Alberta's carbon price — if you don't have an opinion on it, you should - Macleans.ca
 

Alberta’s carbon price — if you don’t have an opinion on it, you should

It might have a huge influence on federal regulation


 

Etienne de Malglaive/REA/Redux

So Alberta hasn’t really proposed to increase its carbon price to $40, as reported last week. Speaking with Luiza Savage in Washington, D.C. yesterday, Premier Alison Redford said the much debated 40-40 plan isn’t something “we’ve in any way landed on or proposed.” (Read the full interview here.)

You still need to know about Alberta and its system for pricing carbon. Why? Because it might be the blueprint for federal emission regulations for the oil and gas industry that are expected to — forgive the pun — come down the pipe later this year. Alberta and Ottawa are collaborating “intensely” on the upcoming federal rules for the oil and gas industry, Redford told Maclean’s.

But is Alberta’s setup the model the nation should follow? Here’s what you need to know to start making up your mind:

1. Provincial vs. federal regulations, a bit of history.

In 2006 Ottawa let it be known via the Canada Gazette that it intended to regulate greenhouse gas emissions. The approach the government had in mind was the following: target the largest polluters, those with emissions over 100,000 tonnes per year, and use “intensity targets.” That would limit the amount of GHGs per unit of output rather than putting a cap on aggregate emissions. However, the government added, such targets should be “ambitious enough to lead to absolute reductions in emissions and thus support the establishment of a fixed cap on emissions.” (A big hat-tip to University of Alberta professor Andrew Leach here, who wrote this paper.)

Deeds, however, did not follow those words speedily, and a few provinces have since pressed ahead with their own rules. Alberta was the first to put a price on carbon in 2007; a few months later, Quebec imposed a carbon levy on energy producers and a cap-and-trade system in 2011. B.C. followed suit in 2008 with a carbon tax on gasoline and other fuels.

Among Alberta’s reasons to anticipate the federal hand were concerns over public revenue. Even if the federal system  didn’t impose new taxes, Alberta companies would be able to deduct their compliance costs from both income taxes and royalties, which, as Leach notes, would hit provincial coffers. On the other hand, if provinces implemented rules at least as strict as whatever Ottawa might come up with they might be able to avoid federal policy superseding their policy, which would allow them to keep all the money within their boundaries.

When it decided to attach a price tag to carbon emissions, Alberta turned to the Gazette announcement, crafting a system targeting emissions above 100,000 tonnes per year through intensity targets.

Fast-forward to 2010, now, when Canada pledged to the United Nations it would reduce GHGs by 17 per cent below its 2005 level by 2020, on par with what the U.S. promised. In order to do that, Ottawa has opted to come up with different regulations for different sectors of the economy. So far, it has approved rules to cut emissions from cars and light trucks (model years 2017 and beyond) and in the electricity sector. According to Environment Minister Peter Kent, oil and gas regulations will be out shortly — and on that one, according to the Pembina Institute, the feds are “taking a close look” at Alberta’s model.

2. How Alberta’s carbon price works.

The benchmark: As we mentioned, the system covers only major polluters, i.e. facilities that produce 100,000 tonnes or more of GHGs per year. (The baseline applies to all facilities in Alberta, not just the oil and gas industry, as would be the case with federal regulation.) Unlike a carbon tax or cap-and-trade system, the rules do not bound smaller emitters.

The target: Right now, the target is a 12 per cent reduction from a plant’s average intensity. Alberta’s 40-40-plan-that-never-was would have increased that to 40 per cent.

Ways to achieve the target: If they don’t reach the target by cutting their own emissions, producers can either put money into a government-run fund that invests in green technology — the price tag is $15 per tonne of above-target GHGs — or buy offset credits, which represent reductions in Alberta emissions achieved by facilities not bound by the rules.

3. A few takeaways on Alberta’s setup.

Emissions reductions: The intensity target doesn’t guarantee a reduction in the absolute level of emissions, the Pembina Institute notes. It is possible for oil producers to comply with the target and increase their overall levels of emissions. However, this doesn’t mean the system itself can’t lead to absolute reductions — whether it does or not depends on the specific target and how industry reacts. Also, the model offers companies the possibility of buying others’ emissions reductions — now, making sure that such GHG cuts are additional, i.e. would not have happened even without regulation, is tricky, argues the Pembina Institute. (That’s difficult in any system that involves buying and selling carbon credits, including cap-and-trade.)

