CALL TO ‘GET IT RIGHT’ ON CARBON
Expiration of province’s current rules offers opportunity for new approach
With 38 days and counting until the Alberta Specified Gas Emitters Regulation expires, the new provincial government arguably has only one option for dealing with the approaching deadline — extend the agreement for a few months to allow time to develop a policy that prices carbon appropriately and reaches beyond industry to include consumers.
“It’s not simple, but it’s too important not to get it right. We could do an awful lot of damage if we do this wrong,” Steve Wil- liams, chief executive of Suncor Energy, said Friday while advocating for the province to develop lasting policy solutions that will impact behaviour.
The additional time should lead premier-designate Rachel Notley to a decision that results in scrapping the emitters regulation, as currently constituted, for something much more robust.
Williams addressed a packed room inside the Palliser Hotel prior to a panel discussion on carbon policy led by the Ecofiscal Commission and sponsored by Suncor and the Max Bell Foundation. He talked of the importance of developing sound policies to address the challenge of how to “bend the curve” on greenhouse gas emissions while not sacrificing the competitiveness of the oil and gas industry.
“The path forward is really about choosing the energy future we want. In environmental terms, that is as clean and sustainable as we can get,” he said.
“In financial terms, energy needs to be affordable, innovative and create jobs and fuel the economy. In social terms, energy should help us sustain important systems like education and health care. We must realize they are all linked. We can’t do one without the other.”
The difficulty for governments is crafting the right policy — and in Alberta’s case, leaving behind the current regulation — that is broad and includes a meaningful price on carbon that changes behaviour and spurs innovation.
“We need to put a real price on carbon and emissions,” said Jim Dinning, a member of the multipartisan advisory council of the Ecofiscal Commission. “Zero price means zero awareness and if we don’t price it, we won’t change it.”
Alberta still gets points for being the first North American jurisdiction to put a price on carbon, but as has been shown in recent months, the SGER now lags what’s in place in other provinces.
Whether it’s the cap-and-trade structure — like what Quebec has put in place, with Ontario set to follow — or a carbon price as British Columbia has chosen, the consensus in the room Friday was that the SGER fails on three counts — coverage, stringency and transparency. It doesn’t include the consumer, the intensity targets are set at a level that has not encouraged a change in behaviour and the system is not transparent.
“Alberta’s current policy has a fair bit of room for improvement,” said Chris Ragan, the Ecofiscal Commission chairman and a professor of Economics at McGill University.
Ragan believes Albertans want to see meaningful action on carbon policy and that higher standards for environmental stewardship that also delivers tangible results will lead to the Holy Grail of market access for Alberta’s oil production.
It also has to be done with the goal of balancing both the economy and the environment.
The challenge is achieving all of this at a time of significant uncertainty in Alberta following the election of a new government, the prospect of a royalty review, the likelihood of higher corporate taxes and a lower oil price, all of which are having an impact on corporate spending plans and access to capital. It’s a tall order. “There is a huge appetite for a very simple answer. We think climate change is happening. We think a broad-based carbon price is the right answer,” said Williams who spoke with Notley within 24 hours of the election and said he was encouraged by the conversation that struck the right balance between the economy and the environment.
“If you look at the CO2 production in a modern economy, about 80 per cent of it happens at the point of consumption or the point of use. So targeting just industry simply doesn’t get to it.”
The question remains as to how all this can be achieved.
The answer lies not only in policy decisions made by government in conjunction with industry, but also in the realm of collaborative innovation that not only reduces the carbon footprint but also the costs. If set at the right level, the carbon price will drive innovation that achieves both of these objectives.
The good news is that Canada’s oilsands players have already started on that journey of innovation through collaboration with the creation of the Canadian Oil Sands Innovation Alliance (COSIA) back in 2012.
Since then, 750 pieces of intellectual property and $1 billion in technology have been contributed to COSIA, which has also engaged global firms such as GE and expertise from countries such as Germany and Israel to help in the quest to reduce both emissions and costs.
“Let’s work together. With government. With clean tech. With post-secondary institutions. If we have learned anything from Silicon Valley, part of their secret is that those lines are all blurred and everyone works together with a common objective,” said Judy Fairburn, executive adviser with Cenovus Energy and the board chair of Alberta Innovates Tech Futures.
But, as Dinning pointed out Friday, it’s going to take a while to shift gears.
That’s why Notley should extend the Alberta Specified Gas Emitters Regulation beyond June 30 and chart a new course of action that will allow Alberta to lead, not lag, on carbon policy.