Alberta plans to implement province-wide trading in greenhouse gas emissions, in anticipation of the federal government ratifying the international Kyoto climate change treaty.

Alberta Environment Minister Lorne Taylor says he’ll form a working group, including government, industry and non-government organizations, to come up with a made-in-Alberta market for greenhouse gases such as carbon dioxide (CO2).

“I don’t think we can hide our heads in the sand,” Taylor said in Calgary at the first computer-simulated greenhouse gas trading workshop held in Canada. “I think there is going to be a cost for CO2” emitted to the atmosphere.

Taylor told more than 100 participants at the two-day workshop, held last week at the University of Calgary, that he expects Ottawa will ratify, as early as next year, the Kyoto agreement to reduce greenhouse gases in response to global warming.

Alberta still has concerns about the deal’s effects on the competitiveness of its energy industry, especially since the U.S. has rejected Kyoto, Taylor said. “(But) quite frankly, whether we like it or not, the feds can ratify it . . ..”

Dave Olecko, Business Edge
Allan Amey, president of Climate Change Central, says emissions trading will become increasingly important.

Under Kyoto, Alberta will be expected to cut up to 100 million tonnes per year of its current CO2 emissions, Taylor said. That’s about one-third of Canada’s initial target under the Kyoto agreement.

Trading in greenhouse gas emissions, permitted under Kyoto, would enable companies that reduce their emissions to sell “emission-reduction credits” to other companies in the domestic and the global marketplaces.

Albertan and Canadian businesses also would be able to secure credits, and apply them to operations here, by investing in projects elsewhere in the world that reduce emissions.

Federal government policy will be key in recognizing credits for companies that take early action, and in implementing the rules for a domestic emissions-trading scheme.

But Ottawa has yet to introduce any policy even though the U.K., Australia, Denmark and other countries are implementing their own trading programs. Several companies in Alberta, including EPCOR, TransAlta, Suncor Energy, PanCanadian Petroleum, Shell Canada, Vision Quest Windelectric and Canadian Hydro Developers, have already started trading in greenhouse gas emission reductions.

“I think that the companies here have taken their responsibilities very seriously,” said Carlton Bartels, chief executive of New York-based brokerage firm CO2e.com, which presented the trading workshop in Calgary. “They are experimenting with all the different aspects, trying to find a solution that works.”

Emissions trading will give companies flexibility in investing to help meet Canada’s Kyoto target, said workshop participant Doug Heaton, manager of project development at EPCOR.

“By buying credits created by somebody else anywhere in the world, and applying them back to the operation we have, we are in fact providing funding for these other people to do projects which will reduce emissions,” Heaton said.

Participant Peter Dickey, a consultant to TransAlta Utilities, said a group that includes industry representatives and government officials is working on a planned $1-million national emissions-trading pilot program.

“(Emission) offsets and access to offsets through a really good, effective trading system is a bridging strategy that we see for Alberta that is critical,” said Dickey, an associate at the International Institute of Sustainable Development Business Trust in Calgary.

The workshop included 35 companies, eight non-governmental organizations and five provinces. Major sponsors included Alberta Environment and Climate Change Central, a provincially funded public-private sector agency co-ordinating efforts to reduce greenhouse gases in Alberta.

“Emissions trading is going to become increasingly important, not only in Canada, but globally, given the direction we’re going in Kyoto,” said Allan Amey, president and chief executive of Climate Change Central.

Chris Severson-Baker of the Pembina Institute for Appropriate Development, an Alberta-based environmental group, said the only way some companies are going to be able to reduce their greenhouse gases is by offsetting them through trading with others “who can reduce theirs easier and cheaply.”

But, he added: “The devil’s in the details when it comes to setting the rules for what is a tradeable offset and what isn’t.”