Environment Canada has launched Phase I of its Credit for Early Action Program, a part of its proposed intensity-based cap-and-trade regime for large industrial emitters.1 The program is designed to offer a one-time allocation of credits to those eligible parties that invested in measures to reduce their greenhouse gas (GHG) emissions between 1992 and 2006. Eligible parties will be able to use credits earned through the program to meet their compliance obligations under the proposed federal regime.
Although the federal government will not issue Early Action Credits until 2009, parties wishing to apply for credits must submit a Notice of Interest to Environment Canada by July 28, 2008. In this Notice, parties must provide Environment Canada with administrative information about the facility where the reductions took place and a description of the actions for which the applicant is seeking credit. Environment Canada is also requiring applicants to submit more detailed information by September 5, 2008.
The federal government will issue Early Action Credits worth only the equivalent of 15 megatonnes of carbon dioxide, which will be allocated to eligible parties, pro rata, between 2010 and 2012.
To be eligible for Early Action Credits, parties must prove a historical GHG reduction initiative that meets the following criteria:
- It must have reduced emissions of carbon dioxide,
methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons
or sulphur hexafluorides;
- It must have resulted in initial reductions that occurred
in 1992 or later, and the reductions must have continued at
least until December 31, 2006;
- With certain exceptions, it must have occurred at a
single large industrial facility in one of the sectors
designated in Environment Canada's December 2007
"Notice with respect to reporting of information on air
pollutants, greenhouse gases and other substances for the
2006 calendar year;"2
-
It must have occurred at a facility where 2006 emissions or
capacity exceeded the minimum threshold specified in the
following table for that facility's sector (if the
facility's sector is not specified, the threshold
is zero);
Sector
Threshold
Chemicals
50 kilotonnes of carbon dioxide equivalent (CO2e)
Fertilizers (nitrogen-based)
50 kilotonnes CO2e
Natural gas pipelines
50 kilotonnes CO2e
Upstream oil and gas
3 kilotonnes per facility and 10,000 barrels of oil equivalent per day per company
Electricity
10 megawatts
- It must have resulted in reductions beyond those that
would have resulted from the business conditions that existed
when the reductions first occurred; and
- It must have resulted in GHG reductions that have not
already received a credit through a mandatory program or in a
voluntary system, such as the Pilot Emission Removals,
Reductions and Learnings and the Greenhouse Gas Emission
Reduction Trading Pilot.
For further information, please see www.ec.gc.ca/cmap-cea/default.asp?lang=En&n=B148443A-0.
Footnotes
1. See Torys' March 13, 2008 Climate Change Bulletin.
2. Generally, these sectors are alumina and aluminum; base metal smelting; cement; chemicals manufacturing; electricity; certain iron, steel and ilmenite smelting; iron ore pellets; lime; natural gas transmission and storage (but not distribution); natural gas liquids; oil sands; petroleum refining; potash; pulp and paper; and upstream oil and gas.
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