Lessons Learned in Alberta May 8,2012 Mike Fernandez, Alberta Energy
Climate Change Strategy 200Mt • 2050 -- 200Mt reduction or 50% below projected business as usual and 14% below 2005 levels
Alberta’s CCS ProgramMONEY• Financial support of $2B to support 3-5 commercial scale CCS projects and inject 5Mt of CO2 by 2015.RULES• New legislation in 2010, and 2011. Detailed regulatory audit in 2012.
Lesson 1 – Transparency is key.MONEY• Open and transparent process – Full Project Proposals and all materials were made public• Fairness Monitor (Third party oversight) – Oversaw the entire FPP process• Be clear in your announcement of who is in and who is out. – Absolute clarity of who we selectedRULES• Regulatory work includes stakeholders.
Lesson 2 – Third party expertise is invaluable.MONEY• Financial and economic support used during our evaluation of proposals.• Expert support on Knowledge Sharing provisions.RULES• Lots of consultants and stakeholders working on regulatory advice.
Lesson 3 - Address regulatory gaps.MONEY• So important to investors.• Sort out long-term liability and tenure ASAP.RULES• Start with an Audit – Do a thorough analysis of all regulatory gaps and address them.
Lesson 4 - Contract negotiations are complex.MONEY• Front end principles around risk sharing save a lot of pain.• Provide for amendments…you’ll need them.• Parallel negotiations can be a positive or a negative.• Defining “commercial operations” has been a hurdle.• Be clear on Knowledge Sharing provisions.• These discussions take a lot of time…plan for it.
Lesson 5 - CollaborationMONEY and RULES• Climate change is a shared outcome of many departments.• Cross ministry Deputy Minister Committee to support CCS.• Partner with industry – Alberta industry are vocal proponents and advocates of CCS
Lesson 6 – Making payments takes time…MONEY• Sort out financial security well ahead of time.• If you use third parties to help certify a milestone: – Ensure the proponent helps scope – Start early – Be prepared for lengthy debates between engineers• Do not link payments to your fiscal year end as it’s a serious constraint.