Page 1. Canadian Geothermal Energy Association P. O. Box 1462 St. M, Calgary, Alberta, T2P 2L6, Canada -

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1 Page 1 Hon. George Heyman Minister of Environment and Climate Change Strategy PO Box 9047 Stn Prov Gov Victoria, BC V8W 9E2 clean.growth@gov.bc.ca August 24, 2018 Dear Minister Heyman: RE: Intentions Paper - A Clean Growth Program for Industry The (CanGEA) is the collective voice of Canada s growing geothermal industry. CanGEA s focus is the continued development and recognition of power and heat generation projects. Cultivation and stewardship of geothermal related advances in policy and innovation continue to be the driving force of the Canadian geothermal industry. Through member support and consultation, CanGEA advocates for the advantages that geothermal investment and cultivation will bring, not only through the continued protection of the environment and recognition of environmental responsibility but also through the plethora of economic and market opportunities that geothermal energy and innovation presents. In recent years, the government of British Columbia has made great strides towards strengthening environmental policies, renewing commitments, and reducing its industrial sector s carbon footprint; however, more work must be done to ensure that all options are explored while addressing such a complex issue that affects a diverse number of individuals, groups, organizations, and stakeholders. The supports the Clean Energy Fund Program for Industry and thanks the Ministry of Environment and Climate Change Strategy for taking initiative to engage with stakeholders and the public on such a pressing issue. To this end, the (CanGEA) makes the following recommendations in response to the Clean Growth Program for Industry Intentions Paper: 1. Transparency and openness surrounding the collection of data, program structuring and disbursement of funding; 2. Enabling and fostering of collaboration and partnerships through a government facilitated data portal; 3. Strive towards progressive policies to address the need for new ideas and investment, including the inclusion of clarity surrounding eligibility and Technology Readiness Levels (TRL); 4. Aim to support Fund applicants that best serve the program by supporting low/zero emission projects, or projects that reduce emissions; 5. To revaluate the Incentive Matrix in a way that: a. Clearly defines Pro-Rated/Full-Incentive and, b. Is structured in a way that incentivizes all emitters to pursue emission reductions regardless of eligibility level. The (CanGEA) is the collective voice of Canada's geothermal energy

2 Page Clean Growth Program for Industry The Clean Growth Program for Industry directs a portion of B.C. s carbon tax paid by industry into incentives that encourage them to transition to cleaner operations and reduce emissions. It is designed for regulated large industrial operations, such as: Pulp and paper mills, Natural gas operations and refineries, and Large mines Emitting over 10,000 tonnes of GHG emissions per year. The program is funded by the incremental carbon tax above $30 per tonne as paid by industry. In 2018, B.C. s $30 carbon tax rate was raised to $35 per tonne, and it is set to increase by $5 every year until As the price of carbon rises, the Clean Growth Program will allow industries to receive incentives based on some or all of the carbon tax they pay above $30 a tonne, depending on their emission levels and reductions. The program includes two initiatives: Industrial Incentive that reduces carbon-tax costs for industrial operations that meet world leading emissions benchmarks, and Clean Industry Fund that invests some revenue from industrial carbon taxes directly into emission reduction projects, making traditional industries cleaner and stronger. Firstly, we would like to request that due diligence is taken to ensure that transparency and openness be prioritized in the collection of data and fund disbursement related to the two initiatives outlined in section 2.1 of the Clean Growth Program for Industry Intentions Paper (CGPIP). Transparency surrounding emissions, Fund collection, Fund project applicants, and Fund disbursement will aid in fostering open and competitive markets and investor confidence. While the intentions of these Funds are understood as helpful to the ongoing development of clean technologies, ensuring that data related to collection of funds, emissions, successful initiative is made publicly available would be best practice in responsible governance. CanGEA recommends that transparency is made a priority through creation or delegation of accountability mechanisms, procedures and evaluation tools surrounding program implementation, structuring and review. This will ensure that the Fund and collection of emissions tax is responsibly distributed and that the policy is working as intended through continuous reductions in emissions by industry. Contrary to this, if the policy is not acting as intended, a revaluation or program retooling may be conducted by the accountability mechanism to avoid inefficient allocation funds and resources. The (CanGEA) is the collective voice of Canada's geothermal energy

3 Page Industrial Incentive The Industrial Incentive will help B.C. industries thrive in the global market while becoming world leaders in clean growth and emission reduction technologies. It will also help to prevent carbon leakage the movement of industry that competes internationally to places where there s little or no price on carbon pollution. It is structured so that the cleaner the industrial operation, the larger their incentive. Applicants for the incentive will be assessed using two evidence-based benchmarks: 1. An eligibility benchmark will determine if the facility or industrial operation receives an incentive. It will be based on reported emissions associated with each operation s unit of production referred to as their emissions intensity. For example, a lumber mill might have an eligibility benchmark based on emissions per board foot produced. 2. A performance benchmark will determine the amount of incentive an industrial operation receives. This benchmark is based on the emissions intensity of similar products made at the cleanest facilities around the world. The closer a B.C. operation gets to matching that performance benchmark, the larger their incentive will be potentially reducing their carbon tax costs to the minimum of $30/tonne. CanGEA supports the incentivization of industry towards reducing emissions. Section 2.2 focuses on the means in which Funds will be collected prior to disbursement to applicants, we support this and believe that this way to utilize carbon tax funds will optimize R&D in both the industrial sector that will be incentivised and R&D in the clean technology sector that will directly benefit from the tax. Our concern with this section is that the eligibility matrix as presented may appear less of an incentive to producers that produce less than the major emitters; producers falling on the eligibility cusp may have less incentive to reduce emissions because they feel it has less value. In order to attain full benefit for all parties, we recommend that the matrix be re-evaluated to provide clarity surrounding pro-rated and full-incentive so that they are clearly defined, and all producers of emissions are able to participate in a meaningful way while receiving incentives. The (CanGEA) is the collective voice of Canada's geothermal energy