Price: Though the policy doesn’t impose a hard cap on emissions, it imposes a hard cap on the price of carbon. Right now, that’s $15 per tonne of GHGs in Alberta. That’s because companies have no incentive to reduce emissions if it costs them more than paying into the technology fund for above-limit GHGs. The oft-quoted figure for how much it costs oil producers to comply with Alberta’s current regime is $1.8 per tonne. According to the Pembina Institute, federal oil and gas emissions regulations crafted after Alberta’s system would have to set the fee for contributing to the fund at least $100 per tonne in order for Canada to be able to meet its 2020 target.

Impact on oil and gas production: compared to a carbon tax, Alberta’s policy offers emitters less of an incentive to reduce production in order to cut GHGs, notes Leach: “assuming that the facility reduced production by 10 percent, and that emissions decreased proportionately (a simplifying assumption), the facility’s emissions intensity would not change, so its carbon liability per barrel of oil produced would also remain constant.” On the other hand, Alberta’s framework offers a stronger incentive than a carbon tax for companies to become more efficient, i.e. to be able to increase production per unit of emissions. This suits the oil sands sector well, argues Leach, because technological innovation there is supposed to spur precise this type of efficiencies. Alberta’s regime offers oil sands producers stronger incentives to adopt technology such as wedge wells and solvent-aided extraction in existing facilities than a carbon tax would.

Distortions: The policy introduces some economic distortions. Leach found that Alberta’s policy effectively puts different prices on different ways of reducing the very same GHGs. The industry-based approach championed by Ottawa would further distinguish between units of carbon according to which sector of the economy they come from, even though emissions do the same environmental damage regardless of origin.

 


 

Alberta’s carbon price — if you don’t have an opinion on it, you should

  1. Glo-Bull Warming is the biggest fraud ever perpetrated in human history.

    • Oh give me a home where the buffalo roam,
      And the deer and the antelope play,
      Where nothing is heard of a discouraging word,
      And the skies are not cloudy all day.

    • Hey Billy Bob, after ya go huntin’ for dem possums and squirrels, are ya gonna settle down in that thar rockin’ chair and catch up on world events from the latest episode of Hee Haw? Maybe pluck a few strings on the banjo?

      http://www.youtube.com/watch?v=1tqxzWdKKu8

      • Taking too much medication again are you?

  2. In the face of ever-increasing CO2 concentrations
    en.wikipedia.org/wiki/File:CO2_data_mlo.svg

    global average temperatures have stagnated (or slightly declined) over the last
    decade:http://www.metoffice.gov.uk/hadobs/hadcrut4/diagnostics.html

    Whatever else that tells us, we can be sure that CO2 never was the Great Climate Boogeyman it has been made out to be, and there is no ‘climate crisis’.

    Trying to carbon strangle our economies is just going to lead to pointlessly higher costs and energy poverty for people and industries.

    • Are you qualified to draw those conclusions?.. thought not.

        • Right, and did they conclude [as you have] that it means that GHG have had zero effect on GW, or that it isn’t still happening? No they didn’t. did they?

          • The most abundant greenhouse gas is water vapour.

            The main driver of the earths climate is the sun.

            The atmosphere hasn’t been warming for sixteen years, coinciding with the decrease in sun spot activity.

          • We already had this conversation. The main body of credentialed CC scientist have already debunked the Sun did it theory. Try again with something else

          • Jan. 8, 2013: In the galactic scheme of things, the
            Sun is a remarkably constant star. While some stars exhibit dramatic
            pulsations, wildly yo-yoing in size and brightness, and sometimes even
            exploding, the luminosity of our own sun varies a measly 0.1% over the
            course of the 11-year solar cycle.

            There is, however, a dawning realization among researchers that
            even these apparently tiny variations can have a significant effect on
            terrestrial climate. A new report issued by the National Research
            Council (NRC), “The Effects of Solar Variability on Earth’s Climate,”
            lays out some of the surprisingly complex ways that solar activity can
            make itself felt on our planet.

