The federal government is using Alberta’s greenhouse-gas emissions target – criticized as too accommodating to industry – as the launching point for a national oil and gas carbon policy, even as the province itself looks to toughen those standards.
Alberta today requires large energy companies to achieve a 12-per-cent reduction in emissions, on a per-barrel “intensity” basis that allows overall emissions to still climb dramatically.
That 12-per-cent standard “is part of the conversation, for sure” as the federal government seeks to write its rules, Environment Minister Peter Kent said in an interview Friday.
Discussions involving the 12 per cent target – which an industry source said is “certainly the entry point right now” – suggest that Ottawa is contemplating a policy that will offer little change from a status quo whose strength even Alberta is questioning.
The provincial government, stinging from an international campaign to tarnish the image of the oil sands and block its access to markets, is looking at substantially strengthening its standards, sources say. Government workers have begun modelling emission-reductions targets of 20 and even 30 per cent for the oil sands.
They have also examined the possibility of doubling the $15-per-tonne penalty companies can now pay into a technology fund if they aren’t meeting the reduction standard.
Those proposals remain at early stages. They have yet to be presented to Alberta Environment Minister Diana McQueen or Cabinet, and any ensuing debate could weaken or turn down any change. Mark Cooper, press secretary to Ms. McQueen, confirmed that bureaucrats have been tasked with drafting options for “a renewed climate change strategy,” although any change remains far from policy.
But, he said, “we’re looking at strengthening our climate change strategy. ... We recognize that more needs to be done.”
But the discussion on strengthening standards comes as some inside the Alberta government criticize the federal initiative – which is based on achieving “performance standards” – as weak. They say it brings laggards up to the level of the best players, rather than pushing the entire sector forward.
Mr. Kent, in turn, said he is eager to ensure the federal policy produces real emissions progress, rather than – as is the case in Alberta – allowing companies to buy emissions offsets or pay into a technology fund that can subsequently be accessed by the very companies that paid into it.
“Our objective is for absolute greenhouse gas reductions and performance standards, and while we respect the Alberta technology fund as a supplementary tool, we’re not applying it by any means as a way to avoid compliance with greenhouse gases,” Mr. Kent said.
That has consequences for how Alberta is able to achieve “equivalency” with the federal standards, so it can manage compliance provincially.
And, Mr. Kent said, penalties for non-compliance will exact “meaningful payments rather than sort of the current range of carbon pricing, which some people see as simply a cost of doing business” In other words, Alberta’s $15 per tonne isn’t enough, although Mr. Kent was quick to point out, “We’re not going to put, as some have suggested, CEOs behind bars.”
If Ottawa presses forward with the 12-per-cent standard – and industry is pushing for any emissions gains to be required over time, rather than quickly – it will burden the oil and gas industry with a comparatively small share of the national pain as Canada seeks to meet emissions commitments. Canada’s Copenhagen commitment is to reduce carbon output by 17 per cent below 2005 levels. Holding oil and gas to a 12-per-cent per-barrel standard – and over a period when the oil sands are attempting to double the number of barrels they pump – will mean the cost of compliance will fall far more heavily on other sectors.
Mr. Kent said he is seeking an oil and gas policy that finds a “sweet spot which allows maximum achievement for minimum negative impact.” That means, he said, “We’re going to set standards that some operators today quite possibly could find impossible to achieve.”
But his ministry has been tasked with “working with the industry,” he added.
“We’re not working against the industry. We’re working for jobs ... not discouraging and not stranding investment,” Mr. Kent said.
He remains optimistic, that those measures will prove effective. Skeptics have expressed doubts from the early days of the plan’s formation, he said, and “I’m sure we’ll have doubters up to 2020, when we accomplish our reduction goals.”