100 shadow price, additional
emissions reductions are achieved through planting block plantations on private land with
a target of 8,722 hectares per year. Additionally, planting of shelterbelts on private land
with a target of 6,600 hectares per year penetrates at the $100 shadow price level.
9.1.4. Saskatchewan Afforestation
Figure 9.4: Cost Curve for Saskatchewan Afforestation
Saskatchewan Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
100
200
300
GHG Reductions (kt)
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400
500
Cost Curves Analysis
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Table 9.4: Energy, Emissions and costs associated with emissions reduction from
Saskatchewan Afforestation, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
231.3
22.1
12.6
9.5
30
NA
231.3
22.1
17.0
15.3
40
NA
231.3
22.1
25.3
26.3
50
NA
231.3
22.1
33.5
37.3
75
NA
231.3
22.1
53.6
64.2
100
NA
373.3
71.0
122.3
139.4
125
NA
429.3
95.2
179.6
207.8
150
NA
429.3
95.2
217.2
257.8
200
NA
429.3
95.2
292.2
357.9
250
NA
429.3
95.2
367.3
458.1
The significant actions in Saskatchewan Afforestation
Action
Shadow Price
$20
$100
$125
Hybrid Poplar Species (kt)
231.3
231.3
231.3
% of direct reductions
100%
62%
54%
Plantations (kt)
Nil
142.1
142.1
% of direct reductions
0%
38%
33%
Shelterbelts (kt)
Nil
Nil
56.0
% of direct reductions
0%
0%
13%
In Saskatchewan, planting of fast growing species (e.g. hybrid poplar) on private land
occurs at the $20 shadow price. We assumed a rate of 10,000 ha over 5 years (one-third
of the table’s estimate for the three prairie provinces). At the $100 shadow price,
additional emissions reductions are achieved through planting block plantations on
private land with a target of 7,658 hectares per year. Additionally, planting of
shelterbelts on private land with a target of 5,145 hectares per year penetrates at the $125
shadow price level.
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9.1.5. Manitoba Afforestation
Figure 9.5: Cost Curve for Manitoba Afforestation
Manitoba Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
50
100
150
200
250
300
350
GHG Reductions (kt)
Table 9.5: Energy, Emissions and costs associated with emissions reduction from Manitoba
Afforestation, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
231.3
22.1
15.3
13.0
30
NA
231.3
22.1
21.8
21.8
40
NA
231.3
22.1
29.7
32.3
50
NA
231.3
22.1
32.2
35.5
75
NA
231.3
22.1
50.3
59.7
100
NA
313.1
51.1
96.4
111.5
125
NA
313.1
51.1
122.8
146.8
150
NA
313.1
51.1
149.3
182.0
200
NA
313.1
51.1
202.2
252.6
250
NA
313.1
51.1
255.1
323.1
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The significant actions in Manitoba Afforestation
Shadow Price
Action
$20
$100
Hybrid Poplar Species (kt)
231.3
231.3
% of direct reductions
100%
74%
Plantations (kt)
Nil
67.2
% of direct reductions
0%
22%
Shelterbelts (kt)
Nil
14.7
% of direct reductions
0%
5%
In Manitoba, planting of fast growing species (e.g. hybrid poplar) on private land occurs
at the $20 shadow price. We assumed a rate of 10,000 ha over 5 years (one-third of the
table’s estimate for the three prairie provinces). At the $100 shadow price, additional
emissions reductions are achieved through planting block plantations on private land with
a target of 3,620 hectares per year. Additionally, planting of shelterbelts on private land
with a target of 1,247 hectares per year penetrates at the $100 shadow price level.
9.1.6. Ontario Afforestation
Figure 9.6: Cost Curve of GHG Emissions for Ontario Afforestation
Ontario Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
50
100
150
200
GHG Reductions (kt)
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300
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Table 9.6: Energy, Emissions and costs associated with emissions reduction from Ontario
Afforestation, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
201.4
18.1
11.5
9.3
30
NA
201.4
18.1
15.7
14.9
40
NA
201.4
18.1
19.4
19.8
50
NA
201.4
18.1
25.9
28.6
75
NA
201.4
18.1
42.4
50.5
100
NA
201.4
18.1
58.9
72.5
125
NA
315.9
58.2
116.5
135.9
150
NA
315.9
58.2
141.4
169.2
200
NA
315.9
58.2
191.3
235.7
250
NA
315.9
58.2
241.3
302.3
The significant actions in Ontario Afforestation
Action
Shadow Price
$20
$125
Hybrid Poplar Species (kt)
201.4
201.4
% of direct reductions
100%
64%
Plantations (kt)
Nil
114.5
% of direct reductions
0%
36%
In Ontario, planting of fast growing species (e.g. hybrid poplar) on private land at a target
rate of 7,500 hectares in 5 years occurs at the $20 shadow price. At the $125 shadow
price, additional emissions reductions are achieved through planting block plantations on
private land with a target of 6,000 hectares per year.
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9.1.7. Québec Afforestation
Figure 9.7: Cost Curve of GHG Emissions for Québec Afforestation
Quebec Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
50
100
150
200
250
300
350
GHG Reductions (kt)
Table 9.7: Energy, Emissions and costs associated with emissions reduction from Québec
Afforestation, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
201.4
18.1
12.3
10.3
30
NA
201.4
18.1
19.1
19.4
40
NA
201.4
18.1
25.9
28.5
50
NA
201.4
18.1
32.7
37.6
75
NA
201.4
18.1
49.7
60.3
100
NA
201.4
18.1
66.8
83.0
125
NA
201.4
18.1
83.8
105.7
150
NA
305.0
58.2
147.6
177.4
200
NA
305.0
58.2
197.2
243.5
250
NA
305.0
58.2
246.8
309.6
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The significant actions in Québec Afforestation
Shadow Price
Action
$20
$125
Hybrid Poplar Species (kt)
201.4
201.4
% of direct reductions
100%
66%
Plantations (kt)
Nil
103.6
% of direct reductions
0%
34%
In Québec, planting of fast growing species (e.g. hybrid poplar) on private land at a target
rate of 5,000 hectares in 5 years occurs at the $20 shadow price. At the $125 shadow
price, additional emissions reductions are achieved through planting block plantations on
private land with a target of 6,000 hectares per year.
