The provincial government has released a consultation document on devising a new output-based pricing system (OBPS) related to carbon emissions.
The OBPS system, like a cap-and-trade program, will apply to large-scale industrial facilities with annual emissions of 50,000 tonnes or more of carbon dioxide equivalent, requiring these facilities to meet specific emission targets, or pay a carbon price of $25 per tonne if they exceed them.
Alternatively they can acquire offset credits if they reduce their greenhouse gas emissions (GHGs) below those targets.
Sustainable Development Minister Rochelle Squires said the system Manitoba is introducing will result in greater reductions in emissions with a lower carbon tax than the federal government’s plan.
Alberta and Saskatchewan are establishing their own output-based pricing systems as well, while the federal government is working on a ‘backstop,’ she stated in a news release.
This is a key part of the province’s Made-in-Manitoba Climate and Green Plan, under which new legislation — The Industrial Greenhouse Gas Emissions Control and Reporting Act — provides government with authority to develop this emissions compliance scheme.
Manitoba has a half-dozen industrial facilities with annual emissions that now exceed 50,000 tonnes or more of carbon dioxide equivalent, including Koch Fertilizer Canada, TransCanada Pipelines, Graymont, Canadian Kraft Papers, Husky Oil, and Vale.
The pricing scheme will not apply to municipalities, universities, schools, hospitals, landfills, waste water treatment facilities, or natural gas distribution networks, the minister noted.
The consulting document cites the aim of the system to “generate meaningful carbon emissions reductions through appropriate incentives.”
The province is additionally looking at options for establishing offset protocols and an offsets registry to recognize and track offset credits from Manitoba projects.
“Priority will be given initially to offset activities and protocols in the areas of agriculture, waste, and land use change and forestry as potential compliance options,” the document noted.
The pricing scheme will be phased in with the first compliance period beginning in January 2019.
James Battershill, general manager for Keystone Agricultural Producers (KAP) said their organization will need a bit of time to review the document and consult with farmers about it. It is by far the most complex aspect of the province’s plan, he said.
“It’s an exceptionally complicated piece of the puzzle and it’s going to take us some time to fully comprehend and communicate with our members about it,” he said.
The main questions for their industry will be around establishing the offset market and how farmers can participate in it, he said.
KAP will be asking its membership what they’re looking for in an offset market, how they can best take advantage of the opportunities it can offer, he said.
More information about the OBPS system is available at the Government of Manitoba website.