Comment: What does Kenney’s ‘Summer of Repeal’ mean for carbon offset markets?

It’s a funny time of year for Cattlemen magazine. After the June issue, we don’t print another one until the August issue.

Most of our material isn’t breaking news, but sometimes things develop between when a writer files and when it’s time to print (for example, see Steve Dittmer’s column this month). Who knows what will have changed, or not, by the time the next issue of Cattlemen arrives in your mail box?

Our June issue has a story on carbon offset protocols in the beef industry, written by Piper Whelan. Piper worked on it for quite a while before filing it this spring. Some of it relates to feedlot protocols created in Alberta. After reading it, I wondered whether Jason Kenney’s vow to kill the carbon tax would affect those protocols.

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On May 22, Alberta’s new UCP government passed legislation that would eliminate the tax on May 30. However, it looks like the UCP government may be re-using and recycling elements of the existing system instead of tipping it all in the bin. Kenney’s UCPs will still be taxing large greenhouse gas emitters. For now, the government plans to keep Energy Efficiency Alberta, the agency that pays people to reduce energy use by doing things like replacing windows and light bulbs, Jeremy Simes of the Western Producer reports. But the UCP plans to mitigate climate change through its Technology Innovation and Emissions Reduction program, so there may be a shift there.

But what does this actually mean for ag-related carbon offset protocols?

“I’m actually not too concerned about the offset market for now,” writes Aaron Schroeder of Brightspot Climate, via email.

Brightspot Climate is an energy and climate change consultancy that has, for example, quantified emission reductions from zero-tillage. Schroeder thinks the offset system will continue under the UCP’s modified program, but likely with lower prices for credits.

“The government has suggested a price of $20/tonne, which is down from $30/tonne in 2018, but still up from $15/tonne in 2015,” he writes.

It will be fairly close to business as usual for Alberta’s feedlot feed efficiency protocol, says Dr. Calvin Booker of Feedlot Health Management Services in Okotoks. The feedlot protocol Booker helped develop is part of the compliance market, meaning its credits are bought by large emitters who have to offset their emissions to be in line with regulations.

Feedlots are not considered emitters in Alberta, so they don’t have to buy carbon offset credits, Booker says. But if they can reduce their greenhouse gas emissions and have that reduction quantified by an official protocol, they can sell those tonnes in the market.

Booker says the price of credits is set to drop in the compliance market. “But for all the development that we’ve done, the price was actually below $20 anyway.”

Under the previous NDP government, credits were on course to eventually hit $50/tonne. Still, Booker isn’t worried about the price cap. “I don’t really think that will have a big impact in the big picture.”

These changes might not have much impact on the grassland conservation protocol, either. Climate Action Reserve, a California-based carbon offset registry, has been working with Viresco Solutions and the Canadian Forage and Grassland Association on adapting that protocol to Canada. Max DuBuisson, policy director of Climate Action Reserve, says that the plan is to develop the protocol for the compliance market at some point.

“But CFGA decided to take action without there being a clear path for it being a compliance protocol,” he says. Instead, they’re focusing on the voluntary market first.

DuBuisson says there’s a market for credits from voluntary buyers. Some companies want offsets from Canadian projects, and there aren’t many voluntary offset projects to choose from. Combine that with the good story attached to grasslands conservation and “there’s an appetite for these credits,” he says.

The voluntary market is unrestricted, so voluntary buyers could be from anywhere. Climate Action Reserve doesn’t own credits itself or connect buyers and sellers. But DuBuisson has gleaned some information from market participants. In general, buyers want credits that support particular goals, whether it’s supporting certified local projects or supporting an underdeveloped region, says DuBuisson.

While DuBuisson is aware of what’s been happening in Alberta, he doesn’t seem too fussed about the election’s potential effect on carbon credits in the compliance market, either. His understanding is that Alberta will still have a functioning program, just not at the higher prices everyone was anticipating. Climate Action Reserve has submitted a letter of intent to the Alberta Climate Change office to develop the grassland protocol for the compliance market as well.

He’s also heard from Canadian stakeholders that there’s a push to get the federal government to launch its own carbon offset program. “There’s always the possibility the federal government is going to launch their own program if they see these changes happening at the provincial level,” he says.

Whether Jason Kenney’s election win made you want to throw your hat in the air in celebration or stomp it into the dirt, it’s good news that the carbon offset system will survive in some form, at least, especially given the work that went into developing it. I worked at Alberta Agriculture up until 10 years ago, and even then people were working on carbon offsets.

The other piece of good news for the beef industry is that this kind of work not only puts a few bucks in the back pockets of feedlot owners (and maybe cow-calf folks down the road), but also lends credibility to the beef industry’s environmental stewardship claims. Beef producers have every reason to feel chuffed about this, especially when combined with the other good stewardship work that’s happening.

About the author

Editor

Lisa Guenther is the editor of Canadian Cattlemen. You can follow her on Twitter @LtoG.

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