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Alberta targets increased carbon tax Notley rolls out strategy to put province in forefront of ‘progressive, forward-looking energy producers’; industry endorsement GARY PARK For Petroleum News
It was a scene that would have been unthinkable six months ago before Albertans elected a socialist New Democratic Party that was seen as an enemy of the petroleum industry by pledging aggressive measures to combat climate change.
But the unthinkable happened in Edmonton on Nov. 22 when Premier Rachel Notley unveiled a strategy that is underpinned by an economy-wide carbon tax and a cap on greenhouse gas emissions from the oil sands.
As she delivered the plan from a podium, Notley was backed symbolically and actually on the stage by the most powerful leaders of Canada’s crude producers - Murray Edwards of Canadian Natural Resources, Steve Williams of Suncor Energy, Lorraine Mitchelmore of Shell Canada and Brian Ferguson of Cenovus Energy - all of them key players in the oil sands sector.
To nods of assent from his peers, Edwards said the plan showed “we will do our part to address climate change,” while Williams said the plan will “make one of the world’s largest oil-producing regions a leader in addressing the climate change challenge.
“This is a sensible, reasonable balance,” he said, in a complete about-face from years of industry warnings that new taxes could cripple the industry. “It’s literally a game changer ... it will create a wealth of opportunities and jobs for future generations.”
Not a passive role The sub-text is that Alberta will no longer take a passive role while others, notably President Barack Obama, tar the oil sands as the “dirtiest” source of crude on the planet, ignoring what the industry has already accomplished over more than 20 years in lowering per-barrel carbon emissions.
Notley said Alberta got a “wake-up call” earlier in November “in the form of a kick in the teeth” when Obama rejected the Keystone XL pipeline, declaring that the United States would not be a party to importing “dirtier” oil.
She said her government is “turning the page on the mistaken policies of the past. Our goal is to become one of the world’s most progressive and forward-looking energy producers.”
The strategy includes a tax of 4.7 cents per liter of gasoline and a rise in average home-heating costs of C$320 per year by 2017 and C$470 by 2018.
Those carbon penalties are projected to raise C$3 billion a year, which Alberta will reinvest in renewable energy sectors and provide some consumer rebates to offset the increases.
Multiple steps Other steps include:
•A phasing out of coal-fired power plants by 2030, replacing them with renewable energy - primarily wind power - and natural gas, with renewable sources accounting for 30 percent of Alberta’s electricity production within 15 years.
•An increase in the current carbon tax of C$15 per metric ton for major industrial emitters to C$20 across the economy by January 2017 and C$30 by January 2018. At C$30, the levy will add an estimated C$2.25 per barrel to costs for oil sands producers.
•An overall oil sands emissions limit of 100 million metric tons, up from the current 70 million metric tons, with provisions for new upgrading and co-generation plants. The cap is in line with National Energy Board forecasts.
•A methane reduction strategy to lower emissions by 45 percent from 2014 levels by 2025.
Provincial, territorial premiers The strategy was presented Nov. 23 to a meeting of Canada’s 10 provincial and three territorial premiers in advance of the Nov. 30 start of the United Nations climate change summit in Paris.
Tim McMillan, president of the Canadian Association of Petroleum Producers, said the strategy will allow the oil and natural gas industry to grow, further enhance its environmental performance through technological innovation, and improve Canada’s ability to reach more markets beyond North America.
But he cautioned the Alberta government to move carefully as it puts the strategy into practice by recognizing that “our sector can only become a global supplier of responsible produced oil and natural gas if we are competitive on the world stage.”
Mike Hudema, a spokesman for Greenpeace, praised Notley’s “historic step,” while insisting that “much bigger emission reductions will be needed for Alberta to do its part to keep (the increase in global temperatures) below 2 degrees Celsius.”
Imperial a no show The only significant no show among the companies was Imperial Oil, 69.6 percent owned by ExxonMobil.
Its most important holdings in Alberta are the huge heavy oil complex at Cold Lake and its recently started Kearl oil sands mine, plus a 25 percent stake in the Syncrude consortium.
A company spokesman told the Canadian Press news agency that the company needs time to determine how the policy will affect its existing operations and possible future projects.
He said Imperial believes any greenhouse gas policy should protest the competitiveness of Alberta’s oil and gas industry.
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