Crude-producer Alberta unveils rules for large carbon emitters

(Reuters) - Canada’s main crude-producing province Alberta unveiled new rules on Wednesday on how it would charge large industrial emitters including the oil sands sector for carbon output, saying emissions will be cut by 19 percent by 2030.

FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, July 21, 2014. Pump jacks are used to pump crude oil out of the ground after an oil well has been drilled. REUTERS/Todd Korol

The left-leaning New Democratic Party government said the plan had been designed in consultation with industry, but the opposition United Conservative Party said it could cost jobs in a province that is still adjusting to the long-term slump in global oil prices.

Environment Minister Shannon Phillips said the regulations will reduce Alberta’s emissions by 20 million tonnes by 2020 and 50 million tonnes by the end of the next decade.

The Carbon Competitiveness Incentives (CCI) plan applies to any facility emitting more than 100,000 tonnes of carbon a year, of which there are 110 in Alberta. The oil sands make up 24 percent of Alberta’s total emissions.

The government did not disclose names of the biggest emitters.

“The fact is that investors are demanding credible climate action,” Phillips said. “This whole policy is designed around protection of jobs and ensuring that companies remain competitive.”

The policy is expected to bring in C$500 million to C$800 million a year in government revenue and will be phased in over three years. Alberta will make over C$1.3 billion in funding available over the next seven years to support projects aimed at cutting emissions.

Most industries will have a benchmark set at 80 percent of production-weighted average emissions. Any facility producing at a higher intensity than the benchmark will be subject to “compliance obligations”, which can be met by paying for emissions at C$30 a ton, reducing emissions or buying offsets. Those producing at a lower intensity than the benchmark will accumulate credits that can be used to offset future costs.

In the oil sands, emissions intensity will be measured by the amount of greenhouse gas produced in extracting one barrel of oil, and the benchmark will be the top quartile of projects or 57.7 kilograms of carbon dioxide equivalent per barrel.

“This plan is an important step forward in addressing climate change as it will incent those facilities with the lowest emissions intensity,” said Cenovus Energy spokeswoman Sonja Franklin.

A spokeswoman for Suncor Energy said the company is evaluating the announcement to determine its impact.

Phillips said it was difficult to assess the cost to industry because companies can use credits to offset costs, which can also be written off against government royalties.

Reporting by Nia Williams; Editing by Grant McCool and James Dalgleish