North American power companies, the continent's biggest
polluters, slashed spending on energy efficiency programs by 42 percent between
1995 and 1999, in part because of the deregulation of electricity markets, an
environmental watchdog said Monday.
In a 45-page report on the continent's electricity market, the Commission for
Environmental Cooperation, a Montreal-based agency created under the North
American Free Trade Agreement, said power companies cut expenditures on energy
efficiency measures to $1.4 billion in 1999 from $2.4 billion in 1995.
That added to air pollution in the United States, Canada and Mexico, which hurts
both the environment and human health, the agency said.
Power companies made the cuts largely because of the restructuring of the
electricity industry, which includes the privatization of public utilities, the
"Much of the electricity demand growth during this period could have been
significantly moderated by energy efficiency measures, thus avoiding the
associated air pollution and other environmental impacts, had these programs not
been left to languish under restructuring," the report said.
The study came just two days after the administration of U.S. President George
W. Bush said it would relax costly air pollution rules when utilities are
repaired or expanded. The move triggered a storm of protest from environmental
groups, who warned that would increase air pollution and worsen respiratory
ailments such as asthma.
DEREGULATION RAISES RISKS
Janine Ferretti, the commission's executive director, said deregulation has left
power utilities with less incentive to implement energy conservation measures.
Ongoing efforts to deregulate the sector add to the risk and uncertainty of
investing heavily in energy efficiency, she added.
"It's hard for them to make those investments with that kind of uncertainty and
risk," she told Reuters.
"There needs to be some sort of effort to minimize those uncertainties and risks
so that the behavior and pattern of companies is one that is consistent with
meeting environmental outcomes."
As electricity markets deregulate in the three countries and the cross-border
trade in power rises, environmental considerations will be even more important,
Critics have blamed the deregulation of California's power market for last
year's electricity shortage, which sparked brownouts in the state and a
subsequent flurry of investigations and lawsuits.
Ontario has abandoned a planned C$5.5 billion ($3.5 billion) sale of Hydro One,
the provincially owned electricity transmission grid, after its plan faced a
public backlash and was blocked in court.
ELECTRICITY SECTOR A TOP POLLUTER
According to research by the commission, North America's electricity sector is
the top polluter because of the use of fossil fuels such as coal, oil and gas in
many power plants.
In 1999, the year for which the most recent data is available, power plants
reported the largest toxic releases of all industrial sectors. They emitted
450,000 tonnes of pollutants to air, land and water, the agency said.
In the United States, the electricity sector produces one-quarter of all air
emissions of nitrogen oxides, 70 percent of the sulfur dioxide, 25 percent of
mercury and 35 percent of carbon dioxide. Some of the gases contribute to air
pollution effects such as acid rain, as well rising levels of greenhouse gases,
which researchers say are a key factor in global warming.
Furthermore, forecasts call for growth in electricity demand of 21 percent in
the United States, 14 percent in Canada and 66 percent in Mexico from 2000 to
2009, the agency said. There are plans to build nearly 2,000 new generating
units in North America by 2007, a 50 percent increase over current installed
Even if only a fraction of that is built, governments will have to grapple with
the implications for the environment, Ferretti said.
"It's hard to tell what fuel source will be used and this is why it is important
that the three countries work together to address any kind of possible negative
implications," she said.