Alberta’s Specified Gas Emitters Regulation requires large industrial facilities to meet annual emission intensity limits. Facilities that exceed their limit have three options:
- pay into Alberta’s Climate Change and Emissions Management Fund at $15 per tonne for emissions over the limit
- use emission credits from previous years or buy credits from facilities that have not exceeded their limit
- buy emission reductions (or offsets) from emission lowering activities such as wind energy generation
The department estimates that the SGE Regulation helped reduce emissions by 61 million tonnes and paid $578 million into the Climate Change and Emissions Management Fund, from 2007 to 2014. In contrast, all other actions in Alberta’s climate change strategy reduced emissions by approximately 10 million tonnes.
What we examined
We followed up on the recommendations from our 2009 and 2011 reports. By 2015 we expected the department to:
- clarify its guidance to facilities and to those who verify that facilities are meeting their emission intensity limits
- ensure that facilities follow the department’s requirements when they estimate their emission levels
- improve its approach to ensure legitimacy of emission reductions that facilities could use as offsets
- make sure all protocols for offset projects followed the department’s standard for activities that could legitimately claim to reduce emissions
- assess whether its regulatory process was cost effective
The Specified Gas Emitters Regulation is a key action in Alberta’s strategy to reduce emissions. The department’s progress in implementing our recommendations has been slow—it has not implemented two of the five recommendations.
The department has implemented improvements in some areas where we previously found weaknesses. However, the department still needs to improve its systems to regulate large emitters. Our findings illustrate that there continue to be weaknesses in the consistency and timeliness of key processes, including its review of compliance with guidance for tailings ponds emissions, and its review and analysis of protocols.
The department stated that it has faced significant challenges, such as the ongoing cross-ministry review of Alberta’s climate change strategy and changes in emission measurement methods. In our opinion, external challenges do not negate the need for good systems. Such systems are critical for the program to achieve desired results.
Why this is important to Albertans
If the SGE Regulation fails to reduce emissions as expected, the government may not meet its climate change goals. Effective systems for managing the program will help improve the quality of emission reports, ensure facilities meet their obligations and provide reliable information on the program. Regular assessment of the SGE Regulation’s cost effectiveness, based on credible methods and data, provides the government with reliable information from which to make decisions about the program.