The Atlantic Loop would see Nova Scotians paying billions of dollars to connect to Quebec’s electrical grid and likely then billions more to build generating capacity there.
Even if it’s a bad deal (as the provincial government contends), it’s also this province’s best chance to kick coal before a 2030 legislated ban on using it to generate electricity comes into effect (though many argue the Atlantic Loop couldn’t be done in time even if it were approved tomorrow).
With already expensive electricity ratcheting up 14 per cent over the next two years, Nova Scotians are faced with continuing to burn coal we import from South America for the medium term (and potentially longer).
And now we’re facing signing a deal for renewables that would appear to shackle future generations with subsidizing Quebec Hydro.
The federal government announced its plan to ban coal electricity generation nine years ago.
Alberta, which had a similar reliance on coal to Nova Scotia at the time, is on trak tobe off it well before 2030.
So why are we in such a tight spot?
And is it a bed we have long been making for ourselves?
Prime Minister Justin Trudeau attends a news conference to announce details on the construction of a gigafactory for electric vehicle battery production by Volkswagen Group’s battery company PowerCo SE in St. Thomas, Ont. on April 21, 2023. “We want to see investment like this coming to Atlantic Canada, too,” he said last week. “This is what our commitment to building the Atlantic Loop is all about.” – Carlos Osorio / Reuters
The ‘deal’
It must all just be a happy coincidence.
Days before Prime Minister Justin Trudeau arrived in our province last Monday, some unnamed federal staffer leaked to the Canadian Press that our provincial government is standing in the way of Ottawa’s attempts to contribute $4.5 billion toward the $7.9 billion cost of the Atlantic Loop.
Then, Trudeau arrived on Monday and used his speech at the Atlantic Forum to exchange praise with frmer rime minister Brian Mulroney and champion both the Atlantic Loop and the carbon tax.
“(Volkswagen) looked carefully across North America and one of the reasons they came here was because, in their mission to build clean cars, they are making sure their manufacturing uses clean electricity,” Trudeau said of the company, which the parliamentiary budget officer has estimated would receive $16.3 billion in government subsidies in exchange for building a plant in southwestern Ontario.
“We want to see investment like this coming to Atlantic Canada, too. This is what our commitment to building the Atlantic Loop is all about.”
Nova Scotia Premier Tim Houston was quick to set the record straight — telling reporters last week that $4.5 billion was a loan, not a grant.
“The federal government has not offered any direct grants to Nova Scotia for the capital costs of building the Atlantic loop,” reads a response by Department of Natural Resources and Renewables spokeswoman Patricia Jreige.
“Te estiated capital cost has risen from $2.9 billion in 2020 to more than $7.5 billion (including interest costs during construction). This does not include the actual cost of the energy itself, nor any firm capacity that Quebec might provide.”
The $4.5 billion loan was offered to the electrical utilities in Nova Scotia and New Brunswick. It would be paid off by ratepayers over its 50-year life.
The interest rates would be set based upon Bank of Canada policy rates at the time of the project’s financial close.
The provincial governments would have to guarantee the loan — meaning that if for some reason ratepayers stopped paying via Nova Scotia Power, taxpayers would be on the hook for the balance of the 50 years of payments.
“We need the federal government to come to the table with a serious offer that does not place the significant financial burden for the loop on Nova Scotian ratepayers,” said Jreige.
“When and whether a deal can be achieved depends on the federal government. In the eantime we are not waiting around.”
Nova Scotia’s plan
“I don’t see any plan,” said Larry Hughes.
The Dalhousie University professor and observer of this province’s electrical sector sat with his laptop last week in the hallway of the Mulroney Institute of Government between panel discussions held as part of the Atlantic Forum.
The plan that Hughes couldn’t see, was how we’re going to get off coal without the Atlantic Loop.
“We’re already getting about half our electricity from the Maritime Link (hydro) and we expect a combination of wind and solar will make up the rest to reach 80 (per cent),” said Jreige of the province’s plan to get off coal without the Atlantic Loop.
Graphic from federal Department of Natural Resources 2020 interim report Towards A Clean Power Roadmap For Atlantic Canada.
The final 20 per cent could come from imported natural gas.
Hughes sees that plan as thin on some important details.
The wind’s not always blowing and it’s often cloudy. So while wind and solr power ave taken giant steps over the past decade in becoming cost competitive ways of generating electricity, you still need a backup source.
“Energy storage is the big issue,” said Hughes.
Nova Scotia Power has pilot projects that encourage customers to install battery backups in their homes that charge during the hours there’s less demand on the grid (at night) and release it back into the grid during high demand periods (5-6 p.m.).
The utility is also testing ways that owners of electric vehicles can have them operate in a similar fashion when plugged into their homes at night.
But none of this promises to get near the energy storage capacity required.
Green hydrogen for Europe
In public comments, Premier Houston has also pointed to the multiple green hydrogen/ammonia plants proposed for this province.
Basically, they propose to use chemistry to store the power of wind, tide and sun.
The furthest project along is EverWind Fuels, which bought the former NuStar transshipment terminl at Poin Tupper last year for $60 million.
That company has received environmental approval for its $6-billion proposal to buy and build 600 megawatts of onshore wind and solar and convert it to green ammonia (adding a nitrogen molecule to hydrogen makes it easier to ship).
“We just signed two wind projects this morning,” EverWind chief financial officer Matthew Tinari told the Atlantic Forum last Tuesday.
Due to tight timelines and requirements from its European customers that it not cannibalize the green energy on Nova Scotia Power’s grid, EverWind is buying up wind projects that are (or near) being ready to build.
