GHG emissions – GHG Accounting

Canadian Government sets internal emissions reduction target and establishes Centre for Greening Government – Walking the Talk

The Pan-Canadian Framework on Clean Growth and Climate Change (the Framework, released in December 2016) recognizes that while governments are directly responsible for a relatively small share of Canada’s emissions (about 0.6%), there is an opportunity for them to lead by example. A number of provinces are already demonstrating leadership, including through carbon neutral policies. For example, British Columbia’s (BC) public sector has successfully achieved carbon neutrality each year since 2010. Over the past 6 years, schools, post-secondary institutions, government offices, Crown corporations, and hospitals have reduced a total of 4.3 million tonnes of emissions through improvements to their operations and investments of $51.4 million in offset projects. BC was the first, and continues to be the only, carbon neutral jurisdiction in North America. Municipalities are also recognized as essential partners in emission reduction efforts – how cities develop and operate have an important impact on energy use, and therefore GHG emissions.

The Framework sets out an approach to government leadership, which includes (1) setting ambitious targets; (2) cutting emissions from government buildings and fleets; and (3) scaling up clean procurement.

To play its part, the federal government has announced that it will reduce its own greenhouse gas (GHG) emissions by 40% by 2030. In support of this goal, the Honourable Scott Brison, President of the Treasury Board, announced the creation of the Centre for Greening Government (the Centre) at the Treasury Board of Canada Secretariat in November 2016. The Centre will track the Government of Canada’s emissions centrally and coordinate efforts across government departments in order to ensure that the government’s objectives are met. Progress on emission reductions will be achieved by strategic investments in infrastructure and vehicle fleets, green procurement, and support for clean technology. Already, the federal government announced $2.1 billion in Budget 2016 towards repairs and retrofits to a wide range of government buildings, and to the greening of government operations.

The Centre’s work is rooted in the following Government of Canada commitments:

The Centre engages in the following government-wide activities:

analyzing and reporting;
providing policy and operational support;
setting requirements for federal organizations to deliver results and achieve performance goals; and
establishing communities of practice to identify best practices and lessons learned in greening actions from federal partners and provincial, territorial and other jurisdictions.

The federal government has indicated that it will immediately begin by aligning the way it measures GHG emissions with international standards to provide an accurate picture to measure the government’s progress.

The Centre is also working in close partnership with Environment and Climate Change Canada to further to goals of the 2016-2019 Federal Sustainable Development Strategy (FSDS), which was tabled in Parliament in October 2016. The Centre is the lead for Goal 2 of the FSDS: Low-carbon government.

British Columbia releases long-awaited Climate Leadership Plan

On August 19, 2016, the BC government released its long-awaited Climate Leadership Plan, which updates the province’s earlier Climate Action Plan (2008). The plan follows the release of the government-appointed Climate Leadership Team’s (CLT) recommendations in November 2015 and sets out 21 actions to reduce emissions across five areas: (1) natural gas, (2) transportation, (3) forestry and agriculture, (4) communities and built environment, and (5) public sector.

The CLT had made 32 recommendations including, among others, the establishment of a mid-term 2030 greenhouse gas emissions reduction target and a reduction in the provincial sales tax from 7% to 6%, which would be offset by an increase in the carbon tax by $10 per year commencing in July 2018. While the Climate Leadership Plan has been informed by some of the recommendations made by CLT and feedback received from the public and stakeholders, the plan focuses on actions that will enable BC to achieve its legislated target of reducing emissions 80% below 2007 levels by 2050. In so doing, the Climate Leadership Plan bypasses BC’s 2020 target of achieving a reduction in GHG emissions of 33% below 2007 levels. The BC government has declined to set a mid-term target and will keep the province’s revenue neutral carbon tax at $30 per tonne until the federal government’s approach to carbon pricing is revealed.

The key actions in the Climate Leadership Plan include the following:

Communities & Built Environment

Working together with local governments to refresh the Climate Action Charter, with a particular focus on: (i) growth near major transit corridors for large urban communities; (ii) increasing the use of decision support tools that provide the information needed to create more resilient green infrastructure; and (iii) strengthening the ability of communities to adapt to the impacts of climate change.
Amending regulations to promote more energy efficient buildings.
Creating a waste-to-resource strategy to reduce waste sent to landfill and establishing a food waste prevention target of 30% and increasing organics diverted from landfills to 90%.

