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Alberta Two visions, one sector: What UCP, NDP platforms mean for oil sands producers

While insisting he takes climate change seriously, Mr. Kenney said he would immediately move to kill the levy on consumer fuels if he wins power next week.

Todd Korol

United Conservative Party Leader Jason Kenney is looking to unshackle Alberta’s energy producers from the constraints of climate policy, even as the province’s oil sands producers tout their success at driving down emissions.

In the run-up to the April 16 provincial election, Mr. Kenney is aggressively campaigning against the carbon-pricing policies of NDP Leader Rachel Notley and Liberal Prime Minister Justin Trudeau. The UCP Leader is promising to roll back the policies while adopting an aggressive posture toward the federal Liberal government and industry critics.

While insisting he takes climate change seriously, Mr. Kenney said he would immediately move to kill the levy on consumer fuels if he wins power next week and would substantially weaken it as it applies to large emitters, including those in the oil sands. He would also eliminate the emissions cap that the NDP government imposed on the oil-sands sector to hold its greenhouse gas below 100 megatonnes of carbon dioxide.

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Mr. Kenney calls it a “fight back strategy” aimed at defending the industry. He said he would not only unwind much of the NDP’s climate-change policies but challenge any effort by the federal government to impose its own carbon tax. Mr. Kenney said he would also go to war with environmental groups and other industry critics.

There is clearly an appetite in the province for a combative position given that Ms. Notley’s more conciliatory approach has failed so far to result in pipeline construction, said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents smaller oil and gas companies.

“We have an ongoing issue of market access that is absolutely at a maximum crisis level,” Mr. Goodman said in an interview. While the smallest producers are exempt, many of his members have had to comply with the Alberta government’s mandatory production curtailment that was put in place in January to clear the glut of crude that was growing in the province due to insufficient export capacity.

“Canada is showing great leadership, and the industry is showing great leadership and it is being overly penalized internationally for making an effort where other countries are not. That’s the frustration from a number of my members,” he said. Smaller companies bear the full cost of the carbon tax, unlike the larger firms that are given a break by only requiring them to pay the tax on a small percentage of their emissions. And they have not seen the promised dividend in terms of market access that was supposed to flow from the NDP climate policy, he said.

In advance of the election campaign, his group joined the Canadian Association of Petroleum Producers (CAPP) and the Canadian Energy Pipeline Association (CEPA) in calling for less burdensome environmental regulations and lower taxes to stimulate investment in the sector, and a focus on selling Canadian liquefied natural gas in Asian markets to reduce coal use there. CAPP does not comment on the parties’ specific proposals in the election campaign, association spokeswoman Tracy Larsson said.

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Mr. Kenney has targeted oil company executives, slamming the support for the carbon tax offered by those such as Suncor’s chief executive Steve Williams and president Mark Little, who will replace the retiring Mr. Williams in May. At an industry conference in Houston last month, Mr. Little reiterated the company’s endorsement of the carbon tax, but added that it becomes a concern when it is layered on other regulations and high corporate taxes. The company declined to comment on the parties’ platforms.

Oil sands companies insist they are making major strides in reducing the GHG emissions from each barrel of crude they produce and some of the industries largest players, including Shell, Suncor and Canadian Natural Resources Ltd., remain supportive of carbon pricing. CNRL recently announced it had cut its greenhouse gas emissions per barrel, known as emissions intensity, by 25 per cent between 2012 and 2017. That environmental improvement was replicated across the industry, with average Canadian crude now below the global average for emissions intensity, the company told investors on a conference call last month.

In recent presentations to investors, oil sands executives argued Canadian companies are now world leaders in applying emissions-reduction technologies in oil and gas extraction. That charm offensive is aimed at global institutional investors who are increasingly focused on how efforts to combat climate change will affect their portfolios.

Ms. Notley’s government implemented a carbon tax, now at $30 a tonne, and has pledged to phase out coal power and generate one-third of the province’s electricity from renewable sources by 2030. The province remains Canada’s largest source of greenhouse gases, accounting for nearly 40 per cent of the country’s emissions in 2015. Annual GHGs are now projected by the province to stay roughly flat, around 263 megatonnes by 2030.

She also signed onto the national climate plan in exchange for federal support for the Trans Mountain pipeline expansion.

The rollback of climate regulations and attack on environmental groups in Alberta could undermine the industry’s effort to repair its reputation, said Duane Bratt, a political scientist from Mount Royal University in Calgary. “I think the villain-ization of Alberta will come back in spades and possibly worse" if Mr. Kenney changes course, he said.

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