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Report on Business Carbon clash: Trudeau government’s plan for green economy meets political resistance

The federal government is accelerating Canada’s transition to a lower-carbon economy, even as conservative politicians in the provinces vow to scuttle key measures that would support that effort.

Natural Resources Minister Jim Carr endorsed an advisory council report Thursday that spells out an ambitious agenda of increasing energy efficiency, switching off fossil fuels and reducing greenhouse gas emissions in the country’s oil and gas industry.

The Generation Energy report was produced by an advisory committee appointed by Mr. Carr after he hosted a conference last year on the need for a new Canadian energy strategy. The committee included representatives from the oil and gas industry and the electricity sector, as well as from clean energy and Indigenous organizations.

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The panel declared that climate change is a growing danger, and that Canada must be part of a global transition to lower-carbon energy needed to avert the most catastrophic impacts.

“There’s real risk involved in falling behind in this energy transition, in failing to build the momentum – and public and investor confidence – required to achieve it,” it said. “Canada must step on its accelerator.”

However, there is considerable political opposition to the Liberal government’s climate-change approach. Conservative politicians argue that Ottawa and its allies among provincial governments are driving up energy costs for Canadians with carbon taxes while undermining the competitiveness of the domestic oil industry with levies and new regulations.

Doug Ford will be sworn in as Ontario premier on Friday and has already said he will scrap the province’s cap-and-trade system that not only puts a levy on carbon emissions but finances programs to help homeowners and businesses reduce their energy use. Alberta’s United Conservative Party Leader Jason Kenney says he will move in a similar direction should he win an election scheduled for next spring.

The Generation Energy report is hardly a radical document; the panel’s co-chairs are Merran Smith, president of the advocacy group Clean Energy Canada, and Linda Coady, chief sustainability officer for pipeline and natural gas giant Enbridge Inc.

The report includes no call for Canada to rely solely on renewable energy by a certain date; there is no direct attack on the oil sands industry nor opposition to industry’s plan for three pipeline expansion projects that would increase volumes of Canadian crude to U.S. and offshore markets.

However, it does lay out a daunting challenge for the country’s oil and gas sector, which suffered from the global price collapse of 2014-15 and is recovering far more slowly than some international competitors.

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The goal, it said, is for the Canadian oil industry to reduce its carbon dioxide emissions on a per-barrel basis below that of major competitors, while also reducing costs. To get there, the industry will have to make massive investments in new technology and innovation.

That’s a tall order for oil sands companies whose production is among the most carbon intensive in the world, and whose cost structure is high. The Canadian Association of Petroleum Producers complained recently that climate and other environmental policies are placing an increasing burden on its members that make it difficult to attract investment.

In an interview, Mr. Carr said the Generation Energy panel’s conclusion are consistent with the Liberal government’s approach, which emphasizes action on climate change and providing incentives for Canadians to use less energy and lower-carbon energy, while supporting the traditional fossil fuel sector.

“I think you can talk about those goals at the same time,” he said, “We use the energy resources we have – developed more sustainably, moving more safely to an expanding set of export markets – while we increase our investments in all of the other components that contribute to the low carbon economy.”

Conservative MP Ed Fast slammed the Liberals for undermining the oil and gas industry as it pursues its environmental agenda. “I find it appalling that the Liberals are taking reckless action that will only speed up the decline of the Canadian economy,” the Conservative environment critic said.

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