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Details of BC’s Emissions Trading Have to Wait

July 29, 2010

If you’re paying attention to efforts to tackle climate change through emissions trading, or “Cap and Trade”, systems, then there have been a number of recent developments worthy of note.

The third development was a promise by the BC Government to release consultation documents describing our province’s plans, as a member of the WCI, to implement a Cap and Trade system and a system for dealing with carbon offsets.

Deborah Carlson, from West Coast Environmental Law attended today’s briefing. Unfortunately, BC government did not release their consultation documents on the emissions trading and offsets regulations, so there isn’t much to write about.

However, Tim Lesiuk, BC’s chief negotiator for the WCI, did give a presentation
to stakeholders this morning, and shared some thoughts about the proposed content of those regulations.

Some of the highlights:

  • Of the US states, only California and New Mexico are on track to participate in the WCI cap and trade program when it’s scheduled to launch in January 2012. And California voters will have an opportunity to nix California’s participation when they vote on Proposition 23 this November.
  • In Canada, BC, Manitoba, Quebec and Ontario are all busy drafting regulations and seem to intend to participate as of January 2012. The federal government continues to maintain that it will only act in concert with the US federal government, where the prospects for cap and trade are looking very unlikely in the near term.
  • While the WCI as a whole has a rather unambitious reduction target of 15% below 2007 by 2020, BC will maintain its own 33% reduction target over the same period.
  • Still to be determined are the annual allowance budgets for the industrial emitters that will be forced to participate (those with annual emissions of 25,000 tonnes and up), as well as the distribution plan—likely some mix of giving allowances away for free, auctioning, and possibly selling.
  • Compliance periods will be three years long, i.e. every three years emitters will be required to show that they have enough allowances or offset certificates to account for their emissions over that period. If they fail to do so, it’s proposed that they will be assessed a penalty of three additional allowances for every missing allowance.
  • The WCI allows for early reduction allowances for emitters that have made reductions in the period 2008-2011, but all of these will need to be issued no later than the first quarter of 2013.
  • Unlike other WCI jurisdictions, BC will not be extending the cap and trade program to transportation and building emissions in 2015, but will maintain its carbon tax for these emission sources. No word yet on what this means for carbon pricing in BC. Two prices?
  • BC will need to include in its inventory emissions from the generation of imported electricity coming from outside the WCI if is consumed in BC, e.g. electricity imported from coal-fired generators in Alberta.
  • Offsets will come from projects in forestry, agriculture and waste management.

Cap and Trade is not without its critics, and it is critically important to get this right, or a cap and trade system could cause more problems than it solves. The government said they will spend the rest of the summer talking to industry and stakeholders, with plans to release the formal consultation papers in September. Stay tuned.