Harper, Prentice dig in on GHG restrictions
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Gary Park For Petroleum News
Canadian Prime Minister Stephen Harper and Alberta Premier Jim Prentice have decided the time has come to make the economic case against punitive measures to regulate carbon emissions in the oil industry.
Harper led the salvo by using, for him, unusually blunt language in declaring that “under the current circumstances in the oil and gas sector, it would be crazy economic policy” to impose unilateral penalties on greenhouse gas emissions, adding his government is “clearly not going to do it.”
Two days later, Prentice said that “under no circumstances (is the Alberta government) going to make changes that, at a very difficult time, damage the investment climate or damage jobs in the province.”
But even those two close allies are not quite singing from the same song book.
With Harper making it clear his government will not support any increase in Alberta’s long-established carbon dioxide levy of C$15 per metric ton for major emitters, Prentice, despite signaling in recent months that he was prepared to raise the penalty, has been forced to admit Alberta will not go it alone.
Spending cuts Even so, he delivered an unequivocal message to Albertans: Expect an early round of spending cuts - likely confined to the infrastructure sector since he has ruled out education or health care - ahead of forecasts that the plunge in oil prices could slash provincial revenues by C$7 billion in 2015.
Prentice told reporters that although Alberta wants to be an environmental leader it is also “mindful that we need to see investment and jobs created.”
He was guarded on what the province will do when its C$15 carbon levy expires at the end of 2014, refusing to be drawn by speculation that the penalty could be doubled.
He has been forced to issue dire warnings, given the latest round of economic growth projections, with RBC Dominion Securities lowering its real gross domestic product target for Alberta in 2015 to 2.7 percent from 3.5 percent and warning the deceleration will continue into 2016 at 2.3 percent - bad news for all of Canada because Alberta is the largest single driver of national prosperity.
In a hasty update, Prentice said that “a few weeks ago, I thought it was a terrible circumstance to talk about $75-a-barrel oil. Today that doesn’t look so bad.”
“The changes have been so deep and so dramatic, all Albertans will feel the consequences.”
He said low oil prices are expected to persist until at least March 31, when the current fiscal year ends, and possibly beyond.
Todd Hirsch, chief economist for ATB Financial, said Prentice - who has ruled out cuts to education and health care and has refused to consider ending Alberta’s hold out against a provincial sales tax - “doesn’t have much room to maneuver.”
Signatories in Peru Harper said that “nobody in the world is regulating (carbon emissions) in their oil and gas sector.”
But in slamming the door he has turned his back on four of Canada’s 10 provinces - British Columbia, Manitoba, Ontario and Quebec - which signed a pact at the United Nations climate change conference in Lima, Peru.
They joined 12 other state, provincial or territorial governments - including New South Wales in Australia and Scotland –- in recognizing that their national governments may not be prepared to move with the required urgency.
“All of us are signed on to an agreement to set targets together, to set common disclosures and to build cooperation to get deep reductions,” said Ontario Environment Minister Glen Murray.
Most of the signatories to the compact agreed to reduce greenhouse gas emissions by 80 percent or more by 2050.
Harper, after promising for years to set emissions limits for the petroleum industry under a “sector-by-sector approach,” has backed away from that pledge.
He has said Canada will not take action until the United States introduces measures for reining in emissions from coal-fired power plants and curbing carbon output from the oil sector at a time when its production is soaring.
Canada’s Environment Minister Leona Aglukkaq told the Peru summit that her government has already regulated areas of coal-fired electricity and transportation and remains committed to achieving its pledge to reduce greenhouse gases by 17 percent from 2005 levels by 2020.
She said Canada “will continue to move forward with measures in a way that reduces greenhouse gas emissions while maintaining economic growth. We have shown that it is possible to protect the environment while supporting economic growth.”
However, even Aglukkaq’s own department released a report Dec. 9 that even if the economy sags and energy consumption drops Canada will still be 116 million metric tons of carbon output short of its 2020 target, with Alberta climbing to 249 million metric tons in 2012 (largely stemming from its oil sands sector) from 232 million metric tons in 2005 and could reach 287 million metric tons in 2020, making up one-third of Canada’s total.
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