Crude-producer Alberta unveils rules for large carbon emitters

Reuters News
Posted: Dec 06, 2017 3:05 PM

By Nia Williams

CALGARY, Alberta (Reuters) - Canada's main crude-producing province Alberta unveiled new rules on Wednesday on how it would charge large industrial emitters including the oil sands sector for carbon output, saying emissions will be cut by 19 percent by 2030.

The left-leaning New Democratic Party government said the plan had been designed in consultation with industry, but the opposition United Conservative Party said it could cost jobs in a province that is still adjusting to the long-term slump in global oil prices.

Environment Minister Shannon Phillips said the regulations will reduce Alberta's emissions by 20 million tonnes by 2020 and 50 million tonnes by the end of the next decade.

The Carbon Competitiveness Incentives (CCI) plan applies to any facility emitting more than 100,000 tonnes of carbon a year, of which there are 110 in Alberta. The oil sands make up 24 percent of Alberta's total emissions.

The provincial government did not disclose names of the biggest emitters.

The policy is expected to bring in C$500-C$800 million a year in government revenue and will be phased in over three years to give companies time to adjust. Alberta will make C$1.3 billion in funding available to industry over the next seven years to support projects aimed at cutting emissions.

Under the plan, most industries will have a benchmark set at 80 percent of production-weighted average emissions. Any facility producing at a higher intensity than the benchmark will be subject to "compliance obligations", which can be met by paying for emissions at a rate of C$30 a ton, reducing emissions or buying offsets. Those producing at a lower intensity than the benchmark will accumulate credits that can be used to offset future costs.

In the oil sands, emissions intensity will be measured by the amount of greenhouse gas produced in extracting one barrel of oil, and the benchmark will be the top quartile of projects or 57.7 kilograms of carbon dioxide equivalent per barrel.

The changes will reward the most efficient producers and help Alberta meet its climate change goals, Phillips said.

"The fact is that investors are demanding credible climate action," she said. "This whole policy is designed around protection of jobs and ensuring that companies remain competitive."

Phillips said it was difficult to put a number on the cost to industry because companies would be able to use credits to offset costs, while the compliance obligations can also be written off against royalties paid to government.

($1 = 1.2791 Canadian dollars)

(Reporting by Nia Williams; editing by Grant McCool)