For 15 years, ERA has been investing in a diverse portfolio of transformative, sustainable technologies that reduce emissions, lower costs, attract investment, and create jobs in Alberta. To better understand how these investments make an impact, ERA measures and reports on project and market emissions reduction on a quarterly basis. Below is an overview of how ERA calculates these reductions.
What are emissions reductions for a project and how do we calculate them?
Project emissions reductions are those emissions reductions that result from the scope of an ERA-funded project and are based on the actual units of equipment, technology, or processes implemented during the project time frame. Project emissions reductions may include both direct and indirect emissions reductions in Alberta. The project time frame includes the life of the funded project, including operation beyond the end of the contribution agreement period if the equipment, technology, or processes continue to operate.
To calculate emissions reduction for a project, a baseline emissions scenario must first be determined. The baseline scenario is the GHG emissions that would occur in the absence of the proposed project. The project emissions are the emissions after the project is implemented and for the duration of the project’s life. The difference between the baseline scenario and the project scenario (baseline emissions minus project emissions) is the emissions reduction. Emissions may be on-site, upstream, and/or downstream of the project site.
As an example, a renewable power generation project that replaces an existing natural-gas-combined-cycle power plant has near-zero emissions and therefore the emissions reductions for the project would be equal to the emissions that would otherwise be generated from the natural-gas-combined-cycle power plant.
ERA uses internationally recognized methodologies, standards and best practices for calculating GHG emissions reductions. Where applicable, ERA follows GHG emission quantification methodologies, emission factors, and/or principles from the Government of Alberta’s carbon-pricing system, known as the Technology Innovation and Emissions Reduction (TIER) system. This includes methodologies for GHG quantification protocols under the Alberta Emissions Offset System. All methodologies used to quantify emissions reduction for projects conform to the five accounting and reporting principles described under ISO 14064, namely: accuracy; completeness; consistency; relevance; and transparency.
Project and operating data used to prepare assumptions that are then used in the methodology to calculate GHG emissions are determined by the project recipient and reviewed for reasonableness by ERA. At the start of a project, and before any activities are complete, the emissions reductions are considered validated and represent a forecast of reductions that may occur in the future. ERA does not audit the underlying information or verify to source data. ERA is not directly making claims that these emission reductions will take place, but rather reporting the potential based on information provided for funded projects. Once a project is complete, ERA reports verified emissions reductions, which are the reductions that a project realizes. Verified emissions reductions are calculated using internationally recognized methodologies by an independent, and accredited, third-party verifier.
What are market emissions reductions and how do we calculate them?
Market emissions reductions are emissions reductions that result from the commercial adoption of the technology into the Alberta marketplace and are based on the market rollout plan and anticipated market adoption for the funded technology. These hypothetical reductions are currently forecasted out to the year 2050. Market emissions reductions typically occur after project completion as the technology is adopted in the marketplace but may also start during the project execution period (i.e. before the project end date) if the technology is commercialized during the ERA-funded project period.
Market Emission Reductions (MER) are forecasted for each funded technology in which the technology is expected to result in emission reductions in the Alberta economy from subsequent implementations of the technology outside the scope of the ERA-funded project. The GHG team utilizes the information provided by the proponents at the project proposal and completion stage to establish the forecast for each project in ERA’s GHG database.
The framework for forecasting MERs for each technology follows a two-step process:
- The project technology is assigned to one or more “markets” which represent major sectors/product classes in the Alberta economy. For example, a renewable energy technology would be assigned to the “electricity” market, while a cement carbon capture technology would be assigned to the “Mineral products Manufacturing” market. ERA’s GHG team defines markets based on logical interpretation of NAICS categories, NIR sectors, and Alberta TIER market definitions. ERA forecasts the expected size of the market through 2050 in units of measure relevant to the market, for example, a barrel of oil for the Crude Oil market.
- The emissions impact of the technology in its market(s) are estimated based on A) the emissions reduction intensity of the technology per unit of activity (for example, tonnes of carbon dioxide equivalent reduction per barrel of crude produced), B) the forecasted market size, and C) factors that will affect the pace and scale of commercialization (adoption) of the technology in the market, including:
- Market penetration limit: fraction of the total market that could adopt the technology
- Commercialization start and end date
- Steady-state start and end dates (the dates on which the technology will have reached full saturation of the market limit and the date in which the technology starts exiting the market because it is being superseded by another technology or is no longer relevant)
ERA applies conservative assumptions to market size, emissions reduction intensity, market penetration limits, and commercialization timelines to avoid overstating the potential impacts of its investments.
A key attribute of ERA’s market emissions reduction forecasts is that they are not intended to reflect a specific future emissions reduction scenario, nor do they claim to estimate the future environmental benefits achieved by any entity, but rather reflect the emissions reduction potential associated with a given technology. For example, ERA’s market emissions reduction estimates can reflect the total emissions savings from full adoption of a particular flaring reduction technology but cannot be used to make factual statements about any given company’s future flaring reductions or future commercial adoption rates. Understanding and accurately reporting on the full emissions reduction potential of all funded technologies (beyond just the project level) is an essential component of ERA’s work. With these factors in mind, ERA’s guidance on the use of its market emissions estimates is as follows:
- Market emissions reduction estimates are best used to reflect the overall potential of the technologies funded by ERA and should not be interpreted as a future forecast of emissions or emissions reductions for any specific region, sector, company, facility, or technology. The existence of market emissions reduction potential, as reported by ERA, is not a guarantee that said potential will be realized in the future.
- ERA’s market emissions impacts are reported in tonnes of CO2 equivalent for comparison purposes. However, the use of this unit is not intended to imply the equivalence of market reduction estimates with actual realized emissions reductions from a specific activity or policy.
- ERA’s market impact forecasts should be treated as a scenario rather than a prediction, based on the best available information at the time of the estimate. There are numerous assumptions embedded in the forecasts, and although ERA endeavours to make reasonable assumptions based on best practice and professional judgment, there remains a high degree of uncertainty associated with forecasting future technology impacts. There remains a high degree of variability in the range of reasonable assumptions and other reasonable calculations may vary from those that are presented. ERA makes no warranty on the accuracy or correctness of the estimates provided.
Disclaimer
ERA may distribute or provide access to project reports written and published by proponents whose projects received ERA funding.
ERA does not audit, substantiate, or otherwise verify, and is not responsible or liable for, any environmental claims, environmental performance metrics, or any representations, statements, or claims regarding emissions or emissions reductions contained in any such report, or any assumptions or methodologies underlying any such claims. To the extent any such report contains statements, representations, warranties, or guarantees of a product’s businesses, or business activity’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change, those statements, representations, warranties, or guarantees are made by the project report’s authors and not ERA.