The province of Alberta plans to toughen its greenhouse gas emissions standards for oil sands mines, closing a loophole that rewarded some of Canada’s highest-emitting facilities with millions of dollars worth of tradeable credits, according to sources.
Two sources with knowledge of the changes, and not allowed to speak publically, told Reuters Alberta’s changes will mean that mines and upgraders will no longer financially benefit from their emissions when they account later this year for their 2021 performance.
Alberta is Canada’s largest oil-producing province, and has already raised the stringency of facility-based benchmarks, a second way that the government sets emissions standards for industrial sites, the sources said.
Oil sands mines and upgrading facilities, operated by Canadian Natural Resources, Suncor Energy, Imperial Oil, and others, produce heavy emissions due to the energy required to separate oil from Alberta’s sand and clay deposits, reports CTV News Canada.
The process is so energy-intensive that it has also made Suncor Energy into Canada’s largest carbon emitter: it belches roughly 28 million tons into the atmosphere every year, equivalent to the entire emissions of Tunisia.
The mines and upgraders collectively generated 2.4 million emissions performance credits (EPC) in 2020 and were required to pay for 700,000, the first year of a new emissions regulatory system from Premier Jason Kenney’s government.
The net figure amounted to 1.7 million credits, worth about $54.4 million (U.S. $42.67 million) to those oil companies, based on the trade value of about $32 per credit. Credits trade at around 80 percent of the federal carbon price, which was C$40 per ton in 2021, when emitters could use 2020 credits for compliance.
Alberta’s emissions system, called TIER (Technology Innovation and Emissions Reduction Regulation), was not intended to provide credits to oil sands mines, two sources with knowledge of the changes said.
The TIER regulation is Alberta’s industrial greenhouse gas emissions pricing regulation and emissions trading system. Facilities regulated under TIER must reduce emissions to meet facility benchmarks. TIER replaced the Carbon Competitiveness Incentive Regulation (CCIR) on January 1, 2020.
Alberta’s new changes will mean that mines and upgraders will no longer financially benefit from their emissions when they account later this year for their 2021 performance, the sources said.
Large emitters can choose to measure their emissions intensity, or carbon per barrel, against a facility’s past performance, or against an industry benchmark.
“This is fundamentally the problem, that a facility can show some continuous improvement and gain credits, but still be a high emitter and be a relatively poor emissions performer from its peers,” said Dave Sawyer, an environmental economist who advised a previous Alberta government on managing emissions.
“The current loophole is ludicrous but the solution still doesn’t address the fundamental problem: Alberta must reduce its absolute emissions, not its relative emissions,” said Emile Boisseau-Bouvier, a climate policy analyst at environmental group Equiterre.
