Nova Scotia is the first province being offered an equivalency agreement from the federal government, where provincial greenhouse gas reduction regulations will supercede federal ones.
The federal government is allowing the province to opt out of new federal rules that would have forced Nova Scotia Power to close two aging coal-fired electricity plants.
It's a move Nova Scotia Power said will save it hundreds of millions of dollars.
Federal Environment Minister Peter Kent made the announcement in Halifax on Monday.
The deal has yet to be negotiated.
"This will achieve the same greenhouse gas reductions as the federal approval while at the same time providing Nova Scotia with the flexibility to taken an approach that best suits its circumstances, Kent said Monday.
"Our government is open to agreements that allow provincial regulations to be considered equivalent to federal ones."
Nova Scotia has legislated a 25 per cent reduction in greenhouse gas emissions from electrical generation by 2020.
Draft regulations released by Ottawa in August 2011 would have automatically shut down coal-fired plants once they reached 45 years.
That would have forced Nova Scotia Power to close plants — the Trenton Generating Station and the Point Tupper Generating Station.
"The equivalency arrangement allows us to use the plants today in the most economical means possible for our customers, which means we'll be using less coal," said Rob Bennett, president of Nova Scotia Power.
Nova Scotia Power operates those plants only in periods of peak demand.
"That's how we achieve a reduction overall in emissions," he said.
The federal regulation would involve hundreds of millions of increased costs to Nova Scotia that would have been "unnecessary," Bennett said.
"It allows us to make the best economic use of assets … and that help us keep costs down while not exceeding carbon limitations," he said.
Under the arrangement, Nova Scotia will have to impose new emission reductions beyond the year 2020 to harmonize with the federal time period, which runs to 2030.
The Ecology Action Centre said the federal government's offer of an equivalency agreement is a recognition of the aggressive targets already in place in Nova Scotia.
It makes sense to allow Nova Scotia Power the flexibility to shut down its coal plants based not on age of the plant, but on the distribution needs for renewable energy as they come, said Catherine Abreu, spokeswoman for the Ecology Action Centre.
"We do expect [Nova Scotia Power] to start shutting down coal-fired plants in line with the hard caps that Nova Scotia has in place," Abreu said Monday.
The new emission targets will likely be published in June, the federal government said.
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