            Understanding the sun-climate connection requires a breadth of
            expertise in fields such as plasma physics, solar activity, atmospheric
            chemistry and fluid dynamics, energetic particle physics, and even
            terrestrial history. No single researcher has the full range of
            knowledge required to solve the problem. To make progress, the NRC had to assemble dozens of experts from many fields at a single workshop. The report summarizes their combined efforts to frame the problem in a truly multi-disciplinary context.

          • wiki sourced. right!

          • Wrong

          • Heat physics uses Jr High math.

          • So much BS in one place could have an crippling effect on this forum. Wer’e in an interglacial period. The Holocene interglacial period idiot. Do a search. The effects can be attributed to that. Not your quasi eplanation of really really laughable quantum quackery. Time for you to come in for a landing BB.

          • There it is again, shoeless and clueless.

          • “In recent years, researchers have considered the possibility that
            the sun plays a role in global warming. After all, the sun is
            the main source of heat for our planet. The NRC report suggests,
            however, that the influence of solar variability is more regional than
            global. The Pacific region is only one example.

            Caspar Amman of NCAR noted in the report that “When Earth’s
            radiative balance is altered, as in the case of a change in solar cycle
            forcing, not all locations are affected equally. The equatorial central
            Pacific is generally cooler, the runoff from rivers in Peru is reduced,
            and drier conditions affect the western USA.”

            Raymond Bradley of UMass, who has studied historical records of
            solar activity imprinted by radioisotopes in tree rings and ice cores,
            says that regional rainfall seems to be more affected than temperature.
            “If there is indeed a solar effect on climate, it is manifested by
            changes in general circulation rather than in a direct temperature
            signal.” This fits in with the conclusion of the IPCC and previous NRC
            reports that solar variability is NOT the cause of global warming over
            the last 50 years.

            Much has been made of the probable connection between the Maunder Minimum, a 70-year deficit of sunspots in the late 17th-early
            18th century, and the coldest part of the Little Ice Age, during which
            Europe and North America were subjected to bitterly cold winters. The
            mechanism for that regional cooling could have been a drop in the sun’s
            EUV output; this is, however, speculative”

            Why don’t you read ALL of you’re own article you dense moron? But no you’d rather cherry pick.
            Better yet, quite reading stuff you aren’t qualified to judge.

          • Try reading the whole article you dense moron, to the last paragraph.

            And that should be quit, not quite, you uneducated leftard.

          • I did read the whole thing, unlike you. There’s nothing in the last para to support your Sun theory either.

            Meanwhile what part of the NOT did you not understand? They even put it capitals for you. Maybe they should have used crayon?

            “If there is indeed a solar effect on climate, it is manifested by
            changes in general circulation rather than in a direct temperature
            signal.” This fits in with the conclusion of the IPCC and previous NRC
            reports that solar variability is NOT the cause of global warming over
            the last 50 years.”

          • Credentialed CC “scientists”, read fraud artist watermelons, green on the outside and red on the inside.

          • Stop going to Watt’s site…it’ll turn you into a “denier” of reality

          • You don’t tell me what to do, your assumption is wrong and you’re an idiot heading for a “lee shore”.

          • It’s free country. Have at all the uniformed second hand evidence you want.

          • Now you’re a green grocer.

          • Better than being a greentard.

          • Misstating my ‘conclusions’ is a form of strawman argument.

          • No it isn’t. You’re simply drawing your own conclusions from cherry picked facts. Why don’t you post their conclusions? Frankly i’m not interested in yours. I already know them, as did you, long before the data was even available.

          • The fact remains that the globe has not warmed in over a decade. Some would claim as long as 17 years.

            That’s not a conclusion, an hypothesis, deduction, or anything of the sort, but a simple fact.

        • If only the rubes understood the hazards of cherry-picked “data” they wouldn’t waste their time and energy trying to convince us that actual scientists are wrong.

          • You’re the only “rube” on this thread, are you one of Suzuki’s female “security” detail?

            Cherry picked data, that’s exactly what the Glo-Bull Warmers have done, manipulate the data to fit their flawed models, garbage in garbage out.

          • Careful, Billy Bob… with all that thrashing you’re liable to hurt yourself.

