09/09/2011 09:28 EDT | Updated 11/09/2011 05:12 EST

Ottawa warns electricity firms not to sneak around pending emissions rules

OTTAWA - Federal Environment Minister Peter Kent is serving notice that he won't tolerate companies trying to sneak around pending regulations to clamp down on greenhouse-gas emissions.

In an interview on Friday, Kent said pointedly that regulations for coal-fired electricity plants are not yet final, and he could still change the rules — especially if corporate interests are trying to skirt them.

"Until the final regs are written, they're not written," he said.

He emphasized that he has changed regulations at the last minute before — for biofuels — and wouldn't hesitate to do it again if the need arises.

Calgary-based Maxim Power Corp. is rushing to build a coal-fired plant in western Alberta which would emit far more greenhouse gas than proposed federal regulations would allow in the future.

However, under the new regulations, a company that is already operating by July 2015 could take 45 years to comply.

Maxim officials have told the Alberta Utilities Commission that it had assurances from Environment Canada that its plant would fall under existing rules as long as it is up and running by that time.

But Environment Canada has never backed up that claim, environmentalists note.

Kent said in the interview the aim of that grace period was to make sure there was no "stranded" capital — long-term investments made under the old regime that would be rendered worthless if the new rules were to apply right away.

Kent said he never intended to create a loophole that would prompt companies to build rule-breaking plants quickly.

He suggested he will move to close that loophole, if necessary.

"It was never the intention to create a loophole for short-cutters to get in and get a half-century licence to emit greenhouse gases or to put other toxins into the air which have serious impacts on Canadians living downwind," Kent said.

One option could include changing the date for when the stricter standards apply to new plants. The clock would not start ticking for older plants until July 2015, but new plants would face an earlier date to comply.

Such a change would be easy to make, have no side-effects on the other regulations and effectively block Maxim and any other company from rushing development in order to duck tougher standards, said Chris Severson-Baker, a Calgary spokesman for the Pembina Institute.

"It's a very simple change."

Officials from Maxim did not immediately respond to a request for comment. But industry has frequently complained in the past that regulatory uncertainty makes doing business in Alberta difficult.

Since announcing the draft regulations in August, Kent said he has heard loud and clear that Canadians won't stand for companies that seek to circumvent the spirit of the proposed new rules.

"I'm sending a strong message that Canadians don't want that to happen, and these regs weren't designed to allow it to happen."

Kent referred back to a promise made by his predecessor, Jim Prentice, more than a year ago — a promise to "guard against" any rush to build non-compliant plants before the phase-in of new rules.

"Canadians expect corporate social responsibility to be the guiding influence, as we move forward with greenhouse-gas regs across all sectors," Kent said. "So that's where we are, and that's what we're doing."

The draft regulations for coal-fired plants were published in the Canada Gazette at the end of August, and allowed for a 60-day consultation period.

"This consultation period is a real consultation period," Kent stressed.

Usually, draft regulations are passed with very few changes, since the government usually consults heavily before publishing them.

Indeed, Environment Canada consulted far and wide before publishing the rules in August, making its intent quite clear.

But Kent says he will continue consulting with an open mind until the very end of the 60-day period, now that the feedback has been so overwhelming.

Ottawa is moving sector-by-sector to implement stricter requirements on greenhouse-gas emissions in an effort to meet its 2020 commitment to reduce emissions by 17 per cent from 2005 levels.

The government has said that about 13 per cent of its total emissions come from coal-fired electricity plants.

Maxim won provincial approval in June to build its $1.7-billion, 500-megawatt plant near Grande Cache, Alta.

It would use new "supercritical" technology that would make for fewer emissions than current coal-fired plants, but would still produce far more emissions than the new federal regulations would permit.

Environmentalists have been quick to denounce the corporate plan and are calling on Ottawa to prevent it, reminding Kent of Prentice's promise to guard against corporate shirkers.

They have argued that if Maxim is allowed to proceed, "Ottawa's new regulations could be tarnished before they're even published."

But they were encouraged by Kent's words on Friday.

"Canadians across the country called on Minister Kent to stop Maxim Coal’s efforts to sneak past the proposed new federal coal regulations, and this is an encouraging sign that the Minister is listening," said Graham Saul, executive director of Climate Action Network Canada.