4 Page Clean Industry Fund The Clean Industry Fund will support investments that reduce greenhouse gas emissions from large industrial operations. The Fund is designed to work alongside the Industrial Incentive to help B.C. s industrial operations, such as oil and gas, forestry, mining and smelting, transition to a low-carbon economy. Industrial operations that report their emissions under the Industrial Incentive program will be eligible to apply to the Clean Industry Fund. Initial investments from the Fund will help facilities implement emissions reduction projects where additional funding is needed to justify the business case. The focus will be on implementing readily available technology, but the Fund may look to diversify over time, supporting the continued growth of emerging technologies from B.C. s clean tech sector. The Fund will be established using the incremental carbon tax revenue from industry that remains after the Industrial Incentives have been provided. It will also be designed to leverage additional investments from facilities and partners, such as industry associations and other government funding programs. CanGEA fully supports the Clean Growth Program Fund and the utilization of funds from emissions towards supporting technology and projects that seek to lessen BC industry impact on the environment. Development of emerging technologies and practices should be prioritized. While the investment into tried-and-true technologies has been prolific to the growth of the renewables sector, investment into new technology should be acknowledged. Firstly, the lack of conciseness surrounding readily available technology is discouraging of wouldbe investors and developers with technology that scored high on TRL and is in use in other jurisdictions and markets but not yet deployed in BC or Canada. To this end, we recommend that the government of British Columbia consider including technology readily available or proven technology in other jurisdictions as part of the initial Fund call. (i.e. Geothermal, storage, Carbon Capturing, etc.) as well as to consider expanding the call to emerging technologies. Secondly, we would like to express our appreciation for the government of BC in prioritizing of collaboration and partnership through the intent to create this Fund and the leverage that it will provide for R&D. In order for collaboration to be fully realized, care must be taken to provide open data of applicants and projects so that partnerships may be fostered, and deals struck. We recommend that the government of BC consider a government facilitated data portal for applicants and investors to find synergies and encourage collaboration. The intention of this section is understood to be helpful to development and investment while hindering emissions; however, this section should further elaborate on what Technology The (CanGEA) is the collective voice of Canada's geothermal energy

5 Page 5 Readiness Level (TRL) is considered readily available, and may look to diversify over time, would mean for inclusion of emerging technology or lower TRL scored technology. The exclusion or dismission of technologies would be detrimental to the competitive market and may stifle innovation. We hope that following this initial stakeholder consultation that the government reconsider and look to expand the scope of eligibility. 2.4 Key Considerations As the Clean Growth Program for Industry is being designed, we are seeking public input on the best ways to implement it. Key areas under consideration include: 1. Ensuring that all industrial operations are able to take advantage of the incentives to help become the cleanest in the world. This could be achieved by allowing facilities that emit less than 10,000 tonnes of emissions annually to opt in, as long as they meet the same emission reporting requirements as larger industries. 2. Ensuring the Industrial Incentive does not weaken the signal from our carbon price to reduce emissions. This could be achieved by continuing to update the performance benchmark for example, every five years as the cleanest facilities in the world become even cleaner. 3. Finding the right balance for Clean Industry Fund investments between low-cost projects that reduce emissions now, and long-term clean growth solutions that could have a larger impact in the future. 4. Identifying strategic industrial investments for the Fund to complement those made by existing technology funds. This will provide greater opportunities for the clean technology market in B.C. Concluding Remarks In summary, CanGEA and its members make the following recommendations: Transparency and openness surrounding the collection of data, program structuring and disbursement of funding through creation or delegation of an accountability mechanism or governing body. Enabling and fostering of collaboration and partnerships through open data through the development of an open data portal that would allow for sourcing of investments or collaboration partnerships. Strive towards progressive policies to address the need for new ideas and investment, including the inclusion of clarity surrounding eligibility and Technology Readiness Levels (TRL) to best encourage innovation and market competitiveness. The (CanGEA) is the collective voice of Canada's geothermal energy

6 Page 6 Aim to support Fund applicants that best serve the program by supporting low/zero emission projects, or projects that reduce emissions which will enable continuous overall reductions and strive towards constant environmental improvement and technology innovation. To re-evaluate the Incentive Matrix in a way which: a) Clearly defines Pro-Rated/Full- Incentive and, b) Is structured in a way that incentivizes all emitters to pursue emission reductions regardless of eligibility level. This will ensure that all possible measures are taken to reduce the maximum amount of emissions regardless of percentage of overall industry impact and to allow for incentives for all eligible emission reductions industry participants. CanGEA would once again like to extend our appreciation to the Ministry of Environment and Climate Change Strategy in undertaking this endeavour of responsible governance through careful consideration all options. We encourage the Ministry to consider our recommendations as we believe they address and expand upon the underpinned considerations in Section 2.4. Therefore, CanGEA would like to request a meeting with your Ministry to further discuss our recommendations. We look forward to future collaboration opportunities and the ongoing development of additional comprehensive policies and investment frameworks. Sincerely, Kayla Wilson-Layton Policy Analyst The (CanGEA) is the collective voice of Canada's geothermal energy