9.1.8. Atlantic Afforestation
Figure 9.8: Cost Curve for Atlantic Afforestation
Atlantic Afforestation
Shadow Price ($/tonne CO2e)
250
200
150
100
50
0
-
20
40
60
80
GHG Reductions (kt)
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100
120
Cost Curves Analysis
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Table 9.8: Energy, Emissions and costs associated with emissions reduction from Afforestation
in the Atlantic Provinces, 2010
Shadow
price
Energy
Saved
Emissions
Reduced
TechnoEconomic
Costs
Expected
Resource
Costs
Perceived
Private
Costs
($ / t CO2e)
(PJ)
(kt)
(’95
$million)
(’95
$million)
(’95
$million)
10
NA
-
-
-
-
20
NA
-
-
-
-
30
NA
55.9
6.0
3.9
3.2
40
NA
55.9
6.0
4.8
4.4
50
NA
55.9
6.0
6.5
6.7
75
NA
55.9
6.0
10.8
12.4
100
NA
55.9
6.0
15.0
18.0
125
NA
55.9
6.0
17.8
21.7
150
NA
55.9
6.0
22.1
27.5
200
NA
96.1
26.1
46.3
53.1
250
NA
96.1
26.1
59.9
71.2
The significant actions in Atlantic Afforestation
Action
Hybrid Poplar Species (kt)
Shadow price
$30
$200
55.9
55.9
100%
58%
Plantations (kt)
Nil
40.2
% of direct reductions
0%
42%
% of direct reductions
In the Atlantic provinces, planting of fast growing species (e.g. hybrid poplar) on private
land at a target rate of 2,500 hectares in 5 years occurs at the $30 shadow price. At the
$200 shadow price, additional emissions reductions are achieved through planting block
plantations on private land with a target of 3,000 hectares per year.
10.
Regional Output
In this section, we will display the individual sector outputs as regional aggregates. The
regional tables define energy saved, GHG emissions reduced, techno-economic costs
(TEC), expected resource costs and perceived private costs associated with the reduction.
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As we noted in section 2.1, we represent costs in transportation differently than the other
sectors. Transportation reports very large negative techno-economic costs (i.e., benefits)
because walking, cycling, transit and higher occupancy private vehicles cost less than
single occupancy private vehicles. In the first TEC columns, we exclude the financial
savings while in the second, they are included. These “benefits” are, however,
accompanied by a very large loss of consumers’ surplus reflected in the ERC columns.
We also portray the impact of assumptions regarding vehicle ownership (do consumers
still continue to buy vehicles even though they switch to modes requiring vehicles less?).
10.1.
British Columbia
British Columbia is characterized by a relatively dense urban population with mild
winters, a large resource industry and electricity provided by hydropower. BC registered
a reduction of 10.9 Mt of GHG emissions at the $150 shadow price, the shadow price that
induced national reductions closest to the Kyoto target. Of this, transportation
contributed 3.75 Mt, electricity 1.59 Mt, commercial 1.6 Mt, residential 0.8 Mt and NG
extraction 0.75 Mt, for a total of 8.5 Mt. Transportation mode and fuel switching, fuel
switching to hydro from NG, energy efficiency and landfill gas actions in commercial
and residential (which reduced electricity demand) and NG extraction actions contributed
the lion’s share of reductions in this province.
Figure 10.1: Cost Curve of GHG Emissions for British Columbia, 2010.
British Columbia Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
2,000
4,000
6,000
8,000
GHG Reductions (kt)
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10,000
12,000
14,000
Cost Curves Analysis
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Table 10.1: Energy, Emissions and costs associated with emissions reduction in BC, 2010
TEC
w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
86.1
5.54
(2.8)
(3.5)
(3.3)
(0.8)
(0.7)
0.1
20
92.0
6.14
(2.7)
(3.5)
(3.3)
(0.6)
(0.5)
0.4
30
98.3
6.49
(2.5)
(3.6)
(3.3)
(0.3)
(0.3)
0.8
40
104.6
6.93
(2.4)
(3.7)
(3.3)
(0.1)
(0.0)
1.1
50
110.9
7.20
(2.3)
(3.8)
(3.3)
0.1
0.3
1.4
75
125.8
7.95
(2.1)
(4.1)
(3.3)
0.7
0.9
2.4
100
138.6
8.58
(1.7)
(4.2)
(3.2)
1.4
1.7
3.3
125
151.3
9.60
(1.3)
(4.2)
(2.9)
2.3
2.6
4.4
150
162.4
10.72
(0.8)
(3.7)
(2.2)
3.2
3.6
5.5
200
178.1
12.01
0.9
(2.8)
(0.8)
5.3
5.8
8.1
250
190.6
13.31
2.4
(1.8)
0.7
7.7
8.3
10.9
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
10.2.
Alberta
Coal-fired electricity supply, a large agricultural sector, a very large petrochemical and
gas industry and a mixed urban and rural population characterize Alberta. It also has the
potential for sequestration. At the $150 shadow price, Alberta registers a reduction of
67.8 Mt, over a third of the Kyoto target, with approximately 7% of the population of
Canada. Of this 2 Mt is from agricultural actions, 5.5 Mt is from transportation, 3.6 Mt is
from NG extraction actions, 8.7 Mt is from upstream oil and 44.8 Mt is from the
electricity sector: reduced electricity production (5.5 Mt), high efficiency coal burners
(5.1 Mt), sequestration (20.5 Mt) and a switch to combined cycle gas turbines from coal
(13.7 Mt).
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Figure 10.2: Cost Curve of GHG Emissions for Alberta, 2010.
Alberta Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
10,000 20,000 30,000 40,000 50,000 60,000 70,000
GHG Reductions (kt)
Table 10.2: Energy, Emissions and costs associated with emissions reduction in Alberta, 2010
TEC w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
292.3
40.48
(5.4)
(6.1)
(5.9)
(0.8)
(0.7)
1.0
20
331.5
49.73
(4.8)
(5.9)
(5.5)
1.0
1.1
3.4
30
336.6
52.59
(4.4)
(5.7)
(5.1)
3.1
3.3
6.1
40
331.8
54.29
(4.0)
(5.6)
(4.8)
5.3
5.5
8.9
50
326.2
55.71
(3.7)
(5.5)
(4.5)
7.5
7.8
11.9
75
308.5
60.52
(1.8)
(4.2)
(2.7)
13.7
14.0
19.6
100
299.4
63.11
(0.8)
(3.8)
(1.9)
19.9
20.4
27.8
125
293.8
65.74
(0.1)
(3.5)
(1.1)
26.3
26.9
36.2
150
293.1
67.61
0.4
(3.0)
(0.2)
32.9
33.6
44.9
200
290.9
69.55
1.2
(3.1)
0.5
46.2
47.1
62.7
250
291.3
71.16
1.7
(3.1)
1.3
59.9
61.0
80.9
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
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Cost Curves Analysis
10.3.
Final Analysis Report
Saskatchewan
Saskatchewan has a mixed rural and urban economy with coal-fired electricity supply and
the potential for sequestration. At the $150 shadow price, Saskatchewan generates 17.7
Mt in emissions reductions. 10.4 Mt comes from electricity, which is mainly from
sequestration. 1.6 Mt comes from transportation, and 1.6 Mt from NG extraction as well.
Another 3 Mt come from the agricultural sinks actions.
Figure 10.3: Cost Curve of GHG Emissions for Saskatchewan, 2010.
