North America's integrated electricity market requires cooperation on
environmental policies

Commission for Environmental Cooperation releases working paper on North
America's electricity market

Montreal, 27 November 2001 -- The North American Commission for
Environmental Cooperation (CEC) is releasing a working paper
highlighting the trend towards increasing trade, competition and
cross-border investment in electricity between Canada, Mexico and the
United States. 

It is hoped that the working paper, Environmental Challenges and
Opportunities in the Evolving North American Electricity Market, will
stimulate public discussion around a CEC symposium of the same title
about the need to coordinate environmental policies trinationally as a
North America-wide electricity market develops. The CEC symposium will
take place in San Diego on 29-30 November, and will bring together
leading experts from industry, academia, NGOs and the governments of
Canada, Mexico and the United States to consider the impact of the
evolving continental electricity market on human health and the
environment.

"Our goal [with the working paper and the symposium] is to highlight key
environmental issues that must be addressed as the electricity markets
in North America become more and more integrated," said Janine Ferretti,
executive director of the CEC. "We want to stimulate discussion around
the important policy questions being raised so that countries can
cooperate in their approach to energy and the environment."

The CEC, an international organization created under an environmental
side agreement to NAFTA known as the North American Agreement on
Environmental Cooperation, was established to address regional
environmental concerns, help prevent potential trade and environmental
conflicts, and promote the effective enforcement of environmental law. 

The CEC Secretariat believes that greater North American cooperation on
environmental policies regarding the continental electricity market is
necessary to:

*  protect air quality and mitigate climate change,
*  minimize the possibility of environment-based trade disputes,
*  ensure a dependable supply of reasonably priced electricity across
North America
*  avoid creation of pollution havens, and
*  ensure local and national environmental measures remain effective.

The Changing Market

The working paper profiles the rapid changing North American electricity
market. For example, in 2001, the US is projected to export 13.1
thousand gigawatt-hours (GWh) of electricity to Canada and Mexico. By
2007, this number is projected to grow to 16.9 thousand GWh of
electricity.

"Over the past few decades, the North American electricity market has
developed into a complex array of cross-border transactions and
relationships," said Phil Sharp, former US congressman and chairman of
the CEC's Electricity Advisory Board. "We need to achieve this new level
of cooperation in our environmental approaches as well."

The Environmental Profile of the Electricity Sector

The electricity sector is the single largest source of nationally
reported toxins in the United States and Canada and a large source in
Mexico. In the US, the electricity sector emits approximately 25 percent
of all NOx emissions, roughly 35 percent of all CO2 emissions, 25
percent of all mercury emissions and almost 70 percent of SO2 emissions.


These emissions have a large impact on airsheds, watersheds and
migratory species corridors that are often shared between the three
North American countries.

"We want to discuss the possible outcomes from greater efforts to
coordinate federal, state or provincial environmental laws and policies
that relate to the electricity sector," said Ferretti. "How can we
develop more compatible environmental approaches to help make domestic
environmental policies more effective?"

The Effects of an Integrated Electricity Market

One key issue raised in the paper is the effect of market integration on
the competitiveness of particular fuels such as coal, natural gas or
renewables. Fuel choice largely determines environmental impacts from a
specific facility, along with pollution control technologies,
performance standards and regulations.

The paper highlights other impacts of a highly competitive market as
well. For example, concerns about so called "pollution havens" arise
when significant differences in environmental laws or enforcement
practices induce power companies to locate their operations in
jurisdictions with lower standards.  

"The CEC Secretariat is exploring what additional environmental policies
will work in this restructured market and how these policies can be
adapted to ensure that they enhance competitiveness and benefit the
entire region," said Sharp.

Because trade rules and policy measures directly influence the variables
that drive a successfully integrated North American electricity market,
the working paper also addresses fuel choice, technology, pollution
control strategies and subsidies. The CEC will use the information
gathered during the discussion period to develop a final report that
will be submitted to the Council in early 2002.

For more information or to view the live video webcast of the symposium,
please go to: http://www.cec.org/electricity.

You may download the working paper and other supporting documents from: 
http://www.cec.org/programs_projects/other_initiatives/electricity/docs.cfm?varlan=english.

Commission for Environmental Cooperation
393, rue St-Jacques Ouest, Bureau 200
Montr?al (Qu?bec) Canada H2Y 1N9
Tel: (514) 350-4300; Fax: (514) 350-4314
E-mail: info@ccemtl.org