Public Sector

Promoting the use of low carbon and renewable materials in public sector buildings.
Mandating the creation of 10-year emission reduction and adaptation plans for provincial public sector operations.

Transportation

Increasing the requirements for BC’s Low Carbon Fuel Standard to 15% by 2030 (it currently requires a reduction in the carbon intensity of transportation fuels by 10% by 2020 (relative to 2010)).
Amending regulations to encourage emission reductions in transportation by allowing utilities to double the total pool of incentives available to convert commercial fleets to natural gas, when the new incentives go towards vehicles using 100% natural gas.
Expanding support for zero emission vehicle charging stations in buildings through the Clean Energy Vehicle program.

Forestry & Agriculture

Rehabilitating under-productive forests, recovering more wood fibre, and avoiding emissions from burning slash; these actions will be taken through the new Forest Carbon Initiative, which will seek to increase the rate of replanting and fiber recovery by 20,000 hectares per year.

Industry & Utilities

Developing new energy efficiency standards for gas-fired boilers.
Facilitating projects that will help fuel marine vessels and commercial vehicles with natural gas.

Natural Gas

Developing a strategy to reduce upstream methane emissions, including targets for reducing fugitive and vented emissions from extraction and processing infrastructure (built before January 1, 2015) by 45% by 2025.
Investing in infrastructure to develop upstream electrification of several projects, including the Peace Region Electricity Supply Project, North Montney Power Supply Project and others.

The BC government has said that the Climate Leadership Plan is a living document that will be further updated over the coming year. The plan will likely be updated to reflect federal climate change policy developments once the working groups that were established at the First Ministers’ meeting in March 2016 report back in October 2016 (working groups were established to study (a) clean technology, innovation and jobs, (b) carbon pricing mechanisms, (c) mitigation opportunities, and (d) adaptation and climate resilience).

Global Protocol for Community-scale GHG Emissions released for Public Comment

On March 20, 2012, the ICLEI – Local Governments for Sustainability and C40 Cities Climate Leadership Group released a draft edition of the Global Protocol for Community-Scale Greenhouse Gas Emissions (GPC) to help cities around the world measure and report GHG emissions using a consistent protocol. Public comments on the draft GPC may be submitted until April 20, 2012 and a final version will be released on May 15 at the United Nations climate talks in Bonn. The design of the GPC is specified within the scope of the Memorandum of Understanding that was signed between ICLEI – Local Governments for Sustainability and C40 Cities Climate Leadership Group on 1 June 2011 in Sao Paulo.

The GPC is the result of a year-long collaboration between ICLEI – Local Governments for Sustainability and C40 Cities Climate Leadership Group; in June 2011, the two organizations forged an agreement to develop a standard approach for accounting and reporting GHG emissions that will boost the ability of cities to access funding and implement actions. Other organizations that participated in the development of GPC include the World Bank Group, United Nations-HABITAT, United Nations Environment Program, the Organization for Economic Cooperation and Development, and the World Resources Institute. This new collaboratively developed community protocol establishes a single minimum standard for accounting and reporting community scale greenhouse gas (GHG) emissions that can be used across multiple platforms. The GPC complements ICLEI’s programs and tools on local climate action that are being implemented globally, in particular the 2009 International Local Government GHG Emissions Analysis Protocol (IEAP) and its national supplements.

The GPC has three main components:

guiding principles and a policy framework to link the efforts across local and national governments and the private sector;
the 2012 Accounting and Reporting Standard with supplemental guidance on methodologies, and reporting templates; and
a roadmap for institutionalizing the process for updating the Standard on an ongoing basis.

Background

To manage emissions in an effective and transparent way, cities must measure and publicly report them. Planning for climate action at the city level starts with developing a GHG inventory, which allows local policy makers and residents to understand which sectors drive GHG emissions in their city or community, and respond by developing action plans that address those sectors. To date, a consistent accounting and reporting guidance for cities on how to conduct community scale inventories has been lacking. Rather, competing guidance has resulted in a proliferation of protocols and inventories that cannot be easily communicated between financing institutions, local and national governments, and the private sector. The absence of a common approach prevents comparison between cities and across time, and reduces the ability of cities to demonstrate the global impact of collective local actions.