Saskatchewan Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
5,000
10,000
GHG Reductions (kt)
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15,000
20,000
Cost Curves Analysis
Final Analysis Report
Table 10.3: Energy, Emissions and costs associated with emissions reductions in
Saskatchewan, 2010
TEC
w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
145.7
9.49
(1.3)
(1.5)
(1.4)
(0.2)
(0.2)
0.2
20
164.8
12.83
(1.0)
(1.3)
(1.2)
0.3
0.3
0.8
30
167.7
14.44
(0.5)
(0.9)
(0.7)
0.9
1.0
1.5
40
171.0
14.78
(0.5)
(1.0)
(0.7)
1.5
1.5
2.3
50
172.8
15.15
(0.3)
(0.9)
(0.6)
2.1
2.2
3.1
75
177.6
15.99
0.1
(0.7)
(0.2)
3.7
3.8
5.2
100
184.5
16.61
0.3
(0.7)
(0.1)
5.3
5.5
7.3
125
190.0
17.27
0.4
(0.7)
0.0
7.0
7.2
9.5
150
194.2
17.68
0.5
(0.7)
0.2
8.7
8.9
11.8
200
201.2
18.05
0.6
(0.9)
0.2
12.1
12.4
16.5
250
206.9
18.39
0.6
(1.1)
0.3
15.7
16.0
21.3
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
10.4.
Manitoba
Manitoba has a mixed rural and urban economy with a hydro-based electricity production
system. At $150 Manitoba generates 5.6 Mt of reductions. Of this 1.3 are from
agricultural sinks, 1.1 Mt are from transportation, 1.1 Mt from NG transmission actions,
0.68 Mt from various industries besides NG transmission, 0.4 Mt from commercial and
0.32 and 0.31 from residential and afforestation, respectively.
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Figure 10.4: Cost Curve of GHG Emissions for Manitoba, 2010.
Manitoba Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
1,000
2,000
3,000
4,000
5,000
6,000
GHG Reductions (kt)
Table 10.4: Energy, Emissions and costs associated with emissions reduction in Manitoba,
2010
TEC
w/o
Trans
Sector
TEC,
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC,
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
29.6
2.87
(0.7)
(0.9)
(0.8)
(0.2)
(0.2)
0.1
20
31.5
3.41
(0.7)
(0.9)
(0.8)
(0.1)
(0.0)
0.2
30
32.9
3.65
(0.7)
(1.0)
(0.8)
0.0
0.1
0.4
40
34.1
3.78
(0.7)
(1.1)
(0.9)
0.2
0.2
0.6
50
35.3
4.17
(0.5)
(1.1)
(0.8)
0.3
0.4
0.7
75
38.2
4.52
(0.5)
(1.2)
(0.8)
0.7
0.8
1.3
100
40.7
4.85
(0.3)
(1.2)
(0.7)
1.0
1.2
1.8
125
42.9
5.22
(0.2)
(1.2)
(0.6)
1.5
1.6
2.4
150
44.7
5.58
(0.1)
(1.1)
(0.3)
2.0
2.1
3.0
200
47.5
5.95
0.3
(1.1)
(0.0)
2.9
3.2
4.3
250
49.6
6.22
0.4
(1.1)
0.1
4.0
4.3
5.6
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
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217
Cost Curves Analysis
10.5.
Final Analysis Report
Ontario
Ontario, a populous, mainly urban and economically diverse province, generated 39 Mt
of reductions at $150. Electricity generates the largest reductions, with 13.6 Mt.
Transportation follows with 9.8 Mt. Industry as a whole generates 6.9 Mt, with 3.2 of
this coming from NG transmission actions and 2.2 Mt from fuel switching and energy
efficiency in Other Manufacturing. The commercial sector generates 4.5 Mt while
residential generates reductions of 2.9 Mt. It should be noted that these sectors generally
increase their use of electricity, exchanging some of their direct emissions in the BAU for
indirect emissions in the electricity sector.
Figure 10.5: Cost Curve of GHG Emissions for Ontario, 2010.
Ontario Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
10,000
20,000
30,000
GHG Reductions (kt)
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40,000
50,000
Cost Curves Analysis
Final Analysis Report
Table 10.5: Energy, Emissions and costs associated with emissions reduction in Ontario, 2010
TEC
w/o
Trans
Sector
TEC
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
244.5
17.33
(7.3)
(8.8)
(8.3)
(1.9)
(1.8)
0.4
20
249.0
18.91
(7.0)
(9.4)
(8.3)
(1.4)
(1.1)
1.3
30
261.1
20.97
(6.7)
(9.9)
(8.4)
(0.8)
(0.4)
2.3
40
298.3
26.19
(6.0)
(9.9)
(7.8)
0.1
0.6
3.4
50
322.2
28.98
(5.1)
(9.9)
(7.3)
1.1
1.7
4.7
75
343.8
31.47
(3.9)
(10.4)
(6.6)
3.7
4.7
8.4
100
365.1
33.37
(3.1)
(11.3)
(6.2)
6.5
7.7
12.4
125
383.5
35.85
(2.0)
(11.7)
(5.4)
9.6
11.1
16.6
150
401.8
38.65
(0.5)
(10.8)
(3.5)
13.1
14.9
21.1
200
449.1
42.89
4.0
(8.8)
0.8
20.8
23.2
30.6
250
501.7
48.08
9.8
(4.5)
7.2
29.8
32.7
41.2
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
10.6.
Québec
Québec, like Ontario, is populous, mainly urban and economically diverse. Unlike
Ontario, its electricity sector is dominated by hydro, virtually eliminating the possibility
for reductions in that sector. It generated 16 Mt of reductions at $150. Of these, 5.6 Mt
were from transportation. 5.6 Mt were from industry, with Other Manufacturing
contributing 2 Mt. Another 2 Mt of these were from the Québec Metal Smelting
industry. NG transmission actions contribute only 0.09 Mt, unlike Ontario and westward,
where NG transmission contributes large reductions. Commercial contributes 1.6 Mt
while residential contributes 2.1 Mt.
M.K. Jaccard and Associates
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Cost Curves Analysis
Final Analysis Report
Figure 10.6: Cost Curve of GHG Emissions for Québec, 2010.
Quebec Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
5,000
10,000
15,000
20,000
GHG Reductions (kt)
Table 10.6: Energy, Emissions and costs associated with emissions reduction in Québec, 2010
TEC
w/o
Trans
Sector
TEC
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
74.4
5.95
(7.1)
(8.0)
(7.8)
(1.9)
(1.8)
0.1
20
82.3
7.26
(6.8)
(8.2)
(7.7)
(1.7)
(1.6)
0.5
30
87.9
7.95
(6.5)
(8.4)
(7.7)
(1.5)
(1.3)
0.8
40
93.0
8.83
(6.3)
(8.5)
(7.5)
(1.2)
(1.0)
1.2
50
99.4
9.55
(5.9)
(8.5)
(7.3)
(0.9)
(0.6)
1.6
75
114.6
11.31
(5.1)
(8.6)
(6.8)
(0.0)
0.4
2.8
100
127.0
12.70
(4.3)
(8.7)
(6.3)
1.0
1.6
4.2
125
136.7
14.02
(3.6)
(8.7)
(5.8)
2.1
2.8
5.7
150
144.3
15.77
(3.0)
(8.2)
(4.8)
3.5
4.3
7.3
200
156.4
17.05
(2.0)
(8.5)
(4.1)
6.1
7.2
10.9
250
166.5
18.23
(1.4)
(8.8)
(3.4)
8.9
10.3
14.8
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
M.K. Jaccard and Associates
220
Cost Curves Analysis
10.7.
