Canada: Emission Limit Implementation Recommendations From Alberta's Oil Sands Advisory Group

On June 16, 2017, the Alberta Oil Sands Advisory Group (OSAG) released its report, Recommendations on Implementation of the Oil Sands Emissions Limit Established by the Alberta Climate Leadership Plan, which sets out recommendations for implementing and remaining within the 100 megatonne (MT) per year greenhouse gas (GHG) emissions limit for the oil sands sector (Emissions Limit) articulated in Alberta's Climate Leadership Plan (Plan). For more details about the Plan, please see our April 2016 Blakes Bulletin: Alberta Budget 2016: Climate Leadership Plan Implementation and our November 2015 Blakes Bulletin: Just Like Any Good Recipe, Alberta's Climate Leadership Plan Has a Little Bit of Everything.

The Report recommends the introduction of a regulatory regime that places a continued emphasis on emissions intensity as GHG emissions approach the Emissions Limit. The new regime includes forecasting requirements and the issuance of annual authorizations for GHG emissions by oil sands facilities. Through the allocation of these authorizations and other mechanisms, the regime seeks to encourage innovation and ensure that the Emissions Limit is not exceeded.

OIL SANDS ADVISORY GROUP

The OSAG was established by Alberta's Minister of Environment and Parks in July 2016 to advise the Alberta government on the implementation of the Plan as it relates to the oil sands. Pursuant to its mandate letter, the OSAG was specifically tasked with advising on the implementation of the Emissions Limit. Its membership for the purposes of the preparation of the Report included a cross-section of representatives, including environmental, aboriginal and industry leaders.

EMISSIONS LIMIT AND REPORT RECOMMENDATIONS

The Emissions Limit is legislated in the Oil Sands Emissions Limit Act (Act). As defined in the Act, the Emissions Limit excludes GHG emissions associated with primary production, enhanced recovery, experimental schemes, co-generation, and up to 10MT for new upgrading capacity or expansion of existing upgrading capacity.

The concept of emissions scarcity is a central feature of the OSAG's recommended approach to implementing the Emissions Limit. This is a condition in which the Emissions Limit is projected to be exceeded within the first five years of a long-term forecast prepared by the Alberta Energy Regulator or the Alberta Climate Change Office (Regulator).

The Report also includes the following points:

  • A new regulation called the Oil Sands Emissions Limit Implementation Regulation or OSELIR should be created.
  • As required by the OSELIR, oil sands operators will prepare annual facility-level forecasts of GHG emissions for the following calendar year. These forecasts will be submitted to the Regulator.
  • The Regulator will use annual facility-level forecasts to prepare a long-term (minimum 10 year) aggregate GHG emissions forecast for the oil sands industry as a whole.
  • Each year, the Regulator will issue GHG emissions authorizations to each oil sands facility, the sum of which shall not exceed the Emissions Limit.
  • The allocation of authorizations will depend on emissions scarcity. In the absence of emissions scarcity, each facility will receive authorizations to cover its actual emissions. In times of emissions scarcity, the allocation of authorizations will favour facilities with lower forecasted GHG emission intensities. Facilities with higher forecasted intensities (third and fourth quartile facilities) will not receive enough authorizations to cover all of their forecasted emissions.
  • Also in times of emissions scarcity, the OSELIR shall restrict the construction of new facilities or the expansion of existing facilities such that neither can occur without an authorization from the Regulator.
  • A sliding scale of Regulator action, depending on the actual emission levels, which demonstrates a reward and penalty approach:

    • 80MT: When actual GHG emissions from the oil sands sector reach 80MT, the Regulator will undertake a formal assessment of the development and implementation of carbon reduction technologies employed by oil sands facilities and determine if there should be any change in focus or priorities (which determination will likely be enforceable through the requirements to be included in OSELIR).
    • 95MT: When actual GHG emissions reach 95MT, the Regulator must evaluate the broader context in which the oil sands industry is operating and "initiate actions necessary to be prepared to respond in a timely manner" if aggregate annual facility level emissions reach the Emissions Limit. Those actions will include specifically forewarning approved projects not yet under construction that their final construction authorization may not be forthcoming and/or forewarning both operating projects and those under construction of the potential for emissions constraints.
    • 100MT or greater: If aggregate annual GHG emissions for any given year are forecasted at greater than 100MT, the Regulator must reduce the annual authorizations for facilities with higher forecasted GHG emission intensities (i.e., third and fourth quartile facilities) by an amount sufficient to remain within the Emissions Limit. Facilities that are in the third quartile would share one-third of the reduction requirement and facilities in the fourth quartile would share two-thirds of the reduction requirement.

