Will we meet our climate targets? New carbon pricing system for large emitters lacks crucial details

Mar 31, 2023 | 42-4, Bills, Blog, Environment, Governance, Legislature, Video | 0 comments

In Budget 2023, the BC NDP announced a new output-based pricing system (OBPS) for large industrial emitters, which would exempt those who pollute the most from paying the carbon tax up-front.

After surpassing a to-be-determined emissions threshold, industrial facilities would be forced to pay a fixed rate on their emissions, or purchase authorized carbon offsets.

Bill 10 legislates these changes to our industrial emissions framework by creating a skeleton for a new made-in-BC OBPS.

Ultimately, the merit of this new system will rely on its ability to incentivize emissions reductions through stringent emissions thresholds, regular updates to the OBPS rates and the validation processes that hold emitters to account.

It appears all of these details will be revealed in regulations made by the BC NDP without the input of the Legislative Assembly, and without the ability for debate.


A. Olsen:
Thank you for this opportunity to speak to Bill 10, Budget Measures Implementation Act. I know that I’ve got some watchers on the other side that are going to be holding me very accountable.

Today I want to talk about the significant changes that are proposed within Bill 10, changes to the Greenhouse Gas Industrial Reporting and Control Act, the GGIRCA. These changes, in addition to the new energy action framework that was announced last week, and the approval of new LNG projects, natural gas projects, will significantly impact energy and climate policy in British Columbia.

What I’ll be trying to understand is how these pieces, and specifically the piece that’s being outlined here in Bill 10, interact with the other pieces that are moving. However, the implications of these changes mostly won’t be understood or determined for a number of months, as much of the detail is going to be coming through the regulations of this bill and further consultation for those other pieces.

The province has the legislative authority under the Greenhouse Gas Industrial Reporting and Control Act to regulate emissions from industry. In March 2021, B.C. set sectoral targets covering emissions across the economy. The oil and gas industry is currently responsible for around 50 percent of the industrial emissions and 20 percent of B.C.’s total emissions. The sectoral target for the oil and gas industry aims to reduce emissions by 33 percent to 38 percent by 2030.

Amendments to the GGIRCA that are made here in Bill 10 exempt large emitters from paying carbon tax up front and introduce a new made-in-B.C. output-based pricing system — or OBPS, output-based pricing system — to match the federal government’s carbon pricing schedule, beginning in 2024. The success of B.C.’s output-based pricing system will ultimately rely on its ability to incentivize emissions reductions through stringent emissions thresholds, regular updates to the output-based pricing system rates and the validation processes that hold emitters to account.

Given the current lack of details around B.C.’s output-based pricing system, I look forward to hearing the answers from the minister, at committee stage, about this government’s decision to pursue a made-in-B.C. system, rather than utilizing the federal model, and how these changes relate to B.C.’s LNG strategy and our reliance on carbon offsets to meet our climate targets.

In addition to the changes to the GGIRCA under Bill 10, and in relationship to the changes that are made to that act under Bill 10, this government just announced a more significant change to energy policy with the new energy action framework.

Under the new framework, the province requires all proposed LNG facilities in or entering the environmental assessment process to pass an emissions test, with a credible plan to be net zero by 2030. However, this does not apply to the already permitted projects Cedar LNG, LNG Canada’s phase 1 and 2 or Woodfibre LNG. Net zero does not encompass upstream emissions — the emissions created when exported fossil fuels are burned overseas.

Similar to the changes made in this bill, Bill 10, to the GGIRCA, the new framework also lacks in details, and I have many questions. How will net zero be defined? Is this government relying solely on carbon credits to be net zero? How will the new emissions cap and other regulations like stricter methane rules affect industry investment in the sector? How do the changes in Bill 10 speak and interact with the new framework, that’s also largely undefined?

I’m worried that the sector ultimately won’t be held accountable. We’ve got an output-based pricing system that’s being outlined in here, but what message is this going to send to the fossil fuel industry? If we let the industry get away with a credible plan to be net zero, I think we’re going to lose. A credible plan to be net zero could just be purchasing the cheapest offsets that are out there.

Other methods of decreasing emissions produced by the gas sector could include carbon capture and storage, but the recent international panel on climate change report noted that this would be the most costly and least effective way to tackle the problem that we face and which is partly being addressed here through the bill that we’re debating today.

The energy action framework also establishes a clean energy and major projects office to fast-track investments in clean energy and technology. It seems, at first blush, like an office to greenlight more greenhouse gas emissions in the province. This new office will not necessarily increase solar, wind, geothermal or tidal energy, all of which the IPCC report says that we need to be investing in robustly.

The new framework that was announced after Bill 10 was put on the table also includes a regulatory cap for the oil and gas industry to ensure British Columbia meets its 2030 emissions reduction target for the sector. The details of this are unclear, as the province still needs to engage with stakeholders on the design of the regulatory cap on oil and gas sector emissions, including on issues like how the cap will be allocated, credit training and verifiable offsets. I’m worried that this consultation process will become yet another source of delay.

