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Alberta Takes First Step in "Re-thinking" Climate Policy

26-Jun-15

By Michael Barbero

On June 25, 2015 the Alberta government announced it would renew and revise the Specified Gas Emitter Regulation ("SGER"). The announcement increases reductions in greenhouse gases ("GHG") by large emitters of GHG. It also increases the cost of technology credits used by emitters to achieve compliance. These changes come as part of a larger "re-thinking" of Alberta's climate policy currently being undertaken by the new Alberta government.

SGER
Currently, SGER requires entities emitting 100,000 tonnes or more of greenhouse gas per year to reduce their emissions intensity per unit of production by 12%. Reductions may be achieved in four ways:

  1. Direct improvements to operations;
  2. By earning Emissions Performance credits;
  3. Through purchasing Alberta carbon off-set credits; or
  4. Through payment ($15 per tonne) to the Climate Change Emissions Management Fund ("CCEMF").

The changes to SGER will increase the reductions required by large emitters. Larger emitters will need to reduce emissions intensity by 15% in 2016 and by 20% in 2017.

The cost of achieving these reductions will also increase. Effective 2016, the price for payments to the CCEMF will increase from $15 per tonne to $20 per tonne. In 2017 the level will increase to $30 per tonne.

Government's New Approach
As noted, the changes to SGER are part of a larger re-evaluation of the approach by the government of Alberta to address climate change. In addition to the SGER amendments, the government has announced its intentions to:

  • Create an advisory panel chaired by Dr. Andrew Leach of the University of Alberta, to conduct a "comprehensive review of the current policy" and report to the government by the fall of 2015.
  • Create an advisory panel to review oil and gas royalties.
  • Establish clear climate change policies prior to the UN Conference Of Parties World Summit to be held in France on December 7 and 8, 2015.

Conclusions
The government's changes to SGER seemingly reflects the concerns of those emitters who require market access. The amendments, and the government's position generally, are an acknowledgement of the relationship between proactively addressing emissions in Alberta and increasing access to world markets.

Moreover the review to be carried out by Dr. Leach and others could yet result in further changes to emission regulation in Alberta. In fact, it seems quite likely that the result of the advisory panel's review could be a move away from SGER towards a more comprehensive approach. Such an approach could include more extensive amendments to the regulatory system such as a cap and trade regime, a comprehensive carbon tax (as exists in B.C.), or increased transfer of costs associated with emission reduction being passed on to consumers.

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