Author: WM

BC Releases Consultation Papers for Proposed Cap-and-Trade Regulations

BC Ministry of Environment (MOE) released consultation papers for the Emissions Trading Regulation and the Cap and Trade Offsets Regulation. The proposed regulations will provide the foundation for the province’s proposed cap-and-trade system under the Western Climate Initiative (WCI), which has a planned start date of January 1, 2012.

On October 22, 2010, the BC Ministry of Environment (MOE) released consultation papers for the Emissions Trading Regulation and the Cap and Trade Offsets Regulation. The proposed regulations will provide the foundation for the province’s proposed cap-and-trade system under the Western Climate Initiative (WCI), which has a planned start date of January 1, 2012. MOE is seeking comments from stakeholders, First Nations and the general public on the two proposed regulations until December 6, 2010. The proposed regulations are anticipated to be finalized in early 2011.

The proposed Emissions Trading Regulation is designed to establish an efficient, fair market for trading cap-and-trade compliance units. Under the proposed Emissions Trading Regulation, operations that meet certain criteria will be considered a “Regulated Operation”.

The following provisions are under consideration:

  • starting January 1, 2012 (or any subsequent year in which an operation emits 25,000 tonnes or more of CO2e), the regulation will apply to the operator of an operation that emits 25,000 tonnes or more of CO2e;
  • source types listed in Schedule A of the current Reporting Regulation (including activities such as general stationary combustion, aluminum production, cement production, coal mining, industrial wastewater processing, lime manufacturing, petroleum refining, and pulp and paper production) are under evaluation to be “covered sources” in the first compliance period;
  • additional sources types under consideration include emissions from anaerobic or aerobic digestion of wastewater, emissions from surface coal mines and stored coal piles, specific oil and gas and petroleum refinery emissions, and fugitive hydrofluorocarbon emissions  from cooling units at electricity generators;
  • verified emission reports and compliance unit liability may be linked in the registry, meaning that an amount equal to a Regulated Operation’s annual greenhouse gas (“GHG”) emissions will become its corresponding compliance obligation;
  • facilities below the 25,000 tonne threshold may be able to opt in to the emissions trading system;
  • each compliance period will last three years;
  • at the end of each three-year compliance period, one compliance unit will be retired for each tonne of GHG emissions;
  • every three years, BC will prepare a nine-year “Allowance Budget Forecast”, with the first forecast for the period from 2012 to 2020 being published in the first quarter of 2011 (in 2014, BC would release a forecast for the period from 2015 to 2023);
  • every three years, BC would establish a cap on allowances issued for the following three-year compliance period, known as an “Allowance Budget”;
  • in the third quarter of 2011 and every year thereafter, BC would publish an annual “Allowance Distribution Plan” that will describe how allowances will be allocated for the following year (including number of allowances to be auctioned, number of allowances to be distributed for free, number of allowances to be held in reserve or contingency accounts, and number of allowances to be sold directly in the market);
  • there will be two main allowance distribution mechanisms for distributing allowances to a Regulated Operation: by auction and by distribution for free;
  • auctions of allowances will be held quarterly in coordination with other WCI members on a single round, sealed-bid, uniform price basis;
  • BC will have the ability to set a minimum price for allowances sold at auction;
  • allowances allocated for free will be transferred into accounts at the beginning of each year;
  • a registry will be established to record the issuance, holding, transfer, retirement and cancellation of compliance units;
  • BC may collaborate on a registry with other WCI members;
  • compliance will be assessed every three years on July 1 of the year following the last year of the compliance period;
  • a number of compliance mechanisms will be available to Regulated Operations including limited use of offsets and approved compliance units from other systems, unlimited banking, multi-year compliance period, linking with partner jurisdictions, and government support for low-carbon policies and programs;
  • BC will set limits on the use of offsets as a percentage of an operator’s compliance obligation and is still seeking input about the percentage to be adopted in BC;
  • penalty for non-compliance will be assessed at three additional allowances for every allowance that the regulated operation is short; and

The proposed Offsets Regulation will govern emission offsets and set out steps for offset registration, validation, monitoring, quantification, reporting, verification, certification and issuance. It is expected that offsets issued in BC will be able to be traded and used for compliance across the WCI.  The following provisions are under consideration:

  • offset project eligibility will be evaluated on the basis of the following criteria: definition of an offset, real, additional, permanent and verifiable;
  • a BC offset, of “emission reduction unit” (“ERU”), would be issued based on certification of verified emission reductions from a registered offset project (one ERU will represent a reduction or removal of one tonne of CO2e);
  • ERUs would be issued for projects located within BC and may also be issued for projects located outside of BC in a partner jurisdiction (Recognized Compliance Units, or RCUs, are compliance units that will be recognized by BC under the Cap and Trade Act but not issued by/in British Columbia.;
  • ERUs would only be issued for projects that have a start date of January 1, 2007 or later (2007 was the year in which the WCI Memorandum of Understanding was signed);
  • BC government will carry out periodic risk-based auditing.

