Economic and CO2 impacts of alternative power sources for electricity generation by 2040 in New Brunswick, Canada
2022
Sharma, Chinmay | Lantz, Van | Withey, Patrick | McMonagle, Galen | Ochuodho, Thomas O.
Incoming Federal Greenhouse Gas (GHG) emission regulations in Canada will require a phase-out of coal-fired electricity production within the next decade or so. To illustrate the economic impacts of such shifts in electricity generation, we develop a dynamic computable general equilibrium model for province of New Brunswick (NB) that reflects the role that coal, natural gas, nuclear, hydro, wind, and biofuel utilities play in producing electricity. We consider future scenarios where coal utilities are phased-out and replaced with alternative energy sources. Our findings indicate that phasing-out coal-fired electricity generation in NB will result in small reductions in present value Gross Domestic Product (GDP) (at 0.38%) and large reductions in CO₂ emissions (at 14.6%) relative to business-as-usual conditions by 2040. Re-investing in alternative energy sources will result in even smaller reductions in present value GDP (ranging from 0.23 to 0.32%), consumption (0.11%–0.17%) and investment (0.12%-0.16%). We show that the most cost-efficient way to reduce emissions and maximize consumer welfare is by re-investing capital from coal-fired generation to nuclear (at $23.95/tonne of CO₂, on average), with hydro a close second (at $26.54/tonne of CO₂, on average). In answering these questions, we make several contributions to the: i) we are the first to disaggregate electricity generation into its constituent parts in the IO table in an Atlantic Canadian context, ii) we are the first to compute the cost effectiveness of various electricity futures in NB; and iii) we are the first to systematically assess the Canadian government's plan of divestment from coal-fired technologies in a dynamic setting.
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