In a world filled with abbreviations and acronyms, do you recognize GHG, NRTEE, PCT, or WCI? Chances are you do, and your customers will soon also (if not already).
Faced with a global environmental crisis, many governments and lobbyists are pushing for real environmental change. Change is happening on the greenhouse gas emissions front (albeit at a slow pace) largely in the form of legislative initiatives such as the carbon tax implemented by British Columbia and Quebec, and programs in other jurisdictions that will pave the way for “cap-and-trade” systems there. These developments present opportunities for industry.
On July 1, 2008, British Columbia introduced a carbon tax through its Climate Action Plan. Almost immediately, Sustainable Prosperity, a think tank out of the University of Ottawa, ranked BC’s carbon tax as the most effective climate change policy in Canada. The tax is meant be phased in over a five-year period, with an initial price of $10 per tonne of carbon, increasing to $30 per tonne by 2012. To the average consumer, this will mean an initial increase in the price of gasoline of 2.41 cents per litre, followed by a subsequent increase to 7.24 cents by 2012. The thinking behind the tax is that “when you tax something, you normally get less of it.” A carbon tax should decrease carbon emissions. (The tax is meant to be “neutral” in that the revenue it generates will be returned to tax payers through reductions in personal income and business taxes.)
It remains to be seen whether or not a carbon tax will impact consumer behaviour, or simply drive up the cost of certain items. The real question is whether the average consumer is willing to give up the luxury and convenience of car travel and take public transit. The tax is not without its sceptics, but one must remember that the tax is only one component of a larger emissions reduction plan.
BC also became the first Canadian province to join the Western Climate Initiative (WCI) — a group of 21 states and three provinces. The WCI focuses on and is developing a regional cap-and-trade system to reduce GHG emissions. In BC this initiative is supported by the Greenhouse Gas Reduction Targets Act. By 2010 BC will require public sector organizations to become carbon neutral, in part through the operation of carbon credits administered by the Pacific Carbon Trust (PCT). In anticipating a region-wide cap-and-trade system, the government set limits on GHG emissions through the Greenhouse Gas Reduction (Cap and Trade) Act.
However, GHG emissions are a global problem, not a regional issue. As such, the National Roundtable on the Environment and Economy (NRTEE) has recommended a national cap-and-trade system, one that would maximize the efforts of Canada as a whole. At the federal level, it appears Ottawa shares this sentiment, but progress has been slowed due to Ottawa’s close monitoring of Washington. Ottawa has indicated that Canada’s cap-and-trade system must be similar to the system adopted by the US; that perspective is about keeping Canada’s economy competitive with that of the US and avoiding “needlessly” hindering economic growth.
A requirement of any cap-and-trade system is a reporting mechanism.
Alberta was the first Canadian province to implement such a system, but it’s focussed on reducing emissions intensity rather than total emissions. Ontario has also followed suit with the Greenhouse Gas Emissions Reporting Regulation, but it exempts small emitters (between 10,000 and 25,000 tonnes) from the reporting requirement. As a result, Ontario is currently out of step with emerging North American trends. (It has announced that it will encourage voluntary reporting by these emitters.) BC’s reporting regulation requires emitters of greater that 10,000 tonnes/year to report. The reporting obligation applies to a wide range of activities including such things as base metal production, cement production, coal mining, wastewater processing, petrochemical production and refining, and many others.
Several key definitions under the BC’s new reporting regulations will determine whether and what the facilities will be required to report. For example, the regulation doesn’t apply to emissions from landfills managed under the Landfill Gas Management Regulation. In addition, the regulation only requires facilities to report direct emissions; there’s no requirement to include and report indirect emissions from suppliers of materials or services to the reporting facility. Companies that fail to comply with the requirements may be penalized with fines of up to $1 million plus possible jail terms (of up to six months) for any director, officer or agent of the company who knew about, authorized or acquiesced in the offence.
The mandate of the PCT is to purchase quality GHG offsets originating in BC from businesses to offset the provincial government’s emissions of one million tonnes per year. The PCT may also purchase and sell offsets and fund new technologies to reduce emissions. The theory behind the PCT is that market forces will generate the most efficient way to reduce emissions and the PCT can assist by providing investment to emissions reducers. The companies that can reduce emissions cheaply will do so and sell their emission credits to others who cannot, or to the PCT. Companies that cannot meet their GHG emission standards will buy carbon credits. (A carbon offset is generated when changes are made by a company to reduce or sequester GHGs such as carbon dioxide. Typically these changes include the generation of renewable energy such as: run-of-river projects; switching to efficient fuels; and, emission storage or sinks.)
The market value for carbon offsets has yet to be established, but BC is currently paying PCT $25 per tonne of CO2 emissions. Of course, PCT is acquiring those tonnes through open tender calls that ensure it receives competitive prices. Over time, the price will reflect more of a true market for offsets. These activities are expected to trigger investment in more green technologies and so-called “green collar” jobs.
If all goes well, the provincial and federal governments’ attempts to deal with rising GHG emissions will result in reduced GHG emissions and long-term benefits from new eco-efficient technologies and sustainable energy sources.
Tony Crossman (email@example.com) is National Leader of the Environment Group of Miller Thomson in Vancouver, BC. This article was prepared with contributions from: Charles Bois (firstname.lastname@example.org), Sarah Hansen (email@example.com) and Keoni Norgren (firstname.lastname@example.org).