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November 2008

Vol. 13, No. 46 Week of November 16, 2008

Harper’s haste makes Alberta nervous

Prime minister’s enthusiasm for U.S.-Canada climate-change pact opens door to cap-and-trade system fiercely opposed by Alberta

Gary Park

For Petroleum News

In his haste to ensure Canada gets a full and fair hearing when the new U.S. administration takes office, Prime Minister Stephen Harper is proposing a joint climate-change pact with President-elect Barack Obama in an effort to protect the Alberta oil sands by offering guarantees of a secure North American energy supply.

But those overtures from Ottawa put Alberta Premier Ed Stelmach on edge.

While he has “great confidence” that Harper will seek input from the provinces on any environmental deals, the premier is adamant he will fight “tooth and nail” against any program that invades Alberta’s jurisdiction.

In particular, oil and gas producing provinces such as Alberta and Saskatchewan want nothing to do with cap-and-trade systems for greenhouse gas emissions, which some see as an essential element of any cross-border attempt to adopt common standards and mechanisms.

Such an arrangement could, according to the Harper government, shield the oil sands from U.S. federal regulations limiting or banning the cross-border flow of raw bitumen or synthetic crude derived from the oil sands.

Albertans own the resources

“Whatever the agreement is, it has to be fair to Albertans, who own (the province’s oil and gas) resources,” Stelmach said. “And that’s why we have to be at the (negotiating) table.

“We all share a common goal and that is to reduce greenhouse gas emissions, but not on the shoulders of Albertans,” he said.

Harper, uncertain over exactly what environmental course the Obama administration will take, is apparently eager to seize some of the initiative in his efforts to craft a common climate-change plan that doesn’t undermine Canada’s heavily resource-dependent economy.

“We must get our greenhouse gas emissions down,” he said. “But we must do so in a way that does not further impair the economic situation of our countries.”

Following his first post-election conversation with Obama, Harper said the president-elect “expressed a desire to participate fully in global efforts to fix the problems of greenhouse gases and, for us, that’s an important change.”

Concern over oil sands

Obama’s advisors have already raised concerns about the role of the oil sands — whose crude output creates about triple the greenhouse gases of conventional oil — in producing a “dirty” energy supply, but that is being weighed against Obama’s own goal to reduce U.S. dependence on Middle Eastern and Venezuelan oil.

Canada’s newly appointed Environment Minister Jim Prentice said Ottawa is seeking a joint approach that would protect both the environment and the economy, similar to a pact that tackled acid rain in the early 1990s.

Foreign Affairs Minister Lawrence Cannon said the proposed pact would offer uniformity and supplant the patchwork of plans that are being introduced in various states and provinces.

Tom d’Aquino, president of the Canadian Council of Chief Executives, said the proposed climate change deal is of “huge” importance to Canada.

“How important is energy independence to the United States? It’s a top priority for them. And where does Canada fit into this top priority? Bingo — we are essential,” he said.

Harper: U.S. faces challenges

Harper echoed that thought by noting the United States “faces major challenges if you’re talking about energy security and Canada remains the most important and most U.S. secure source of energy. It’s a reality for any president of the United States.”

The Canadian Association of Petroleum Producers supported harmonized climate change regulations, so long as the oil sands were not singled out for special attention.

CAPP Vice President Greg Stringham told reporters the Canadian industry wants a “clear and consistent policy that should apply across the board, with no discriminatory measures.”

A Greenpeace spokesman said Obama’s victory could spell big changes for the oil sands at a time when there is a “growing movement to curb dirty oil imports and start building a clean energy future.”

Alexander Moens, a professor at Vancouver’s Simon Fraser University, suggested Obama favors a cap-and-trade system, which means Canada cannot exempt itself otherwise its oil industry will be punished.

He said U.S. lawmakers will insist on imposing heavy import tariffs on goods if Canada does not have the same emission caps, while U.S. protectionists will lobby for them unless Canadian companies are part of the same regime.






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