The federal government is contributing nearly $1.7 million toward a $1-billion push to build Canada’s first power plant fuelled by “clean coal” technology.

The technology – which is still at the research and development stage – would eliminate up to 95 per cent of greenhouse gas emissions from coal-fired generators, along with harmful air pollutants such as sulphur dioxide and mercury.

“We think there’s a great opportunity for clean coal technology,” Natural Resources Minister Herb Dhaliwal said in Calgary last week. “This is an investment in the long term. It recognizes that diversity in energy is very important.”

Alberta, Saskatchewan and Nova Scotia all depend on coal for 70 per cent of their electricity, while 25 per cent of Ontario’s net generation comes from coal-fired plants.

The Clean Power Coalition of Canada, whose founding members in Alberta include TransAlta, EPCOR and ATCO Power, plans to retrofit an existing coal-fired power plant with clean coal technology by 2007 to cut emissions in half.

Jim Dinning

The technology would be incorporated in a new pilot demonstration plant, to be built in 2010, to reduce emissions by 75 to 95 per cent.

It makes both economic and environmental sense for Ottawa to invest in “home-grown” technology solutions to reduce greenhouse gas emissions in Canada, said Jim Dinning, executive vice-president of sustainable development and external relations at TransAlta.

“Better to invest in this kind of technology that makes our coal asset a clean-burning fuel for the longer term, rather than forcing companies like ours to be spending millions of dollars by buying emission-reduction credits outside of Canada,” Dinning told reporters.

Under the Kyoto climate change treaty, Canadian companies would be able to reduce their greenhouse gases by buying emission-reduction credits from nations such as Russia and the Ukraine, whose economies are struggling.

But David Lewin, senior vice-president of environment and sustainable development at EPCOR, says Alberta has about 1,100 years of coal reserves left at current extraction rates.

“We just have to find ways of utilizing that,” he said in an interview.

Lewin said the first phase of the clean coal effort, to assess emerging technologies for use in the ‘next-generation’ power plant, will cost about $5 million and be completed this spring.

Research shows that some technologies are far enough along that it might be possible to skip the step of retrofitting a power plant and go straight to building the pilot plant, Lewin said. The coalition expects to make a decision by May.

Environmentalists say they recognize the need to develop clean coal power. But they’re worried that industry and government are making a huge investment in an idea that will take a decade to commercialize and may ultimately prove uneconomical.

“Our concern is that we may spend billions and billions of dollars chasing a potential thing,” said Robert Hornung, policy director at the Pembina Institute for Appropriate Development.

Industry and government need to make similar investments in proven energy-efficiency technologies and renewable energies that can reduce greenhouse gas emissions now, he said.

Alberta has a “tremendous opportunity” in wind energy that isn’t being fully exploited because of lack of provincial support, he added.

Last year, the federal government committed $260 million to a tax incentive over the next five years to encourage wind power. The Alberta government has been unwilling to match the incentive or require electricity generators to produce a certain percentage of their power from renewable sources.

Ottawa’s incentive is about half of a similar tax incentive that the U.S. government offers to wind energy producers, says Canadian Hydro Developers Inc., a Calgary-based renewable energies developer.

The first province that matches the federal incentive would see “major new energy developments” and spin-off benefits, Canadian Hydro says.

Dinning noted that Canadian clean coal technology could be exported to the U.S., which generates more than 50 per cent of its power from coal, and to other big coal-using nations like Russia, China, India and Australia. He added the Canadian coalition will be looking for additional funding from Ottawa as well from provinces, the private sector and even the U.S. Energy Department, which is funding similar clean coal research.