I wonder how the province’s emissions cap for the oil and gas industry will be operationalized. What will the starting point be for the cap, and how will it be allocated? How will the cap be harmonized with the intentions of the federal emissions cap in the same space? Most importantly, how does this government intend on enforcing it? How will the changes that we’re debating through Bill 10 and the province’s move from their current carbon tax system to a new output-based pricing system for large emitters factor into the carbon accounting related to the new emissions cap announced outside of this process?

It’s clear that in Bill 10, the changes to the output-based pricing system…. As with the energy action framework, the devil is very much hidden in the details. What’s clear, however, is that this government is trying to reconcile fossil fuel expansion with climate action.

The new output-based pricing system proposed in Bill 10 will be used to meet emissions targets. However, the government missed the previous goal of 33 percent reduction by 2020, with emissions instead remaining more or less unchanged from the 2007 levels.

The most surefire way to limit emissions, I think, is the obvious one that everyone in this room knows, and that’s to stop expanding the fossil fuel infrastructure. However, this government did the exact opposite in approving Cedar LNG and giving Ksi Lisims the green light for an environmental assessment.

Cedar LNG, a floating facility to be constructed near Kitimat, will export three million tonnes of LNG and produce 1.2 megatonnes of emissions annually for 40 years. Upstream the project would add an additional 39 megatonnes, about the same amount of emissions produced by putting 8.4 million cars on the road for a year or driving around the planet 12 million times. The government used the energy action framework as a smokescreen for green-lighting more fossil fuels.

Even before the approval of Cedar LNG, critics were warning that B.C. is unlikely to meet its 2025 or 2030 goals. How does this government reconcile the need to reduce emissions while approving new emissions-intensive fossil fuel projects?

In order to reduce global warming, we need to act urgently, within this decade. The recent IPCC report makes it clear. Avoiding the worst-case scenario is only possible if we stop expanding oil and gas and coal projects. It doesn’t matter how many of these output-based pricing systems or how many times we try to shift the focus somewhere else. If we’re increasing emissions and we are allowing the largest emitters to not have to pay up front, the reality is that those emitters are going to continue to emit.

Missing in this discussion is the need to limit fossil fuel production as we move to net-zero emissions by 2050. We urgently need to figure out a managed decline of the industry and a fair transition for workers and communities, or we might find ourselves in the situation that my colleague from Prince George–Mackenzie noted, with the hundreds and thousands of jobs that have been lost in his riding.

We are addicted to fossil fuels and the revenue they generate. The recent surge in global oil and gas prices has resulted in record profits for oil and gas companies. Shell just posted record profits of $40 billion U.S., doubling last year’s record profits, and Shell owns the largest share in LNG Canada.

Deputy Speaker:
Member, on Bill 10, please.

A. Olsen:
We’re talking about an output-based pricing system, in Bill 10, that companies such as Shell are implicated in. How is it that I am not able to speak to the system that is going to be implicating them?

This province is too dependent on those revenues from the oil and gas industry. In February 2023, the province released an updated labour market outlook, with major projected growth in the oil and gas sector.

I can sympathize with how difficult it is to change a system. We’re partly trying to make adjustments through this output-based pricing system. This government has the opportunity to do just that. They have a majority and the support from the public. A recent poll found that a majority of British Columbians would rather see the provincial government directing its investments and support to clean energy projects than new fossil fuel projects.

We have an opportunity to be global leaders. Instead, we’re following. Despite this government’s rhetoric on the need to reduce emissions and act on climate, they’ve been ineffective in curbing emissions and meeting our legislated targets. Approving more LNG projects adds fuel to that fire.

The changes in Bill 10 to the Greenhouse Gas Industrial Reporting and Control Act exempt large industries from paying the regular carbon tax up until a certain limit. But that limit is set by a regulation by this government without the input of the Legislative Assembly and without the ability for debate.

What I outlined in this speech is the reality that there is a large number of complex measures that are being put in place, all at the same time, mostly with very little content involved in them. They are frameworks. The details of them have not been thought through, the impact.

How, of the energy action framework that I noted, do the approvals of LNG impact with this output-based pricing system? And the fundamental question: why is it that we are allowing multinational, billion-dollar profiting corporations to be able to shift their responsibility away from paying what British Columbians…? At the very least, if this is just about money, then they should be paying what British Columbians expect them to be paying: their share.

So as we go through this, we will be asking the questions, the tough questions, of this government. How is it that they are going to achieve what they say that they’re going to achieve? That is, meeting our climate action commitments while approving more fossil fuels, expecting there to be more jobs being created in an industry that should be sunsetting and expecting those revenues to pay the way at a time in which we’re facing a climate emergency.

With that, I’ll take my seat.



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