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Published in Spring 2001
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Electricity and the Environment
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CEC examines environmental opportunities and challenges from evolving electricity sector
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Whether electricity restructuring benefits or harms the environment is one of the fundamental questions being considered by a new CEC initiative, as Yolanda Clegg describes.
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By Yolanda Clegg
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When the lights went out in San Francisco a few weeks ago, suddenly everyone was talking about restructuring and the "energy crisis" in the electricity sector. Restructuring, as well as increased trade and integration of the electricity grid across the continent are some of the many changes occurring in the North American electricity sector. These changes present both opportunities and challenges with regards to the environment. Customers, in some jurisdictions, will be able to choose what kind of 'generation' they want to purchase, including power from renewable energy sources. In addition, many states and federal legislative acts within the United States have either enacted or proposed Renewable Portfolio Standards (RPS) within their restructuring legislation, which requires that a percentage of electricity produced be derived from renewable sources.
There are some 90 federal and state/provincial jurisdictions in Canada, Mexico and the United States, each of which can have their own form of restructuring legislation, creating a myriad of issues concerning the comparability of environmental standards.
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| Photo: National Renewable Energy Laboratory (NREL) |
| Wind power: a renewable energy source within most North American jurisdictions | The electricity sector in all three North American countries represents an important engine of economic growth, generating billions of US$ per year in revenues. The energy and electricity sector has been a key area for environmental issues. Indeed, the generation of electricity represents one of the single most important emission sources of sulfur dioxide, nitrogen oxides, mercury, fine particles, greenhouse gases and other pollutants. The distribution of electricity also poses important challenges in land-use change, the fragmentation of important habitats and ecosystems, and the disruption of migratory corridors.
In the last decade, the sector has made impressive strides forward in reducing most levels of environmental pollution, while responding to increased energy demand in all three countries. This decoupling of energy growth from rates of environmental degradation is the result of many hands working together, from end-of-pipe abatement technologies to more stringent emission standards and increased efficiency.
A key question for environmental policy remains: will the enormous changes underway in the electricity sector affect environmental protection positively or negatively in the coming years? Will the increased integration of the North American electricity market create new opportunities for environmental policy cooperation, in such complex areas as Renewable Portfolio Standards, "green" power certification schemes, as well as environmental performance and product standard policies? Some of the environmental challenges arise from the extended life of more-polluting power plants and the existence of possible "pollution havens"-jurisdictions where the regulatory climate is more lax and clusters of relatively "dirtier" generation facilities concentrate.
To help answer these and other complex questions involving this sector and the environment, last year CEC began work-as part of a NAAEC Article 13 special Secretariat report-on restructuring of the electricity sector and the environment. The core issues to be examined over the next 8-10 months in part one of the project will include an overview of trends within North America's electricity markets in generating capacities and technologies, fuel types, cross-border electricity transfers, demand-side energy efficiency approaches, and regulatory approaches. Part two is based on modeling and other estimates and will provide analysis of probable changes in environmental quality linked to restructuring. Part three will focus on Renewable Portfolio Standards and "green" electricity. In support of this analysis, CEC is developing an online "green" electricity database that includes certification programs, environmental marketing guidelines and relevant renewable energy restructuring legislation. Part four will examine policy implications of increased transborder transfers of electricity within North America, including an initial assessment of the extent to which market access and various trade rules may affect such transfers.
To help guide CEC's work, an advisory board on electricity and the environment met for the first time in January 2001. The advisory board, chaired by Philip Sharp of Harvard University, is composed of leading experts in electricity and environmental issues, representing private utilities, regulatory agencies and environmental groups from Canada, Mexico and the United States. A background note was prepared for the January advisory board meeting and can be found, together with a list of the board members and the proceedings of the first meeting, at http://www.cec.org/electricity . Public comments and submissions to be considered by the Advisory Board and CEC's Secretariat are welcomed, and will be posted on the CEC web site (submissions should be sent to yolanda@ccemtl.org). A public symposium will be held in fall 2001 to identify the next steps in addressing environmental challenges in the context of the continent's quickly changing electricity sector.
Advisory Board on Electricity Restructuring and Environment
Prof. Philip Sharp (Board Chairman)
Kennedy School of Government, Harvard University
 Canada
Ron Daniels
Dean, Faculty of Law, University of Toronto
Christine Elwell
Senior Policy Analyst, Sierra Club of Canada
Jack Gibbons
Chair, Ontario Clean Air Alliance/Pollution Probe
Jean-Étienne Klimpt
Directeur Environnement, Hydro-Québec
Robert Page
Vice President, Sustainable Development, Trans-Alta Corporation
 Mexico
Dr. Pablo Mulas del Pozo
Director, Programa Universitario de Energía, Coordinación de la Investigación Científica, UNAM
Ing. Alberto Escofet
Presidente, Alesco Consultores, S.A. de C.V.
Gastón Luken
Presidente y Director General, GE Capital
 USA
Ralph Cavanagh
Senior Attorney, Natural Resources Defense Council (NRDC)
Steve Kean
Executive Vice-President and Chief of Staff, ENRON
Robert Kelter
Director of Litigation, Illinois Citizens Utility Board
Elizabeth Moler
Senior Vice-President Government Affairs & Policy, Exelon Corporation
Tom Rawls
Vice President and Chief Environmental Officer, Green Mountain Energy Company
Susan Tomasky
Executive Vice President & General Counsel, American Electric Power
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Yolanda Clegg 