A review of market‐based climate change regulation in Alberta's oil and gas sector

Alberta has implemented the Specified Gas Emitters Regulation to address the issue of growing greenhouse gas emissions. The regulation allows large emitting facilities to achieve emission reduction targets using market‐based compliance instruments. The goal of this analysis is twofold: (1) Overview market participants, composition, and offset management approaches and (2) discuss future corporate offset strategy options. Market participants are generally weighted toward firms in the electricity generation sector. In the oil and gas sector, while many firms participate in the offset market, a small number dominate. Market composition analysis of program compliance instruments over time offers insights regarding supply and demand. A program‐level view of all market‐based compliance instruments, as well as offset credits specifically, shows how major policy changes can transform market dynamics. Corporate offset management approaches of firms in the oil and gas sector are then analyzed and categorized into one of three approaches: development, sourcing and use, and banking. Based on the analysis, a discussion of future offset strategy options for firms operating under the regulation is provided for a range of policy scenarios. The analysis serves to inform regulated emitters in the private sector exposed to newly enacted or increasingly stringent regulation by assessing the current state of activities and providing insights of emergent strategies. WIREs Energy Environ 2018, 7:e277. doi: 10.1002/wene.277 This article is categorized under: Fossil Fuels > Climate and Environment Energy and Climate > Climate and Environment Energy and Climate > Economics and Policy Energy Policy and Planning > Climate and Environment