    • Here’s a little experiment that you can conduct in order to determine the immediate effects of C02 emissions. Go and stand directly behind a city diesel bus for at least fifteen minutes as it idles at a transit hub. Stand directly in line with its exhaust. Then write up a complete and unbiased report on your findings assessing the immediate overall effects that you’re able to identify. We’ll be waiting for your findings. LOL

      • CO2 makes up 13-14 % of gas or diesel exhaust, most of it is N2 (67-68%).

        If clues were shoes leftards would all be barefoot.

        • Wer’e all really impressed by the fact that your able to quote numbers that big Billy Bobby.

          • There’s a barefoot one right now.

      • Any warming would be due to the temperature of the exhaust from the engine, including elevated heat content for the oxygen and nitrogen, and nothing to do with any GHG effect from the CO2.

        • That one went right over your pointy little head didn’t it? I wasn’t referring to any effects that the C02 emissions would have on the atmosphere. Just the effects that it might have on you. But now we’ll never know.LOL

          • Well, then whatever you were referencing has no relevance to the atmosphere, now does it?

    • “Whatever else that tells us…”

      The only thing your comment tells us is that your ignorance of the topic is so replete that you’re utterly unaware of how little you know.

      • Heh heh heh… insults without adding any substance to the discussion.

        Some posters at least try to substantiate their positions, but apparently not you.

        • I’m sorry, but a completely unsubstantiated assertion(“…there is no ‘climate crisis”) requires no substantiation to refute.

          • Declaring a crisis needs substantiation.

            The absence of any warming at all belies such hyperbole.

          • “The absence of any warming at all…”

            Heh.

            GlynnMhor 1977: Well, thank goodness it’s stopped warming!

            GlynnMhor 1986: Woohoo! Global warming disproven!

            GlynnMhor 1996: Somebody better tell them scientists that physical laws have been repealed! The Earth isn’t warming!

            GlynnMhor 2002: It’s really stopped this time!

            etc., etc…

          • Does this comment and repost of the data I linked to have some sort of meaning, or is it just some kind of embarrassed muttering to avoid the awkward silence?

          • You actually linked to some data?

            Somewhere, perhaps, but not nearby.

            Meanwhile the major datasets all show that the warming has disappeared, and the temperatures have stagnated. Here’s another one:
            http://www.drroyspencer.com/latest-global-temperatures/

            And it remains that models tuned and selected to match the 1970-2000 warming period fail to replicate the temperature changes before and after that time.

            A theory has to be able to explain all of the observations, not just offer some sort of plausible scheme that might work for only some of the data.

          • Uh yeah, that read “etc, etc.,” is a link.

            “Meanwhile the major datasets all show that the warming has disappeared,”

            Yeah, you keep saying that. I get it.

            Too bad nobody was listening to you back in 1977 when “the warming dissappeared” and we saved ourselves all this trouble.

    • There are alternatives to energy poverty. They just need developing. Other countries are on it and will reap the profits, but Our Majority Government’s not lookin’. They’re only getting around to responding to climate at this point in order to make Obama make XL happen – a real back-assward way of looking at the situation – or as they said at one of the climate conventions, “Neanderthal”.

  3. Suppose I have a facility that produces 160,000 tonnes of CO2 per year. How easy would it be for me just to split the lot, so instead, I have two facilities that each produce 80,000 tonnes of CO2, to avoid the regulation completely?

  4. Need to address peat land-use change, emissions. Sequestering wood or future GMO-ed tree products, in peat pore water, in a long-term underground geological site, will be how Russia and the Cdn Shield saves us from GOP and Con AGW excesses. If rainfall doesn’t increase in central/Northern AB, AB won’t be a big sink. If it does, no peat should be drained for oil sands development. I guess we are waiting an J.Trudaeu to make up for religious boomer errors here and for him to fund some North of 50^o climate modelling?

    • Obama will make your head explode when he approves Keystone XL.

  5. Ontario’s credits should be excluded from Canada’s. Ontarians are paying for the reduction of emission and if other provinces are going to benefit from that, then they or Ottawa have to cough up the money.