The consultation papers for the proposed Cap and Trade Offsets Regulation and Emissions Trading Regulation are available online.

WRI Releases Greenhouse Gas Protocol for U.S. Public Sector

The World Resources Institute (WRI) and LMI have released a protocol entitled the “GHG Protocol for the U.S. Public Sector: Interpreting the Corporate Standard for U.S. Public Sector Organizations”. This protocol outlines how federal, state and local governments can account for their greenhouse gas (GHG) emissions and serves as a resource for U.S. public sector organizations implementing Executive Order 13514, which requires federal agencies to report and reduce their GHG emissions.

The World Resources Institute (WRI) and LMI have released a protocol entitled the “GHG Protocol for the U.S. Public Sector: Interpreting the Corporate Standard for U.S. Public Sector Organizations”. This protocol outlines how federal, state and local governments can account for their greenhouse gas (GHG) emissions and serves as a resource for U.S. public sector organizations implementing Executive Order 13514, which requires federal agencies to report and reduce their GHG emissions.

The protocol interprets and applies the GHG accounting principles established by WRI’s “Corporate Standard” to the unique structures of the public sector.  The term “public sector” is a broad one that includes any organization owned, controlled or operated by the government and includes government agencies, school systems, quasi-governmental organizations and utilities, as well as public-private partnerships. The protocol aims to help managers of organizations at all government levels design and develop a GHG inventory. For organizations that have already created GHG inventories through voluntary or mandatory programs that are based on the Corporate Standard, the protocol provides useful information on key accounting issues.

The protocol was developed in response to the need of public organizations for tailored guidance on interpreting the Corporate Standard for the public sector. Public sector activities often involve shared resources between multiple organizations and leasing arrangements for buildings, vehicles, and land that can pose challenges attributing ownership or control of GHG emissions. For organizations that already monitor and report energy use and other environmental metrics, GHG emissions reporting represents a new and integrative performance indicator.

As stated by the WRI, the objectives of the protocol are as follows:

•         To help public organizations prepare a GHG inventory that represents a true and fair account of their emissions, through the use of standardized approaches.

•         To simplify the process and reduce the costs of compiling a GHG inventory.

•         To provide public sector organizations with information for use in building an effective strategy to manage and reduce GHG emissions.

•         To support voluntary and mandatory GHG reporting.

•         To increase consistency and transparency in GHG accounting and reporting among public sector organizations and GHG programs.

While the protocol was developed primarily for U.S. government organizations, the principles contained in the protocol can be applied to governments worldwide since it is based on the internationally accepted Corporate Standard.

LINK

Background on the GHG Protocol Initiative

The Greenhouse Gas Protocol Initiative was launched in 1998 with the objective of developing internationally accepted GHG accounting and reporting standards. Designed as a multi-stakeholder partnership of businesses, non-governmental organizations (NGOs), and governments, it was convened by the WRI and the World Business Council for Sustainable Development (WBCSD).

The cornerstone document of the GHG Protocol Initiative is the GHG Protocol Corporate Accounting and Reporting Standard (Corporate Standard, 2004), which provides a step-by-step guide for quantifying and reporting GHG emissions. The Corporate Standard was designed to be program and policy neutral, allowing users the flexibility to adapt the core methodology and concepts to specific accounting and reporting needs. To provide guidance on how to build GHG policies, reporting programs, and tools based on the concepts of the Corporate Standard, two accompanying documents were developed:

•         Measuring to Manage: A Guide to Designing GHG Accounting and Reporting Programs (2007); and

•         Designing a Customized Greenhouse Gas Calculation Tool (2007).

WCI Proposes Harmonised Reporting Requirements for Canadian WCI Members

On September 8, 2010, the Western Climate Initiative (WCI) released its proposal for revising and harmonising the existing Final Essential Requirements for Mandatory Reporting (the Essential Requirements) for use in Canadian jurisdictions.

On September 8, 2010, the Western Climate Initiative (WCI) released its proposal for revising and harmonising the existing Final Essential Requirements for Mandatory Reporting (the Essential Requirements) for use in Canadian jurisdictions. The proposal is entitled Harmonisation of Essential Requirements for Mandatory Reporting in Canadian Jurisdictions with the WCI Essential Requirements for Mandatory Reporting and the EPA Greenhouse Gas Reporting Program (the Harmonisation Document).

By way of background, on July 16, 2009, the WCI published the Essential Requirements for implementation by WCI Partner jurisdictions. On September 22, 2009, the U.S. Environmental Protection Agency (EPA) adopted its final Mandatory Reporting Rule (the EPA Rule) for greenhouse gas emissions. On May 28, 2010, the WCI invited stakeholder comment on its proposal to harmonise the Essential Requirements with the EPA Rule for use in a cap-and-trade program.  In order to maintain consistency across all WCI jurisdictions, WCI members acknowledged that the WCI proposal to harmonise with the EPA Rule necessitated the development of revised Essential Requirements for use in Canadian provinces to ensure harmonised quantification methods throughout the U.S. and Canadian WCI jurisdictions.  As a result, WCI members directed the WCI Reporting Committee to develop amended Canadian Essential Requirements that are themselves harmonised with the proposed WCI Essential Requirements for use in U.S. jurisdictions.

