 Trevor Nickel, Evan Chrapko and Xiaomei Li stand in front of a new and unique biorefinery near Vegreville that uses manure from a feedlot to produce biogas that is burned to generate electricity. When completed, the refinery will also produce ethanol to be added to gasoline. |
Alberta may be the international bad boy when it comes to greenhouse gases from the oilsands. But even as the fossil-fuel industry continues to expand, a few enterprising individuals are building niches for renewable energy and greener economic activity with tools unique to Alberta.
Take, for example, a new biorefinery near Vegreville, the first of its kind in Canada.
Using new, homegrown technology, the plant is already generating electricity from manure and, when it's completed this year, it will produce ethanol with a smaller environmental footprint than any other plant in the country.
Alberta is the only place in Canada where there's money to be made by cutting greenhouse gas emissions and selling credits on the country's only carbon market. The buyers are big oilsands companies and coal-fired electrical companies required by law to offset their rising GHG emissions.
Last year, a handful of farmers reduced their GHG emissions by not tilling their fields and then sold the credits in the first deals on this fledgling market.
Businesses can earn credits when they reduce emissions by switching from truck to rail to ship their goods, or by retrofitting an old, leaky office tower for energy efficiency, says Andy Ridge, head of the climate change policy unit in Alberta Environment.
President Barack Obama is expected to introduce some sort of carbon trading scheme in the U.S., and that's bound to be discussed in his Feb. 19 meeting with Prime Minister Stephen Harper.
In Alberta, there's no trading floor, just a website (www.carbonoffsetsolutions.ca) with so far only about 15 sellers. Buyers can peruse the offers and click on a button to inquire about a deal. Only Alberta companies can trade.
It's a very small beginning. Only one megatonne of credits was sold in the first round of trading last year. That's less than one-fifth of the 5.4-megatonne reduction required by the province's climate change policy.
For most of the required reduction, the 100 big emitters paid $15 to government for every tonne over the legal limit. Some managed to reduce emissions at their plants. The money paid to government went into a special fund for developing green technologies.
If successful, the theory goes, a healthy carbon-trading market should encourage changes in corporate behaviour, help build greener industries and lower carbon emissions, says Ridge, though there's still debate among environmentalists about whether some of these credits produce real GHG reductions.
Evan Chrapko and his partners in Highmark Renewables are hoping to leverage the new carbon market.
They need another $26 million to finish their ethanol plant near Vegreville.
It's not easy to raise money for renewable energy projects in the heart of oil country, even though there's $2 billion in taxpayer's money available for carbon capture and storage for the oilpatch and electric utilities.
But selling carbon credits could be the key, says Chrapko, who sat on the province's royalty review committee in 2007.
"It's a perfectly elegant business outcome driven by proper and strong public policy," he says.
Highmark's new technology eliminates thousands of tonnes of methane (a powerful GHG) by turning cattle manure into biogas that fires a small electricity plant.
For every tonne of manure they use, Highmark will get credit for a GHG reduction of one fifth of a tonne, for a total offset of 75,000 tonnes annually. Those offsets are permanent -- "no-risk" -- and certified under a federal formula or protocol that determines the amount of GHG reductions.
"The only question right now is at what price will the credits change hands?" says Chrapko.
That's a touchy question. In Europe, the price of carbon is expected to rise from $40 Cdn to $62 Cdn a tonne under a different, permit-based system, according to a January Deutsch Bank estimate.
To finance carbon-capture and carbon-storage projects through the carbon market, the price in Alberta would have to go to $50 to $100 a tonne, according to some estimates.
Currently in Alberta, carbon sells for no higher than $15 a tonne as the government levy acts as a ceiling.
Alberta's price would certainly go up if Canada were to join Obama's proposed emissions trading system, says Jesse Rowe of the Pembina Institute.
Joining a U.S. cap-and-trade system would mean other changes in Alberta's system, says Rowe. The province would likely have to drop its unique emission intensity measure, which requires a reduction in GHG per barrel of oil produced.
That is, unless Harper can get an exemption for the oilsands, says Rowe -- no doubt a major issue on Harper's agenda.
As to whether the carbon credits actually represent real GHG reductions or just hot air, that is also still being debated.
The federal and provincial government worked for almost a decade on complicated protocols to make sure the reductions are real in about 24 sectors of the economy, says Ridge.
More companies will get into the market as protocols are developed for other economic activities, he says.
Rowe, however, says some of the province's protocols are weak and may give too much credit for nominal reductions in GHG emissions.
spratt@thejournal.canwest.com.
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