The Harper government is looking to regulate the technology used to control oil industry emissions, in a move aimed at demonstrating Ottawa is determined to deal with the oil sands’ carbon footprint.
Environment Canada plans to release a formal notice this summer that the government will proceed with “performance rules” for large industrial emitters, starting with refineries and oil sands upgraders, and eventually covering bitumen production.
The regulations will govern the technology that companies incorporate in new plants to reduce emissions, and give federal bureaucrats the responsibility for approving the specific design and equipment employed.
Such an approach to emissions control by Ottawa would be more interventionist than the government’s previous positions on climate change regulation, which have been widely criticized as lax. But the government is now facing intense criticism from Europe and the United States over its growing emissions from the booming oil sands, and is eager to show that it is acting.
The timing is especially critical for TransCanada Corp.’s Keystone XL project. The U.S. State Department is in the final stages of an environmental review of the pipeline project and the Environmental Protection Agency has urged the department to provide more information about what Canada is doing to reduce emission from the oil sands. The pipeline would deliver some 700,000 barrels per day of Alberta bitumen to the vast refining complex on the American Gulf Coast.
Oil industry officials worry the new rules will lack flexibility, be expensive to implement and will leave too much discretion over technology choices in the hands of federal bureaucrats.
“It’s unbelievably complex to set up and administer,” said one industry official who has been briefed on the federal plan. “And it’s going to have civil servants deeply involved in deciding what is the best available technology.” Instead, producers want Ottawa to adopt an approach that would allow companies to determine the best way to reduce the cost of lowering CO2 emissions.
Environment Minister Peter Kent has promised Ottawa will introduce rules for large, energy-intensive industries as part of Canada’s commitment to reduce emissions by 17 per cent from 2005 levels by 2020.
This initial round of federal emissions regulations will cover only new or expanded facilities, industry sources say. The government plans to follow up at a later date with regulations for existing large-scale operations.
Industry officials are also urging the federal government to align its policy with that of Alberta, which required oil sands producers to reduce emissions per barrel of crude produced, but allowed them to pay into a technology fund if they could not achieve the targeted reductions. That technology fund is helping to finance carbon capture and storage demonstration projects which will remove CO2 from the emissions stream at upgraders, and bury the gas underground.
The Harper government has twice promised to impose climate-change rules on industry but backed away as it tried to match developments in the United States.
The Obama administration had supported the adoption of an economy-wide cap and trade system but failed to get legislation through Congress. The Environment Protection Agency is now proposing to impose performance standards on both new and existing facilities, starting with coal-fired power plants and refineries.
Republicans in Congress – backed by some conservative Democrats – are now trying to block the EPA from imposing those regulations, saying they will drive up the cost of electricity and gasoline at a time when the U.S. economy can least afford it.
At a recent United Nations climate conference in Bonn, Germany, Canadian officials said Ottawa remains committed to hitting its 2020 target, but that federal and provincial policies implemented to date will deliver only a quarter of the emissions-reduction needed to reach it.
Officials told the assembled delegates that it would impose new regulations on large industrial emitters, including oil sands producers. However they reiterated that Ottawa is determined to “align” its efforts with the United States.
The federal government is also expected to release this summer its final regulations covering coal-fired power plants. Those rules will require power plants constructed or refurbished after 2015 to meet strict new emissions levels, essentially ruling out new coal plants unless they incorporate carbon capture and storage technology.
However, those rules are not expected to have a major impact on Canada’s total emissions until well after 2020.
