Alberta ‘quiet leader’ for carbon offsets

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A system of carbon dioxide offsets pioneered in Alberta for farmers may soon be a key part of the rapidly emerging cap-and-trade business that aims to reduce overall emissions and will have a major impact on the coal-fired electrical power plants and oil industry in this province.

With the start of new global climate talks in December in Copenhagen–to replace the Kyoto Protocol by 2012–the rush is on.

The United States expects to have a cap-and-trade law in place this fall, and Ottawa is expected to announce a discussion paper on proposed regulations for a national carbon trading market within weeks, with regulations also ready by the fall.

B. C.,Ontario, Manitoba and Quebec, along with seven U.S. states, have been planning a regional cap-and-trade system by 2012 under the Western Climate Initiative.

Earlier this month, Saskatchewan announced it would set up a similar carbon-offset structure — a system likely to mirror Alberta’s as both depend heavily on thermal coal to generate electricity, and have strong agriculture sectors.

This year in Alberta, the number of registered carbon-offset projects jumped to 25 from seven in 2007, and totalled 3.5 million tonnes of carbon dioxide, according to Alberta Agriculture and Rural Development. Ten of the projects were minimum-till or no-till agriculture projects, which contribute less CO2 to the atmosphere than conventional farming. It’s estimated the agricultural offsets sold for between$11 and$13.50 per tonne last year, equal to about$11 million paid back to the sector.

According to the United Nations, each year about 10 billion tonnes of carbon dioxide can’t be absorbed by nature. But if nations stopped clear-cutting tropical forests and all farmers used zero-till methods, 4.5 billion tonnes could be sequestered — stored in the soil and vegetation.

“If we could mobilize the carbon sinks of agriculture and forestry, it would have a major effect on carbon dioxide in the atmosphere,” said former soil scientist Karen Haugen-Kozyra, director of policy development for Climate Change Central, an Alberta government advisory group that runs the province’s carbon-offset registry.

A decade ago, Alberta started thinking about a system to value the efforts of farmers who practised low-impact agriculture. What followed were stringent protocols that set the amount of carbon dioxide that could be captured in various soils and various regions. By 2003, Alberta and federal officials were working closely together.

Dave LaBarre, a former Calgary oil trader, was just named to head the market section at BlueSource– a large international firm which develops and markets carbon offsets and is the largest player in Alberta, with 1.1 million tonnes of offsets registered in 2008.

“I got into the business in 2003, looking for the next best thing to come along, and we knew emissions trading was going to start in Europe in 2005.”

With natural gas trader Robert Andrews, LaBarre developed the technical knowledge of how to develop protocols — complicated formulas to value the carbon offsets. He says he’s now doing a similar task for Ontario.

Haugen-Kozyra says staff from Alberta have consulted with U. S. organizations, including the Environmental Protection Agency. “Alberta is the quiet leader, with an international reputation on climate change,” she said.

When the federal Liberal government was defeated in 2005, Ottawa stopped work on the system, but Alberta kept at it.

“When the premier said he wanted the regulatory framework in place in 2007,we were ready. Now, Canada has identified the Alberta system to be adapted into the national system,” said Haugen-Kozyra.

She thinks there may actually be a shortage of offsets available in Canada, so the federal system might allow 10 per cent of international offsets from Europe to be included. However, if the U. S. enters the game, it could become a continental marketplace.

Alberta’s offsets are traded within the province, although some are exported as part of a voluntary offset system some large firms follow to showcase their green efforts.

But no offsets from other provinces are accepted in Alberta, which last year recorded overall emission reductions of 6.5 million tonnes (including the 3.5 million tonnes of registered offsets).

About 100 Alberta firms emit more than 100,000 tonnes of CO2 each year, and these must reduce emissions by 12 per cent or buy credits or pay$15 a tonne into a development fund. A national program might be more stringent.

As well, Alberta’s reduction goals of stabilizing emissions by 2020 are out of whack with what is being discussed in Ottawa and the U. S.,which may seek absolute reductions of 20 per cent in the 2005 to 2020 time period.