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Climate policy faces storm clouds Federal panel estimates Canada on track to achieve only half of 2020 target to reduce GHG emissions, endangering export markets Gary Park For Petroleum News
A federally appointed advisory panel believes Canada is lagging so far behind its promised cuts in greenhouse gases that it could end up paying a heavy price in 2020 — the loss of export markets for its oil sands bitumen and LNG along with fines or penalties.
The research report by the National Round Table on the Environment and the Economy, NRTEE, requested last year by federal Environment Minister Peter Kent, warned that even under the most optimistic projects Canada would have trouble getting even half way to its 2020 goal of reducing emissions by 17 percent from 2005 levels.
It said foreign governments have already started to introduce regulations that set minimum environmental standards on products, such as requiring fuels to have a reduced environmental footprint, restricting the trade and market access of Canadian companies.
The report warned that Canadian companies are not prepared for these regulations, raising the threat of significant economic repercussions and could “suffer damage to brand recognition.”
Push for pipeline approval The conclusions coincide with the Canadian government’s rapid push to gain regulatory approval for pipelines from the Alberta oil sands and British Columbia shale gas plays to the Pacific Coast for export to Asia.
David McLaughlin, president of the 24-year-old advisory panel which the federal government is closing this fall as a budget-cutting measure, said the report was based on extensive consultations with officials from government, business and universities who, for the first time, expressed growing concerns.
“It surprised us that there was that much concern,” he said.
The panel said Canada “risks serious harm to its national economic interests by not proactively developing frameworks, nor engaging in initiatives related to life-cycle approaches (for sustainable development) domestically and globally.”
“The risk is real and Canada must act now to maintain its competitiveness,” the report said.
It estimated policies and programs now in place will cut carbon dioxide levels by 104 million metric tons, mt, by 2020, 117 million mt short of Ottawa’s commitment to lower emissions to 607 million mt.
Under its most optimistic outlook, the panel said an accelerated approach could bring Canada to about 300 million mt if additional climate change measures were introduced and the Alberta government raised penalties on excess emissions.
Fourteen climate plans Earlier in June the Canadian government agreed with the provinces of Saskatchewan and Nova Scotia to have a single set of regulations for new coal-fired electricity generation units. Ottawa estimates the coal-fired plants represent 11 percent of Canada’s total emissions.
But McLaughlin said Canada has 14 different climate plans — one federal, 10 provincial and three territorial — “so how can we expect anything but the situation we have today?”
The report said the fast expanding oil sands sector is the largest single contributor to rising greenhouse gases, putting pressure on the Canadian and Alberta governments to adopt some high-cost solutions, such as carbon capture and storage.
Travis Davies, a spokesman for the Canadian Association of Petroleum Producers, told Petroleum News the industry “recognizes the need to continue to take action to reduce greenhouse gas emissions in our operations and to engage responsibly in the conversation about climate policy in Canada.”
“At the same time, it is important to recognize the world needs energy — including crude oil and natural gas — to meet demand projections and Canada is uniquely positioned to provide it, responsibly and reliably, for the foreseeable future.”
He said the transition to a lower carbon energy system in Canada and globally “must be based on lowering GHG emissions from all forms of energy and across the full value chain from production to consumption.”
Heavy lifting required McLaughlin said Canada “can still reach the targets if we do some really heavy lifting, but as time goes by the lifting gets heavier.”
Mark Cooper, a spokesman for Alberta Environment Minister Diana McQueen, said his province is more than willing to do its “fair share” and is prepared to “look at our overall (climate change) strategy,” but does not believe it should have to carry an unreasonable burden.
He said Alberta would prefer to see the Canadian government negotiate comprehensive agreements rather than proceeding on a sector-by-sector basis.
Cooper said Alberta is targeting combined emissions cuts of 50 million mt by 2020 from a “business as usual” level.
He noted Alberta’s limited penalties of C$15 per mt for excess emissions from heavy industries have reduced greenhouse gases by 3.2 million mt and injected C$312 million into a technology fund since 2007. The oil sands sector estimates it has accounted for 2.6 million mt of that total.
The industry-funded Oil Sands Developers Group, which represents operators and developers, said oil sands projects have reduced their carbon dioxide emissions by 38 percent per barrel since 1990 and are making progress toward further lowering “emissions intensity” levels.
The developers’ group said the oil sands make up 4.6 percent of Canada’s overall emissions and 0.1 percent of global emissions, while the industry is working on a proposed carbon capture and storage system for Canada despite the decision in May by a TransAlta-led partnership to cancel plans for a CCS project.
The C$1.4 billion venture was designed to capture 1.4 million mt per year of carbon dioxide, but failed to attract enough buyers of the CO2 for enhanced oil recovery.
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