Over the past 18 months we have seen a rapidly changing law and policy landscape for climate change mitigation in Alberta.
The Climate Leadership Plan
Changes began in November 2015 with the release of the long anticipated Climate Leadership Plan (the "Plan"). The Plan, based upon recommendations made in the Climate Change Advisory Panel Report (the "Report"), focuses on four key areas:
* implementing a new carbon price on greenhouse gas (GHG) pollution;
* phasing out coal-generated electricity and developing more renewable energy;
* legislating an oil sands emissions limit; and
* employing a new methane emissions reduction plan.
As described in the Report, carbon pricing forms the "backbone of [the] proposed architecture". The carbon levy is to be applied across all sectors and its revenue will be used for defined purposes designed to reduce GHG pollution.
Another key element of the Plan is to phase out coal-fired electrical generation by 2030. The goal is to replace two-thirds of this electrical generation capacity with renewable energy and one-third with natural gas. In the meantime, coal-fired generators will be subject to the carbon levy on emissions above those created by Alberta's cleanest natural gas-fired plant producing the same amount of electricity.
The Plan includes a transition to performance-based standards and a legislated limit to oil sands emissions. This means the carbon levy will be applied to oil sands facilities based upon results already achieved by high performing facilities. Further, an annual limit of 100 Mt from the oil sands sector will be imposed by legislation.
The Plan seeks by 2025 to reduce methane emissions from oil and gas operations by 45%. It applies new emissions design standards to new oil and gas operations, and addresses emissions arising from venting and flaring and fugitive emissions from existing facilities.
The Climate Leadership Act came into force on January 1, 2017 and enables the carbon levy. The current carbon price is $20 per tonne and will increase to $30 per tonne in January 2018.
The Climate Leadership Regulation provides details on the implementation and application of the carbon levy. The Regulation specifies which activities are subject to the carbon levy and at what stages of the fuel supply chain the carbon levy is payable. This includes locomotive diesel, aviation gas and jet fuel, and raw gas and natural gas. The determination of the amount of fuel on which the carbon...