Varcoe: Alberta business leaders want feds to scrap O&G emissions cap

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At conferences in Ottawa this week, a delegation of Alberta enterprise leaders delivered a single, clear message to federal officers in regards to the incoming oil and fuel emissions cap.

It got here forward of Monday’s deadline for public submissions in regards to the new framework for the controversial federal coverage, with provincial leaders from the power, agriculture, telecom and monetary sectors sitting down with federal civil servants.

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“The unified message was that the cap, as offered, is unworkable, untenable, and it’s going to extend funding uncertainty,” stated Deborah Yedlin, CEO of the Calgary Chamber of Commerce, which organized the journey.

In the course of the COP28 summit in December, the Liberal authorities unveiled particulars for the cap on greenhouse fuel emissions to be imposed on the nation’s oil and fuel sector.

The coverage goals to decrease emissions within the upstream sector by 35 to 38 per cent by the top of the last decade from 2019 ranges utilizing a brand new cap-and-trade system. Ottawa has pledged to succeed in net-zero standing by 2050.

As proposed, the plan consists of a number of flexibility measures that may enable firms to buy some carbon offset credit, or contribute to a decarbonization fund, in the event that they exceed their emissions allowances. These steps might ultimately decrease the discount determine to twenty to 23 per cent.

With the federal authorities now receiving submissions on the coverage, it’s clear the Alberta authorities and trade leaders consider the coverage is a non-starter.

“It’s very tough to work with attempting to make adjustments to it. It’s designed as a manufacturing cap, though it’s disguised as an emission cap,” Whitecap Sources CEO Grant Fagerheim stated in an interview Thursday.

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“That is the tipping level.”

The provincial authorities and quite a lot of teams are getting ready to ship in suggestions within the coming days, spelling out their issues with the federal program.

The Alberta authorities maintains the plan will curtail oil and fuel manufacturing and infringe on the province’s unique constitutional rights surrounding useful resource growth.

The top of the Explorers and Producers Affiliation of Canada (EPAC) famous the cap is predicated on 2019 trade manufacturing ranges. But, oil output has risen by seven per cent since then, whereas pure fuel manufacturing has elevated by 12 per cent, making the federal goal even tougher to succeed in.

EPAC president Tristan Goodman stated the coverage is probably going unconstitutional and believes it’ll drive away funding due to the uncertainty it creates.

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“It is a uncommon time the place fixes received’t work. It must be scrapped,” he stated Thursday.

“A cap on emissions, which is on this case a cap from the federal authorities on manufacturing, just isn’t workable.”

Alberta is the most important emitting province within the nation, and the Canadian oil and fuel sector was answerable for 28 per cent of nationwide emissions in 2021.

Producers level out they’re decreasing emissions per barrel, many firms have adopted net-zero targets, and the sector faces an array of present federal insurance policies to decarbonize.

These embrace an escalating nationwide value on carbon, the clear gas laws and incoming guidelines to slash methane emissions by 75 per cent by the top of the last decade.

Michael Belenkie, chief government of Benefit Vitality, stated the coverage would doubtless have an effect on larger emissions-intensity manufacturing within the Canadian sector.

Canada, the world’s fourth-largest oil producer, would be the first main exporter to undertake an trade emissions restrict.

“For a lot of the trade, this could be a step too far,” Belenkie stated.

“We’ll see widespread resistance and earlier than this turns into an actual drawback for sure individuals inside the trade, I might be stunned to see this not pursued vigorously by way of the courts.”

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The provincial authorities has vowed to battle the cap and any try to decrease manufacturing, with Premier Danielle Smith elevating the potential of utilizing both Alberta’s Sovereignty Act or court docket motion to oppose it.

Andrew Leach, a College of Alberta professor within the division of economics and the school of regulation, stated there are excellent questions in regards to the cap’s design — together with the constitutional questions round it.

“It might be an attention-grabbing case. But when I needed to guess on it, I might say that the courts would uphold one thing that appears like an oil and fuel cap,” he stated.

A problem is probably going, given the province efficiently fought the federal Influence Evaluation Act.

Stephen Buffalo, CEO of the Indian Sources Council of Canada, identified that First Nations are shopping for possession stakes in pure useful resource tasks throughout the nation and received’t sit by if the cap makes it harder to take a position.

“This (cap) is an actual unfavourable factor for First Nations right here in Western Canada which can be concerned in these tasks,” he stated.

“They’ve overstepped their boundaries right here and that must be examined.”

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The federal authorities plans to publish the draft laws this 12 months, with closing laws being printed in 2025.

The cap is predicted to be phased in between 2026 and 2030.

“No trade must be allowed limitless air pollution; the oil and fuel trade isn’t any totally different,” a spokesperson for federal Setting Minister Steven Guilbeault stated in a press release.

Business executives be aware the sector is seeking to put money into areas corresponding to carbon seize and storage, together with know-how to decrease methane emissions.

Mike Holden of the Enterprise Council of Alberta, who attended this week’s assembly in Ottawa, stated the group is against the cap and the impact it’ll have on Canada’s competitiveness and productiveness.

He’s additionally frightened it’ll impede funding in decarbonization efforts, whereas hitting one area of the nation tougher than the remainder.

“The cap will not be supposed to be punitive on one area, however the truth stays the overwhelming majority of oil and fuel manufacturing in Canada is in Alberta,” he added.

“That’s undoubtedly a priority that we introduced ahead.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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