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In 2008, British Columbia imposed a “revenue-neutral” carbon tax on the purchase and use of fuels within the province, revenues from which are returned to taxpayers through the reduction of other taxes. Fuels subject to this tax include gasoline, diesel, natural gas, heating fuel, propane, coal, and certain other materials including peat and tires when used to produce energy. Tax rates are based on a price of $30 per tonne of CO2 equivalent emissions, and as a result the tax per unit of fuel consumed differs depending on type – from $5.70 per cubic metre of natural gas to $62.31 per tonne of high heat value coal. The B.C. government has estimated that this measure alone may, by 2020, reduce the province’s greenhouse gas emissions by approximately 3 million tonnes of CO2equivalent annually.
On October 20, 2014, B.C. tabled the Greenhouse Gas Industrial Reporting and Control Act (Bill 2), which goes much further than previous greenhouse gas (GHG) emissions legislation in the province. Taking direct aim at coal-based electricity generation facilities and liquefied natural gas (LNG) facilities, Bill 2 requires each of these newly regulated operations to report its GHG emissions and comply with its emissions limit. Bill 2 received royal assent on November 24, 2014 but the statute is not yet in force.
The emissions limit for LNG facilities is 0.16 tonnes of GHG emissions for each 1 tonne of LNG produced by the operator. LNG operations are intended to include all GHG emissions from the point where gas enters a facility to the point when it is loaded onto a mode of transportation such as ship or rail car. This would appear to capture emissions from ancillary operations to the LNG plants such as “inside the fence” natural gas-fired power generation.
Entities whose operations exceed their emission limit can still comply with the proposed legislation by earning the necessary number of compliance units. Compliance units can be any combination of the following:
- offset units – earned through the removal or reduction of GHG emissions by way of an approved emission offset project and verified by third-party verification procedures
- funded units – earned by payment of a prescribed amount (to be determined) per tonne of GHG emissions (payments are intended to be applied to a technology fund used to find way to reduce GHG emissions in other economic sectors)
- earned credits – earned by a reduction of GHG emissions lower than the emission limits in a previous compliance period and carried over into the period in which the earned credit is used
- recognized units – units of another jurisdiction which are, or are deemed to be, equivalent to offset units under Bill 2. Presumably, the emission offsets generated under Alberta’s neighbouring emission offset projects will be accepted as recognized units in B.C.
Much of the proposed legislation’s mechanics are relegated to future regulations, which are expected in 2016. As such, the application of Bill 2, including compliance and reporting procedures to emission offset project approval and use of the funded unit technology fund, remains to be seen.
Renewable and Low Carbon Fuel Requirements Regulation
Ninety-five per cent of fuel suppliers in B.C. – those suppliers who each produce more than 75 million litres of gasoline and diesel combined – are subject to various requirements under the provincial government’s Renewable and Low Carbon Fuel Requirements Regulation. These large producers are required, under the possibility of administrative sanction, to ensure that fuels have a minimum renewable fuel content by volume (4% for diesel and 5% for gasoline), and to meet targets for the reduction of the carbon intensity of fuels by 2020.
Clean Energy Act
Since 2010, British Columbia’s Clean Energy Act has sought to make the province self-sufficient in electricity generation by 2016, with a clean and renewable energy target of 93%. The Act also seeks to make the province a net exporter of clean and renewably generated electricity. The legislation further creates a smart meter requirement for electricity consumption management, mandates reductions in the province’s GHG emissions to 2050, and establishes a feed-in tariff program for emerging technologies. Under the Act, biomass, biogas, geothermal heat, hydro, solar, ocean and wind are classified as renewal sources of energy. Natural gas, when used to power LNG plants, has since been added to this list by regulation.