By Collin Gallant on December 7, 2017.
New regulations to cut industrial carbon dioxide production shouldn’t greatly effect the City of Medicine Hat’s power production unit, but effects on other locally-based major industries remains to be determined.
Environment Minister Shannon Phillips announced changes Wednesday to the Specified Gas Emitters Regulation, stating that industry-specific standards would reward “best in class” operations with rebates.
Others would continue to pay a levy of $30 per tonne above certain levels, but now have access to an investment fund to buy new, pollution-lowering technology.
In the city’s case, it would remain a payer into the system, according to local officials, but its costs would not change dramatically in the incoming rating system.
“(Our emissions) are slightly higher than best in class,” said Travis Tuchscherer, a manager of asset optimization in the utility’s business department.
“We’ll continue to pay in … we feel comfortable with the numbers we have used and there will not be a large budget impact either way.”
The city’s powerplant is one of four local entities captured under the regulations by producing more than 100,000 tonnes of CO2 annually.
The regulations — which are apart from the carbon levy that already exempts large industry — also applies to local CF Industries fertilizer plant, methanol-producer Methanex, and carbon black maker Cancarb.
Private industry officials told the News they needed more time to study the possible effects and economics of the plan that will be phased in by 2020.
A new power generation standard however, takes effect on Jan. 1, 2018.
Other sectors, such as petrochemical and fertilizer production, will see standards developed, including product specific rates and allowances to shield some trade-exposed industries.
Phillips named the local plants during a teleconference to launch the system.
“We need to get in a room with them and make sure the innovation funding is going to work,” she said. “There are a few large employers in Medicine Hat that are affected.”
Changes were first proposed in 2015, when the NDP government launched its climate action strategy, and discussions since then went into designing the system, she said.
For about a decade, Alberta’s largest polluters have paid under the SGER system, which charges if specific reduction targets, set against an individual facility’s historic output, are not met.
The Carbon Competitiveness Incentive program replaces it, and would “reward companies that use best practices and reward investment in modern and efficient facilities,” she said.
“That’s how we are going to create a race to the top in Alberta.”
About one quarter of facilities in each sector — those with lowest emissions — would receive credits they could sell to others. Others would need to buy credits and could access a new $440-million fund to help upgrade facilities.
Phillips also said allowances will be made for industries that face competition from counties with less stringent carbon pricing, or in unique sectors that have fewer entries.
Government critics have coined the term “carbon leakage” to argue the provincial economy is at a disadvantage versus less stringent jurisdictions.
“Right now there is a patchwork of carbon pricing system, there is a consensus (about carbon reduction),” said Phillips.
Conventional oil and gas operations are typically too small to qualify, though some large gas plants and oilsands sites are affected.
Previously, individual facilities were judged against their own historic emission levels and required to either reduce the figure or buy offset credits from renewable energy projects or agricultural producers.
Medicine Hat’s power plant currently transfers credits stockpiled from its landfill composting activities, and also receives flow-through credits from the privately-owned Box Springs Wind Farm.
Local large emitters annual CO2 production in 2015
CF Industries – 1,793,215
Methanex – 350,264
City of Medicine Hat Power – 321,751
JBS Packers (Brooks) – 234,365
Cancarb Ltd. – 151,505
Spectra NGL Plant (Empress) – 366,593
Pembina NGL Plant (Empress) – 78,362
Lantic Sugar (Taber) – 78,159
CNRL Gas Plant (Hays) – 66,597
AECO Gas Storage (Suffield) – 37,118
Source: Government of Canada
Note: Total is tonnes of “carbon dioxide equivalent” comprising CO2, methane, nitrous oxide, and other greenhouse gases.
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