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Canada

Wind industry defends Alberta offset policy

CANADA: The wind industry has defended the use of carbon offsets in Alberta after critics of the province's climate strategy said it was having no material effect on actual emissions.

Vision Quest Windelectric's Summerview Wind Power Project in Alberta
Vision Quest Windelectric's Summerview Wind Power Project in Alberta

Since 2007, the provincial government has required facilities emitting more than 100,000 tonnes of greenhouse gases a year to reduce their carbon intensity - or emissions per unit of production - by 12% from their baselines.

Around 100 emitters are covered by the regulation. Together, they produced 109.5 million tonnes (Mt) of greenhouse gas emissions in 2009, while the province as a whole emitted 244 Mt.

Last year, the companies bought about 3.83 Mt worth of offsets to help meet the target. About 11% of the total, or 407,000 tonnes, was purchased from Alberta producers, bringing the total number of wind offsets purchased since the program began to 1.3 Mt.

The wind energy sector is the second most popular choice as an offset source, after agriculture, where farmers use reduced or no-till farming methods to help store carbon in their fields.

The government does not collect information on how much emitters paid for wind offsets, says Chris Bourdeau, the acting issues manager in the environment ministry's communications department.

But there is an effective cap on what they were likely to be willing to shell out, because buying offsets is just one of the options for compliance.

Emitters who miss their target can instead choose to pay C$15 a tonne into a Climate Change and Emissions Management Fund that will be used to support development of emissions-reduction technologies.

It has not yet been specified if the wind sector will benefit from this. Payments to the fund were $62.9 million in 2009, bringing the total to C$186.9 million.

In May, the Alberta government claimed its program has reduced emissions in the province from what they would have been without the regulation by 17.28 Mt since 2007, with 7.01 Mt of that drop coming in 2009.

But Pembina Institute, an Alberta-based sustainable energy think-tank, argues that most of the reductions represented by offsets would probably have occurred anyway, through business-as-usual renewable energy investments or farming practices.

"Instead of overselling its fundamentally flawed regulations, the government needs to focus on developing a serious plan for real reductions in the province's greenhouse gas pollution," says Matthew Bramley, the director of Pembina's climate-change programme.

But the wind industry disputed the criticism that investment in wind development would have happened without the regulation.

Investment

TransAlta Wind has four projects selling offsets through the Alberta system.

Jason Edworthy, director of community development for TransAlta Wind, says the ability to get value for wind's environmental attributes is key to investment decisions in a competitive power market like Alberta's, where long-term power purchase agreements are not generally available to producers.

David Huggill, the Western Canada policy manager for the Canadian Wind Energy Association (CanWEA), agrees offsets are fundamentally important to Alberta wind producers.

"This province is one of the few jurisdictions that has priced carbon and we are able to put that into our business case, which certainly helps the financing of wind projects," he says.

"The offsets and the fact that there is a dollar amount attributed to them is why, I think, we see sustained interest in wind."

Bourdeau defends the programme as a first step in transitioning the province to a lower-carbon future. "We've got our industry operating under a regulatory environment for greenhouse gas emissions, which very few jurisdictions can say," he argues.

"We're learning about how industry is reacting and the choices they are making, and industry has to acknowledge this program in the business decisions they are making looking ahead."

At the same time, he says, the province knows it needs to go further. When and how it will do that depends on how the rest of North America moves forward.

"We need to make sure that our next step is in line with what other jurisdictions are going to be doing," he says.

Bourdeau points out Alberta is the only place in North America where wind energy producers can sell the emissions reductions they generate to emitters that are bound by law to meet mandatory targets.

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