Alberta s Climate Change Strategy and Regulations

Transcription

1 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

2 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

3 Alberta s 2008 Climate Change Strategy Alberta s 2020 target = 260 Mt Alberta s 2050 target =187 Mt

4 Alberta s Specified Gas Emitters Regulation In force as of July 1, 2007, expires September, 2014 Large final emitter regulation (>100 kt CO 2 e 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

5 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 $213 million allocated to 51 clean technology projects leveraged investment from other sources, totalling over $1 billion $1.3 billion committed to two carbon capture and storage projects 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

6 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 Provincial Emissions 2 (Mt CO2e) Emissions Intensity kg/$ Savings from BAU (Mt CO2e) Year Alberta GDP 1 (millions 2002 $) Intensity Index (1990 = 100) BAU Emissions , , , , GDP values from StatsCan (chained 2002 dollars), StatsCan Table Values published in the Environment Canada National Inventory Report GHG Inventory 3 Calculated as 1990 emissions intensity * GDP

7 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 Manufacturing / Construction 5% Industrial Process 4% Transportation 16% 2011 Alberta Greenhouse Gas Emissions by Sector - National Inventory Report (242 Mt Total) Waste 1% Agriculture 7% Electricity / Heat Generation 20% Oil and Gas and Mining 18% Residential / Commercial 6% Oil Sands 23% (Mining, In Situ and Upgrading) Derived from: National Inventory Report , Environment Canada

8 National Context Source: Canada s Emissions Trends, Environment Canada, October 2013 Total Emisssions (Mt CO2e) AB ON QC SK BC NS MB NB NL

9 National Emissions Projection Source: Canada s Emissions Trends, Environment Canada, October 2013 Reductions to Date = 128 Mt Additional Reductions Required = 122 Mt

10 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

11 Reported Emissions (kt CO2e) Large Final Emitters Threshold 100 kt CO 2 e 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 CO 2 e SGRR: 40% more facilities, 16% more emissions 14,000 12,000 10,000 8,000 6,000 4,000 2,000 (3% more of Alberta s total emissions) 2011 Facilities Ranked by Total Annual Emissions 47% of Reported Emissions

12 $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

13 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 CO 2 e

14 12 Per Cent Intensity Reduction Target 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 Emissions Intensity (tco2e / product) ,000 40,000 20, ,000-40,000-60,000-80, , , ,000 Credits Required (tonnes CO2e)

15 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 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000, * Emissions savings at facility (relative to baseline) Recognition of cogeneration Carbon Offsets Submitted fund credits EPCs Submitted EPCs generated** (including cogen recognition) Total Avoided Emissions*** *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

16 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 Facility Count Total Direct Emissions (Mt CO2e) Tonnes Owed (thousands) EPCs Requested (thousands) Reductions at facility (kt CO2e) Recognition of Cogeneration (kt CO2e) Net total Credits owed (kt CO2e) Net cost per tonne emitted Chemical $0.08 Coal Mines $3.54 Fertilizer $1.10 Forest Products $1.31 Gas Plant $1.54 In Situ Oil Sands $0.20 Oil Sands Mines & , ,740 $1.65 Upgraders Mineral $0.63 Pipeline $1.31 Power Plant , ,058 2,820 $1.03 Refining $0.60 TOTAL* ,143 2,947 1,666 3,253 6,196 $0.77 *Totals may not add up due to rounding, not all EPCs requested will be granted

17 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

18 Distribution of Compliance: In Situ and Electricity Sector Examples SGER $/bbl in situ total Linear (SGER $/bbl) SGER $/MWh Sector Average Linear (SGER $/MWh) $1.00 $3 R² = $2 Compliance Cost ($/bbl) $0.50 $0.00 Compliance Cost ($/MWh) $1 $0 -$1 R² = $2 -$ Emissions intensity (t/bbl) (Baseline cogen adjustment) -$ Emissions Intensity (t/mwh) (cogen excluded)

19 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 t CO 2 e/mwh lifecycle intensity of natural gas combined cycle

20 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

21 SGER is working Conclusion 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

22 Questions? Justin Wheler, P.Eng. Climate Change Engineer Air and Climate Change Policy Branch Alberta Environment and Sustainable Resource Development (780)