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President Barack Obama's climate plan provides new challenges for the Harper government, and not only in Ottawa's determination to get the bitterly controversial Keystone XL pipeline approved.
While Mr. Obama's approval of the Keystone hangs on the debate as to whether the pipeline – of itself – will significantly add to greenhouse gas emissions, the president's climate plan will create waves for Prime Minister Stephen Harper's vow to regulate emissions more broadly.
Since abandoning a proposed cap-and-trade plan in 2009, Mr. Harper has wedded himself to Mr. Obama's climate approach – adopting the same 2020 target for reducing greenhouse gas emissions and pursuing regulation for specific industries rather than adopting an economy-wide strategy.
His government has worked with the Americans on tougher emission standards for cars, trucks and trains, as well as efficiency targets for consumer goods and for buildings.
Environment Minister Peter Kent promises to implement new regulations for large industrial emitters on a sector-by-sector basis, starting with the oil and gas sector. The oil and gas regulations – seen as an important step in winning American support for Keystone pipeline – were promised for the first half of this year but will likely be released by end of summer.
Beyond that, it gets tricky as the U.S. president failed to include the heavy-emitting industries like refining, steel and cement in his ambitious plan laid out Tuesday.
Without a similar commitment from the Americans, the prime minister will face stiff opposition from companies that are loath to take on costly new regulations as they try to compete with U.S. firms that are spared the burden.
The oil refiners' association has already warned that its members – particularly in central and eastern Canada – are vulnerable to cost pressures. As if to underscore that concern, Imperial Oil Ltd. announced last week that it will close its small, aging Halifax-area refinery because it can't compete in the intensely competitive Atlantic basin market.
The absence of U.S. plans to regulate what is called the "energy-intensive, trade-exposed" sectors – refining, manufacturing, pulp and paper, chemicals, cement – "could provide the Harper government with a very convenient excuse for not going there," said Mark Winfield, a professor of environmental studies at York University.
"I'm quite sure Mr. Harper's government would seize with both hands any excuse for inaction."
But Canada faces a very different challenge than the U.S. in meeting their joint 2020 target of reducing emissions by 17 per cent from 2005 levels.
Some 40 per cent of U.S. emissions come from the power sector, which is dominated by coal-fired plants. Low-cost natural gas has helped drive down emissions in that sector, as utilities switch from coal to gas. Environmentalists have been successful at preventing several new coal-fired plants from being constructed.
In Canada, it is the oil and gas sector that dominates industrial emissions, accounting for 20 per cent of the total and expected to grow with oil sands expansion and the development of shale gas projects in British Columbia and elsewhere.
But proposed federal regulations are not expected to lower in emissions from oil and gas, merely slow their growth. And that means other sectors will have to take on more of the burden if Canada is to meet its 2020 target, according to a report from Calgary-based think tank the Pembina Institute this week.
Growing oil industry emissions could force other industrial sectors to slash their levels by more than 25 per cent over the next 17 years to meet the country's target, according to Pembina.
A more likely scenario is that the Harper government will continue to insist it will hit its targets, without a convincing plan to get there.
Shawn McCarthy covers energy in the Ottawa bureau.