Ottawa swoops in with climate-change offer

Globe and Mail: SHAWN MCCARTHY AND CAMPBELL CLARK - November 5, 2008

OTTAWA - Prime Minister Stephen Harper is proposing to strike a joint climate-change pact with president-elect Barack Obama, an initiative that would seek to

protect Alberta's oil sands projects from potentially tough new U.S. climate-change rules by offering a secure North American energy supply.

Key federal ministers issued the call for a climate-change pact Wednesday, less than 24 hours after Mr. Obama won his historic election victory, in a clear bid by Ottawa to carve out a key place for Canada on the new administration's agenda.

Energy security has been a major issue in the U.S. election, and Mr. Obama campaigned heavily on eliminating dependence on Middle East and Venezuelan oil. But he has also condemned the United States's reliance on "dirty oil" - his advisers have specifically criticized the oil sands - and has promised tougher climate-change action.

A Canada-U.S. climate-change pact could tie those issues together by adopting common standards and mechanisms such as a market-based emission trading system, while acknowledging the important contribution the oil sands make to North American supplies and the need to adopt technologies that would reduce oil sands emissions.

Environment Minister Jim Prentice said Ottawa is looking for a joint approach that would protect both the environment and the economy.

"When you're talking about the environment, you're also talking about energy, and when you're talking about energy, you're also talking about the economy," Mr. Prentice said in an interview.

"The election of president Obama, when one looks at the speeches and the commitments he's talked about in terms of the environment, presents really exciting opportunities for us, as Canadians."

Foreign Affairs Minister Lawrence Cannon said the proposed pact would provide uniformity and supplant the patchwork of plans that are being implemented in various states and provinces.

The proposed climate-change deal would also offer Mr. Harper's government a means to engage Mr. Obama on the president-elect's own priorities at a time when the U.S. recession and the resurgence of the Democrats in Washington have fuelled fears of rising protectionism.

"The broader importance, I think, is huge," said Tom d'Aquino, president of the Canadian Council of Chief Executives, a big-business lobby group. "How important is energy independence to the United States? It's a top priority for them. And where does Canada fit into this top priority? Bingo we are essential."

Unlike George W. Bush, who set no medium-term climate-change targets, Mr. Obama has pledged to cut greenhouse-gas emissions to bring them back to 1990 levels by 2020, a reduction of about 15 to 20 per cent. Mr. Harper's government is promising a cut of 20 per cent by 2020, though critics argue his policies are insufficient to meet that target.

The Canadian government is soon expected to release its regulations for large industrial emitters that will take effect in 2010.

Mr. Obama and congressional leaders have promised to pass national emission limits that were long opposed by Mr. Bush, and some Democrats have been highly critical of the oil sands as a troubling source of new emissions.

U.S. environmentalists argue that Ottawa's approach to climate change is inconsistent with a serious effort to reduce emissions, and insist the oil sands represent the kind of dirty sources of crude oil that a new administration should be most worried about.

"The trend in the United States is a much greater focus on lower-carbon fuels and promoting energy efficiency," said Liz Barratt-Brown, a senior lawyer with Washington-based Natural Resources Defense Council.

"That approach does not bar tar sands, but it would make it much more difficult for refiners and blenders to lower the carbon content of their fuels if they are relying more on high-carbon supplies from Canada."

California has already passed regulations that require gasoline marketers to reduce the carbon emissions from their fuel sources, and require them to account for those emissions right back to the production source.

Mr. Obama's campaign platform promised a similar approach, which has also been included in climate-change bills that have been introduced in Congress.

Ms. Barratt-Brown noted that, unlike U.S. plans, Canada's approach does not include a firm cap on emissions, but instead uses an intensity target which regulates emissions on the basis of production levels.

Gary Mar, Alberta's representative in Washington, said he is confident the Obama team is familiar with the oil sands projects and is expected to encourage their development, given the desire for energy security.

Mr. Mar said international studies suggest that the emissions from the oil sands are comparable to conventional sources of oil, if the companies implement so-called carbon-capture-and-storage technology.

However, neither the proposed federal regime nor Alberta's provides any real incentive for oil sands producers to invest the huge amount of money needed to adopt carbon capture and storage, said Stephen Kaufman, an executive at Calgary-based Suncor Energy Corp. and chair of an industry group that promotes the technology.

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