As Alberta’s new provincial government looks to assert itself as a leader on climate change issues, it recently announced that it is taking meaningful steps to achieve real, demonstrable reductions in the province’s greenhouse gas (GHG) emissions. In addition, Premier Rachel Notley has made it clear that she expects to have a long-term climate change strategy in place for the province before she travels to the United Nations Climate Change Conference (COP 21) starting in Paris on November 30, 2015. To that end, Alberta’s Minister of Environment and Parks, Shannon Phillips, announced on June 25, 2015 that the government is taking a two-step approach to climate change policy renewal.

As a first step, Alberta’s existing GHG regulation, the Specified Gas Emitters Regulation (SGER), has been renewed with more stringent levels that will apply from 2016. The SGER came into force in 2007 and was originally set to expire in September 2014. The regulations were extended without change by the former Progressive Conservative government, first to

December 31, 2014 and then to June 30, 2015.

Currently, Alberta requires any facility that emits 100,000 tonnes or more of carbon dioxide equivalent (CO2e) a year to reduce their emissions intensity by 12%. This level is set to increase:

  • 15% as of January 1, 2016; and
  • 20% as of January 1, 2017.

A regulated entity can achieve compliance in one of four ways: (1) meeting its

target through the implementation of operational efficiencies, (2) Alberta-based emission offset credits, (3) emission performance credits, or (4) contributing $15 per tonne to the Climate Change and Emissions Management Fund (the Fund).

For regulated entities looking to pay into the Fund, higher compliance costs are on the horizon:

  • in 2016, $20 for every tonne over a facility’s reduction target; and
  • in 2017, $30 for every tonne over a facility’s reduction target.

This increase will bring the cost of carbon in Alberta into line with British Columbia’s carbon tax, which currently sits at $30 per tonne of CO2e.

As a second step, an advisory panel has been established to undertake a comprehensive review of the province’s climate change policy. Chaired by Dr. Andrew Leach (Associate Professor and Academic Director of Energy Programs at the University of Alberta School of Business), the advisory panel will consult stakeholders (including industry groups, First Nations, environmental organizations, and subject matter experts within academia, government, and the private sector) and report to the Minister of Environment in the early fall to assist the government in formulating a new climate change strategy for the province. It is understood that all options will be on the table, including a carbon tax and a cap-and-trade scheme that could potentially link with other jurisdictions. Over the next few weeks, advisory panel members will be finalized and dates will be scheduled for public consultations. Dr. Leach has indicated that while the average cost imposed on industry (assuming constant performance over time) will be smaller than BC’s at $6 per tonne, the change in policy means that the average cost will be over three times higher than the average cost of emissions under the current policy. The NDP’s campaign platform may provide an indicator of things to come – overall GHG reductions from the oil and gas sector, phase-out of coal-fired electricity, expansion of renewable energy sources (including wind, solar and co-generation), and implementation of an energy efficiency strategy. From the government’s standpoint, its commitment to a higher carbon price and more stringent emission reduction targets will lend credibility to and underpin the climate change policy measures it will be introducing in the coming months.