New day for Canada in carbon policy shift

Turning the page: Canada takes carbon seriously

WHEN it comes to natural beauty, Canada has it in spades. Boasting lush boreal forests, the majestic Rocky Mountains and awesome ice bergs off the coast — to name just a few — Mother Nature has made Canada her playground.

It is with these wonders in mind that the federal government — along with most of the provinces and territories — wants to save the country’s pristine environment by revamping its existing climate change policies to reduce greenhouse gas emissions in all sectors, including the oil and gas industry.

“From an environmental performance perspective, it feels like we’re coming out of a lost decade and that didn’t actually get us anywhere further ahead,” says Simon Dyer, associate regional director of environmental research organisation the Pembina Institute.

“Hostility to environmental issues hurt the oil and gas industry greatly. It is an important industry but the disproportionate attention — that it’s the soul and most important sector of the economy — is unfortunate.”

Attitudes are shifting and with that has come recognition of changes to provincial environmental policy, particularly in the country’s largest energy producing province.

In November, the Alberta government announced major revisions to existing policy, including an increased carbon tax to C$30 (US$22.17) per tonne by 2018, a 100 megatonnes per annum cap on oil-sands emissions, and the elimination of coal-fired power generation by 2030.

Its existing carbon tax is C$15 per tonne and current oil-sands emissions are 70 million megatonnes per annum from production of more than 2.3 million barrels per day.

Two options

Surprisingly, the action plan has been viewed as game changing by major players such as Suncor Energy, Canadian Natural Resources, Cenovus Energy, and Shell Canada, as well as First Nations and environmental groups.

“There are really only two options — do something substantive on climate change as our trading partners asked us to do, or do nothing. Quite frankly, the argument to do nothing is to reject the science of climate change,” says Alberta Environment Minister Shannon Phillips.

“A status quo position is just underlining a rejection of the science. It’s broadly recognised that we must do something and that’s why we worked productively with industry, environmental groups and others to come to this robust and widely-accepted policy.”

Alberta said it was following British Columbia’s lead, which was the first North American jurisdiction to introduce a C$30 per tonne tax in 2008.

Unfortunately progress has stalled since then, Dyer says.

“British Columbia was a climate leader but its leadership has actually stalled since 2012 when it stopped increasing its carbon tax — and carbon pollution has actually been rising and it’s projected to continue rising,” he says.

In advance of the COP21 climate talks in Paris late last year, British Columbia began work on a new Climate Leadership Plan.

A spokesman for British Columbia Environment says the second round of public consultation is currently under way and a finalised plan will be released this spring.

There has been a general acceptance that effective climate change policy is necessary before Canada can move forward with any plans for growth. Both Ontario and Quebec announced plans to establish cap and trade systems and Newfoundland & Labrador are creating new regulations.

Opposition

Saskatchewan Premier Brad Wall has been the only major vocal opponent of a carbon tax, saying it would “knee-cap” the oil and gas sector at a time when it is already dealing with low commodity pricing resulting in significantly decreased capital investment, deferred or cancelled projects, and job losses.

“The last thing we need is a tax increase or a new federal carbon tax — or a provincial carbon levy. Now is not the right time for any of those things,” he said.

“I don’t want a level playing field — I don’t want it level with other provinces if ours can actually be better and our business climate can actually be improved.”

Canadian Association of Petroleum Producers vice president of policy and performance, Alex Ferguson, says carbon pricing is high on industry’s list of priorities and is not considered an impediment.

“We don’t see this as a bad time to be doing something,” saysFerguson. “We appreciate the climate change issue is important, critical, needs to be addressed with a sense of urgency and we support moving on that. It’s just a matter of how do you do that in the best way?”

There has been general agreement the federal and provincial governments have changed Canada’s direction with its tough new stance on emissions.

Next month, Prime Minister Justin Trudeau will meet with Canadian Premiers to discuss the idea of a pan-Canadian climate change plan that would set national emissions-reductions targets and introduce a minimum C$15 per tonne carbon price for provinces and territories.

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