Final Analysis Report
Atlantic
The Atlantic provinces are a diverse economic region with a mix of energy resources
including hydro, coal and nuclear power. It generated 20.7 Mt of reductions at the $150
shadow price, 12.3 Mt of which were in the electricity sector. This drop is from an 84%
decrease in NG use and an 88% decrease in coal combined with 25 % increase in nuclear
and a 25% increase in hydro. Industry generated 3.9 Mt and transportation 2.6 Mt.
Residential is the final significant sector with 1.2 Mt.
Figure 10.7: Cost Curve of GHG Emissions for Atlantic, 2010.
Atlantic Cost Curve
GHG Shadow Prices
250
200
150
100
50
0
-
5,000
10,000
15,000
GHG Reductions (kt)
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20,000
25,000
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Table 10.7: Energy, Emissions and costs associated with emissions reduction in Atlantic, 2010
TEC
w/o
Trans
Sector
TEC
All
Sectors
TEC w/
Parked
Vehicle
Costs
ERC
All
Sectors
ERC w/
Parked
Vehicle
Costs
Perceived
Private
Costs
(Mt)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
68.5
5.92
(0.7)
(1.2)
(1.1)
(0.2)
(0.2)
0.1
20
77.1
6.73
(0.6)
(1.2)
(1.1)
(0.1)
(0.0)
0.3
30
114.0
10.60
0.1
(0.7)
(0.4)
0.3
0.4
0.7
40
139.3
13.18
0.7
(0.2)
0.1
0.8
0.9
1.1
50
165.4
15.41
1.5
0.5
0.9
1.4
1.5
1.7
75
189.5
17.38
2.5
1.1
1.7
2.8
3.0
3.4
100
198.2
18.38
2.9
1.2
2.0
4.2
4.4
5.2
125
204.2
19.47
3.2
1.4
2.3
5.7
6.0
7.2
150
209.0
20.55
3.7
1.8
3.0
7.4
7.6
9.2
200
216.0
21.72
4.7
2.3
3.8
10.7
11.1
13.5
250
220.9
22.61
5.3
2.7
4.5
14.2
14.6
18.0
Shadow
price
Energy
Saved
Emissions
Reduced
($ / t
CO2e)
(PJ)
10
11.
Discussion of the significant actions
Early in this report we provided a table of the most significant actions for reducing
emissions at $10 and at $150. We will now look more closely at those actions that are
important at all shadow price levels.
11.1.
The Significant Actions
11.1.1. Switch to simple and combined cycle gas turbines in the electricity
production sector
Switching from coal boilers to simple and combined cycle gas turbines for electricity
production provides 21.0 Mt on an energy efficiency basis, and 9 Mt on a fuel-switching
basis, for a total of 30.0 Mt at $150 (16.9% of national reductions at $150). The
difficulty with implementing this action is that electricity demand falls or is stagnant in
the provinces (Alberta, Saskatchewan and Ontario) where this action will have the most
effect. The newer, cleaner equipment will have to be retrofit to older equipment, a large
cost to producers.
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11.1.2. Sequestration in electricity and hydrogen production
Large reductions come from the sequestration of emissions from coal-fired electricity
supply (24.5 Mt, 13.8% of the national total at $150). Utilization of sequestration on this
scale will, however, require that a few key technologies, such as hot filtration of power
plant exhaust gases, mature very soon. Hydrogen production does not require hot
filtration and can commence using current technology; it contributes 2.8 Mt at both $10
and $150 (it is an inexpensive exogenously defined action), or 1.6% of national
reductions at $150. The rest of the technologies required, such as deep well injection and
the use of CO2 for enhanced oil recovery, already exist within the oil extraction industry.
11.1.3. Switch to hydro-powered electricity production
Choosing hydroelectric power over fossil fuel alternatives provided the third largest
reduction. There are, however, many uncertainties and issues related to actual GHG
emissions other values associated with this action. How does one consider lost forested
land and its capacity to absorb CO2? What of subsequent methane production? What is
the value of a natural valley as opposed to one flooded by the reservoir behind the dam?
The construction of dams is also capital intensive (relative to combined cycle gas plants)
and requires a long lead time before saleable electricity is generated.
11.1.4. Switch to non-hydro renewables in electricity production
Occurring mainly in Ontario, wind, solar and biomass contributes 2.4 Mt at $10 and 3.7
Mt at $10, or 2.7% and 2.1 % of national reductions.
11.1.5. Commercial, Residential and Industrial electricity energy efficiency
programs
While not a perfect estimate of the effectiveness of electricity efficiency programs, one
obtains an idea of how effective these programs may be in that emissions related to
demand reductions in the electricity sector drop by 7.6 Mt at $150. Although outside the
scope of this analysis, further study to clarify the source of these reductions may be
warranted.
11.1.6. Natural Gas Transmission – Replace turbines with electric drivers
and leak detection and repair programs
The issue table for natural gas identified switching from gas turbines to electric drivers
for transmitting gas. This single action saves 7.4 Mt, or 4.2% of the national reductions
at $150. Leak detection and repair was also identified as a potential action; methane, the
primary component of natural gas, is a strong greenhouse gas twenty-one times more
potent than CO2. Natural gas must be transmitted from the extraction point to the end
user through pipelines, over distances of thousands of kilometres, a huge infrastructure
which requires a lot of maintenance to prevent leakage. Actions to reduce leakage
contribute 1.3 Mt of reductions at $150.
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11.1.7. Commercial landfill gas capping, flaring and cogeneration
The decomposition of garbage emits enormous quantities of the methane. If we capture
and burn this methane, it is emitted as CO2, considerably less potent than CH4. If we
burn it and make electricity we save the fuel we would have used to make the electricity
instead, saving yet more emissions. In many locales, this is a negative cost action (i.e., a
benefit). This action contributed 6.0 Mt of direct reductions at $150 (3.4% of $150), not
including reduced indirect emissions from electricity.
11.1.8. General transportation mode shifting and efficiency
While a critical analysis of transportation demand shows little willingness to travel less,
there seems to be large potential reductions via mode switching. This would be primarily
a movement from single occupancy to multi-occupancy vehicles; there would also be
some movement from private vehicles to transit, cycling and walking, etc. This potential
is, however, associated with very large losses of consumers’ surplus. While we show less
potential in this area than in our earlier analysis for the Roll Up, mode shifting and
personal car efficiency improvements still contribute 4.9 and 3.3 Mt, or 2.8% and 1.9%
of national reductions, respectively.
