March 12, 2007

Alberta legislates 12% cut in greenhouse gases by large industrial emitters

Alberta has become the first province in Canada to introduce legislation requiring large companies to reduce greenhouse gas (GHG) emission intensity from their operations. Under Bill 3, the Climate Change and Emissions Management Amendment Act and its accompanying Specified Gas Emitters regulation, companies that emit more than 100,000 tonnes of greenhouse gases per year must reduce their emissions intensity by 12% starting July 1, 2007. It is expected the regulation will apply to about 100 facilities which represent about 70% of Alberta's industrial emissions.

The regulation also provides options companies can use to meet the target. Compliance options include making operating improvements, buying an Alberta-based offset to apply against their emission total or contributing to a new government fund that will invest in technology to reduce greenhouse gas emissions in the province.

"I believe technology is key to delivering on Albertans' vision for emission management. By dedicating a technology fund right here in Alberta, we are able to draw on our own renewable resource of innovation," said Environment Minister Rob Renner.

If a large emitter is not initially able to reducing its emissions intensity by 12%, it will have the option of investing in an Alberta-based technology fund. The fund, which will be established as a dedicated revenue fund, will be used to develop infrastructure to reduce emissions or to support research into innovative climate change solutions. Large emitters will be required to pay $15 per tonne to the technology fund for every tonne above the 12% target.

Alternatively, large emitters could also invest in projects outside their operations that reduce or offset emissions on their behalf. Such projects must be Alberta-based.

For example, a facility may purchase offsets from a farming operation that has changed its tillage practices so as to release fewer GHG emissions compared to normal tillage practices. The offset reductions offered by an operation must be verified by a third party before the transaction takes place to ensure the emission reductions are real.

Projects that qualify as offsets must be located in Alberta and investments from the technology fund will be made within the province. The technology fund could also be used to further the development of carbon capture and management-an option with great potential to reduce GHG emissions worldwide.

Alberta was the first province to introduce specific climate change legislation (the Climate Change and Emissions Management Act) in 2002 and the first to require large industrial facilities to report their greenhouse gas emissions, under the Specified Gas Reporting regulation (Alberta Reg 251/2004).

Coinciding with the new legislation and regulation were announcements of funding for GHG emission reduction projects and the creation of a carbon capture and storage task force.

Prime Minister Stephen Harper, together with Alberta Premier Ed Stelmach, said the federal government intends to contribute $155.9 million through the new Canada ecoTrust initiative to support leading-edge projects in Alberta that will yield real, measurable reductions in GHG emissions and air pollutants. These initiatives will focus on environmentally responsible resource development and will support the province's work on its climate change plan.

The Alberta government says it will direct the funding toward several clean-energy related projects, such as:

* work to determine the opportunities and address the challenges associated with developing a large-scale system to capture and transport carbon dioxide for use in enhanced oil recovery or for underground capture and storage. These projects will be undertaken in association with the work to be done by the joint Canada-Alberta ecoENERGY Carbon Capture and Storage Task Force;

* a clean coal front-end engineering design (FEED) project, seen as the first step towards creating a coal-fired electricity generation facility capable of near-zero emissions;

* a waste-to-energy project in Edmonton to convert municipal waste into electricity. In addition to developing environmentally-responsible and economic alternatives to landfills for municipal waste disposal, this project may also demonstrate the potential for the production of fuels and energy from agricultural and forestry waste; and

* a hydrocarbon upgrading demonstration program, which will invest funding in projects that explore commercial opportunities to upgrade Alberta energy resources into other consumer products, while minimizing environmental impacts.

The $1.5-billion Canada ecoTrust for Clean Air and Climate Change was unveiled in Quebec last month (EcoWeek February 19, 2007). It will allow each province and territory to develop technology, energy efficiency, and other projects that will provide real results. The funding, to come out of anticipated 2006-07 budgetary surplus, will be made available once the forthcoming federal budget is approved.

Harper and Stelmach also announced the formation of a Canada-Alberta ecoEnergy Carbon Capture and Storage Task Force to recommend the best ways for Canada to implement this technology on a large scale. The two leaders said the work of the new task force will be part of national effort to ensure Canada takes full advantage of its status as the global front-runner in CO2 capture and storage technology.

Building on Canada's CO2 Capture and Storage Technology Roadmap, released in March 2006 by Natural Resources Canada, the task force will examine the opportunities for large-scale application of carbon capture and storage (CCS) technology in Canada. It will list and evaluate obstacles that are now preventing more widespread adoption of CCS, and outline actions, roles and responsibilities for the federal and provincial governments, industry, and other stakeholders. This will become a blueprint for collaboration by the relevant interests to take advantage of those opportunities.

The task force will be headed by Steve Snyder, president and CEO of TransAlta and chair of The Conference Board of Canada. Other members include:

*David Keith, a University of Calgary professor specialized in climate science, energy technology and public policy. Roughly half of his technical and policy work addresses the capture and storage of CO2, including work managing the risks of geologic storage and services in his work as chair of a crosscutting group for the IPCC special report on CO2 storage.

*Kathy Sendall, senior vice-president of Petro-Canada with responsibility for the company's oil and gas exploration and production in North America. She holds an MSc (Honours) in mechanical engineering from Queen's University.

*Ian Anderson, president of Kinder Morgan Canada, one of the largest energy transportation, storage and distribution companies in North America. His responsibilities include the executive oversight of a 4,500-kilometre petroleum pipeline system transporting production from the Alberta oilsands to British Columbia and the United States.

*Patricia Youzwa, president and CEO of SaskPower. Her experience in the private and public sectors has included running a business consulting company for three years and before that, serving as Saskatchewan's deputy minister of Economic Development and deputy minister of Energy and Mines.

Named to the task force as ex-officio members are:

*Cassie Doyle, deputy minister of Natural Resources Canada since June 2006. She was previously with Environment Canada as assistant deputy minister, and later as associate deputy minister, of Human Resources and Service Innovation.

*Dan McFadyen, deputy minister of Alberta Energy. A professional engineer with over two decades of experience in public service and the energy sector, McFadyen was previously vice-president, regulatory affairs and public policy, with the Canadian Energy Pipeline Association (CEPA). During his career, he has also held senior posts in the Nova Scotia and Saskatchewan governments.

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