The following principles were applied in the harmonisation process:

1. A Canadian facility should apply the same functions, equations, sampling protocols and measurement criteria as U.S. facilities subject to the U.S. version of the harmonised Essential Requirements. This means that the harmonised Essential Requirements will achieve the same level of reporting accuracy for Canadian and U.S. facilities, but the U.S. version may require more data elements to be reported to harmonize with the EPA Rule.

2. The quantification methods included in the harmonised Essential Requirements must remain sufficiently reliable and accurate to be employed in a greenhouse gas (GHG) cap-and-trade program.

3.The WCI reporting system must remain suitable for use in Canadian jurisdictions. For example, it must allow reporting in metric as well as English units and must, where necessary, include Canada-specific emission factors.

4. The harmonised Essential Requirements should facilitate harmonisation with Canadian federal reporting. Some Canadian jurisdictions are working with Environment Canada to develop a one-window reporting tool for provincial and national GHG reporting requirements.

The WCI anticipates that Canadian WCI members will implement the harmonised Essential Requirements by adopting them into or through their reporting regulations.  The WCI is also working on minor revisions to the general provisions of the Essential Requirements and the development of quantification methods for upstream oil and gas, natural gas transmission, distribution and storage, underground coal mine and magnesium production that are appropriate for use in Canadian member jurisdictions.

A stakeholder call to discuss the proposal will be hosted by the WCI during the week of September 20th. The Harmonisation Document is available through the WCI web site.

Canadian Federal Government Issues Notice for Reporting of 2010 GHG Emissions

On August 14, 2010, the federal government published a notice in the Canada Gazette requiring all persons who operate a facility emitting 50,000 tonnes of carbon dioxide equivalent or more per year to report their 2010 emissions to Environment Canada no later than June 1, 2011.

On August 14, 2010, the federal government published a notice (the Notice) in the Canada Gazette requiring all persons who operate a facility emitting 50,000 tonnes of carbon dioxide equivalent or more per year to report their 2010 emissions to Environment Canada no later than June 1, 2011. This information will be collected through Environment Canada’s Single Window Reporting System, which was launched in early 2010.

Pursuant to section 46(8) of the Canadian Environmental Protection Act, 1999 (CEPA 1999), persons subject to the Notice are required to keep copies of this information, together with any calculations, measurements and other data on which the information is based, at the facility to which the calculations, measurements and other data relate, or at the facility’s parent company, located in Canada, for a period of three years from the date the information is required to be submitted.

The Minister of the Environment intends to publish greenhouse gas emission totals by gas by facility. Pursuant to section 51 of CEPA 1999, any person subject to the Notice who provides information in response to the Notice may submit, with their information, a written request that it be treated as confidential based on the reasons set out in section 52 of CEPA 1999. The person requesting confidential treatment of the information is required to indicate which of the reasons in section 52 of CEPA 1999 applies to their request. However the Minister may disclose, in accordance with subsection 53(3) of CEPA 1999, information submitted in response to the Notice. Any person who fails to comply with CEPA 1999 may be subject to a maximum fine of $1,000,000 and/or three years’ imprisonment.

Saskatchewan to Move Forward with Proposed GHG Program

Saskatchewan is planning to move forward with its proposed greenhouse gas (GHG) management program, with draft offset program methodologies expected to be released in September 2010.

Saskatchewan is planning to move forward with its proposed greenhouse gas (GHG) management program, with draft offset program methodologies expected to be released in September 2010. These draft guidance documents will supplement the previously released Management and Reduction of Greenhouse Gases Regulations which are anticipated to be approved in fall 2010.

Saskatchewan has set a target of reducing GHG emissions to 20% below 2006 levels by 2020. The proposed threshold for regulated emitters is 50,000 tonnes of CO2 equivalent (CO2e) per year, and regulated emitters will be required to reduce emissions by 2% per year from 2010 to 2019 to meet the 20% reduction goal. In order to meet compliance obligations, regulated emitters will be able to purchase offset credits created from activities that have reduced and sequestered GHG in Saskatchewan and that occurred after January 1, 2006. In addition, regulated emitters will be able to contribute “carbon compliance payments” to the Saskatchewan Technology Fund Corporation, the proceeds of which will be used to invest in GHG reduction initiatives and research.

The proposed Saskatchewan GHG management program is similar to the one currently operating in Alberta, where the emissions threshold for regulation is also 50,000 tonnes of CO2e. Alberta and Saskatchewan are considering linking their GHG programs in order to increase the liquidity of the markets.