  6. Dr. Soon is an astrophysicist whose field of expertise is the sun for
    Harvard and the Smithsonian. He said, “The Sun is the all encompassing
    energy giver to life on planet Earth.” And presently it’s getting a lot
    of attention from scientists. He expects that if 2009 is another cold
    year which correlates to the decreased sunspot activity, that the global
    warming theories which attribute temperature fluctuations to increases
    in the levels of atmospheric CO2 will need to take notice.

    He
    says, “If this deep solar minimum continues and our planet cools while
    CO2 levels continue to rise, thinking needs to change. This will be a
    very telling time and it’s very, very useful in terms of science and
    society in my opinion”.
    Read more at http://www.tgdaily.com/general-sciences-features/42006-harvard-astrophysicist-sunspot-activity-correlates-to-global-climate#jmMbWOjOcvbJaL9Y.99

    • Let’s see, credentialed scientist declares global warming to be a fraud. Ok, after 8 seconds on Google, we learn some stuff about Dr. Soon:

      May 21 – 23, 2012

      Willie Soon was a speaker at the Heartland Institute’s 7th International Conference on Climate Change (ICCC7). DeSmogBlog researched the co-sponsors behind Heartland’s ICCC7 and found that they had collectively received over $67 million from ExxonMobil, the Koch Brothers and the conservative Scaife family foundations.

      …sponsored by big oil and right-wing money, check.

      January 31, 2003

      Soon co-published a controversial review article titled “Proxy climatic and environmental changes of the past 1000 years” (Climate Research, 2003) with Sallie Baliunas. The article claims that the twentieth century was not the warmest century in the past 1,000 years and that the climate has not changed significantly during this time…

      After the article was published, three of the editors of Climate Research resigned in protest, including incoming editor-in-chief Hans von Storch. Storch declared the article was seriously flawed because “the conclusions [were] not supported by the evidence presented in the paper.” In addition to the resignations, thirteen of the scientists cited in the paper published rebuttals stating that Soon and Baliunas had misinterpreted their work.

      …in disgrace following professional malpractice, check.

      This is fun!

      • If anything it is the absence of global warming that establishes the hype and fear-mongery of supposed global warming to be fraudulent.

        • …that’s the best you can do? No, YOUR science is faulty! Nyeah!

          Now let’s turn to evolution. I mean, if anything it’s the ABSENCE of evolution that establishes the hype and fear-mongery of supposed evolution to be fraudulent.

          • The most awesome part of lil’Glynn’s feat is how he discovered that the proof of the fraud was hiding in plain sight, published by the fraudsters themselves! All he had to do was link to the proof and voila – climate change disproven!

            Just wait until they realize their mistake. D’oh!

          • Good, good. Post the same link again.

            It’s no more proof than it was the other two times you posted it. Maybe next time, just say QED after. That sounds smart. QED.

          • Just like how that graph shows that from 1962 to about 1980 there was no warming for 18 years! It’s obviously dis-proven then… just so long as time stops in 1980.

            Here, since you like graphs so much: http://www.skepticalscience.com/solar-activity-sunspots-global-warming-intermediate.htm

            Unlike you, I’ve kept the context around the graph so that people can actually look at it and understand what it means.

            The globe may not have warmed over the last little while (which doesn’t talk about what it already did) but that’s because the sun is in a *major* downswing in activity if you look at the graph. That all we see is temperatures holding steady is worrisome given how much less energy we’re getting from the sun.

          • Haw haw haw… SS is a political talking point site, and in any case your last paragraph is an outright admission that the Sun’s role in global temperatures is much larger than the modeling and assumptions of the AGW alarmism have heretofore supposed… and CO2’s role correspondingly smaller.

          • If by “political talking point site” you mean a site that sticks to the published science with full and extensive citation of the literature, then yes.

          • Except it’s not larger than the modelling and assumptions of AGW have supposed. You’re simply ignorant.

            The temperature rise is still within the A1 range. Note that final word. Range.

          • Looking at local temperatures, it’s colder today than it was two weeks ago.
            Meanwhile the Earth’s axis has continued to tilt the hemisphere further towards the sun. Whatever else that tells us, we can be sure that the Earth-axis-tilt bogeyman is not making the hemisphere warmer, and there is no reason to believe that August will be any warmer than April.

