Beware of oil lobbyists drilling for policy gifts

Industry wish list mostly granted, says Jessica Wilson.

As the new NDP government in B.C. considers further support for the natural gas industry, it should take a long, hard look at the results of the previous Liberal government’s eagerness to please the oil and gas lobby.

We all know the promised liquefied natural gas (LNG) boom never materialized, but to get a sense of what else is at play it’s worth reading the 26-page memo sent by the Canadian Association of Petroleum Producers (CAPP) to B.C.’s deputy minister of natural gas development in April 2016. This memo, obtained by Greenpeace under B.C.’s Freedom of Information Act, is an oil and gas climate policy wish list that was mostly granted by the Christy Clark government.

For example, CAPP successfully urged the Clark government to reject its own Climate Leadership Team’s advice to raise the carbon tax and extend it to methane emissions. This is a big deal because B.C. hasn’t increased the price of carbon since 2012 and reducing methane emissions is one of the largest and most cost-effective actions we can take to fight global warming.

Fortunately, increasing the carbon tax and extending it to methane emissions are both included in the NDP-Green party governing agreement. The new government will have to hang tough in the face of what will no doubt be a fierce public relations and lobbying campaign, with oil companies warning of dire competitiveness impacts (even though there isn’t any significant competitive impact for domestic natural gas consumption and LNG exports remain a pipe dream due to global oversupply).

The new government should also be aware CAPP scored a third policy win when the Clark government announced a $20-million subsidy for the industry to comply with an impending federal regulation to reduce methane emissions from the oil and gas sector. CAPP had asked the B.C. government to cover one-third of the costs, saying “a government commitment of $20 million can lead to up to $40 million worth of leveraged methane-emission reduction projects.” B.C.’s subsequent Clean Infrastructure Royalty Credit Program went even further and agreed to cover up to 50 per cent of costs.

The craziest part of this, however, is the province didn’t need to offer $20 million to incent methane reductions: they’ll be required under federal law. At an average price of less than $10/ tonne to eliminate the bulk of methane leaks, extending the $30 carbon tax to methane emissions should be all the incentive they need.

CAPP asked for $20 million per year for three years. Any request for an extension on this subsidy will hopefully fall on deaf ears, but the John Horgan government also needs to reject “other fiscal measures” proposed in the April 2016 memo. These seemingly obscure changes in accounting rules would allow the oil industry to avoid paying the carbon tax on a substantial proportion of its emissions in B.C. and undercut the effectiveness of the federal climate plan.

In setting aside the policy details, there is a much bigger policy question the new B.C. government will have to wrestle with: what kind of an economy does it want to build?

On the first page of the CAPP memo, it says “CAPP supports a climate policy framework in British Columbia that creates a vibrant and competitive oil and gas sector” and as a core principle “compliance should be achievable within the context of growing production.”

This is an oxymoron: no climate policy worthy of the name can be built on a foundation of ever-growing fossil-fuel production. We need a vibrant energy sector, but CAPP and its members need to accept energy isn’t synonymous with oil and gas. If they can’t or won’t transition into renewable-energy providers, then there is no place for them in a climate-safe world. More government subsidies for oil companies or loopholes in regulations only delay the inevitable and make the transition more painful.

Thankfully there is a place for this discussion to take place: the Emerging Economy Task Force that will be established as part of the NDP-Green party governing agreement. I hope they realize that while giving the oil and gas lobby what it wants may be politically easier in the short run, it leaves B.C. less prepared for the economy of the future.

... CAPP and its members need to accept energy isn’t synonymous with oil and gas.