All You Need To Know About Carbon Emissions

All you need to know about carbon emissions

Below is a jargon-free crash course on carbon emissions and the buzzwords bandied about by Canada's political players, as the nation nears an election day with green issues front and centre

David Staples
Canwest News Service
Published: Saturday, September 27, 2008

This past winter, a student offered a challenge to the much respected Queen's economics professor Tom Courchene.

Courchene has been teaching public policy for the past 42 years and has written more than 250 books and articles on economic, social and political issues in Canada. Yet, as learned and accomplished as the professor is, the student thought Courchene needed to know more about the growing political debate over carbon emissions: “You can't keep doing this without looking at the environment.”

Before that moment, Courchene admittedly knew little about the nuances of carbon taxes, cap-and-trade systems, sequestration technologies and carbon offsets. In this, Courchene was in the same boat as most experienced Canadian policy-makers, not to mention the rest of us.

Many struggle with the complexities of this issue. While the public policy discussion over global warming has been around for several decades, it's only now become a hot political debate in Canada, and particularly in Alberta where concerns over Liberal Leader Stephane Dion's so-called Green Shift plan have voters trying to play catch-up, just as Courchene did this past winter.

“I've had a crash course on this,” he says.

But that course hasn't been easy. “It's a wicked problem,” Courchene says. “It's hard to imagine a more delicate and, at the same time, complex problem.”

Part of the difficulty comes from the vague definition of the terms of the debate. For example, people might well be asked in a poll whether or not they favour a carbon tax, but there are many different kinds of carbon taxes, some of them with the potential to help Alberta both prosper and cut down on emissions, while others would amount to a massive transfer of wealth from Alberta to other parts of Canada.

As a starting point, here is a glossary of the main terms that will be used repeatedly in the ongoing political debate.


The main greenhouse gas, CO2, is a colourless, odourless, non-combustible gas. It is produced by the burning of wood, coal, coke, oil, natural gas or other fuels containing carbon. It comes naturally from springs and wells. Carbon dioxide emissions from fuel burning are responsible for about 87 per cent of global warming. Over the last 150 years, CO2 concentrations have risen 35 per cent in the atmosphere, most of that increase coming in the last four decades.


Other greenhouse gases are referred to as carbon dioxide equivalents (CO2e). In order to compare emissions between the various greenhouse gases, they have been assigned a global warming potential number measured in CO2e. The number reflects their influence on warming the atmosphere. For example, methane has a global warming potential of 21, meaning it has 21 times the amount of heating capacity of CO2.

Total greenhouse gas emissions in Canada in 2006 were 721 megatonnes of CO2e. China is now edging ahead of the United States as the world's biggest emitter of CO2e, but the latest worldwide data, from 2004, shows that the U.S. produces 6,049 megatonnes of carbon, 22.2 per cent of the total output, while China produces 5,010 tonnes, for 18.4 per cent.

Canadian emissions were 2.3 per cent of total worldwide emissions, just behind Germany, 3.1 per cent, but ahead of the United Kingdom, 2.2 per cent.

Canada's 2006 emissions level is a decrease of 2.8 per cent from 2003 levels (a megatonne is one million tonnes or one billion kilograms). This slight reduction in recent emissions is due to a smaller quantity of carbon-rich coal being burned to produce electricity, more hydro and nuclear generation, and a reduced demand for heating fuels because of warmer winters in 2004-6.

But the long-term trend is that CO2e emissions are rising. We're 22-per-cent above 1990 levels of 592 megatonnes. Canada's Kyoto Protocol target was our 1990 level minus six per cent, 558.4 megatonnes in total.

Almost all of Canada's increase in CO2e emissions since 1990 — 119 megatonnes out of the total 129-megatonne increase — came from the energy and transportation industries. The biggest culprit on a percentage basis was fuel for light-duty trucks, which had their emissions go up by 116 per cent, a 24-megatonne increase; this huge increase reflects the growing popularity of sports utility vehicles, reports Environment Canada.