Harmonization of GHG accounting methodologies presents local governments with opportunities for credible reporting of climate data in a transparent, verifiable, consistent, and locally relevant way. An internationally recognized GHG accounting standard which harmonizes prevailing methodologies can help local governments to set targets, measure progress, and leverage national and international financing. The community protocol integrates seamlessly with national and corporate GHG accounting methodologies, facilitating linkages between these entities for improved coordination to reduce GHG emissions. ICLEI is also working with its partners to reflect provisions of the GPC in the GHG performance section of the carbon Cities Climate Registry (cCCR). As of February 2012, the cCCR had compiled more than 1 GtCO2/yr of community GHG emissions reported by over 160 cities worldwide.

The GPC builds upon the principles, knowledge, experiences, and practices defined in previously published city-led inventories, institutional standards, and organizational protocols. These include the International Local Government GHG Emissions Analysis Protocol (ICLEI), Draft International Standard for Determining Greenhouse Gas Emissions for Cities (UNEP/UN-HABITAT/WB), GHG Protocol Standards (WRI/WBCSD), Baseline Emissions Inventory/Monitoring Emissions Inventory methodology (EC-CoM JRC), and Local Government Operations Protocol (ICLEI-USA).

Within the context of the GPC, several challenges have been identified in efforts to account for community-scale emissions:

Developing a community-scale GHG accounting and reporting standard that attributes emissions to the activities of the community.
Harmonizing existing community-based GHG accounting methodologies and standardizing accounting, reporting, and the relationships of community-scale inventories with national, organizational, and global climate efforts.
Advancements in GHG accounting methodologies at the community-scale are continuously evolving. An open, global protocol must therefore include a process for revising the standard to meet the inevitable improvements of tomorrow.

To address these challenges, the GPC provides a template to analyze the relationship with national and organizational GHG accounting methodologies, allocating all community activities and services that may result in GHG emissions, including inter-city emissions, to categories defined by the 2006 IPCC Guidelines and by Scope definition, to reflect varying levels of control by the community over these emissions. In addition, the GPC introduces a community-scale GHG accounting standard – referred to as the 2012 Accounting and Reporting Standard – which harmonizes GHG accounting methodologies and provides step-by-step guidance for cities on how to collect relevant data, quantify emissions, and report results using a series of summary reporting templates. Data collection for reporting is guided through use of data collection tables, providing transparency in activity data, emissions factors, and data sources. The 2012 Accounting and Reporting Standard enhances local policy development by: (i) benchmarking emissions between cities to facilitate peer-to-peer networking and sharing of best practices; (ii) allowing for consistent measurement of a community’s GHG emissions over time to evaluate various GHG abatement efforts; and (iii) facilitating climate-linked finance.

The GPC and associated processes are guided by six principles:

Measurability. Data required to perform complete emissions inventories should be available; where necessary partners will work with communities to develop local capacity communities to enable for data development and collection for compliance with the 2012 Accounting Standard.
Accuracy. The calculation of GHG emissions should not systematically overstate or understate actual GHG emissions.
Relevance. The reported GHG emissions should reflect emissions occurring as a result of activities and consumption from within the community’s geopolitical boundaries.
Completeness. All significant emissions sources included should be accounted for.
Consistency. Emissions calculations should be consistent in approach.
Transparency. Activity data, sources, emissions factors and accounting methodologies should be documented and disclosed/

Comments on the full document should be submitted through the feedback form template. The deadline for feedback is April 20, 2012. Feedback should be sent directly to GPC@iclei.org.

Québec Prepares to Start Emissions Trading as it Formally Adopts Cap-and-Trade Regulation

On December 14, 2011, Québec formally adopted the Regulation respecting the cap-and-trade system for greenhouse gas emission allowances (the Regulation), which came into force on January 1, 2012 and is based on the rules established by the Western Climate Initiative (WCI).

With the adoption of the Regulation, Québec officially steps to the starting line next to California. The first year of implementation of the system will be a transition year, which will allow emitters and participants to familiarize themselves with how the system works. In particular, 2012 will provide emitters and participants with opportunities to register with the system, take part in pilot auctions and buy and sell greenhouse gas (GHG) emission allowances in the market. No reduction or capping of GHG emissions will be required during this transition year. Over the course of the year, emitters will also be able to make any adjustments that may be necessary to meet their emission reduction obligations, which will come into force on January 1, 2013. Starting on January 1, 2013, some 75 operators in Québec (primarily in the industrial and electricity sectors) whose annual GHG emissions equal or exceed the annual threshold of 25,000 tonnes of carbon dioxide equivalent (CO2e), will be subject to the capping and reduction of their GHG emissions.

