US embassy cable - 04OTTAWA3046

UNCLAS SECTION 01 OF 02 OTTAWA 003046 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/ESC/ISC, OES/EGC AND WHA/CAN 
DOE FOR INTERNATIONAL AFFAIRS (DEVITO, PUMPHREY, DEUTSCH) 
DEPT PASS USTR (MELLE, CHANDLER) 
DEPT PASS FERC (LONGENECKER) 
 
E.O. 12958: N/A 
TAGS: ENRG, ETRD, SENV, CA, Environment 
SUBJECT: CANADA FORGES AHEAD ON CLEAN COAL 
 
REF: OTTAWA 2263 (NOTAL) 
 
1.  (U) Summary:  The Canadian Clean Power Coalition, an 
association of coal and energy producers, is developing a 
"roadmap" for building a clean coal power plant in Canada by 
2012.  The group comprises public and private entities which 
are responsible for over 90 percent of Canada's coal-fired 
electricity generation capacity, and is supported by the 
Canadian federal government and several provincial 
governments.  The goal of the Canadian project will be to 
construct a demonstration coal-fired power plant whose 
emissions are comparable to a similar sized unit using 
natural gas feedstock.  The project will also examine 
retrofit technologies for existing coal plants, and will seek 
to lower costs for both new plants and for retrofits.  End 
summary. 
 
2.  (U) Coal currently accounts for about 19 percent of 
Canada's total electricity generation (reftel).  As plants 
age, their replacement or retrofitting with clean coal 
technology would be fully consistent with Canada's 
commitments under the Kyoto Protocol, which it signed in 
2002.  Figures vary considerably regarding Canada's coal 
reserves, but at current production of about 70 million short 
tons per year, Canada's proven reserves of 6,200 million tons 
would last at least 85 years.  Canada's ultimately 
recoverable coal reserves may be as high as 43,000 million 
tons of all types of coal. 
 
3.  (U) The recently completed Phase I of the Canadian Clean 
Power Coalition (CCPC)'s activities was a technical and 
economic comparison of different potential clean coal 
technologies, and the potential of each with various types of 
coal found in Canada.  Among the CCPC members are TransAlta, 
Luscar Ltd., Ontario Power Generation, SaskPower, Nova Scotia 
Power, and the California-based Electric Power Research 
Institute.  The federal government and the provincial 
governments of Alberta, Saskatchewan, and Nova Scotia also 
actively support the CCPC. 
 
4.  (U) The Phase I study concluded that Integrated 
Gasification Combined Cycle (IGCC), although not a fully 
developed technology for power plant applications, presented 
the best option for a clean coal power plant in Canada.  The 
CCPC also examined other possible clean coal technologies 
such as oxyfuel (combustion with oxygen and CO2) and amine 
scrubbing, but noted that IGCC potentially can deliver lower 
cost electricity and more efficient sequestration of carbon 
dioxide (CO2) than the other options.  The study also noted 
that IGCC is the best technology for producing hydrogen from 
coal, and can thus support Canada's burgeoning hydrogen 
technology industry. 
 
5.  (SBU) According to officials at the Canadian government's 
CANMET Energy Technology Centre, GOC spending on clean coal 
is about C$25 million annually (one Canadian dollar equals 
approximately .84 U.S.).  Support for the CCPC accounts for a 
major portion of the GOC's clean coal budget, with the GOC 
providing overall policy coordination and the use of its 
research facilities.  CANMET officials told ESTOFF that 
Canadian government and private sector researchers are 
closely following the progress of the U.S. zero-emission 
FutureGen project, but have no plans to formally participate. 
 
6.  (SBU) The CCPC's Phase II will consist of identifying 
sites for a demonstration project, as well as recommending 
which types of coal offer the best potential for power 
production and CO2 storage.  The study is currently 
considering sites in Saskatchewan (using lignite coal) and 
Alberta (where sub-bituminous coal is abundant).  The CCPC is 
also examining retrofit technology for better capture of 
sulfur dioxide and nitrous oxides at existing plants.  GOC 
officials commented that Alberta is probably the best 
candidate for construction of Canada's first clean coal 
facility, due to energy requirements in the oil sands, 
abundance of coal, and opportunities for sequestration of CO2 
in depleted oil wells. 
 
7.  (SBU) According to GOC officials, a key part of the 
CCPC's Phase II study will also be to make a business case 
for an IGCC power plant.  While CO2 capture can raise the 
cost of electricity by as much as 50 percent over current 
rates, officials believe that this cost will be reduced 
through technology development, and further offset by 
producing hydrogen and other chemical by-products.  GOC 
officials see the issue of reducing cost as the key to clean 
coal's success, especially for retrofitting of existing 
plants.  The older plants may require extensive 
re-engineering to capture CO2, and retrofitting is especially 
problematic if there is no adequate site nearby for 
sequestration. 
 
8.  (SBU) Comment: GOC officials readily acknowledge that 
Canada has thus far made halting advances on clean coal 
technology, but believe they are now catching up with the 
United States and other countries which are pursuing the 
technology.  While interested in the progress of FutureGen, 
they believe that Canada has a sufficient industrial and 
scientific infrastructure, as well as vast deposits of 
specific types of coal, to justify its own continuing work on 
clean coal technology.  Progress on changing the political 
environment for clean coal may be more difficult, however. 
Ontario's energy minister, showing no signs of backing down 
on his pledge to close all coal plants in Canada's most 
populous province, recently declared that the term "clean 
coal" is an "oxymoron."  In Canada, as in other places, 
coal's image as a dirty fuel may linger in the public mind 
until clean coal becomes a proven technology.  End comment. 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
CELLUCCI