Several important transportation measures were modelled exogenously from CIMS.
These include off-road efficiency standards (0 Mt at $10, 2.0 Mt at $150), truck driver
training in efficiency (1.9 Mt at both $10 and $150), accelerated truck scrappage (2.2 Mt
at both $10 and $150) and truck speed controls (0 Mt at $10, 3.2 Mt at $150).
Penetration of these actions occurred to its maximum level when the shadow price
exceeded the estimated cost of that action; if it had been possible to endogenise them in
CIMS, their penetration would have been more gradual. See Appendix A for additional
information on the impact of exogenously modeled actions.
11.1.9. Residential high efficiency furnaces, fuel switching, hot water and
shell improvements
The combined effects of high efficiency furnaces and shell improvements in the
residential sector contribute 3.8 MT, or 2.1% of the national total. Fuel switching to
natural gas and electricity contributes another 2.0 Mt, or 1.1% of national reductions.
Hot water efficiency contributes another 1.8 Mt, or 1.0 % of national reductions at $150.
11.1.10.
Fuel switching for water boilers and space heating in Other
Manufacturing
Switching to NG and electricity for water boilers and space heating contributed 2.5 and
2.4 Mt (1.4 % and 1.3%) respectively.
11.1.11.
Improving the agricultural sink
Improvements in the agricultural sink via grazing strategies, no-till, etc. contribute 5.5 Mt
at negative cost at $20 and only develop positive costs at $30. They contribute their full
8.5 Mt at $75.
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11.1.12.
Final Analysis Report
Fuel switching in general
Fuel switching from more to less carbon-intense fuels, and from fossil fuels to electricity
in general, plays an enormous part in reducing our GHG emissions. It is a difficult matter
to define the numbers because switching from one technology to another can carry both
efficiency and fuel switching characteristics with it, and allocation to these two
components is not simple.
11.2.
Final words
This analysis report is an attempt to reveal the most important actions at each of the
specified shadow prices levels and outline the most important underlying dynamics.
Among these dynamics we have specifically drawn your attention to the importance of
the relative price of electricity against the main fossil fuels and the prices amongst these
fossil fuels. Most important among these relationships is the relative price relationship of
electricity and natural gas. As per the AMG Roll Up exercise, the price of natural gas
was not altered from the reference case. Given the importance of this fuel for GHG
reductions, this is an important caveat.
In this vein, we have also drawn your attention to the importance of what is not modelled
endogenously by CIMS in this analysis: the large exogenous actions in commercial,
residential and transportation, demand feedbacks driven by change in product prices and
internal pricing of natural gas. Exogenous actions entered the calculation of cost and
reductions in an “all-or-nothing” way with the criterion being the cost of that action as
specified by the tables. Had it been possible to endogenise these actions, the penetration
rates would not have been as prescribed by the tables.
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12.
Final Analysis Report
Appendix A: Costs and reductions for the exogenous actions.
12.1.
Introduction
At the special request of NRCan’s Office of Energy Efficiency of, we have, in the
following appendix, isolated the effects of the exogenous actions from those modeled
endogenously by CIMS. In early drafts of this report exogenous and endogenous actions
received differing treatment when we calculated perceived private costs. This was in part
due to the fact that no measure of consumers’ surplus was provided by the Issue Tables
for exogenous actions. Endogenous reductions were assessed consumers’ surplus losses
while exogenous reductions were not. NRCan requested some resolution of this
discrepancy. As the exogenous actions could not be eliminated a decision was made to
apply the same consumers’ surplus to exogenous actions as endogenous actions for the
purpose of calculating PPC. Accordingly, in the main body of this final report we apply
the same consumers’ surplus calculation to exogenous actions as we did to endogenous
actions when calculating perceived private costs. Such a calculation is not totally valid as
the penetration of these technologies is stepwise (i.e., all-or-none) and while the quantity
reduced may not alter, the expected resource cost (ERC) and perceived private cost (PPC)
of the reduction does. This changed all ERC and PPC estimates from previous reports.
12.2.
Exogenous versus endogenous costs
When calculating costs, one can include or exclude exogenous costs and emissions in all
calculations. What we had done in the past was to include the TEC costs of exogenously
defined emissions in the total TEC but we excluded the emissions obtained from
exogenous actions from the estimation of PPC (i.e., the area under the curve was equal to
emissions * shadow price where, in our calculations, exogenous emissions were
excluded). Then we made an allowance for these exogenous costs when we estimated
total PPC and the ERC (i.e., the number actually revealed in the AMG Roll Up report).
In the methodology used for the final report we altered the calculation slightly. We have
explicitly included exogenous costs and emissions in ALL calculations. Thus, the TEC
includes the costs and PPC includes the emissions reductions (i.e., exogenous emissions
reductions are used in the area-under-the-curve formula). These data are found in table
12.1 below (this table is identical for the columns presented to table 2.1 found earlier in
the report). If one excludes exogenous costs and emissions from all calculations one
obtains the data seen in table 12.2 below.
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Table 12.1: Summary of National GHG Reductions and Costs including exogenous actions.
PPC
TEC w/
parked
vehicle
costs
ERC w/
parked
vehicle
costs
2010
Permit
Costs
(Kyoto)
(’95 $
billion)
(’95 $
billion)
(’95 $
billion)
(’95 $
billion)
(’95 $
billion)
(30.0)
(5.9)
2.1
(28.7)
(5.6)
0.4
105.0
(30.5)
(2.5)
6.9
(28.0)
(1.8)
0.6
30
116.7
(30.3)
1.8
12.5
(26.4)
2.7
0.7
40
128.0
(29.9)
6.5
18.6
(24.8)
7.7
0.8
50
136.2
(29.2)
11.6
25.2
(22.9)
13.2
0.8
75
149.1
(28.0)
25.3
43.0
(18.7)
27.6
0.9
100
157.6
(28.7)
39.4
62.1
(16.4)
42.4
0.8
125
167.2
(28.7)
54.4
82.1
(13.5)
58.2
0.6
150
176.6
(25.9)
70.7
102.9
(7.9)
75.2
0.1
200
187.2
(22.9)
104.2
146.5
0.4
110.0
(0.7)
250
198.0
(17.6)
140.1
192.7
10.8
147.3
(1.9)
Shadow
price
Emissions
Reduced
TEC
ERC
($ / t
CO2e)
(Mt)
(’95 $
billion)
10
87.6
20
Comments regarding Table 12.1:
•
Emissions reduced include the impact of all exogenous actions (transportation,
upstream oil, agriculture, afforestation, metals, coal mining and pulp and paper and
buildings table actions in commercial and residential).