It should be noted that starting in 2015, companies which import or distribute in Québec fuels that are used in the transportation and building sectors (and whose combustion generates an amount of GHGs greater than or equal to 25,000 tonnes of CO2e per year) will also be subject to the capping and reduction of their emissions.

For all participating WCI members, the adoption of a cap-and-trade regulation a cap is the first of two key steps towards the establishment of a regional North American carbon market. The second step will consist of concluding a series of recognition agreements, among the different partners, to link their systems together.

BC and Ontario in the meantime continue to dither on whether to join the cap-and-trade scheme and businesses in those provinces are losing out on key opportunities to participate in the transitional market, recently valued for 2012 at almost US$ 800 million by Thomson Reuters Point Carbon. By finalizing their cap-and-trade regulations in a timely way, BC and Ontario could continue to be leaders in regional efforts to reduce GHG emissions and to spur technological innovation in their provinces.

Durban COP 17 – An Agreement to Agree

From November 28 to December 11, 2011, delegates from 194 countries met in Durban, South Africa for the 17th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). With the expiry of the Kyoto Protocol’s initial commitment period looming at the end of 2012, the Durban conference delegates were focused on reaching an agreement to extend or replace the existing UN climate regime.

The negotiators ultimately reached an agreement entitled the Durban Platform for Enhanced Action (the Platform is available online). While the absence of specific details as to what is to be agreed by 2015 introduces considerable uncertainty, for the first time a number of nations which contribute significantly to global GHG emissions have agreed to accept legally binding targets on GHG from 2020. This list includes Brazil, China, India and the US.

Four key actions were agreed upon to build towards a global carbon agreement requiring all major emitters to reduce emissions:

Kyoto Protocol Extension. The Kyoto Protocol has been extended for a second commitment period and 35 developed country parties committed to taking on binding emission-reduction commitments after the Kyoto Protocol expires on December 31, 2012. This second commitment period will run from January 1, 2013 to either December 31, 2017 or December 31, 2020, with the final expiration date to be decided upon next year. The parties who committed to a second round of reduction obligations were primarily from the European Union (EU) and have already committed to internally binding emission reduction targets. Certain other industrialized parties, such as Australia, will not take on targets under a second commitment period until a new international climate agreement has been finalized. Japan and Russia have also declared that they will not submit to a second commitment period under the Kyoto Protocol.
Global Carbon Agreement. All UNFCCC parties are required to establish, by 2015, “a protocol, another legal instrument or an agreed outcome with legal force” that would come into force in 2020. This agreement will replace the Kyoto Protocol and impose binding emissions reductions on both developed and developing nations (including the US, China and India). The goal remains to limit global warming to 2° Celsius. Nations did ot change the emission reduction commitments they made at the 2009 Copenhagen and 2010 Cancun climate talks. Rules will be developed in 2012.
Green Climate Fund (GCF). It was agreed that up to US$100 billion per annum by 2020 will be transferred to developing nations for mitigation and adaptation measures. However, it still remains to be seen how the parties will finance the GCF, but it is expected that the GCF will leverage private sector capital to source results-based investments in emission reduction projects.
Work Plan. Starting in the first half of 2012, the Durban Platform Working Group will plan its work on matters such as mitigation, adaptation, finance, technology development and transfer, transparency of action, and support and capacity-building.

Other key outcomes include:

Carbon Capture and Storage (CCS). CCS was approved to qualify for the Clean Development Mechanism (CDM) and earn carbon credits (under the Kyoto Protocol). 5 per cent of credits issued will be held in a reserve to ensure carbon dioxide does not leak from approved CCS projects for 20 years.
Reduced Emissions from Deforestation and Degradation (REDD). Supportive market-based mechanisms and funding will be discussed through 2012.

As a result of the extension of Kyoto and a second commitment period, emissions offset markets based on the CDM and Joint Implementation (JI) will remain active. Although details have not been finalized, it is likely that the EU will continue to accept certified emission reductions (CERs), which are awarded under the CDM to emission reduction projects in developing countries, and emission reduction units (ERUs), which are awarded under the JI to such projects in certain developed countries. The EU has committed to a third phase of its Emissions Trading System, which contemplates the continued use of international offset credits such as CERs and ERUs.

