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Talking tough, but no big stick Canada responds to oil & gas industry’s plea for ‘intensity-based’ greenhouse gas targets, tells private sector it will have to shoulder burden Gary Park For Petroleum News
The buzzword as Canadian Prime Minister Stephen Harper outlined the bare bones of his government’s major environmental initiative was “intensity,” which will resonate with the petroleum industry despite other warnings that the private sector will be forced to bear the cost of reducing greenhouse gas emissions and air pollutants.
In promising to introduce a Clean Air Act when Parliament reconvenes Oct. 16, Harper declared that the days of “voluntary compliance” are coming to an end and will give way to “strict enforcement” as Canada goes to work on cleaning up the atmosphere.
He said the government intends to lift from taxpayers the costs of paying for green initiatives such as the Kyoto Accord, which the government admits it is still legally obligated to enforce, while insisting that the targets are unattainable.
Flanked by four cabinet ministers, he said the new act — part of his pledge to introduce a “made-in-Canada” environmental program — will require a year of negotiations with industry and the provincial governments and could take four years to fully implement.
Although he would not set specific air pollution targets, Harper said industrial sectors will have to develop new technologies to pay for part of the cost of lowering harmful emissions.
“Massive reductions are possible by harnessing technology,” he said, adding that all sectors will be required to comply, including the oil and gas industry.
“The oil industry will be regulated,” Harper said. “If we are going to make significant progress (in reducing air pollutants) that will have to include specific progress in the oil sands themselves.”
The auto industry will also face “mandatory fuel economy regulation,” once its voluntary agreement with the federal government expires in 2010, he said.
That message came after a two-week buildup when Environment Minister Rona Ambrose told a Parliamentary committee that the oil and gas industry along with other large emitters of greenhouse gases were in for a tough time.
“It is time for us to stop politely asking industry to do the right thing,” she said.
Ambrose said legislation would give the government accountability through “increased auditing, increased reporting, increased monitoring ... to show progress both in the reduction of greenhouse gases, but also in addressing air pollution.”
CAPP may have achieved one of five wishes But the Canadian Association of Petroleum Producers may have achieved one of five key points on a wish list submitted to the government.
The industry’s leading lobby group insisted any targets for lowering greenhouse gas emissions should be intensity-based, which means the industry would have to cut emissions per unit of production, such as a barrel of oil or thousand cubic feet of gas.
But following that path would not see the output of greenhouse gases in Canada decline.
In fact, the federal Environment Commissioner Johanne Gelinas said in late September that if oil sands production triples over the next decade, carbon emissions from the northern Alberta resource could double in the 2004-2015 period, wiping out any other national gains in lowering gas emissions.
Even so, Harper appeared to side with CAPP in saying the government will “produce intensity-based targets over the short range and the long term and they will cover a range of emissions, not just carbon dioxide (seen as the leading contributor to greenhouse gases), but nitrous oxide, sulfur oxide, sulfur dioxide; so it will be a comprehensive plan.”
That was the first declaration from the Harper government that its environmental strategy would be intensity-based, which puts Canada at odds with its own Kyoto commitments that require a 6 percent cut in emissions from 1990 levels by 2012, although there are no penalties for those who fall short of the objective.
CAPP President Pierre Alvarez said intensity-based standards are vital for the oil sand gas sector that is “growing very, very quickly and that at each step is improving environmental performance.”
Environmental leaders brushed off that message, with John Bennett, executive director of the Climate Action Network, an umbrella group for 54 organizations, saying it is clear the Harper government is “postponing action on climate change and abandoning the Kyoto Protocol.”
Alvarez: government accepts role of technology Following a meeting with three cabinet ministers earlier in October, Alvarez said he was confident the government understood the environmentally related challenges facing the oil industry.
He said the Harper government was more willing than its predecessor to accept that technology could play a larger role than in the past.
What the petroleum industry wanted to avoid was hard limits on greenhouse gas emissions resulting in a “growing economy being subject to real constraints,” Alvarez said.
He said the answer should be based on lowering the amount of energy used to produce a barrel of oil.
In addition to asking for intensity-based targets, CAPP also said the industry: Should not be treated any less fairly or any more onerously than any other sector; programs should reflect the importance of cost certainty; technology should be factored in as a critical component of any plan; and legislation should recognize that Canada’s natural resources are primarily owned by the provinces, creating a need for a harmonized federal/provincial program.
Stephen Hazell, executive director of the Sierra Club of Canada — part of the Climate Action Network coalition — said Canada needs immediate action, not “another long legislative process.”
The coalition had called for, among other measures, clear, measurable targets for reductions in greenhouse gas emissions; regulations on emissions by big industry by 2008; auto emissions that copy the California standards; and plans to cut emissions from coal-fired power plants.
It has also demanded an end to what it views as C$1.4 billion in annual subsidies, but CAPP rejects any suggestion that the National Energy Board, Canada’s federally financed national energy regulator, and certain programs administered by Natural Resources Canada amount to subsidies.
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