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LETTER: Carbon pricing and hydro power

Letter to the Editor
Letter to the Editor

Running water (hydro power) has been with us for centuries, or longer, to generate relatively cheap power to run milling operations, pumping operations and more recently to generate electricity. 

Using electricity, we can still run milling operations, pumping operations and many other operations. 

All provinces and territories use electricity to a greater or lesser extent.

Newfoundland and Labrador has lots of running water, much of it used to generate electricity, thus avoiding the consumption of fossil fuels or carbon fuels to generate electricity. Many will argue which is the cheaper method to generate electricity. 

Capital cost of building a water powered generating station is high but the running water is cheap. Capital cost of building a fossil fuel generating station is lower but the operating costs are high and produce carbon dioxide greenhouse gas; the latter is known to cause unwanted climate change.

This province has a large generating station (Upper Churchill) and many small generating stations (Bay d’Espoir, Cat Arm, Granite Canal, Hinds Lake, Paradise River, Roddickton, Snooks Arm and Venams Blight, and Upper Salmon) and a second large generating station (Muskrat Falls). All are within the legal boundaries of Newfoundland and Labrador.

Upper Churchill has a maximum generating capacity of 5,428 megawatts (MW). The nine smaller stations have a combined generating capacity of 956 MW. Muskrat Falls will have a maximum generating capacity of 824 MW.  Total hydro generating capacity when Muskrat Falls is operating will be the sum of the above or 7,208 MW. If all these generating plants are operating at maximum capacity continuously for one year 63,142 gigawatt hours (GWh) of electricity will be produced. 

To allow for these plants not producing at maximum capacity continuously and for losses in the distribution lines, a loss of 27 per cent is reasonable. The usable capacity will then be 73 per cent of 63,142 GWh or 46,094 GWh.

To compare the amount of electricity produced with barrels of oil, if oil was used to generate electricity, the conversion factor is: one barrel of oil is equivalent to 1,628.2 (Kilowatt hours) KWh. Hence the barrels of oil saved by using 46,094 GWh hydro electricity will be 28,309,617 barrels (46,094 ÷ 1,628.2 x 1,000,000).  The 1,000,000 is to convert G (gigas) to K (kilos).

When one barrel of oil is burned to produce electricity, 0.43 metric tons of carbon dioxide escape to the atmosphere and the Federal government has introduced a carbon tax of $20 per metric ton of carbon dioxide, which dollar figure may increase substantially in the future.

Therefore 28,309,617 barrels of oil, when burned, will produce 12,173,135 metric tons of carbon dioxide (28,309,617 x 0.43). At a price of $20 a metric ton ($10 in 2018 rising to $50 in 2022), the potential savings of not producing 12,173,135 metric tons of carbon dioxide is $243,462,706. 

As an aside, the annual current cost of 28,309,617 barrels of oil at US$55 per barrel and exchange rate of 1.32 is a little over $2 billion.

From the above calculations, the Federal government has assessed indirectly for 2019 the equivalent in monetary terms the value of 12,173,135 million tons of carbon dioxide per year not going into the atmosphere as $243,462,706, rising to over $608 million in 2022. However, the application of the Federal carbon tax is limited.

For comparison, the budget deficit for the 2018-2019 fiscal year is estimated to be $683 million, cancellation of severance payments is estimated to be $600 million, and Memorial University operating grant $310 million.

Ian McMaster

St. John’s

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