Ottawa regulations

The government of Canada on March 10, 2008, published details of Turning the Corner, the regulatory framework originally announced last April. The new rules will effectively require oil sands plants starting operations in 2012 to implement carbon capture and storage.

The documents, posted at www.ec.gc.ca, provide additional details about how the government of Canada will move forward with its plan to reduce greenhouse gas emissions. This plan includes mandatory reductions for industry, along with additional new measures to address two of Canada’s key emitting sectors: oil sands and electricity.

“Last April, this government made a commitment to Canadians to cut our greenhouse gas emissions an absolute 20% by 2020,” said Canada’s Environment Minister John Baird. “Today, we are announcing the details of those tough measures that will put us on a path to meet our commitments.” Federal regulation will be the most important driver of change for moving Canada to a low-emission economy.

The details of the plan include establishing a market price for carbon, and setting up a carbon emissions trading market, including a carbon offset system, to provide incentives for Canadians to reduce their greenhouse gas emission. In addition, the detailed regulations include new measures like: setting a target that will effectively require oil sands starting operations in 2012 to implement carbon capture and storage; and, effectively banning the construction of new “dirty” coal plants starting in 2012.

“Our regulations will apply to all big industry,” said Baird. “From the oil industry to chemical companies; from smelters to pulp and paper mills, all big industry will have to do their part.” The government consulted extensively with environmental groups, industry and other stakeholders over the past year, and worked to accommodate stakeholder views where reasonable, but remained focused on keeping its commitment to reduce greenhouse gases.

Regulated industries will face mandatory reductions that require companies to reduce emissions 18% by 2010 for every unit of production. The details specify how the targets will apply to each industry sector, how the offsets and trading systems will work, and how credits will be provided to companies that took early actions to reduce their emissions.

The federal government will establish a task force to work with the provinces and industry to reduce emissions even further by 2020,through increased hydroelectric, renewable and nuclear electricity production and through further development of the national grid. Companies will be able to choose the most cost-effective way to meet their emission reduction targets from a range of options: in-house reductions, contributions to a capped time-limited technology fund, domestic emissions trading and offsets, and access to the United Nations’ Clean Development Mechanism. Companies that already reduced their greenhouse gas emissions prior to 2006 will have access to a limited onetime credit for early action.

The proposed greenhouse gas regulations are expected to be published in the Canada Gazette later this year, and the regulations finalized in 2009 to come into force as planned on January 1, 2010.

Reproduced with permission from Nickle’s Daily Oil Bulletin, March 10, 2008. See www.dailyoilbulletin.com.