Panel warns of locating power plants in pollution havens

Canada, Mexico and the United States should take steps to keep a deregulated electric power market from locating hundreds of power plants in “pollution havens,” a North American Free Trade Agreement panel recommended. The three countries also “should act immediately to define and implement carbon reduction strategies, including greenhouse gas emission inventories,” said a report to the Commission on Environmental Cooperation, a body created by the NAFTA treaty.

The report by the commission's Electricity and Energy Advisory Board was released on the eve of the Ottawa meeting of UK Environmental Protection Agency Administrator Christie Whitman and her counterparts from Canada and Mexico. It stated that, although the three countries appear to be on the verge of developing an integrated North American electricity market, developments in that direction have been taking place largely unnoticed for years.
The fact that a marketer in the Canadian province of British Columbia could sell electricity to the Mexican state of Baja California, or that the thickness of the snowpack in eastern Canada directly influences wholesale electricity prices in the United States, is “eloquent testimony” to the existing interconnectivity, the board said. As cross-border electricity buying and selling increase, “a parallel effort must be made to address the environmental challenges we face,” the report said.

The advisory board noted that power companies and energy planners have announced plans to build 2,000 power plants in North America in the next five years, though as few as 40 % of those may actually be built. Plant siting decisions based solely on market considerations probably will send many of these plants to areas with weak environmental standards, with the power they generate being routed to areas with stiffer standards, the report warned.
Although the report did not discuss specific environmental policies, it left little doubt that the concern was that plants would locate in Mexico in order to produce power for the United States.