B.C.’s new Greenhouse Gas Reduction Targets Act sets bold goals that it hopes will drive innovation and investment. The rest of Canada is watching intently to see how it works.

British Columbia’s new Greenhouse Gas (GHG) Reduction Targets Act sets a bold GHG reduction target for the province of at least 33 per cent below 2007 levels by 2020. It also makes the province the first government in North America to require all public sector organizations to publicly report on their emissions levels and actions taken to reduce those levels.
 
The targets set leave some wondering how they can be met, and at what cost to business. Others believe it’s the very boost that the clean tech and energy management sectors need to thrive.
 
The basic provisions
The new act sets out a gradual path to reaching its bold targets. It requires that realistic, economically viable interim targets for 2012 and 2016 be set by the end of 2008, and establishes an emission reduction target of 80 per cent below 2007 levels by 2050.
 
The provincial government, meanwhile, including provincial ministries and agencies, schools, colleges, universities, health authorities and Crown corporations, must become carbon neutral by 2010 and present a public report every year, detailing actions taken towards carbon neutrality.
 
"Our government will lead by example, first by reducing our emissions as much as possible and then offsetting the remainder," says Environment Minister Barry Penner, who introduced the legislation.

Graham Whitmarsh, head of the Climate Action Secretariat, says this leading by example is an essential part of the government’s plan.

"It will mean that more than a million people in B.C. will either work or be educated in facilities that will be carbon neutral, so it’s a tremendously powerful way to raise awareness about the sources of emissions and how you reduce them."

The government is now in the midst of measuring the carbon footprint of all of its operations, which Whitmarsh admits "will take a while, considering how this has to be rolled out across hospitals, the school system, etc." The government is already measuring its inventory in regards to travel, and will offset those at the end of the year.

All offsets bought in the process of meeting its goals will be sourced within B.C. through the Carbon Trust, a Crown corporation launched in autumn 2007 to purchase carbon credits within the province.

Industry and beyond
For government to meet its goals is one thing, but compelling industry to do the same will be a larger challenge. To support that initiative, the government has launched a variety of initiatives in different sectors to encourage behavioural changes.

For instance, it has joined an alliance of six U.S. states and two provinces in the Western Climate Initiative, which will introduce a cap and trade system for emissions in heavy industry, such as gas production, smelting and mining.

"We’re currently involved in the design of the system," says Whitmarsh. The design, which should be complete by August of this year, will lean heavily on the experience of the European trading system, which is currently in its second trading cycle.

In the building sector, on the other hand, the province has introduced a new Green Building Code, which will apply to all new build in the province. For its part, the government is aiming to have all of its new buildings built to a Leadership in Energy and Environmental Design (LEED) Gold standard.

"The reason we introduced a green building standard is that you really begin to impact the housing stock this way," says Whitmarsh. "By 2020, 15 per cent of our housing stock will be built to the new code - a pretty big chunk out of our emissions."

This doesn’t impact the existing housing stock, of course, but this is a challenge that Whitmarsh readily accepts.

"I think over time there will need to be a more varied set of incentives to deal with the existing buildings, but the priority has been to get the new code done so that we’re building new buildings to a much higher standard."

Pushing innovation
While some GHG reductions will come from the application of existing technologies such as more energy efficient building supplies and HVAC equipment, to truly meet the goals set out by the act, investment in innovative R&D is a must. For this reason, the government has set up the Innovation in Clean Energy (ICE) Fund, which is inviting proposals to address specific problems to do with clean energy production and carbon capture and sequestration. The fund is likely to be worth about $25 million and will focus on technology that is production ready but not yet commercial from a price perspective. Applications for the fund were due in the first week of March.

In addition, an endowment of $94.5 million called the Pacific Institute for Climate Solutions is being established for research-intensive universities in B.C. The institute is meant to integrate the disparate research being carried out across the province on climate change adaptation and mitigation solutions.

"We see the economic opportunities of this as very significant," says Whitmarsh. "In Europe, they’ve experienced growth in three major sectors — green technology, green retailing and the service sector. We’ve started to see this growth in the green tech sector but really haven’t seen much in the other two sectors yet. When issues like this come along, it’s the jurisdictions that move first that really create the environment to benefit. We’re keen to create those economic opportunities in B.C."

Certain companies are likely to benefit substantially from the new Act. Mike Scott, senior vice-president of corporate development at Nexterra Energy Corp., makers of a biomass gasification system, considers his company’s technology a natural fit in this environment. The company is currently completing an installation of its technology at the University of South Carolina (USC), and one for use as a district heating system for Dockside Green, a residential mixed-use development in Victoria.

"I feel we could replicate our technology in a variety of institutional, residential and commercial settings," says Scott. "We see a real opportunity to replicate our solution in a variety of these government agencies across B.C."

Gerry Gill, Chairman and CEO of Legend Power, the developers of a voltage regulator in B.C., is of a similar mindset. "I think, with our technology, we can contribute a great deal to meeting these reduction targets," he notes.

The power problem
There is a real potential, however, for the province’s bold plans to stutter in the short term. The problem is the price of electricity. The province’s energy plan, also introduced this past year, calls for B.C. to be energy self-sufficient by 2016. Add to this the requirement that new power all be essentially green to meet the GHG reductions targets, and the challenge becomes pretty clear.

The Joint Industry Electricity Steering Committee, which represents 24 large electricity customers, commissioned a study last year that suggested BC Hydro would have to boost electricity rates at least 7.5 per cent each year for the next decade to satisfy B.C. goals. For residential customers, that would be in addition to an 11 per cent increase ordered in November 2007 by the B.C. Utilities Commission.

The main reason for the rise is that, when you require new power to be green, you limit your generation options. "For instance, probably the cheapest new electricity that would be available would be a 500 MW conventional coal-fired plant," explains Paul Willis, president of Willis Energy, an energy consulting firm in Vancouver. "This new legislation rules that out. It has also made gas-fired projects, like gas turbines and combined-cycle plants, more expensive because that type of plant would have to buy offsets." This is obviously a concern for energy-intensive industries.

Willis sees this challenge as something that’s going to hit many Canadian provinces. Quebec, Manitoba and B.C. in particular have historically very low electricity rates, so they have developed energy-intense industry, in which anywhere between 20-80 per cent of their costs are for electricity. "As costs rise, they will inevitably be affected," says Willis. "These industries are going to have to do retrofits and become even more efficient than they already are. That’s going to require a lot of capital investment, which will be an issue."

Evolution of an industry
Willis himself, of course, is benefiting from the upswing in interest in energy management. He thinks the legislation makes a lot of sense.

"There’s a limit with what you can do through voluntary programs," he notes. "And I think there’s a lot of opportunities. If you look at North America, the electric power industry is about a $200 billion a year industry. Most of that is currently spent on the supply side - power generation. A very small portion of it is spent on the demand side. As we move forward, I think there’s going to be a real shift in that balance. That’s exciting for businesses like ours."

And as Cheryl Slusarchuk, chair of the Climate Action Team notes, that’s the key point of B.C.’s drive to push this initiative forward — to drive new business opportunities by investing in energy efficiency innovations and clean tech. The Climate Action team is tasked with helping the government decide how to reach its overall targets.

"This is about twinning being a good global citizen and using that to build the economic platform for B.C.," Slusarchuk says.

Robert Colman is editor and associate publisher of Green Business.
 

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