•
Perceived Private costs were estimated as the area under a cost curve that includes all
exogenous reductions (except metals & coal mining). One can debate whether these
exogenous actions and their emissions reductions should be included in this curve as
they penetrate at shadow price thresholds based primarily on their techno-economic
rather than perceived costs. This methodology assumes that these actions should be
assigned the same level of perceived private costs as those actions that penetrated at
that shadow price endogenously in CIMS. The actions come in as a lump sum (all or
nothing), thus the costs also appear rather “lumpy”.
•
The techno-economic cost inclusive of parked vehicle costs is based on technoeconomic costs including exogenous costs.
Table 12.2 contains data obtained when one excludes the impacts of exogenous actions,
actions for which we could determine no real consumers’ surplus. Thus we see both a
change in costs and a change (decline) in emissions reductions. In other words, if one
excludes emissions available from these exogenous actions, the shortfall must be
purchased via permits. As a result, one sees values in the final column representing the
cost of permits purchased in 2010, increasing at each shadow price level.
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Table 12.2: Summary of National GHG Reductions and Costs excluding exogenous actions.
TEC
ERC
PPC
TEC plus
parked
vehicle
costs
(Mt)
(’95 $
billion)
(’95 $
billion)
(’95 $
billion)
(’95 $
billion)
(’95 $
billion)
(’95 $
billion)
10
62.9
(26.4)
(5.5)
1.5
(25.1)
(5.1)
0.4
20
72.9
(27.5)
(3.2)
4.9
(25.0)
(2.5)
0.8
30
81.6
(27.9)
(0.4)
8.8
(24.1)
0.6
1.1
40
91.6
(27.9)
2.9
13.2
(22.8)
4.2
1.3
50
99.5
(27.3)
6.6
17.9
(21.0)
8.2
1.5
75
110.7
(26.7)
16.6
31.0
(17.3)
18.9
2.0
100
118.6
(27.6)
27.0
45.2
(15.3)
30.0
2.3
125
125.4
(28.3)
38.0
60.1
(13.2)
41.8
2.6
150
131.4
(28.4)
49.7
75.8
(10.4)
54.2
2.7
200
142.1
(25.5)
75.2
108.7
(2.1)
81.0
2.8
250
151.3
(21.9)
102.3
143.7
6.5
109.4
2.6
Shadow
price
Emissions
Reduced
($ / t
CO2e)
ERC plus
parked
vehicle
costs
2010
Permit
Costs
(Kyoto)
Comments regarding table 12.2:
•
Emissions reduced excludes the impact of the majority of the exogenous actions;
certain exogenous actions could not be removed because they are interwoven with
CIMS functions and would require a complete rerun of the model set (see next
main bullet). The following exogenous actions are excluded from the GHG
emission reductions in table 12.2:
Commercial landfill gas emissions reductions
Emission reductions associated with decreased use of natural gas, oil and coal
in the commercial and residential sectors (modelled using multipliers on fuel
demand within CIMS) as a result of buildings table actions
Exogenous transportation actions
All upstream oil, agriculture and afforestation actions
Small exogenous GHG reductions from the metals, pulp and paper, and coal
mining sectors were not removed due to time constraints. They are small
compared to the exogenous actions that have been removed.
•
Several “exogenous” actions were modelled partly within CIMS by using
multipliers applied to fuel demands within CIMS. This was necessary, especially
for electricity, because the exogenous actions to energy consumptions have
effects on the integrated resolution of energy supply volumes, emission and
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prices. For example, multipliers were applied to decrease total electricity demand
to represent the energy savings of the buildings table measures. Because
electricity demand levels influence electricity price in CIMS, these multipliers
have widespread impacts on all demand sectors in CIMS. These “exogenous”
impacts on GHG reductions and costs cannot be separated out.
•
Techno-economic costs exclude the costs of the commercial and residential
exogenous actions and the energy savings associated with the fuel demand
multipliers. The costs exclude the costs of the exogenous transportation actions
as well as the upstream oil, agriculture and afforestation sectors.
•
Perceived private costs in this table were estimated as the area under a cost curve
that excluded the exogenous GHG reductions (as defined above). Thus, the PPC
value declined for most shadow prices from similar values presented in previous
versions of the cost curve report. In these versions, we included the exogenous
reductions from the transportation sector only because we assumed that there
were recognizable levels of consumers’ surplus associated with them.
12.3.
Comparison of the two tables
Table 12.3 allows for a direct comparison between the two tables for one value (we have
chosen the $50 / t CO2e value). Here we explicitly explain the differences between them
and why they occur.
Table 12.3: Comparison of Two Methodologies; National GHG Reductions and Costs
including and excluding exogenous actions at a $50 / t shadow price
1
2
Shadow
price
Emissions
Reduced
($ / t
CO2e)
3
4
5
6
7
8
ERC plus
parked
vehicle
costs
2010
Permit
Costs
(Kyoto)
TEC
ERC
PPC
TEC plus
parked
vehicle
costs
(Mt)
(’95$
billion)
(‘95$
billion)
(’95$
billion)
(’95$
billion)
(’95$
billion)
(‘95$
billion)
50
(incl)
136.2
(29.2)
11.6
25.2
(22.9)
13.2
0.8
50
(excl)
99.5
(27.3)
6.6
17.9
(21.0)
8.2
1.5
In column 2, the “Emissions Reduced” column, we note that exogenous actions account
for roughly 37 Mt of GHG reductions, scattered among the actions listed below table
12.2. This has the immediate effect of increasing the required permit costs (last column),
nearly doubling them. If one subtracts table 12.2, column 2 from table 12.1, column 2,
one notes that, as shadow prices increase, the quantity of exogenous reductions increases;
it depends on when the exogenous reductions were deemed to penetrate (i.e., a shadow
price threshold is reached).
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In the TEC column, one sees that the value of these exogenous actions was a net benefit
of about $2 billion (the same effect is seen in column 6, TEC with car costs). At lower
shadow prices, the benefit is higher because any exogenous action introduced under any
shadow price reduces the benefit (since it must, by definition, be a cost). In fact, as we
approach the highest shadow prices, we see that the exogenous actions begin to cost us,
in spite of there being large benefits associated with some exogenous actions.
If we now move to column 5, the PPC column, we see that, when we include exogenous
emissions reductions in our calculation of the area under the curve, the PPC increases
substantially. We have made the presumption that these actions actually do entail some
consumers’ surplus and that it is equal for all consumers at the shadow price threshold
where it enters the curve. This is, of course, false and would suggest that the PPC value
under “50 (incl)” is overestimated (an upper limit). It is possible that there are significant
consumers’ surplus losses with these exogenous actions, even the positive ones (for
example, recall that not buying a car saves people a lot of money, but what is their
consumer surplus loss? It would seem that it is at least equal to the cost of the vehicle)
but we have no way of knowing this for most if not all of these actions. Excluding these
costs, of course, make the PPC proportionally smaller, but we are much more confident
of this value because we know the actions and the literature-supported behavioural
response their penetration (and we state again, this is something we don’t know about the
exogenous actions).
