Canadian hydropower can help states achieve carbon-cutting goals

Canadian Hydropower and the Clean Power Plan

Hydropower makes up a sizable share of the U.S. electricity supply. A significant portion of this is imported from Canada, which is linked to the U.S. electricity grid through dozens of connections along the border. Expansion of this resource is …

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About 10 percent of Canadian electricity, much of it generated from hydropower, is exported to the United States. With Canada expected to expand its hydropower capacity in coming years, could some states take advantage of this non-emitting resource to meet Clean Power Plan goals to reduce carbon emissions?

A new C2ES report, Canadian Hydropower and the Clean Power Plan, explores this question, including how the proposed plan would need to be adjusted, and how select states could benefit.

While U.S. hydropower is not expected to significantly expand in the near future, hydropower is growing in Canada, where it already supplies 60 percent of the country’s electricity. More than 5,500 megawatts (MW), enough to power about 2.4 million homes, have been added in the last decade. An additional 11,000 MW is either under construction, nearing the construction phase, or has been announced. To put this in perspective, Canada’s entire electricity generation system is about 128,000 MW.

In their formal comments to the Environmental Protection Agency (EPA), several state environmental agencies, including Minnesota, Wisconsin and Michigan, cited the benefits of Canadian hydropower, including its near-zero emissions. Hydropower is cost competitive and can be quickly and reliably delivered. This last quality is especially valuable because it allows hydropower to complement intermittent renewable resources like solar and wind power.Hydropower is not without challenges. Damming rivers and creating reservoirs causes environmental harm to ecosystems and migratory fish and displaces communities, although project developers have been working to reduce these impacts.

Minnesota and Manitoba already complement each other this way. Canadian hydropower electricity flows south when Minnesota’s wind turbines are dormant, and Minnesota’s wind electricity flows north when supply exceeds local demand, allowing Manitoba’s reservoirs to replenish.

More than a dozen U.S. states import a significant amount of Canadian hydropower. Importing hydropower from even a modestly sized new Canadian project (250 MW) could help a state bridge the gap between its current and proposed 2030 carbon emission rate. A hypothetical project of this size could move Minnesota about 19 percent of the way toward its proposed 2030 goal, or Massachusetts about 32 percent of the way. Due to the availability of Renewable Energy Certificate (REC) trading across the United States and many provinces, a state does not even have to be physically connected to Canada’s grid to take advantage of the zero-emission quality of its hydropower.

For states to take advantage of this resource as they implement the Clean Power Plan, EPA must clarify how imported hydropower can be factored into the calculation of state emission rates. Clarifying whether imported hydropower can be treated similarly to domestic hydropower would reduce uncertainty. EPA would also have to work with states to ensure imported hydropower is not double counted for compliance purposes and that it displaces fossil electricity to receive full credit. As discussed in our report, the existing policy and market environment can already address these concerns.

Once the Clean Power Plan is finalized this summer, states would be responsible for ensuring their own plans clearly establish how imported hydropower would be used to help achieve their goals. One policy option that would facilitate Canadian hydropower imports is to convert rate-based targets (lbs. CO2 / MWh) to mass-based targets (tons CO2 / year). Under this approach, any measure that displaces fossil generation, including hydropower from both new and existing plants, would bring a state closer to its target.

As proposed, the Clean Power Plan already offers states a wealth of policy options to achieve emission reductions. Clarifying that imported hydropower can serve as another measure in states’ policy toolbox could further add to the plan’s flexibility.