Industry accounts for about half of Canada's greenhouse gas emissions. Canadian facilities that produce more than one megatonne of CO2e each year must file an annual report on their emissions. In 2006, roughly 700 large-emission facilities did so. These are businesses such as aluminum and steel smelters, concrete plants, coal-fired electrical generators, oilsands companies, refineries and massive manufacturers.

Facilities in Alberta accounted for 42 per cent of total emissions, followed by Ontario, with 26 per cent, then Saskatchewan and Quebec at eight per cent each. Utilities that generate electricity accounted for 43 per cent of total industrial emissions, manufacturers, 32 per cent, and mining and oil and gas, 20 per cent.


If a cap-and-trade system is used to control CO2e emissions — and the major political parties have all talked about bringing in such a system eventually — it will mainly affect the 700 largest industrial emitters of CO2e in Canada.

Cap-and-trade systems vary widely, says Dr. David Keith of the University of Calgary's Institute for Sustainable Energy, Environment and Economy.

“If you just say 'cap-and-trade,' it doesn't actually tell you anything. The devil is all in the details.”

In a cap-and-trade system, a hard cap, or absolute limit, is put on the total emissions of major industrial polluters. Advocates of cap-and-trade systems argue it's the best way to go because a hard cap lends certainty to the process: Emissions can't go over the cap, and as the cap is lowered over the years, emissions are forced down.

Several cap-and-trade programs are already taking shape in North America, including the Western Climate Initiative, which started in California and extends as far as Ontario and Quebec. It's expected to be up and running in four to seven years. Alberta has not joined in.

To set the hard cap, the Canadian government would count up how much each of Canada's 700 major industrial facilities emit. The government would then grant each facility the right to keep on emitting CO2e, but at a reduced rate, say a cut of 10 per cent in emissions after one year, with more cuts to emissions each year afterwards.

One crucial issue, especially for Alberta, is when the industrial emissions would be counted. If the emissions cap was set on 1990 levels of CO2e emissions — the year of the Kyoto Protocol — then Alberta's oilsands, which have grown rapidly since that time, would have much smaller allowances for putting out CO2e. It would be much easier for Alberta companies to meet their targets if the cap limit was set based on recent emissions levels.

The trading part of the cap-and-trade system works like this: Facility A has historically produced one million tonnes of CO2e each year, so Facility A acquires a government permit to produce that same amount of CO2e, less a reduction of, say, 10 per cent in the first year. So Facility A's permit in the first year would be 900,000 tonnes.

In a pure cap-and-trade system — and not all of them are pure — Facility A would have two options to meet its emissions target: cut overall emissions by 100,000 tonnes or purchase permits from other facilities that allow for an additional 100,000 tonnes of emissions.

If it's extremely costly for Facility A to cut down on emissions, but easier and more cost effective for Facility B — another one-million-tonne polluter — to do so, a trade might be worked out between the two facilities. Facility B will cut its own emissions by not just the mandated 10 per cent, but by 20 per cent, so it's producing just 800,000 tonnes per year, 100,000 tonnes less than its own permit allows.

Facility B will then sell its unused permit for 100,000 tonnes to Facility A, giving Facility A enough permit capacity to cover its full one million tonnes of CO2e emissions.

A market develops in which permits are bought and sold, with a price set on each tonne of CO2e pollution.

A difficult issue in any cap-and-trade system is how the permits are distributed by the government.

“Inevitably it becomes a fairly complex and politicized process,” says Pembina Institute climate change expert Matt Horne. “It's like playing musical chairs and there's not enough chairs for the players and you're basically picking who doesn't get a chair.”

There are two ways to hand out the permits. In one method, the government auctions off a set number of permits each year. New companies that seek to emit CO2e would have to compete at auction for permits with established businesses.

The United States is moving towards such an auction system, Keith says, adding that this is the most efficient and fair way to proceed as all polluters are on the same footing, and those who emit the most will pay the most for their required permits.

But some big industrial emitters, such as Alberta's big coal-fired electrical generators, won't like an auction, says Simon Fraser University professor Mark Jaccard, who has been a top consultant for Canadian prime ministers on the climate change issue for two decades.

“They'll say, 'That's going to be a horrendous cost for us.' They scream and yell, so politicians slide toward a greater and greater amount of free allocations.”


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