Column 4, the ERC column, is derived by formula from column 3 and 5 (see comments
and formula below table 1.1). It suggests that there are considerable costs associated with
consumers’ surplus as defined in our earlier documents and that there are sizable “bribe
costs” as well, costs that would drive the consumers to actually carry through on the
actions defined. Exclusive of exogenous costs (and emissions reduction), the costs of
attaining 100 Mt is $6.6 billion (NPV, 2000), and one would need add to that another
$1.5 billion in permit charges to reach the Kyoto target reduction.
You see in columns 6 and 7 the impact of having people still buy cars, even though they
don’t use them. The difference between the two TECs is the expenditure on vehicles.
You see that, because of the method of calculation of the ERC, and our assumption about
the calculation of the PPC (it does not change with a change in this assumption – the PPC
assumes the consumers’ surplus lost by not having a vehicle is roughly equal to actually
paying money to have the vehicle), the ERC value rises only by a fraction of the actual
cost of the purchase of all these vehicles.
In this methodology, this too is all-or-nothing. One can likely assume that neither case is
true. For example, a one-car family may remain a one-car family after mode switching
has occurred but will a three-car family, given the expenses of fuel, insurance and
maintenance remain a three-car family after mode switching? Here, we assume they do.
We note that the purchase of vehicles is not a trivial sum and it is a sum that changes as
we go to higher shadow prices. This uncertainty requires further review and analysis.
12.4.
Figures for comparison
In this section, we have provided some simple figures comparing the various components
of the methodological differences described above.
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Figure 12.1: Comparison of GHG Reductions with and without exogenous actions.
GHG Emissions Reduction (Mt)
250.0
200.0
150.0
100.0
w/ exog
w/o exog
50.0
0.0
0
50
100
150
200
250
GHG Shadow Price ($ / T CO2 equivalent)
Figure 12.2.a: Comparison of Techno-economic cost methodologies.
Techno-economic Cost ($billions)
15
10
TEC w/ exog
5
TEC w/o exog
0
TEC w. exog, buy cars
-5
TEC w/o exog, buy cars
-10
-15
-20
-25
-30
-35
0
50
100
150
200
GHG Shadow Price ($/ T CO2 equivalent)
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Figure 12.2.b: Comparison of Expected Resource Cost estimates.
Expected Resource Cost ($billion)
160
w/ exog
140
w/o exog
120
w/ exog, buy cars
100
w/o exog, buy cars
80
60
40
20
0
-20 0
50
100
150
200
250
GHG Shadow Price ($ / T CO2 equiv)
Perceived Private Cost ($ billion)
Figure 12.2.c : Comparison of Perceived Private cost methodologies.
250.0
w/ exog
200.0
w/o exog
150.0
100.0
50.0
0.0
0
50
100
150
200
250
GHG Shadow Price ($ / T CO2 equiv)
The following tables separate the endogenous and exogenous GHG emissions reductions
and costs at the national level for the transportation, commercial and residential sectors.
Upstream oil, agriculture and afforestation were also modeled exogenously and are
included in the national total in Table 12.1. Details on these sectors are available in the
main report.
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Table 12.4: Summary of Exogenous GHG Reductions and Costs in Canada.
Shadow
price
Techno-economic Costs
(’95 $ billion)
Emissions Reduced (Mt)
($ / t
CO2e)
Endog
Exog
Total
Endog*
Exog
Total
10
64.4
23.2
87.6
(26.4)
(3.6)
(30.0)
20
74.4
30.6
105.0
(27.5)
(3.0)
(30.5)
30
83.0
33.6
116.7
(27.9)
(2.3)
(30.3)
40
93.0
34.9
128.0
(27.9)
(2.0)
(29.9)
50
101.0
35.2
136.2
(27.3)
(1.9)
(29.2)
75
112.1
37.0
149.1
(26.7)
(1.3)
(28.0)
100
120.1
37.5
157.6
(27.6)
(1.1)
(28.7)
125
126.8
40.4
167.2
(28.3)
(0.3)
(28.7)
150
132.8
43.7
176.6
(28.4)
2.5
(25.9)
200
143.5
43.7
187.2
(25.5)
2.6
(22.9)
250
152.8
45.2
198.0
(21.9)
4.3
(17.6)
Table 12.5: Summary of Exogenous GHG Reductions and Costs in Canada, Transportation.
Shadow
price
Techno-economic Costs
(’95 $ billion)
Emissions Reduced (Mt)
($ / t
CO2e)
Endog
Exog
Total
Endog*
Exog
Total
10
1.1
9.1
10.1
(2.5)
(2.3)
(4.8)
20
2.0
9.3
11.3
(4.7)
(2.3)
(6.9)
30
2.9
9.3
12.2
(6.7)
(2.3)
(9.0)
40
3.8
10.3
14.1
(8.8)
(2.1)
(10.8)
50
4.7
10.3
15.0
(10.7)
(2.1)
(12.8)
75
6.7
10.9
17.6
(15.4)
(1.9)
(17.3)
100
8.6
10.9
19.5
(19.7)
(1.9)
(21.7)
125
10.3
13.6
23.9
(23.8)
(1.2)
(25.0)
150
11.9
16.8
28.7
(27.5)
1.5
(26.0)
200
14.8
16.8
31.6
(34.1)
1.5
(32.6)
250
17.3
18.3
35.6
(39.7)
3.2
(36.5)
*Assumes that a drop in vehicle purchases accompanies a drop in VKT.
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The large exogenous financial benefits in the transportation sector are primarily due to
the penetration of measures F8C - Accelerated truck scrappage and D1 - Short-term
aviation measures at the $10 shadow price. Several additional measures penetrate
between $10 and $150 but their costs are small in comparison. At the $150 shadow price,
the penetration of measure F2B - Truck speed control to 90 km/hr raises costs
considerably. At $250, measures B6 - More frequent resurfacing and B1 - Intercity bus
subsidy increase costs.
Table 12.6: Summary of Exogenous GHG Reductions and Costs in Canada, Commercial.
Shadow
price
Techno-economic Costs
(’95 $ billion)
Emissions Reduced (Mt)
($ / t
CO2e)
Endog
Exog
Total
Endog*
Exog
Total
10
0.89
6.41
7.3
(5.8)
(1.5)
(7.4)
20
1.03
6.41
7.4
(6.0)
(1.5)
(7.5)
30
1.15
6.41
7.6
(6.1)
(1.5)
(7.6)
40
1.25
6.40
7.7
(6.2)
(1.5)
(7.7)
50
1.37
6.40
7.8
(6.3)
(1.5)
(7.8)
75
1.82
6.40
8.2
(5.9)
(1.5)
(7.4)
100
2.34
6.39
8.7
(5.7)
(1.5)
(7.3)
125
2.83
6.38
9.2
(5.6)
(1.5)
(7.1)
150
3.35
6.37
9.7
(5.5)
(1.5)
(7.0)
200
4.32
6.35
10.7
(5.2)
(1.5)
(6.7)
250
(4.9)
(1.5)
(6.4)
5.14
6.34
11.5
*Energy cost savings associated with the fuel demand multipliers are removed and added to the exogenous
column. Minor changes in costs occur but are not apparent at this level of aggregation.
