COMMENT: Still smoking – The dark side of Alberta’s new climate plan

Published 09:54 on November 26, 2015  /  Last updated at 10:24 on November 26, 2015  /  Americas, Canada, Carbon Taxes, Conversations, Views  /  No Comments

As a casual observer of Canadian climate policy, you might think Alberta is the new poster child for consensus climate thinking. When Alberta’s new climate policy was announced on Nov. 22 it was quickly met with praise from industry and environmentalists alike who celebrated that the province had finally turned a corner on carbon emissions. But scratch deeper into the plan and all the champagne seems more fitting for an Irish wake.

By Chris R. McDermott

As a casual observer of Canadian climate policy, you might think Alberta is the new poster child for consensus climate thinking.

When Alberta’s new climate policy was announced on Nov. 22 it was quickly met with praise from industry and environmentalists alike who celebrated that the province had finally turned a corner on carbon emissions.

But scratch deeper into the plan and all the champagne seems more fitting for an Irish wake.

What the fanfare didn’t cover was the accompanying funeral processions for Canada’s national climate target and the role of carbon offsets in climate change mitigation.

Here, the smoke stacks of oil sands operations in Fort McMurray are the proverbial smoking gun.

Under the Alberta plan, carbon emissions from the oil sands will be allowed to rise to 100 million tonnes per year from the current 70 million.

While part of those emissions will be taxed at a rate of $30/tonne, it is still far less than the price required to incentivise material quantities of in-house GHG reductions.

The net result is that Alberta’s emissions won’t go down. The plan acknowledges this and projects Alberta’s total 2030 emissions to be roughly the same as they are today.

At the same time, Canada’s national target, or Intended Nationally Determined Contribution (INDC), for the upcoming Paris climate summit calls for a 30% reduction in emissions below 2005 levels by 2030 – a level the new federal Environment Minister Catherine McKenna calls a “floor”.

Climate negotiators are smart people and will certainly see the mismatch between Canada’s national ambition and that on offer from its largest emitting province, which currently accounts for 36% of the national GHG profile.

To save face, the federal government may say other provinces will make up the difference, but getting the rest of Canada to compensate for Alberta’s lacklustre effort will be a tough, if not impossible, sell domestically.

Against this backdrop, Canada’s INDC should be renamed its Intended Nationally “Dead” Contribution in Paris.

OFFSETTING

The next victim of the Alberta plan is carbon offsetting.

A guiding principal in the creation of the Alberta plan was to “avoid the transfer of wealth outside of Alberta” and offsets are accorded a mere two paragraphs within the 97-page climate change panel report.

Oil sands producers are challenged by an outsized carbon footprint, related market access constraints, plus some of the industry’s highest carbon mitigation costs. If anyone needs carbon offsets, they do.

Yet, surprisingly, the industry eschews such low-cost compliance options. When Canada’s former Prime Minister Stephen Harper routinely called offsets “hot air”, Canada’s big emitters stayed silent, as did the International Emissions Trading Association (IETA), deciding not to defend the concept.

Instead, industry has preferred to take the slow road and wait for expensive “game changing” technologies like CCS to commercialize.

Alberta’s new plan takes this same approach and recycles carbon tax revenues into oil sands research and development (R&D) expenditures. The hope is that R&D leads to a “good as conventional crude” emissions profile for oil sands sometime this century.

LOUD CALLS

Ironically, this delay in reducing oil sands emissions may foreshadow the Alberta climate plan’s final casualties.

Canada’s international partners, fellow Canadians, and even President Obama in his rejection of the Keystone XL pipeline, have all made loud calls for Canada to do more to address its oil sands emissions and to do so now.

Since that message was seemingly met with deaf ears, it’s not unreasonable to assume that the next oil sands pipeline application or exemption request from a Low Carbon Fuel Standard (LCFS) could join in the graveyard alongside Canada’s INDC and carbon offset market ambitions.

That would be a pity.

Chris R. McDermott is a former Canadian negotiator on the Kyoto Protocol and carbon asset manager at Hartz Capital in New York.

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