Alberta’s Climate Change Strategy
and Regulations –
A review of the first six years of the Specified Gas
Emitters Regulation
Justin Wheler, P.Eng.
Alberta Environment and Sustainable Resource Development
Carbon Management Canada Workshop
January 27, 2014
Outline

2008 Climate Change Strategy
and Specified Gas Emitters
Regulation

Greenhouse Gas Emission
Reductions



2008 to Today
Alberta’s Emission Context
SGER Review




Threshold
Target/Price
Design
Offsets
Alberta’s 2008 Climate Change Strategy
Alberta’s 2020 target = 260 Mt
Alberta’s 2050 target =187 Mt
Alberta’s Specified Gas Emitters Regulation




In force as of July 1, 2007, expires September, 2014
Large final emitter regulation (>100 kt CO2e annually)
Facility specific historic baseline
Intensity based mandatory reduction targets
 12% off baseline, phased in at 2% per year for new facilities
 Full compliance flexibility
 On site reductions/recognition of cogeneration
 Retire offset credits (from non-regulated projects)
 Retire emissions performance credits (EPCs - from facilities that
reduce intensity beyond target)
 Pay into compliance fund at $15/tonne
Climate Change Strategy 2008 to Today


Alberta’s Specified Gas Emitters Regulation achieves on average 7
Mt per year of reductions off business as usual
$398 million into the Climate Change Emissions Management Fund



