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February 2007

Vol. 12, No. 8 Week of February 25, 2007

All aboard the Kyoto special

Canadian and B.C. leaders perform about-turns on Kyoto; Harper ready to comply with greenhouse gas protocol; Campbell wants Alaska to be part of Pacific coast coalition

Gary Park

For Petroleum News

There’s a bandwagon lurching its way across Canada these days, creaking under the weight of those scrambling aboard and groaning at the accompanying rhetoric.

Now that politicians of all stripes find themselves agreeing that the science is “right” and climate change is a “fact,” they’re trying to outdo each other in crafting Kyoto-style environmental strategies, putting themselves in the me-first category to ensure they don’t lose touch with environment-haunted voters.

The assortment of wagon riders is especially notable for the latest additions — Prime Minister Stephen Harper and British Columbia Premier Gordon Campbell.

Both have been unabashed skeptics of the Kyoto Protocol until the last few weeks.

But they are suddenly undergoing more color changes than a New England fall.

These days they’re both red-faced at their failure to act in the past, surrounded by brilliant shades of green as they take up the cause.

Industry obvious target

It isn’t yet clear what all this means for the oil and gas industry beyond the obvious — the sector is painted as the leading culprit of greenhouse gas emissions or GHGs and is an obvious high-profile target for punitive action.

The best the Canadian Association of Petroleum Producers can do is stay calm and keep its powder dry until it sees exactly how far the Canadian and B.C. governments will go to win the political war on the environment.

Industry leaders make a case that companies have already made headway in cleaning up their act and are developing technology to make even greater strides, but they are concerned that the current political momentum will result in onerous regulations that will drive investors elsewhere.

Harper made the most abrupt shift by promising his Conservative government will produce a plan to comply with Kyoto if legislation passed in the House of Commons becomes law.

The bill was adopted by a vote of 161 to 113 on Feb. 14, backed by the three opposition parties — Liberal, New Democratic and Bloc Quebecois.

Harper wasn’t even present for the vote, but Environment Minister John Baird said the bill — if ratified by the Liberal-dominated Senate — could not be implemented because it contained no spending provisions.

The opposition parties accused the Conservatives of staging a “coup d’état” and warned there would be a constitutional showdown if the government refused to act on the legislation.

A day later, Harper backed down, saying that “if and when the bill becomes law the government would respect it,” while adding that the bill contains no plan of action and gives the government no authority to spend any money.

B.C. plan leaves rest of country in lurch

While federal politicians were at loggerheads, by far the biggest and most startling package of climate change action landed with a thump in British Columbia on Feb. 14 when the government of Campbell presented the barebones of a plan that leaves the rest of Canada in the lurch.

Not only that, but Campbell wants to “collaborate” with his Pacific coast neighbors in the United States by inviting Alaska, Washington, Oregon and California to “develop a sensible, efficient system for registering, trading and purchasing carbon offsets and carbon credits” as well as establishing common environmental standards for all ports along the coast.

The four state governors will be invited to B.C. this spring to work with Campbell on developing a policy to cut greenhouse gas emissions in the Pacific region.

California Gov. Arnold Schwarzenegger was quick to voice his enthusiasm, welcoming B.C. in the fight against climate change.

“I look forward to meeting with Premier Campbell and working with British Columbia on this issue.”

He ought to be enthusiastic. The Campbell government plan, outlined in a speech opening a new session of the provincial legislature, includes adopting California’s automobile emissions standards starting in 2009.

One key element involves lowering automobile emissions, which account for 40 percent of B.C.’s GHGs, by requiring new vehicles to lower their emissions by 30 percent over the 2009-2016 period and cutting the carbon-intensity of emissions from all passenger vehicles by 20 percent by 2020.

These objectives probably sounds familiar to Schwarzenegger since BC enlisted help from Terry Tamminen, a consultant in developing California’s climate change plan.

B.C. goal is to be ‘carbon neutral’

But now Campbell is talking about outdoing the Terminator, prompting one columnist to ask: So who’s the girly man now?

His government’s goal is to be the first “carbon neutral” jurisdiction in North America by 2010 with an all-out blitz on several fronts.

A “climate action team,” to be headed by Campbell, has the added job of setting interim GHG-reduction targets for different sectors to be implemented in the 2012-2016 period.

The promises include reducing GHGs in the province by at least 33 percent below current levels by 2020, bringing emissions to 10 percent under 1990 levels by 2020. Under the Kyoto Protocol, emissions are supposed to be 6 percent below 1990 levels by 2012.

The government also wants B.C. to be “electricity self-sufficient by 2016.”

At the same time it is setting tough new standards for provincially-owned BC Hydro, telling the utility that “all new and existing electricity produced in B.C.will be required to have net zero greenhouse gas emissions by 2016.”

Effective immediately, the government is ordering all coal-fired electricity plants to sequester 100 percent of their carbon emissions. That creates turmoil for BC Hydro’s plans to build two coal-fired plants, the first for the province.

More details will be included in the province’s Feb. 20 budget. Additional energy and climate change programs will be unveiled over coming weeks.

That will be the first chance for the Campbell administration to show how tough it intends to get.

“Voluntary measures have not got the job done,” said Environment Minister Barry Penner. “They will have to be mandatory. There will have to be consequences.”

Existing five-year plan has no GHG reduction targets

What has stunned many observers is Campbell’s apparent total conversion to the climate-change ranks after showing so little enthusiasm for the Kyoto Protocol.

His government’s existing five-year climate change plan sets no GHG reduction targets.

The session-opening speech, read by Lieutenant Governor Iona Campagnolo was emphatic that the science on climate change is “clear ... it leaves no room for procrastination. Global warming is real.”

It said failure to “act aggressively and shoulder our responsibility” will leave future generations with “shrinking glaciers and snow packs, drying lakes and streams and changes in the ocean’s chemistry.”

Campbell said 2006 was a “time when frankly the world woke up to the challenges that are created by climate change.”

His own epiphany occurred during a recent visit to China when he was troubled by the smog blanketing major cities.

“Citizens are going to have to be part of this,” Campbell said. “We’re going to ask people to be much more conscious about their personal impacts on the environment.”

The petroleum industry was caught off-guard by Campbell’s moves, saying it needed more details before it could react.

But uncertainty among oil and gas companies could have damaging results for B.C., which has relied over recent years on oil and gas royalties and land sales as a major revenue source.

For years it has introduced a steady stream of programs and incentives to attract investment and raise output, which now averages about 2.6 billion cubic feet per day of natural gas, about one-sixth of Canada’s output, and 140,000 barrels per day of oil, making B.C. the third largest combined producing province after Alberta and Saskatchewan.






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