EMISSIONS FINES URGED
Panel seeks strict penalties to keep oilsands firms from nearing cap
Carrots and sticks.
The combination of these tried-and-true techniques are behind a series of recommendations handed to the Notley government by an advisory panel looking at the best way Alberta can limit greenhouse gas emissions from the oilsands.
As part of its climate plan, the NDP government pledged it will keep oilsands emissions below 100 megatonnes annually, even as production continues to climb.
The sector generates about 70 megatonnes, giving it some room to expand.
But can the long-life oilsands keep growing into the next decade and beyond, while avoiding crashing through the emissions ceiling?
That will be the trick going forward but, by most accounts, it looks achievable.
The carrot to meet that goal includes a series of proposals from the province’s Oilsands Advisory Group, such as requiring new facilities and expansions in the sector to use the best available technology.
Another key is for oilsands players to focus on leveraging technology to lower the amount of energy required to produce a barrel of bitumen.
This is critical, and could also drive efficiencies going forward if the sector uses less energy, such as natural gas, to coax more bitumen out of the ground.
The panel — co-chaired by former CAPP president Dave Collyer, Melody Lepine of the Mikisew Cree First Nation and B.C. environmental activist Tzeporah Berman — also recommends the province change existing resource conservation policies that seek to maximize oilsands production, regardless of emissions.
At a news conference Friday, Collyer said the panel wanted to encourage action before Alberta gets close to the edge.
The stick to enforce the cap, however, is large. If the government accepts the recommendations — and Environment Minister Shannon Phillips noted several times Friday they will need to be studied further before regulations kick in next year
— it could impose some heavy actions.
For example, if the province reaches a point it calls “emission scarcity” — getting close to the cap — the government could restrict new projects from starting production until total industry GHGs fall below 100 megatonnes, or enforce mandatory reductions from the industry’s below-average climate performers, in terms of emission efficiencies.
That’s a big shift for a sector that was allowed to grow without any significant restrictions for decades.
“It’s the balance of the carrot and the stick in advance of the emissions limit,” Collyer explained.
“Do you make it more onerous, or do you try and encourage people.”
All of these recommendations are designed to work as a package to solve the problems of growing emissions from the energy sector.
Alberta emitted 267 megatonnes of greenhouse gases in 2013 — highest in the country — and oilsands producers accounted for about 22 per cent of the provincial total.
In a world where carbon increasingly matters, the province and industry need to take action, said Collyer.
A former president of Shell Canada, he doesn’t think Alberta will breach the 100-megatonne limit, a point echoed by industry experts.
“I actually think we’ll be successful in innovating and reducing greenhouse gas intensities,” Collyer told reporters.
“I think of it more as a change of mindset. Here’s an oil-producing, hydrocarbon-producing jurisdiction that is prepared to put a constraint on emissions, as well as a price of carbon.”
Officials from industry and the environmental community said they would study the recommendations in the days ahead.
Berman, who once compared the oilsands to Mordor, pointed out people from diverse backgrounds and viewpoints managed to find common ground on a divisive issue.
“People didn’t think we could do it,” Berman said in an interview.
“For the environmental community, there are questions about whether the cap is enough, etc. For the industry, it’s a concern about investment. These are hard topics.”
Alberta government officials said they don’t see the emissions cap being breached unless several factors fall into place by 2030, such as crude prices increasing to US$80 a barrel for a sustained period and all project proposals with regulatory approval being built.
Under this high-price scenario, production would hit 4.3 million barrels per day.
That’s above the newest forecast from the Canadian Association of Petroleum Producers (CAPP) that estimates oilsands output will grow to 3.7 million barrels per day by the end of 2030, up from 2.4 million barrels last year.
Oilsands analyst Kevin Birn, with energy consultancy IHS Markit, doesn’t see the cap impacting its growth projections in the intermediate or long-term, particularly as companies focus on using technologies such as solvents to lower their emissions per barrel.
“At the same point in time, we see it as introducing an uncertainty for an investor that looks at the oilsands,” he added.
While still examining the report, the group representing the country’s largest oilsands producers supports the panel’s emphasis on innovation to meet the province’s climate objectives.
“Sticks are only a problem if you actually hit the limit, ” said CAPP executive vice-president Terry Abel.
“What I heard today … was a strong belief that we can live within that cap without constraining production.”
People on both sides of the debate will undoubtedly criticize the recommendations in the days ahead, either for being too onerous and driving away investment, or for being too lax and allowing emissions to climb.
But panel member Simon Dyer of the Pembina Institute maintains the committee identified the best ways to reduce GHGs in a cost-effective way, while allowing the oilsands to keep growing.
“It will provide certainty, both for those of us who want to see that emissions are capped, and certainty to industry on what the rules of the game are going forward,” he said.