Canada makes ‘absolute’ shift

Gary Park

For Petroleum News

The Canadian government has entered the Copenhagen climate change summit hinting that it may be ready to make a fundamental course correction in its environmental policy by imposing absolute emission caps and abandoning intensity-based reduction targets.

Environment Minister Jim Prentice, just prior to leaving for Denmark, indicated to a parliamentary committee that the government is “talking about a cap-and-trade system that involves absolute emission reductions, not intensity targets.”

The intensity-based approach, under which reductions would be imposed on units of production, such as a barrel of oil, has been scorned by domestic and international critics as too weak, while rigorously defended by Prentice, Prime Minister Stephen Harper and industry leaders.

The apparent change of heart coincides with growing momentum in the United States to legislate cap-and-trade and set absolute emissions targets, regardless of increasing production.

Gary Leach, executive director of the Small Explorers and Producers Association of Canada, said that assessing the impact of “absolute” targets is not possible until the industry knows exactly how such a policy would be implemented and over how many years.

He endorsed the Alberta government’s per-unit approach, which he said focuses on large industrial emitters, but allows for economic growth.

Leach said Western Canada, which relies heavily on energy exports, could pay a heavy price if faced with absolute caps, particularly if that would result in a transfer of wealth from the region under a carbon permit trading system.

But he said a bill passed in the U.S. House of Representatives, giving the coal industry a “free pass” on most of its emissions, could point to a possible solution for Canada’s oil and gas industry.

For now, the proposal President Barack Obama will take to Copenhagen, setting a reduction target of 17 percent below 2005 levels by 2020, is still roughly in line with the Harper administration’s pledge to cut greenhouse gas emissions by 20 percent from 2006 levels by 2020, then chase a goal of lowering 2006 emissions by 60-70 percent by 2050.

Prentice said he is confident Canada holds “several strategic cards … not the least of which is our plan to harmonize our approach with that of the United States. Harmonization is absolutely crucial for Canada and for the U.S.”

Newfoundland Premier Danny Williams, one of the harshest opponents of the Harper government on several fronts, expressed sympathy in a Calgary speech Dec. 3 for the challenges Harper and Prentice face in Copenhagen.

He called for all 10 Canadian provincial governments to offer a unified position to the federal government by agreeing to a measured, cooperative approach to climate change that would work best for all.

Williams said it is not right for the rest of Canada to abandon Alberta in the climate change fight after benefiting for so many years from the transfer of Alberta’s economic wealth across the country.