        • Lenny, above, really put his finger on it: “…some kind of embarrassed muttering to avoid the awkward silence?”

      • “If this deep solar minimum continues and our planet cools while
        CO2 levels continue to rise, thinking needs to change. This will be a
        very telling time and it’s very, very useful in terms of science and
        society in my opinion”.

        This is a very big problem for the proponents of Glo-Bull Warming.

        • Not as long as Wee Willie Soon is the best scientician you deniers have, Did you even read my reply above? Or are you satisfied that repeating the same quote makes it more right?

          • You’re a moron greentard with absolutely no critical thinking skills whatsoever, you should move out of your mothers basement and get a life.

          • You approvingly quote a scientist. I show you why that scientist is a questionable source. So you paste the same quote by the same scientist again and then insult My critical thinking skills?

            Priceless.

          • You quote DeSmogBlog, enough said.

          • CO2 has continued to increase while temperature hasn’t,

          • CO2 has continued to rise while solar activity has dramatically fallen off. Temperature should be, if anything, falling. It’s only the rise of CO2 that’s kept us level at this point.

          • Hans von Storch, lead author for the IPCC, has an agenda, along with the other two who quit.

  7. If there is in fact a Santa Claus, why has there never been any tangible, empirical evidence? If there are in deed tooth fairies, where is the evidence? If CO2 has a causal relationship with temperature, why is it that no-one has been able to identify it? While there are SOME people that believe in Santa Claus, and SOME that believe in tooth fairies, and even though there is a smidgen of evidence of UFO’s or a Sasquatch,a religion has not been created around such idiotic concepts. Why is it that so many people are so willing to engage in the worship of “global warming” or “climate change” when there is simply no evidence whatsoever that they re related to anything other than the natural variability of the Universe?

      • Those sorts of experiments, as well as calculations based on the physics involved, yield a climate sensitivity to a doubling of CO2 at 1.2 degrees.

        The hype and fear mongery of the AGW alarmism, though, is predicated on that value being 3, 4, 5, or even higher (as per the IPCC Fourth Report).

        Two thirds or more of the modeled warming is arbitrarily attributed to feedbacks that have no basis in experimental data.

        • Again, learn what a range is, before proving you’re an idiot.

  8. By Ken Haapala, Executive Vice President, Science and Environmental Policy Project (SEPP)

    Failing Models: In his August testimony before the US Senate
    Committee on Environmental and Public Works, John Christy, the
    co-developer of the satellite temperature record, presented a graph
    showing that the models relied upon by the UN Intergovernmental Panel
    for Climate Change (IPCC) are clearly failing. The graph compares the
    projections of 34 climate models with actual observations, both at the
    surface (called surface-air) and the lower troposphere (the atmosphere
    from the surface to about 10 km (about 33,000 feet). The statistical
    mean of the projections is well above the observations – with a
    statistical significance of more than two standard deviations. The
    difference shows that the models are not useful in estimating future
    temperatures. Thus, the claims that by emitting greenhouse gases (GHG),
    particularly carbon dioxide (CO), humans are causing unprecedented and
    dangerous future global warming have no scientific basis. [Note that the
    projections from a few of the models do not exceed the observations,
    however, statistically, they are outliers

  9. Four points:

    A. Very glad to see a factual, context-laden, close look at Alberta’s regime. It is often misrepresented or overlooked. Jeffrey Simpson’s ears are burning.

    B. Comments:

    1. The percentage reduction is not from an “average intensity”. It is from a baseline calculated on the average of three years. For older facilities the 40% would apply to an older baseline.

    2. Offset credits are created conventionally (special programs like crop tillage, investing in renewable power, co-gen, etc.), not just by other facilities’ emissions reductions (although extra reductions from “overachieving” can be and are sold in a secondary market). Offset credits represent at least half of how Alberta emitters achieve compliance.

    3. The implicit trade-off point at the end of the article about not being able to reduce production as a way to limit emissions sort of misses the point of an intensity based regime in a resource based economy and growing country. An overarching policy has to be increasing units of output to achieve economic growth, otherwise infrastructure and social programs don’t happen. An intensity based regime tries to balance that with climate consciousness and driving technological change. But it’s not as easily understaood as a simple cap.