The exogenous portion of the commercial sector refers to the following measures:
•
Land fill gas
•
Buildings table actions
•
Community energy systems
•
Water Conservation
•
Benefit from Land Use
For the GHG emissions reductions, landfill gas contributes a constant reduction of 5.96
Mt at each shadow price. The other measures were modeled through the use of fuel
demand multiplier within CIMS. In effect they were “semi-endogenised” so that their
impacts on the supply-sector could be modeled in an integrated fashion. This makes
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them more difficult to report separately. However, we did determine the GHG reductions
associated with these multipliers on natural gas, oil and coal for the commercial sector.
These are included in the exogenous column.
For the TEC, the exogenous column represents the sum of the 5 measures listed above.
Additionally, we estimated the fuel savings arising from declining fuel demands. To
provide a rough breakdown, the summed capital and operating costs of the 5 measures
above was a financial benefit of approximately 0.7 billion. This benefit arises as a result
of the financial savings associated with the “Benefit from Land Use” measure that
overwhelms the summed financial costs of the other four measures combined. The fuel
savings were approximately a 0.8 billion benefit.
Table 12.7: Summary of Exogenous GHG Reductions and Costs in Canada, Residential.
Shadow
price
Techno-economic Costs
(’95 $ billion)
Emissions Reduced (Mt)
($ / t
CO2e)
Endog
Exog
Total
Endog
Exog
Total
10
2.9
0.6
3.6
(3.3)
0.8
(2.5)
20
3.3
0.8
4.1
(3.3)
0.8
(2.4)
30
3.7
0.8
4.4
(3.3)
0.8
(2.5)
40
3.8
0.8
4.6
(3.5)
0.8
(2.7)
50
4.0
0.8
4.7
(3.6)
0.8
(2.8)
75
4.9
0.7
5.6
(3.1)
0.8
(2.3)
100
5.8
0.7
6.5
(2.8)
0.8
(1.9)
125
6.5
0.7
7.2
(2.5)
0.8
(1.7)
150
7.3
0.7
8.0
(2.1)
0.8
(1.3)
200
8.9
0.6
9.5
(1.3)
0.8
(0.5)
250
10.3
0.6
10.9
(0.5)
0.8
0.3
*Energy cost savings due to the exogenous actions are incorporated into the endogenous costs
(due to the use of fuel demand multipliers). They could not be extracted due to time constraints.
The GHG reductions in the residential sector are due to the impact of the buildings table
measures on residential apartments. Similar to the commercial sector, the impact of the
fuel demand multipliers on natural gas, oil and coal is included in this estimate. We had
no opportunity to isolate these cost effects.
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13. Appendix B: A numeric comparison of Cost Curves and the
Roll Up Exercise
Several improvements were made to CIMS between the first Roll Up and the Cost Curves
exercise that affected the cost of reductions at the various GHG price levels. These
include:
•
•
•
•
•
Internalization of mode switching and freight efficiency in the transportation model
Internalization of the NG production and transmission actions
Harmonization of the treatment of consumers' surplus losses related to risk in the
electricity sector with the other sectors
Consumers' surplus losses have been added to the exogenous actions and sectors
Harmonization of the TEC, ERC and PPC cost treatment of all sectors
Internalization / endogenization of mode switching and freight efficiency in the
transportation model
In the first roll up exercise freight efficiency and mode switching were exogenous to
CIMS, or added on after the model had been run. They were endogenous in the cost
curves exercise, which means that CIMS' behavioral algorithms chose when and to what
degree they penetrated instead of it being based on the financial cost given by the tables.
Internalization / endogenization of the NG transmission and extraction actions
All NG transmission and extraction actions were exogenous in the first roll up; all actions
were endogenized for Cost Curves.
Increased valuation of risk in the electricity sector
In the first roll-up exercise, the extra costs to electricity passed through electricity prices
to the consumer and were assumed to be borne by the household, industrial or
commercial consumer. These costs were mainly capital, energy and operations and
maintenance costs plus some real risk costs associated with retrofitting. To clarify the
costs associated with electricity, and to harmonize the treatment of risk in this sector with
the other sectors, we have estimated an ERC (i.e., a consumers’ loss) for electricity in this
analysis. This has significantly increased the costs to electricity and assumes the
electricity generation is a competitive industry like any other. How one deals with these
costs, or whether one accepts them as resource costs remains up to the reader; it involves
a critique of market structure and whether government, electricity producers or the
consumer bears the risk costs.
Consumer surplus losses have been added to the exogenous actions and sectors
In the first roll-up exercise, exogenous and endogenous actions received a differing
treatment in terms of consumers' surplus losses. CIMS automatically calculates
consumers’ surplus losses for endogenous actions; the Issue tables did not provide this
sort of information for actions that remained exogenous from the model. This differing
treatment prompted concern both at MKJA and NRCan and it was jointly decided to
harmonize the cost treatment by applying consumers' surplus losses for the exogenous
actions as it is done for the endogenous actions. The impacts of this change were
described in appendix A.
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Harmonization of the TEC, ERC and PPC cost treatment of all sectors
In the first roll up, some actions were treated differently than others in the calculation of
TEC, ERC and PPC. These actions included some in the residential, commercial and
transportation sectors. In this analysis, we have harmonized the costing methodology for
all sectors as described in the Method portion of this report.
These changes mean that, in some cases, the costs given in the Cost Curves exercise
differ from those in the roll up exercise. A detailed breakdown would require significant
effort due to CIM's integrated structure but an estimation of the cost differences is
possible; we provide such an analysis below for $120 / t CO2e for the Roll Up and $125 /
t CO2e for the Cost Curves analysis. These numbers are approximate and are
provided for relative comparison only.
Cost Difference
ERC of the $120 / t CO2e for the Roll Up was $44.5 billion.
ERC of the $125 / t CO2e for Cost Curves was $54 – $58 billion
Break down of the difference
•
•
•
•
•
10 years (to 2010 in Cost Curves) versus 22 (to 2022 in the first roll-up), plus the
distinction between $120 / t CO2e and $125 / t CO2e
≈ -$12 billion
Endogenization of mode switching and freight efficiency in the transportation model
≈ -$11 billion
Endogenization of the NG production and transmission actions
≈ +$1 billion
Increased valuation of risk in the electricity sector
≈ +$32 billion
Consumer surplus losses have been added to the exogenous actions and sectors
≈ +$5 billion
Harmonization of the TEC and PPC cost treatment of all sectors
- integration effects makes estimation difficult but likely insubstantial due to the
nature of the changes.
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