Nearly half of Canada's greenhouse gas (GHG) pollution comes from large industrial facilities in sectors like oil and gas, electricity generation and chemicals. The Pembina Institute has worked for over a decade on the implementation of regulations to reduce these emissions through a system of targets and trading that maximizes real emission reductions.
Canada’s Approach to Industrial GHG Pollution
In April 2005, the federal government announced a system of emissions targets and trading for heavy industry sectors as part of its plan to meet Canada’s Kyoto Protocol obligation. In November 2005, the government added GHGs to the list of substances that can be regulated under the Canadian Environmental Protection Act. This gives ministers the power to make regulations to limit GHG emissions with no need for further Parliamentary approval. At the end of 2005, Environment Canada was preparing the regulations needed to set industrial GHG targets to take effect in 2008.
After the January 2006 election, the new government stopped work on these regulations. In April 2007, it announced a new framework for GHG regulations for heavy industry. The regulations are due to be published in spring 2008, and will apply from 2010 to 2020. As in the 2005 plan, the targets in this system will be set in terms of emissions intensity – emissions per unit of production – rather than actual emissions. This means that sectors with stable or slow-growing production levels will have to reduce emissions, but a sector with fast-growing production could meet its target while its emissions increase.
Loopholes and Gaps
Because heavy industry accounts for such a large part of Canada’s total GHG pollution, stringent regulations for industrial emissions are the single most important element of a credible federal GHG reduction plan. Unfortunately, Pembina’s analysis of the government’s proposed regulatory framework identified 20 unresolved issues, most of which add to the risk that industrial emissions will be higher by 2020 than the government has claimed. The presence of numerous loopholes and gaps in the framework creates serious doubts about its environmental effectiveness.
Pembina's Position
The Pembina Institute believes that regulated targets for industry should be set in terms of actual emissions, not emissions intensity. Intensity targets create uncertainly about the outcome for actual emissions; actual emission targets provide certainty about the environmental outcome. Actual emission targets also maximize transparency and economic efficiency, and provide more incentive to switch to cleaner energy sources.
Emissions trading gives a company the choice between reducing its own emissions or paying another company to reduce in its place. Trading does not reduce emissions on its own, but when used in conjunction with regulated targets, trading helps ensure that emissions are reduced wherever the cost is lowest. Because the environmental benefit of GHG reductions does not depend on where they occur, Pembina supports GHG emissions trading – but only when strict rules ensure that the “credits” traded represent genuine emission reductions. A system of emissions targets and trading must also be designed to put a high enough price on emissions to ensure the deployment of key clean technologies.
Further details are provided in our extensive publications on regulations for heavy industry.
Oil Sands: the Elephant in the Room
Alberta's oil sands operations stand out from Canada's other large industrial emitters because of their tremendous pace of growth in production and emissions. If all announced projects proceed as planned, emissions from the oil sands are set to increase more than threefold between 2003 and 2012, and fivefold between 2003 and 2020. This would make the oil sands sector the single largest contributor to business-as-usual growth in GHG emissions in Canada.
Pembina is a leading authority on the full range of environmental implications resulting from the intense development taking place in Canada's oil sands industry. For more information, visit www.oilsandswatch.org.
What is Pembina Doing?
The Pembina Institute is working on the detailed design of GHG regulations for heavy industry to try to minimize loopholes and maximize real emission reductions. We will continue to monitor closely and report on the extent to which the government makes progress towards reducing GHG pollution from heavy industry.
In the critical case of oil sands, Pembina is seeking to ensure that new and existing facilities are required to make a fair contribution to Canada's GHG reduction efforts. We are also advocating the removal of tax breaks and other forms of subsidy that favour Canada's oil and gas sector.
