Energy efficient Canadians would gain an income source at the expense of fossil fuel producers and their top industrial customers from an emerging national counterpart to a 19-year-old Alberta carbon emissions control program.
Draft regulations have been posted for a cap-and-trade market titled the Federal Greenhouse Gas Offset System. The clock is running on a 60-day public consultation period required before enacting the final, enforceable version.
The package defines ways to create credits against greenhouse gas (GHG) emissions with refrigeration technology, forest management, landfill methane control and farm soil stewardship. Additional regulations are planned to recognize more cleanup strategies.
Companion rules, titled the Output-Based Pricing System, govern purchases of the emissions credits by fossil fuel producers and their large-scale customers, such as refineries, petrochemical complexes and cement plants.
“The ability to generate and sell federal offset credits creates opportunities for farmers, foresters, Indigenous communities, municipalities and other project developers to earn revenues from greenhouse gas reductions and removals,” according to Environment and Climate Change Canada (ECCC), the federal government agency that would oversee the system.
The national regulations would prohibit double collecting emissions credit revenues that energy efficiency projects generate in the prototype cap-and-trade market in Alberta.
As the top Canadian oil and gas producer province and target of escalating environmental protest, Alberta started GHG policing in 2002. The first step required carbon accounts from operations responsible for annual emissions of 100,000 tons or more.
By 2007, the Alberta government inaugurated a provincial cap-and-trade market, complete with audited carbon emissions reduction credits and aggregators, or brokers earning sales commissions.
The national green certificates market is too new and incomplete to forecast activity levels or revenues, according to ECCC. However, Alberta experience shows that commerce in official carbon reduction credits has potential.
The province has 16 “protocols” that would define types of carbon offsets legitimately for sale. The list ranges from aerobic composting of organic material and biogas production to landfill gas capture, solar and wind power, as well as waste heat recovery.
The Alberta Emission Offset Registry, the market watchdog, recorded 80 million credits, each worth one ton of carbon, on its books and active trading volumes of the certificates measured in hundreds of thousands.
Another provincial carbon management agency, Emissions Reduction Alberta (ERA), manages a rich flow of cash penalties from operations that opted to stay off the cap-and-trade emissions exchange.
Since 2007, ERA handled C$616 million ($462 million). The cash provided public assistance for 126 emissions cleanup and energy efficiency projects worth an estimated C$4.5 billion ($3.4 billion), counting commitments by industry partners.
The Canadian carbon emissions management structure also has cooperative aspects. The federal government accepts the veteran Alberta cap-and-trade market as a substitute for the new national system. Alberta and federal agencies would share equal representation in a newly announced, national carbon capture and storage policy group.
However, the eventual fate of parallel, overlapping Canadian federal and provincial GHG control programs — and especially a national carbon tax on personal and residential use of fossil fuels — remains hotly contested.
A verdict is expected soon from the Supreme Court of Canada on lawsuits by the Alberta, Ontario and Saskatchewan governments that have said the federal program violates their constitutional resource ownership and management rights. Split decisions by province-level appeal courts have to date upheld the federal claim to dominant environmental authority.
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