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WIREs Energy Environ.
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A review of market‐based climate change regulation in Alberta's oil and gas sector

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Alberta has implemented the Specified Gas Emitters Regulation to address the issue of growing greenhouse gas emissions. The regulation allows large emitting facilities to achieve emission reduction targets using market‐based compliance instruments. The goal of this analysis is twofold: (1) Overview market participants, composition, and offset management approaches and (2) discuss future corporate offset strategy options. Market participants are generally weighted toward firms in the electricity generation sector. In the oil and gas sector, while many firms participate in the offset market, a small number dominate. Market composition analysis of program compliance instruments over time offers insights regarding supply and demand. A program‐level view of all market‐based compliance instruments, as well as offset credits specifically, shows how major policy changes can transform market dynamics. Corporate offset management approaches of firms in the oil and gas sector are then analyzed and categorized into one of three approaches: development, sourcing and use, and banking. Based on the analysis, a discussion of future offset strategy options for firms operating under the regulation is provided for a range of policy scenarios. The analysis serves to inform regulated emitters in the private sector exposed to newly enacted or increasingly stringent regulation by assessing the current state of activities and providing insights of emergent strategies. WIREs Energy Environ 2018, 7:e277. doi: 10.1002/wene.277 This article is categorized under: Fossil Fuels > Climate and Environment Energy and Climate > Climate and Environment Energy and Climate > Economics and Policy Energy Policy and Planning > Climate and Environment
(a) Top users of offset credits in the Alberta‐based Offset Credit System. Values represent volume of credits (tCO2e) retired or banked for future use. (b) Top users of offset credits, arranged by vintage year, in the Alberta‐based Offset Credit System. Values represent volume of credits (tCO2e) retired or banked for future use by vintage year.
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Offset strategy will be influenced by the perceived risk of GHG policy. If GHG policy is deemed likely, the perception of risk and resulting risk mitigation actions differ from a scenario where more stringent GHG regulation is deemed as unlikely.
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Offset banking among oil and gas companies that are most active in the Alberta‐based Offset Credit System (i.e., those companies with retired or banked volumes greater than 100,000 tCO2e).
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Offset credit use from 2007 to 2014 among oil and gas sector companies that are most active in the Alberta‐based Offset Credit System (i.e., those companies with retired or banked volumes greater than 100,000 tCO2e).
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Oil and gas sector offset project development activities within the Alberta‐based Offset Credit System (2007–2014).
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Offset project development, by vintage year, within the Alberta‐based Offset Credit System.
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Program compliance for the Specified Gas Emitters Regulation from July 2007 to 2013. Program compliance includes fund payments, recognition of cogeneration, offset credits submitted, and emission reductions at facilities. New offset rules, taking effect in 2012, have resulted in a decrease in offset credits submitted and an increase in fund payments.
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Program compliance, compliance instrument demand, and offset credit supply for the Specified Gas Emitters Regulation from July 2007 to 2013. Program compliance includes fund payments (converted at CAD $15/tCO2), recognition of cogeneration, offset credits submitted, and emission reductions at facilities. Demand represents the sum of offset credits and fund payments. Supply represents surplus offset supply accumulated to date plus new offset supply generated during the reporting year.
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(a) Top oil and gas sector users of offset credits in the Alberta‐based Offset Credit System. Values represent volume of credits (tCO2e) retired or banked for future use. (b) Top oil and gas sector users of offset credits, arranged by vintage year, in the Alberta‐based Offset Credit System. Values represent volume of credits (tCO2e) retired or banked for future use.
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