Providing coverage of Alaska and northern Canada's oil and gas industry
December 2008

Vol. 13, No. 49 Week of December 07, 2008

Economy trumps environment

Canadian Environment Minister Jim Prentice says ‘present-day economic realities’ force re-examination of environmental policy

Gary Park

For Petroleum News

The Canadian government will not harm an already weakening economy to pursue environmental goals, said newly appointed Environment Minister Jim Prentice in his first major speech since taking over the portfolio.

The goal is to strike an “acceptable balance between measurable environmental progress and steady economic growth and prosperity,” he told a business forum at Lake Louise in the Canadian Rockies.

“One must not — absolutely cannot — come at the expense of the other,” Prentice told the high-level gathering.

“If this means re-examining the way forward in the face of present-day economic realities, then so be it,” he said.

“Our guiding principle, in challenging times as in prosperous ones, is to keep economic and environmental policy equally on a sound footing.”

He did not say whether these shifting priorities will affect the timing or content of the government’s long-promised greenhouse gas regulations.

Government could be toppled

That has been thrown into further confusion by a scheduled vote in Parliament on Dec. 8 that could see the three opposition parties topple the government of Prime Minister Stephen Harper, less than two months after the last election.

While moving the economy to center-stage, Prentice said the Canadian government does not intend to sidestep major policy initiatives, including a North American climate-change pact with the new U.S. administration to build a continental “low carbon economy,” based on the foundation of a cap-and-trade system for greenhouse gas emissions, a market-based policy that sets an aggressive limit on emissions.

He said Canada is determined to be at the forefront of resource-based industries where it currently excels — oil, natural gas, pipelines, hydro-electricity and the orderly development of oil sands.

That same destination must also involve Canadian development of technologies and human capital to create a low-carbon world by 2050.

By then, Prentice said, prosperity will “accrue to those who have mastered carbon capture and storage and clean coal technologies … to those who have successfully deployed carbon energy alternatives like nuclear energy and wind and solar power … to those who have developed their infrastructure to harness more remote natural gas basins and hydro-electric projects.”

He said the government’s commitment is to provide 90 percent of Canada’s electricity needs from non-emitting sources, such as hydro, nuclear, clean coal or wind power by 2020.

“This will make an important contribution to our commitment to reduce Canada’s total greenhouse gas emissions by 20 percent by 2020, while ensuring that Canada’s actions going forward are comparable to those of our partners in the United States, Europe and other industrialized countries,” Prentice said.

Looking to new administration

Joining other government and industry leaders, he emphasized that Canada expects the incoming Obama administration to look on production from the oil sands as an “essential part of the overall North American energy market place.”

“When you are speaking about environmental policy, you are speaking about energy policy. They are essentially the flip side of the same coin.

“When (Obama) speaks about American energy security, diversity of supply, you are essentially talking about other sources, like the oil sands, so it’s a very important part of the equation,” Prentice said.

He said Canada, while continuing its lobbying of Obama’s policy advisors, as well as U.S. Congress and key stakeholders, is waiting for Obama to make key appointments before starting direct discussions.

Important issues for debate include reconciliation of the Canadian and U.S. greenhouse gas reduction targets, since Canada’s mid-term goal of a 20 percent reduction in absolute emissions by 2020 is tougher than that proposed by Obama, as well as different approaches taken to date, Prentice said.

He said Canada is ready to move ahead with major policy initiatives, including a continental climate-change pact to build a “low-carbon economy in North America.”

A foundation stone of those negotiations would be a continental cap-and-trade system, promised Nov. 18 in a speech to open a new session of the Canadian Parliament, although the details of such a system have yet to be agreed on by the Canadian provinces, which control the development of natural resources within their own boundaries.

Prentice promised that the provinces will have a consultative role before and during any formal negotiations with the U.S.

Gary Mar, the Alberta government’s representative in Washington, D.C., told the Financial Post that Obama’s policy advisors have indicated the president-elect “wants to think deeply on the subject of how best to move forward on energy and the environment.”

Spokesmen for the Canadian Association of Petroleum Producers say their organization is pursuing all possible avenues to show how the oil sands can be developed in an environmentally sustainable way, including the lowering of greenhouse gas emissions.

They say aligning Canada and the U.S. on climate-change policy and energy strategies is essential, although the details of an emissions-control system are “absolutely critical.”

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