Apr 4, 2017
Carbon and Greenhouse Gas Legislation in British Columbia
In 2008, British Columbia imposed a “revenue-neutral” carbon tax on the purchase and use of fuels within the province, revenues from which are returned to taxpayers through the reduction of other taxes. Fuels subject to this tax include gasoline, diesel, natural gas, heating fuel, propane, coal, and certain other materials including peat and tires when used to produce energy. Tax rates are based on a price of $30 per tonne of CO2 equivalent emissions, and as a result the tax per unit of fuel consumed differs depending on type – from $5.70 per cubic metre of natural gas to $62.31 per tonne of high heat value coal. The B.C. government has estimated that this measure alone may, by 2020, reduce the province’s greenhouse gas emissions by approximately 3 million tonnes of CO2 equivalent annually.
The Greenhouse Gas Industrial Reporting and Control Act (The Act) came into force on January 1, 2016. The Act goes much further than previous greenhouse gas (GHG) emissions legislation in the province, providing for the establishment of specific performance standards for industrial facilities or sectors. Specifically, the Act takes direct aim at coal-based electricity generation facilities and liquefied natural gas (LNG) facilities, by requiring each of these newly regulated operations to report its GHG emissions and comply with an emissions benchmark. Additional performance standards for other industries will likely be adopted at a future date.
The emissions limit for LNG facilities is 0.16 tonnes of GHG emissions for each tonne of LNG produced by the operator. LNG operations include all GHG emissions from the point where gas enters a facility to the point when it is loaded onto a mode of transportation such as a ship or a rail car. This appears to capture emissions from ancillary operations to the LNG plants such as “inside the fence” natural gas-fired power generation.
Much of the legislation’s mechanics are set out in the regulations adopted under the Act, which combine several pieces of existing GHG legislation into a single legislative framework. The regulations, like the Act, came into effect in January 2016 and include the following:
- Greenhouse Gas Emission Reporting Regulation: requiring industrial operations that emit over 10,000 CO2 equivalent tonnes per year to report their GHG pollution annually to the province. Operators who emit over 25,000 tonnes of CO2 per year are required to have their emissions independently verified. The regulation also prescribes the compliance reporting requirements;
- Greenhouse Gas Emission Control Regulation: establishing the B.C. Carbon Registry to monitor compliance unit transactions and enabling the issuance, transfer, and retirement of compliance units. This regulation also enables regulated operators whose emissions exceed prescribed limits to comply with the legislation by purchasing offsets from the market or funded units from the government. Moreover, offset units can be earned through the removal or reduction of GHG emissions by way of an approved emission offset project verified by third-party verification procedures; and
Renewable and Low Carbon Fuel Requirements Regulation
Fuel suppliers who each produce more than 75 million litres of gasoline and diesel combined are subject to various requirements under the provincial government’s Renewable and Low Carbon Fuel Requirements Regulation. These large producers are required, under the possibility of administrative sanction, to ensure that fuels have a minimum renewable fuel content by volume (4% for diesel and 5% for gasoline), and to meet targets for the reduction of the carbon intensity of fuels by 2020.
Clean Energy Act
Since 2010, British Columbia’s Clean Energy Act (the Act) has sought to make the province self-sufficient in electricity generation beginning in 2016 and continuing each year after that, with a clean and renewable energy target of 93%. The Act also seeks to make the province a net exporter of clean and renewably generated electricity. The legislation further creates a smart-metre requirement for electricity consumption management, mandates reductions in the province’s GHG emissions to 2050, and establishes a feed-in tariff program for emerging technologies. Under the Act, biomass, biogas, geothermal heat, hydro, solar, ocean and wind are classified as renewal sources of energy. Natural gas, when used to power LNG plants, has since been added to this list by regulation.
Climate Leadership Plan
On August 19, 2016, the province released its Climate Leadership Plan (the Plan), which updates the province’s 2008 Climate Action Plan. The Plan sets out 21 actions B.C. will take to meet its 2050 emissions reduction target of 80% below 2007 levels. Sectors targeted by these actions include: (i) natural gas; (ii) transportation; (iii) forestry & agriculture; (iv) communities and built environment; (v) industries and utilities; and (vi) the public sector. The Plan is not a static document and the B.C. government projects that further action items will be announced over the course of 2017.