Alberta: N Amer 1st compliance offset C market

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Transcript Alberta: N Amer 1st compliance offset C market

ALBERTA: NORTH AMERICA’S FIRST
COMPLIANCE OFFSET CARBON MARKET
Tom Goddard, Alberta Agriculture and Food
Karen Haugen-Kozyra, Climate Change Central
Andy Ridge, Alberta Environment
Carbon Consultation, October, 2008
Outline
• Context
• Regulatory Framework
• Offset System – Tillage offset
• First Compliance Period
• Conclusions
Alberta’s GHG Emissions in the Canadian Context
(MT CO2e/ yr)
305
223
0.4
0.5
88
1.6
2
66
87
24
62
168
21
207
91
85
2004
48
2020
20
22
2
2
25
9
6
Alberta Approach
• Long term issue
– Need to start with practical, achievable objectives
• Policy certainty for industry
– Large investments being made now – expensive to retrofit,
investment is for 40 years+
• Implementation of new technology will be a big part
of the long-term solution.
– Linked to our unique role as North America’s energy supplier
• Market instruments - bridge gap between current
emissions and long-term solutions.
• All Albertans must be part of the solution
• Requires strategic and focused investment in
transformational changes (technology, behavioral)
• Remain globally competitive
Where have we come from?
• Taking Action on Climate Change – 2002
 Provincial 50% GHG intensity/GDP target by 2020
 Seven thrusts, including:
• Government Leadership
• Energy Conservation
• Carbon Management/ Technology and Innovation
• Renewable and Alternative Energy
• Enhancing Carbon Sinks
• Adaptation
 Climate Change and Emissions Management Act
– GHG regulations on:
 Mandatory reporting of GHGs by industry - 2003
• Intensity targets for large facilities - 2007
Specified Gas Emitters Regulation
•
Applies to all facilities in Alberta that produce over
100,000 tonnes of CO2e
– Facilities have been reporting since 2003
– 103 existing and new facilities as of 2006
•
Develop facility baselines
– Based on average emissions intensity from 2003-05
(emissions/production=baseline intensity)
•
Reduction targets off of baseline (-12%)
Large Industrial Emitters Profile
(>100,000 tonnes CO2e/year)
Chemicals 6%
Other 14%
Gas Plants 7%
Heavy Oil 7%
Oilsands
21%
Alberta Reporting Program - 2006
Power Plants
45%
Options to Achieve Targets
1. Emission Performance Credits
These are credits for better than target performance
2. Fund Credits
Invest in the Climate Change and Emissions
Management Fund at $15/tonne – funds used to
develop or invest in Alberta based technologies,
programs, and other priority areas (as per
CCEMA)
3. Emission Offsets
Voluntary emission reduction opportunities in support
of achieving environmental objectives
Alberta Offsets
Afforestation
Beef feeding
Beef life cycle
Biofuel
Biogas
Biomass
Energy Efficiency
Pork
Tillage
Compost
Enhanced Oil Recovery (2)
Landfill Gas
Waste Heat Recovery (2)
Supported by:
Documentation
Calculators
Guidance docs
Protocols Under Consideration
1.
2.
3.
4.
5.
6.
7.
8.
9.
Nitrogen Use Efficiency
Wetlands Management
Conversion to Perennial Forages
Reducing Summerfallow
Residue Management
Rangeland
Beef - Residual Feed Intake
Pasture Management
Soil Amendment
Offset Criteria
• Emission Offsets
–
–
–
–
–
–
Action (project) taken on/after January 1, 2002
All actions must occur in Alberta
Must be real, quantifiable and measurable
Not otherwise required by law; clearly owned
Not double counted (Unique)
Must be verified by 3rd party
• Tools and Standards
– Protocols – most comprehensive set in NA
• 23 Protocols now approved; 4 more in protocol review process
• 12 more under development for this year
– Project-based Registry launched
– Guidance Documents – Projects, Verification, Protocols
(draft)
Offset System Design
• Protocols
– Developed on ISO 14064 Part 2 framework
– Considered scientific and technical review
– Basis for linking and building when other markets
are developed
• Verification Happens After Credit is created
– Need strong government approved protocols
• Validation and Registration – optional
– Business Risk management tool
• Registry
Supporting doc: Offset Credit Project Guidance Document
Protocol development/validation
1
Check Carbon Offset Solutions website for
draft protocols, protocols under development
2
Develop & compile Technical Seed Document(s)
(TSD) for protocol foundation
3
Prepare Technical Protocol Plan (TPP)
4
Submit TPP & TSDs to Alberta Government for
review
5
Provide feedback to protocol developers – 60 days*
6
Adapt into Alberta protocol format (Standardization)
7
1st round of reviews – expert technical review
No sustained objections, then move forward.
