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Shell calls for Ottawa to release carbon policy

Lorraine Mitchelmore of Shell Canada: Regulations on greenhouse gases are needed to spur innovation.

todd korol The Globe and Mail

The federal government needs to move forward with greenhouse gas regulations so the oil industry can play its proper role in the global debate about climate change, says the top Canadian executive for Royal Dutch Shell PLC.

Ottawa has long delayed promised regulations to rein in emissions across the oil and gas industry, including in the fast-growing oil sands sector. Environment Minister Leona Aglukkaq last week refused to put a timeline on the release of draft regulations, saying the government is still working with the provinces on the plan.

The Canadian Association of Petroleum Producers urged the federal and Alberta governments last spring to go slow on the proposed rules, which had been promised for release in July.

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In documents released last month under Access to Information, CAPP warned that the Canadian industry would lose investment if Ottawa and Alberta imposed regulations requiring companies to cut emissions and to pay a per-barrel levy when allowable limits were exceeded.

In a speech in Ottawa on Tuesday, Shell's Lorraine Mitchelmore said regulations on greenhouse gases are needed to spur innovation and improve Canada's reputation, but they must be introduced in a way that does not undermine the industry's competitiveness.

"Federal [carbon dioxide] regulations will add pressure [on the industry] to innovate – it is a great policy tool for innovation," Ms. Mitchelmore said. "And it will signal to the world that Canada is stepping up to do its part."

Asked about the long delays in releasing the proposed rules, Ms. Mitchelmore said that the regulations are "complex" and that industry is working with Ottawa to ensure they are part of "a competitive framework."

Alberta initially wanted to require oil sands companies to reduce CO2 emissions by 40 per cent, on a per-barrel basis, and to pay $40 per tonne on emissions above that regulated target. That plan would have cost industry roughly $1 per barrel. The federal government countered with a proposal for a 30-per-cent cut and a $30-per-barrel levy, while CAPP wanted a 20-per-cent reduction and $20 levy.

Like several other oil companies, Shell currently factors in a $40-per-tonne imputed carbon price in all its global investment decisions.

Ms. Mitchelmore insisted that there is no tradeoff between environmental protection and growing energy production. She also rejected the oft-heard industry argument that companies need to respond with facts to counter the "emotionalism" of the environmental movement.

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"The argument for environmentalism is not an emotional argument. It is just as rational as the argument for growing our energy industry," she said.

She argued that Canada has played a leadership role in areas such as Alberta's GHG rules, in developing carbon-capture and storage technology at Shell's Quest project at its Alberta refinery, and in the industry's combined effort to commercialize technology needed to reduce the environmental impact of the oil sands.

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