It is anticipated that carbon markets will continue to play an important role in the new international climate treaty to be established by 2015. According to Christiana Figueres, the Executive Secretary of the UNFCCC, the extension of Kyoto will enable its accounting rules, flexibility mechanisms and markets to remain as models to inform future agreements.

Within a day of the negotiations closing, Canada announced that it will formally withdraw from the Kyoto Protocol before the end of the year, with the intent that it will no longer have an enforceable emissions reduction commitment. Canada will, however, remain a party to the UNFCCC and a participant in international climate negotiations.

The next key date is February 28, 2012 when parties must submit their views on raising what the conference called the “level of ambition” to achieve significant mitigation, so that a work plan can be launched. The next round of UNFCCC negotiations will take place in Qatar from November 26 to December 7, 2012.

U.S. EPA Accepts Electronically Submitted GHG Reports

The U.S. Environmental Protection Agency (EPA) has launched a new tool to allow 28 industrial sectors to submit their 2010 greenhouse gas (GHG) emissions data electronically. Prior to being finalized, the electronic GHG Reporting Tool (e-GGRT) was tested by more than 1,000 stakeholders (including industry associations, states and non-governmental organizations) to ensure clarity and user-friendliness.

The data collected with e-GGRT will provide information about the nation’s largest stationary sources of GHG emissions. Industries and businesses will also be able to use the data to help find ways to decrease carbon emissions, increase efficiency and save money.

The EPA expects to receive 2010 GHG data from approximately 7,000 large industrial GHG emitters and suppliers, including power plants, petroleum refineries and landfills.

EPA’s GHG Reporting Program, launched in October 2009, requires the reporting of GHG data from large emission sources across a range of industry sectors. Suppliers of products that would emit GHGs if released, combusted, or oxidized are also required to report GHG data. Under this program, covered entities are required to submit GHG data to EPA annually and the first round of data will be submitted electronically by September 30, 2011. The EPA plans to publish non-confidential GHG data collected through the GHGRP by the end of 2011. More information is available at: Link

U.S. EPA Defers Deadline to Report Factors Used to Calculate GHG Emissions

The U.S. Environmental Protection Agency (EPA) is deferring the deadline for several industries to disclose factors they used to calculate their 2010 greenhouse gas (GHG) emissions. The agency has established two deadlines for industries to report the inputs for calculations they performed to comply with the EPA’s mandatory reporting rule (40 C.F.R. Part 98), while the EPA continues to evaluate industry concerns about revealing potentially confidential business information. For factors the EPA said can be quickly evaluated, industries will be required to report their calculation inputs by March 31, 2013. For factors that will take longer to evaluate, the deadline is March 31, 2015, the agency said in a final rule to be published in the Federal Register on August 25, 2011. The EPA had proposed deferring the input reporting requirements until March 31, 2014 (75 Fed. Reg. 81,350), but now says the additional year is necessary for many of the calculation inputs because “the number of data elements that would require a more in-depth evaluation is much larger than EPA had anticipated at the time of the deferral proposal.” The final rule will require electric transmission systems, stationary sources that burn fuels, underground coal mines, municipal solid waste landfills, industrial wastewater treatment, electric equipment manufacturers, and industrial waste landfills to begin reporting several emissions inputs by March 31, 2013. The various inputs include the total heat input of fuels combusted, methane emissions, the decay rate of materials stored in landfills and the type of coverings used, and volumes of wastewater treated using anaerobic processes.