That’s just phase one of the project, which EverWind aims to have operational by 2025.
Point Tupper, home to one of the world’s deepest ports, is also the site of EverWind Fuels’ under-development green hydrogen and ammonia production, storage and export facility. – Contributed
Phase two would see them build North America’s largest windfarm on a 130,000 hectares of Crwn land thy’ve been approved to lease and quadruple their green ammonia production. There’s also a phase three and phase four with even grander ambitions for further down the road.
While green hydrogen/ammonia production has the potential to help our economy and Europe, it won’t help Nova Scotia get off coal by 2030.
“We are planning in the first few phases to export into primarily the European market just given the how advanced the offtake market is there relative to domestic and North America,” said Tinari.
There’s many a slip between lip and cup — converting electrons into hydrogen molecules and then back into electrons takes a lot of energy.
Numbers vary, but with current technology you get back about half of the electricity that’s initially put in, which makes it an expensive portable battery.
The European Commission estimates it will need to spend $46 billion to $67 billion to create the infrastructure and affordability to import 10 million tonnes of green hydrogen annually by 230.
That’s he same year it proposes to be off coal and imported Russian natural gas.
Europe will get the hydrogen (after they convert it back from ammonia), at least from the first two phases of EverWind’s proposed project because they’re able and willing to pay a lot for it.
That’s assuming it happens at all.
While EverWind’s proposal has broad support from residents and all levels of government, any local will remind you that the Strait of Canso has known many industrialists pitching big energy projects.
There was the proposed oil refinery which got to the point of having some concrete poured, a heavy water plant for nuclear reactors, a marine terminal for which the entire community of Melford was expropriated, two liquefied natural gas import terminals and most recently three liquefied natural gas export terminals. None of those have materialized.
The Tufts Cove generating Pplant in Dartmouth. If we’re still burning coal in 2030, it’s going to make for expensive electricity. The crbon tax (its technically a levy) will have risen to $170 a tonne by 2030. – Tim Krochak / File
How Alberta did it
Alberta’s energy mix nine years ago was similar to Nova Scotia’s — over 60 per cent came from coal.
Like Nova Scotia, they’ve been building a lot of windmills and solar panels.
Unlike us, they’re almost off coal — 12.6 per of their power came from coal in 2022 and they expect to be completely free of it within the next few years.
The majority of their electricity now comes from natural gas (coal plants were converted to burn gas), which emits about half as much carbon as coal.
Megan Bailey, a University of Calgary economics professor, told The Chronicle Herald last winter that Alberta is using natural gas as a transition fuel.
“Can we even talk about what the least bad options are?” said Bailey, who’s been working on a research project on Alberta’s transition off coal to a mixture of renewables and natural gas.
“I understand the local resistance to fracking, but to be onest I thinka lot of people have no idea how incredibly damaging coal is. It’s extraordinarily carbon-intensive and it’s extraordinarily damaging to human health. Asthma, heart problems, add climate damages to that and to me it makes burning coal an emergency. If we turn a blind eye to that we’re not doing a service to people.”
Alberta generated about 70 per cent of its electricity from natural gas in 2022.
Ultimately it will have to get off that to meet a federal net-zero target of 2050.
Natural gas is buying them time.
Nova Scotia probably has natural gas, too. The Nova Scotia Onshore Petroleum Atlas (produced by the Department of Energy and Mines) estimated some seven trillion cubic feet of that would be recoverable (equivalent to three Sable Island deposits) primarily from shalebed deposits in Cumberland and Hants counties.
But to confirm the resource and extract it, we’d have to frack.
Nova Scotia opted to ban the controvertial process in 2014 after many groups and residents expessed concernsabout the environmental impact of hydraulic fracturing.
So we’ve spent the past decade burning coal we import primarily from South America and paying high prices for natural gas that is fracked somewhere else (primarily the Marcellus Shale in the eastern United States).
Long lead times on exploration, permitting and development mean fracking is likely no longer an option.
Even if we manage to get off coal by 2030, the plan remains to generate 20 per cent of our electricity burning natural gas (primarily fracked) imported via the Maritimes and Northeast Pipeline into the forseeable future.
For its part, New Brunswick is planning to build two small modular nuclear reactors adjacent to its existent Point Lepreau nuclear power plant to replace coal on its grid. However, its uncertain whether both of the new style of nuclear plant can be up and operating by 2030.
Rocks and hard places
If we’re still burning coal in 2030, it’s going to make for expensive electricity.
The carbo tax (it’s techically a levy) will have risen to $170 a tonne by 2030.
If we borrow to connect our grid to Quebec we’ll be bidding in competition with the eastern seaboard of the United States which will also be buying their green power.
Quebec Hydro issued requests for proposals last year to build additional green power to just supply its own domestic needs, meaning rate payers here will be paying to build additional production in that province.
“We should look ever so carefully at the Atlantic Loop,” said Hughes.
He’s not saying the deal on offer from the feds is a good one, or tying ourselves to Quebec Hydro won’t have consequences down the line (just ask Newfoundlanders and Labradorians about the deal with Quebec for Churchill Falls).
But he doesn’t see another plan to get off coal.
Well, almost.
Hughes believes a cheaper option than the Atlantic Loop may be to run an undersea cable (similar to the Maritime Link connecting Newfoundland and Cape Breton) from four Romaine River Quebc Hydro facilitis on the north shore of the St. Lawrence River.
But that’s not even being discussed right now.
“What is the government’s other energy strategy other than some vague assurances around offshore wind, onshore wind and hoping for hydrogen?” said Hughes.
We all knew coal was doomed a decade ago.
We made some decisions and didn’t make others.
Now the clock is running out.