$1.3 billion committed to two carbon capture and storage projects






$213 million allocated to 51 clean technology projects
leveraged investment from other sources, totalling over $1 billion
Shell Quest project
Alberta Carbon Truck Line project
$2 billion investment in municipal public transportation through
GreenTRIP
Energy efficiency programs
Renewable fuel standard requiring ethanol / biodiesel
Bioenergy producer credit program supporting agriculture / small
business
2010 Target
 Inherited from 2002 Strategy Albertans & Climate Change, Taking
Action
 22 per cent reduction from 1990 provincial emissions intensity
 Forecast to result in reductions from business as usual in 2010 of 20 Mt
 Reduction in emissions per unit GDP was actually 24 per cent, or 75 Mt
from BAU intensity
Year
1990
2000
2005
2010
1
2
3
Alberta GDP1
(millions 2002 $)
98,683
144,886
170,872
183,251
Provincial
Emissions2
(Mt CO2e)
166
219
228
233
Emissions
Intensity
kg/$
1.682
1.512
1.334
1.271
Intensity Index
BAU
(1990 = 100)
Emissions3
100
166
90
244
79
287
76
308
GDP values from StatsCan (chained 2002 dollars), StatsCan Table 384-0002
Values published in the Environment Canada 1990-2010 National Inventory Report GHG Inventory
Calculated as 1990 emissions intensity * GDP
Savings
from BAU
(Mt CO2e)
25
59
75
Alberta’s Emissions Profile
 Large and growing
resource based
industrial economy
 Large final emitters
make up more than half
of the province’s
emissions
 Growing oil sands
emissions, most other
sectors quite stable
2011 Alberta Greenhouse Gas Emissions by Sector
- National Inventory Report (242 Mt Total)
Manufacturing /
Construction
5%
Waste
1%
Agriculture
7%
Electricity /
Heat
Generation
20%
Industrial
Process
4%
Transportation
16%
Oil and Gas and
Mining
18%
Residential /
Commercial
6%
Oil Sands(Mining, In Situ and Upgrading)
23%
Derived from: National Inventory Report 1990-2011, Environment Canada
National Context
350
Source: Canada’s Emissions Trends,
Environment Canada, October 2013
Total Emisssions
(Mt CO2e)
300
250
2005
200
2011
150
2020
100
50
0
AB
ON
QC
SK
BC
NS
MB
NB
NL
National Emissions Projection
Source: Canada’s Emissions
Trends, Environment Canada,
October 2013
Reductions to Date = 128 Mt
Additional Reductions
Required = 122 Mt
SGER Successes
 Significant emissions reductions and investment in
emissions reduction technologies
 Financial value for greenhouse gases
 Improved quantification methods and data systems
 Carbon market with 28.6 Mt offsets registered, 19.7 Mt
offsets retired and 5.6 Mt EPCs retired
 Facility optimization and investment
 Regulatory Assurance System development
 Verification guidance
 Offset program guidance and requirements
 Facility guidance
 Flexibility to manage complexity of industrial sector
 Phased expansions, multi-product facilities, cogeneration,
operational upsets, alternative baselines
Large Final Emitters Threshold
 100 kt CO2e SGER: 106 facilities in 2012
 All commercial in situ, mines and upgraders
 No conventional/heavy oil
 ~50% of gas plants (by gas receipt)
 50 kt CO2e SGRR: 40% more facilities, 16% more emissions
 (3% more of Alberta’s total emissions)
Reported Emissions (kt CO2e)
14,000
2011 Facilities Ranked by Total Annual Emissions
12,000
10,000
8,000
47% of Reported Emissions
6,000
4,000
2,000
0
1
11
21
31
41
51
61
71
81
91
101
111
121
131
141
151
161
$15/tonne Fund Price
 Unlimited fund credits available at $15/tonne
 Acts as price ceiling when credit undersupply
 Major determinant of what reduction actions
will be taken – credit supply
 Some facilities have complied through fund
only, while others use it as little as possible
 Revenue invested in climate change projects
12 Per Cent Intensity Reduction Target
How It Works
 Annual reduction off static
historic baseline intensity
 Baseline set in years 3-5
for new facilities and
target phased in at 2 %
per year
 Annual compliance
obligation/credit potential
calculated in tonnes CO2e
12 Per Cent Intensity Reduction Target
0.5
60,000
0.45
40,000
0.4
20,000
0.35
0
0.3
-20,000
0.25
-40,000
0.2
-60,000
0.15
-80,000
0.1
-100,000
0.05
-120,000
0
2004
-140,000
2006
2008
2010
2012
Credits Required
(tonnes CO2e)
Emissions Intensity
(tCO2e / product)
 Target on portion of emissions allows higher marginal price than
average price
 12 per cent target means facility compliance can swing a lot
year over year
 The figure below shows an example of a facility’s compliance
history and intensity
Credit Supply and Demand
 The intensity reduction target is the major control on the demand for
credits in the system
 When the system has an oversupply of credits, the price will likely drop
– to date banking has prevented this
 To date there has been a fairly even mix of compliance options used
14,000,000
Emissions savings at facility
(relative to baseline)
Recognition of cogeneration
12,000,000
10,000,000
Carbon Offsets Submitted
8,000,000
fund credits
6,000,000
EPCs Submitted
4,000,000
EPCs generated** (including
cogen recognition)
Total Avoided Emissions***
2,000,000
0
2007*
2008
2009
2010
2011
2012
*2007 was a half year of
compliance
** EPCs generated for 2012
is based on the number of
credits requested, not the
number generated.
***total avoided emissions =
reductions at facility + offset
credits retired + recognition
of cogeneration efficiency
Compliance Distribution Across Sectors
 Significant variation in demand within and across sectors
 Some sectors already in net credit position due to direct reductions in
intensity and recognition of cogeneration
2012
Chemical
Coal Mines
Fertilizer
Forest Products
Gas Plant
In Situ Oil Sands
Oil Sands Mines &
Upgraders
Mineral
Pipeline
Power Plant
Refining
TOTAL*
Facility
Count
Total
Direct
Emissions
(Mt CO2e)
Tonnes
Owed
(thousands)
EPCs
Requested
(thousands)
Reductions
at facility
(kt CO2e)
Recognition of
Cogeneration
(kt CO2e)
9
4
5
4
29
14
5
6.9
0.7
4.4
5.6
6.0
21.8
24.9
194
159
329
0
876
611
2,740
156
0
2
488
258
908
0
347
-91
-31
-86
59
874
-861
191
0
0
623
45
798
537
38
159
327
-488
618
-296
2,740
$0.08
$3.54
$1.10
-$1.31
$1.54
-$0.20
$1.65
4
4
22
4
106
1.9
2.8
40.9
3.8
120.3
1
304
3,628
265
9,143
82
56
807
112
2,947
174
106
785
299
1,666
0
0
1,058
0
3,253
-81
248
2,820
153
6,196
-$0.63
$1.31
$1.03
$0.60
$0.77
*Totals may not add up due to rounding, not all EPCs requested will be granted
Net total
Credits
owed
(kt CO2e)
Net cost
per tonne
emitted
Facility-Specific Historic Baseline
 Adds flexibility
 Recognizes diversity and incremental
improvements
 Significant effort and complexity in finding
representative baseline
 Often have to restate for methodology improvements
and error corrections
 Data management challenge
Distribution of Compliance:
In Situ and Electricity Sector Examples
SGER $/bbl
in situ total
Linear (SGER $/bbl)
SGER $/MWh
$1.00
Sector Average
Linear (SGER $/MWh)
$3
$2
Compliance Cost ($/MWh)
Compliance Cost ($/bbl)
R² = 0.4505
$0.50
$0.00
$1
R² = 0.0441
$0
-$1
-$2
-$0.50
0.00
0.05
0.10
0.15
Emissions intensity (t/bbl)
(Baseline cogen adjustment)
0.20
-$3
0.00
0.25
0.50
0.75
1.00
Emissions Intensity (t/MWh)
(cogen excluded)
1.25
Cogeneration Treatment
 Policy issues affecting cogeneration are not
unique
 Multiple distinct products
 On site versus indirect emissions
 Treatment based on stand alone alternatives
 Exempt emissions beyond heat emissions
 80% efficient boiler reference
 Credit for electricity generation relative to natural
gas fired generation performance standard
 0.418 t CO2e/MWh – lifecycle intensity of natural gas
combined cycle
Emissions Offset System
 Currently no limit on banking or vintage of credits
used
 Provide market-based compliance option
 Extends reach of regulation beyond large emitters
 28.6 Mt CO2e (1 tonne equals 1 offset credit) reduced
 19.7 Mt of CO2e have been submitted
 New protocols being developed
 All projects verified to reasonable level assurance
prior to registry and reviewed upon submission
 All projects must have been started after 2002 and
occur in Alberta
 Moved to “go-forward” crediting in 2012
Conclusion
 SGER is working
 Achieving real reductions
 Investment being made to achieve future
reductions
 Focus on continuous improvement and building on
learnings to date
 Moving forward
 Climate Change Strategy renewal and Regulation
review underway
Questions?
Justin Wheler, P.Eng.
Climate Change Engineer
Air and Climate Change Policy Branch
Alberta Environment and Sustainable Resource Development
(780) 644-6982
[email protected]