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Marcel CoutuTODD KOROL

Alberta's oil sands producers should be allowed to significantly increase their greenhouse gas emissions, even if that means forcing other sectors to take on additional expensive obligations to meet Canada's climate change targets, an industry executive says.

Marcel Coutu, chief executive officer of Canadian Oil Sands Trust, travelled to Toronto Thursday to spread the industry's message about climate change. The oil industry stance highlights the dilemma facing the federal government as it prepares regulations to meet its commitment to reduce emissions by 20 per cent by 2020 from 2006 levels.

If the oil sands were allowed to expand production with only marginal improvements in their per-barrel emissions, the rest of the country faces a much harder and more expensive challenge in meeting Canadian targets.

The Alberta government and the oil industry argue for "intensity-based" targets that would require lower per-barrel emissions, but allow growing industries to increase their overall output of carbon dioxide.

Critics argue the oil companies should face absolute caps on their emissions, but Mr. Coutu said such an approach would stifle growth in Canada's most important resource development.

Strict emission limits would "put a very, very heavy burden on a business that is [in]a growth mode" and is a key engine of the Canadian economy, he said.

Mr. Coutu - whose company owns 36.7 per cent of the Syncrude oil sands project - acknowledged other sectors would have to take up the slack if the oil sands have only intensity-based requirements and Ottawa imposes a national cap on emissions.

"That's the math and there is no escape from that," he said. "What we have to do is prioritize what is most important to the economy and our quality of life. At the end of the day I don't think there is a single element of our economy that is more important than energy."

The math is clearly daunting.

Driven by its need to keep the oil industry growing, Alberta has set regulations that will see emissions continue to grow between 2006 and 2020, even as Ottawa attempts to cut levels by 20 per cent over that period. With Alberta representing more than a third of Canadian emissions in 2006, the failure by that province to cut back will require the rest of the provinces to reduce their emissions by more than 35 per cent from 2006 levels over the next 10 years.

Environment Minister Jim Prentice has been consulting with provinces on the pending federal regulations, and has encountered resistance from outside Alberta that its industry would either be bound by different rules than others, or would be allowed to increase emissions to the detriment of other sectors.

In a meeting with The Globe and Mail's editorial board, Mr. Coutu played down the oil sands' contribution to the country's climate change challenge. He noted the vast majority of emissions occur in the consumption of energy - driving cars, flying airplanes, heating homes and commercial buildings - rather than in its production.

He said that oil sands currently represent only 5 per cent of total Canadian emissions. However, that figure could triple if planned expansions proceed and other sectors rein in their creation of carbon dioxide and other climate change gases.

Mr. Coutu said it's necessary to look at those figures from a global perspective, because additional Canadian petroleum production from the oil sands would be replacing production - and emissions - from elsewhere in the world.

The fact that Canada is a net exporter of energy must also be taken into account, Mr. Coutu said, because Canada could end up taking the environmental responsibility for a product that is eventually purchased by a foreign user.

While it is up to the government to make the call on carbon policy, the oil sands industry needs to "emphasize the importance of energy [and]the importance of crude oil in the mix," he said.

Environmentalists agree with the oil industry on one point: that an effective climate change policy must target energy consumers as well as producers. But the growth of emissions in the oil sands would make the overall effort far more difficult, said Dale Marshall, a policy analyst with the David Suzuki Foundation.



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