The reward in the OSAG's approach is that the most efficient operators can continue production without curtailment, whereas the penalty is that the least efficient operators will bear the brunt of the curtailment requirements.

  • Alberta's resource legislation and policies including the Oil Sands Conservation Act should be reviewed and amended "so as to change the framing from one of resource conservation to one of environmental and economic efficiency, with the effect of no longer compelling Operators to extract those parts of reservoirs with higher GHG intensity."
  • Decisions related to project approvals, renewals and extensions will be guided by considerations related to "Best Available Technology Economically Achievable."
  • In years when actual GHG emissions for the oil sands are below the Emissions Limit, oil sands facilities will not be subject to any penalties for exceeding their forecasted GHG emissions.
  • In years when actual GHG emissions are above the Emissions Limit, oil sands operators will be subject to penalties for exceeding GHG emissions authorizations. The quantum of the penalty in these circumstances is to be established "at a level that will act as a sufficient and effective deterrent," and its payment will not bring a facility into compliance. Penalty provisions will not apply in respect of exceedance due to variability: a) normally inherent in emissions forecasting, b) due to forecasting of start-up conditions, or c) the result of unforeseen operational interruptions and that are beyond the reasonable control of the operator.

IMPACT ON INDUSTRY AND NEXT STEPS

The government will now begin the process of reviewing the OSAG's recommendations. In that regard, the government has said that part of its work will include stakeholder consultation on the Report and implementation measures. This will be important given that the OSAG undertook only limited informal consultation on the implementation of the Emissions Limit in the lead up to the Report. While there appears to have been relatively broad informal consultation with industry, the same cannot be said for environmental, aboriginal or community interests.

While the Report is comprehensive, there are a number of areas where further work and information will be required if the OSAG's recommendations are accepted and the OSELIR is enacted. For example, the most immediate impact on industry appears to be the need to establish forecasting capabilities that satisfy the prescribed protocols and methodologies. Going forward, oil sands operators need information on the nature of these protocols and methodologies in order to assess whether their current forecasting capabilities are sufficient. In addition, the proposed OSELIR is confusing in that it prohibits oil sands facilities from producing GHG emissions in excess of their annual authorizations (but imposes no risk of penalty unless the overage occurs in a year where actual emissions for the oil sands exceed the Emissions Limit).

Also, as noted above, the implications of emissions scarcity on industry participants may be significant—i.e., annual authorizations will be reduced in respect of certain facilities and the construction of new facilities and expansions to existing facilities may be put on hold. Clarity is required around how the Regulator will proceed in these circumstances, and the principles and criteria that will govern the allocation of authorizations. That stated, the use of the reward and penalty approach will presumably keep the industry focused on innovation and technological advances and drive it towards increasingly efficient operations.

If the new regulatory regime as proposed by the OSAG is implemented, it represents a significant response to the criticisms levied on the oil sands in the context of GHG emissions. It also provides a roadmap to oil sands operators that is reasonably clear, with defined end-points.

The recommendations were made on the consensus of the OSAG (which includes industry representation), were supported as a package and have the benefit of relatively extensive consultation with industry, which according to the Report broadly supports measures to address GHG emissions. However, some have criticized the recommendations as being detrimental to Alberta's economy and growth if adopted. It remains to be seen how apparently different views of parties whose interests are seemingly aligned will play into the resulting regulatory scheme, which the Alberta government has said it expects to be implemented by early 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
23 Nov 2018, Other, Toronto, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

28 Nov 2018, Speaking Engagement, Toronto, Canada

Arbitration has a number of advantages and some disadvantages for the resolution of domestic and international commercial disputes.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions