ALBERTA: NORTH AMERICA’S FIRST COMPLIANCE OFFSET CARBON MARKET Carbon Consultation, October, 2008...
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Transcript of ALBERTA: NORTH AMERICA’S FIRST COMPLIANCE OFFSET CARBON MARKET Carbon Consultation, October, 2008...
ALBERTA: NORTH AMERICA’S FIRST COMPLIANCE OFFSET CARBON MARKET
Carbon Consultation, October, 2008
Tom Goddard, Alberta Agriculture and Food
Karen Haugen-Kozyra, Climate Change Central
Andy Ridge, Alberta Environment
Outline
• Context
• Regulatory Framework
• Offset System – Tillage offset
• First Compliance Period
• Conclusions
Alberta’s GHG Emissions in the Canadian Context(MT CO2e/ yr)
223
66
0.5
2
6221
91
920
22
2
2072004
2020
305
87
88
16885
24
48
25
2 6
0.4
1.6
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%)
Power Plants45%
Oilsands21%
Heavy Oil 7%
Gas Plants 7%
Chemicals 6% Other 14%
(>100,000 tonnes CO2e/year)
Alberta Reporting Program - 2006
Large Industrial Emitters Profile
1. Emission Performance CreditsThese are credits for better than target
performance
2. Fund CreditsInvest 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 OffsetsVoluntary emission reduction opportunities in
support of achieving environmental objectives
Options to Achieve Targets
Alberta Offsets
AfforestationBeef feedingBeef life cycleBiofuelBiogasBiomassEnergy EfficiencyPorkTillage
Compost
Enhanced Oil Recovery (2)
Landfill Gas
Waste Heat Recovery (2)
Supported by:DocumentationCalculatorsGuidance docs
Protocols Under Consideration
1. Nitrogen Use Efficiency 2. Wetlands Management 3. Conversion to Perennial Forages 4. Reducing Summerfallow5. Residue Management6. Rangeland7. Beef - Residual Feed Intake 8. Pasture Management 9. 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/validationCheck Carbon Offset Solutions website for
draft protocols, protocols under development
Develop & compile Technical Seed Document(s) (TSD) for protocol foundation
Prepare Technical Protocol Plan (TPP)
Submit TPP & TSDs to Alberta Government for review
Provide feedback to protocol developers – 60 days*
Adapt into Alberta protocol format (Standardization)
1st round of reviews – expert technical reviewNo sustained objections, then move forward.
2nd round of reviews – broader stakeholder reviewNo sustained objection, then move forward
3rd round of reviews – posting for public review30 days
Finalization of protocol & review of public comments by Alberta Environment**
Government approval & posting of protocol
2-10mo
4-6mo
10-30days
1-2mo
1
2
3
4
5
6
7
8
9
10
11
Protocol Developer
Alberta Government
Protocol Developer
Coordination by Climate Change Central (C3)
“All parties involved”
Alberta Government
Challenges of Delivering Agriculture-Based Offsets to Market
• Developing Science• Transaction Costs and Risks:
– Small amounts from each farm– Need to be “Grouped or Aggregated”
• Verification Costs:– Need a low-cost verification system
• Producers will need:– Contractual project and market advice
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
1990 1999 2000 2002
CO2e
Time
NT
RT
Adjusted Baseline
-only New C going forward
2001
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
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.
Protocol Area
Soil ZonesEmissions
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
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
• Market Standards (ongoing) (protocols)
• Market Intelligence
• Market Registry (Meeting Place)
• “How to” Guides
• List of aggregators, verifiers, buyers
• Sample Contracts (seller- buyer; seller-verifer)
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
1. Completeness – Include all relevant GHG emissions and removals. Include all relevant information needed in order to issue valid offset credits;
2. Consistency – Ensure the methodologies for comparable projects yield similar net reductions/removals and ensure consistency among the elements of a Project Document;
3. Accuracy – Reduce bias and uncertainties as far as practical;4. Transparency – Disclose sufficient and appropriate GHG-related
information to allow the Program Authority and verifiers to make decisions with reasonable confidence;
5. Relevance – Select GHG sources, GHG sinks, GHG reservoirs, data and methodologies appropriate to the needs of the intended user.
Quantification Principles
InformationClimate Change Central:
http://www.carbonoffsetsolutions.ca
Alberta Government:
http://www3.gov.ab.ca/env/climate/index.html