Some people following the ongoing pipeline debates are surprised to learn that the province of Alberta, sometimes maligned for its oil sands industry, has long had regulations in place to reduce greenhouse gas (GHG) emissions.
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Specified Gas Emitters Regulation
In fact, Alberta introduced the Specified Gas Emitters Regulation (SGER) back in 2007, when Harry Potter-mania still gripped the nation. In doing so, the province became the first North American jurisdiction to regulate large GHG emitters.
Unveiling the regulation was considered a bold move, given that GHG reduction policy options are complex and there wasn’t then – nor is there now – an obvious, proven path for governments to follow.
In Alberta, just two industrial sectors – oil sands operations and electric power generation – contribute more than three-quarters of GHG emissions reported in the province.
Under the SGER, facilities that emit more than 100,000 tonnes of GHGs per year must reduce their emission intensity by at least 12 per cent from an established baseline. (Emission intensity is the volume of GHG emissions per unit of production.)
Compliance options
Companies that don’t meet the target must either purchase Alberta-based offset credits or contribute $15 per tonne of emissions over the target to Alberta’s Climate Change and Emissions Management Corporation (CCEMC) fund.
The CCEMC fund invests in innovative carbon reduction research, projects and technologies, including carbon capture and storage, renewable energy and energy efficiency opportunities. While the CCEMC fund focuses on Alberta projects, its impact is felt Canada-wide, as its helps broaden the country’s capacity to innovate to a low-carbon future.
So what are SGER’s results?
For the 2012 program, the most recent results available, the Alberta government reported:
- Companies made 7.5 million tonnes (MT) of GHG reductions
- A combined total of almost 40 MT of reductions through operational changes and investing in offsets had been achieved to date
- Companies paid about $86 million into the CCEMC fund, bringing its total to $398 million in contributions since 2007
Suncor’s Alberta-based energy production facilities are subject to the SGER. We comply by contributing to the CCEMC fund, using offsetting generated through our wind farms and co-generation facilities which help to improve our operations and reduce emissions. For 2012, Suncor’s total cost to comply with the SGER was about $20.5 million (based on $15 per tonne of CO2).
In addition to being a CCEMC fund contributor, Suncor is also a beneficiary, having secured CCEMC funding for several projects, including a third-party review of our operations to identify opportunities to improve our GHG performance and a project to optimize wind power generation through battery storage capacity.
The Government of Alberta is currently reviewing the SGER, which is set to expire in September 2014. It is expected that the regulation will be renewed.
As one of the longest-standing climate change regulations, the SGER has provided valuable learnings for climate change regulatory design and application. Undoubtedly, this knowledge will be used in scoping out the new version, and it is likely that intensity targets, carbon price and regulation emission thresholds will be reviewed.
An effective first step
While nobody claims the SGER is perfect, it’s seen as an effective regulation which sends a price signal to incent oil sands and other industrial sectors down the right path while at the same time allowing for economic growth.
One fan of the SGER is Steven Chu, former U.S. secretary of energy, who described it as “a stroke of genius” during a visit to Alberta in 2013.
The fact that the SGER renewal is generating high quality, productive public dialogue is a good thing. Definitive regulation to drive GHG reductions is critical to Alberta and all of Canada, which stands to benefit economically from a vibrant and growing oil sands sector.
The Walrus Talks Energy
The next Walrus Talks Energy event will be taking place on Tuesday, March 25 at 7 p.m. at the Djavad Mowafaghian Cinema, Goldcorp Centre for the Arts in Vancouver, BC.