8
2nd round of reviews – broader stakeholder review
No sustained objection, then move forward
9
3rd round of reviews – posting for public review
30 days
10
Finalization of protocol & review of public comments
by Alberta Environment**
2-10
mo
Protocol Developer
Alberta Government
Protocol Developer
Coordination by
Climate Change
Central (C3)
“All parties involved”
Alberta Government
11
Government approval & posting of
protocol
4-6
mo
10-30
days
1-2
mo
Challenges of Delivering Agriculture-Based
Offsets to Market
•
•
Developing Science
Transaction Costs and Risks:
–
–
•
Verification Costs:
–
•
Small amounts from each farm
Need to be “Grouped or Aggregated”
Need a low-cost verification system
Producers will need:
–
Contractual project and market advice
Carbon Trading 101
Alberta Offset System
• Can sell credits back to 2002 and as far into
the future as you are willing to contract
• Can contract 1 or more years, part or all of
your acres, and part or all of tonnes per acre
allowed through the AB government protocol
• No deadline to sign up  you will not lose
your carbon credits if you wait
Key Regulatory Issues
• Addressing Additionality
– Actions have to be new after 2002
– Not allowing ‘anyway tonnes’
• Addressing the non-permanent nature
of Soil Organic Carbon (reversals of
CO2e)
Alberta – Ensuring Additionality
Adjusted
Baseline
CO2e
-only New C
going forward
NT
RT
1990
1999
2000 2001 2002
Time 
Permanence - Alberta
• Government backs the liability
• Assurance Factor
– Based on expert opinion
– Frequency of reversal of tillage practices in Dry
Prairie and Parkland
– Reversal risk – shaves off C for every tonne
created – into virtual Reserve pool
– Backs the liability of a reversal of Soil C
– No credits earned for that year (no liability on
farmer/project developer)
Alberta Government Protocol
Protocol
Area
Soil Zones
Emissions
Factor
Parkland
Black Soil Zone,
Boreal Plains, Lake
Manitoba Plain,
Boreal Shield (AB,
SK, MB, and NW
ON), Montane
Cordillera (AB)
0.16
metric
tonnes /
acre
Dry
Prairie
Dark Brown Soil
Zone, Brown Soil
Zone
0.084
metric
tonnes /
acre
Figure A1. The boundary between Dry Prairie and Parkland is
the Black-Dark Brown soil zone boundary. The east-central
and east is the boundary is that between the Atlantic Maritime
and Mixed Wood Plains ecozones. From McConkey 2006.
Initial transactions
(July-Dec, 2007)
• 25% of liabilities were settled with
offsets.
• Tillage protocol was favourite
– 7 Projects: 3 Tillage, 2 Wind, 1 LFG, 1 Biomass
• $6 to $12 / tonne
– 30-40% transaction costs
Note – Demand approx 10 to 12 Mt per year
Alberta Offset System Experience
• proved the aggregator model works.
• interest in biosequestration projects – the model
works.
• is now competing on reduced transaction costs.
• More project documentation templates are required.
• Verification standards are needed for more complex
projects (e.g. tillage).
• Ownership issues – barred additional tillage offsets.
• Accreditation of verifiers may be warranted.
• Unanticipated costs found on the project developer
side will lead to more diversification of projects ($15
safety valve a challenge).
www.CarbonOffsetSolutions.ca
Climate Change Central Website
•
•
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•
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Market Standards (ongoing) (protocols)
Market Intelligence
Market Registry (Meeting Place)
“How to” Guides
List of aggregators, verifiers, buyers
Sample Contracts (seller- buyer; sellerverifer)
Summary
• Alberta the first jurisdiction in North America to create
a multi-sector regulatory-based demand for carbon
reductions
• Provincial system focused on technology
development and new market opportunities
– First stages of a carbon market
– New carbon investment opportunities
• Credit creation opportunities exist
–
–
–
–
Back to 2002 – no deadline to sell
Need to consider the $15/tonne limit
Variety of offset projects eligible
A voluntary component of an environmental regulatory policy
framework
– Tools to support market activity
Quantification Principles
1.
2.
3.
4.
5.
Completeness – Include all relevant GHG emissions and removals.
Include all relevant information needed in order to issue valid offset
credits;
Consistency – Ensure the methodologies for comparable projects
yield similar net reductions/removals and ensure consistency among
the elements of a Project Document;
Accuracy – Reduce bias and uncertainties as far as practical;
Transparency – Disclose sufficient and appropriate GHG-related
information to allow the Program Authority and verifiers to make
decisions with reasonable confidence;
Relevance – Select GHG sources, GHG sinks, GHG reservoirs, data
and methodologies appropriate to the needs of the intended user.
Information
Climate Change Central:
http://www.carbonoffsetsolutions.ca
Alberta Government:
http://www3.gov.ab.ca/env/climate/index.html
[email protected]
[email protected]
[email protected]