The second deadline of March 31, 2015 applies to several data elements that must be reported by stationary sources that burn fuels, adipic acid production, aluminum production, ammonia manufacturing, cement production, electronics manufacturers, ferroalloy production, fluorinated gas production, glass production, HCFC-22 production and HFC-23 destruction, hydrogen production, iron and steel production, lead production, lime manufacturing, carbonate uses, nitric acid production, petroleum and natural gas systems, petrochemical production, petroleum refineries, phosphoric acid production, pulp and paper production, silicon carbide production, soda ash manufacturing, titanium dioxide production, zinc production, industrial wastewater treatment, and industrial waste landfills.
Other industries must report inputs by September 30, 2011, which is also the deadline for all industries subject to the mandatory reporting rule to reveal their 2010 emissions.
Industries originally had until March 31 to report their 2010 emissions and calculation factors. But in March, the EPA extended that deadline until September 30th to allow the agency time to review industry concerns that some of the inputs used to calculate their emissions would be considered confidential business information (76 Fed. Reg. 14,812; 53 DEN A-4, 3/18/11). The agency has since determined that GHG emissions and the calculations and test methods used to measure emissions are public information and will not be treated as confidential. They are continuing to examine the factors used in calculations to determine if confidentiality is warranted (102 DEN A-2, 5/26/11). EPA sent another proposed rule to the White House Office of Management and Budget for review on July 13th that would define confidential business information that cannot be disclosed for eight emissions sources, including electronics manufacturing, petroleum and natural gas systems, and carbon sequestration (136 DEN A-9, 7/15/11). (Source: EPA, August, 25, 2011). For more information, see www.epa.gov.

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.

Canadian Provinces Forge Ahead on Cap-and-Trade System

Canada’s three largest provinces – Québec, Ontario and BC – are moving forward with a cap-and-trade system designed under the Western Climate Initiative (WCI) to reduce greenhouse gas (GHG) emissions. This decision comes after plans for a cap-and-trade system have been abandoned by the U.S. Senate.

The cap-and-trade system, scheduled to begin trading in January 2012, would cap emissions on large industrial facilities in Ontario, Québec and BC, as well as in California and New Mexico. The five jurisdictions forging ahead are part of the WCI (other group members, such as Utah and Arizona, have not committed to the system). On Tuesday July 27, 2010, the WCI released its comprehensive design strategy (for more information on the design document, please see our overview: link

The WCI’s commitment is to reduce industrial GHG emissions at the regional level from 15% below 2005 levels by 2020.

Each jurisdiction continues to weigh the pros and cons of moving ahead with the WCI system. In BC, any industrial operation emitting more than 25,000 tonnes of greenhouse gas per year will be subject to the system. This threshold will capture 40 operations in the province. While the regulatory framework for a cap-and-trade program has been put in place (under the Greenhouse Gas Reduction (Cap and Trade) Act and its associated Reporting Regulation), the details of the program as they will apply in BC have not yet been settled.

U.S. EPA Issues Final Rule for GHG Emissions from Large Emitters

On May 13, 2010, the U.S. Environmental Protection Agency (EPA) issued a final rule for addressing greenhouse gas (GHG) emissions from stationary sources under permitting programs of the Clean Air Act (CAA). This rule follows the EPA finding in late 2009 that GHG emissions endanger human health, which allows the EPA to regulate GHGs under the CAA. The final rule sets thresholds for GHG emissions that define when permits under the New Source Review Prevention of Significant Deterioration (PSD) and title V Operating Permit programs are required for new and existing industrial facilities. In particular, regulated facilities would be required to obtain permits showing they are using the best available technology to cut emissions when building new plants or modifying existing ones. The final rule is also referred to as the “tailoring rule” because it tailors the requirements of CAA permitting programs to limit which facilities will be required to obtain PSD and title V Operating Permits.

Starting in January 2011, facilities responsible for almost 70% of U.S. GHG emissions from stationary sources will be subject to permitting requirements. These facilities will include power plants, refineries, factories and cement production facilities that emit 75,000 metric tonnes or more of carbon dioxide equivalent, but will exclude small emitters such as farms, restaurants, hospitals and schools. Without the tailoring, small emitters would also be caught by the rule.

Waste landfills and factories that are not already covered by the CAA that emit at least 100,000 metric tonnes of GHGs per year would get a 6 month extension and would not be regulated until July 2011. Sources that pollute less than 50,000 metric tonnes per year would not be regulated until 2016, if ever, according to the EPA.

The final rule is aimed at giving momentum to the climate bill that was introduced by Senators John Kerry and Joseph Lieberman on May 12, 2010. A number of industry lawsuits have been launched which call into question the EPA’s authority to regulate GHG emissions, however it is President Obama’s hope that the final rule will push lawmakers in states heavily dependent on fossil fuels to support the Kerry-Lieberman bill. As currently drafted, the Kerry-Lieberman bill pre-empts automatic EPA regulations; in the event the Kerry-Lieberman bill is not passed by the Senate, the final rule sets up future regulations for large emitters.

For more information, please refer to the Fact Sheet (Final Rule: Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule) issued by the EPA: link