Alberta’s climate change report released Sunday includes plans for an economy-wide carbon tax, the phasing out of coal-fired power generation in the province by 2030, and a greenhouse gas emissions cap at 100 megatonnes (Mt). Reaction to the plan, which will be presented to a meeting of first ministers in Ottawa Monday, was largely positive from oilsands producers, environmental groups and politicians both inside and outside of Alberta. However, Canada’s oil well drilling association called on the government to make sure “every dollar raised through new carbon taxes” is made available to the oil and gas industry, and said royalties should be reduced.
Oil and gas industry reaction
Canadian Natural Resources Limited, Cenovus Energy Inc., Shell Canada Limited and Suncor Energy Inc. issued a joint statement endorsing the government’s climate change plan, saying the measures “provide predictability and certainty.”
“By directing revenue generated from the new carbon pricing regime towards the development of potentially game-changing greenhouse gas (GHG) reduction technologies, this made-in-Alberta plan lays the foundation for the province to become a global leader in addressing the climate change challenge. It also creates the conditions for Alberta’s oil to become carbon competitive on the global stage and for Canadians to begin receiving full value for their oil exports.”
Watch below: Alberta Premier Rachel Notley says the province will phase out coal by 2030 and replace it with clean, renewable energy.
Company officials touted the plan as a way for Alberta to ensure jobs, economic benefits and government revenues from the oil and natural gas industry are aligned with climate change challenges.
“Today we reach a milestone in ensuring Alberta’s valuable resource is accompanied by leading carbon policy,” said Steve Williams, president and CEO of Suncor in the statement. “It’s time that Alberta is seen as a climate, energy and innovation leader. This plan will make one of the world’s largest oil-producing regions a leader in addressing the climate change challenge.”
The Canadian Association of Petroleum Producers (CAPP) said the plan would improve market access so Canadian oil can reach more markets, one of the industry’s top priorities.
“The province’s climate strategy may allow our sector to invest more aggressively in technologies to further reduce per barrel emissions in our sector and do our part to tackle climate change,” said Tim McMillan, CAPP’s president and chief executive officer, in a statement later Sunday afternoon.
“We encourage the province to follow a balanced approach, recognizing that our sector can only become a global supplier of responsibly produced oil and natural gas if we are competitive on the world stage.”
The group praised natural gas as a way to generate electricity in the province as the phase-out of coal is accelerated.
“Natural gas is the cleanest-burning fossil fuel. Used in power generation, it emits about half the carbon dioxide compared to coal and could virtually eliminate emissions of smog-causing pollutants,” McMillan said.
“Fuel switching would create about 1.5 billion cubic feet per day of new natural gas demand in Alberta. Under the current royalty regime this translates into roughly $140 million per year in new royalties for the province, because natural gas pays much higher royalties than coal based on price and production.”
ExxonMobil-controlled Imperial Oil wasn’t ready to voice its support for the plan as of Monday morning.
Spokesman Pius Rolheiser said the company is studying how the new policy will affect its existing operations and possible future projects in Alberta, and believes any greenhouse gas policy should protect the competitiveness of the province’s oil and gas industry.
Imperial’s oilsands presence includes vast steam-driven operations around Cold Lake, Alta., as well as the massive Kearl mine of and a 25 per cent interest in the Syncrude project north of Fort McMurray, Alta.
The Canadian Association of Oilwell Drilling Contractors (CAODC) had a less positive reaction: the group called on the government to “reinvest every dollar contributed by the oil and gas industry through new carbon taxes back into the industry” in a Monday statement.
“It is unclear how much of the revenue collected through carbon taxes will be reinvested back into the oil and gas industry,” Mark Scholz, CAODC president, said. “If this is a truly a revenue neutral tax, every dollar raised through new carbon taxes should be made available to industry in order to reinvest into new technology to achieve emission reductions.”
The CAODC also called on Notley’s government to reduce oil and gas royalties by the incremental increase from new carbon taxes.
The group said the future of the industry in the province remains uncertain “in the absence of leadership to advocate for pipeline infrastructure and access to international markets.”
“The Alberta government has made the argument that if Alberta shows leadership on the climate file, access to markets is a logical outcome. It is our opinion that anything less, in this case, would be considered a failure.”
The Alberta Green Economy Network (AGEN) issued a statement supporting the plan, but urged the province to focus on a “just transition” for workers moving from carbon-intensive sectors into sustainable industries. The coalition also emphasized the importance of involving First Nations and Metis groups in the plans.
“We need to support workers as they move into the green energy sector and we need to make sure that the jobs they get are good, stable, well-paying jobs,” said Randall Benson, owner of Gridworks Energy Group, which specializes in solar installation.
Greenpeace Canada called the plan a “huge step forward” but said there’s more to be done.
“While the policies announced today are first steps, much bigger emission reductions will be needed to ensure Alberta does its part to keep global warming 2 degrees Celsius,” said Mike Hudema.
“We are concerned that the government has no short- or long-term emission reduction targets. Targets give an important signal to business, let the world know where Alberta is headed, and help ensure that direction leads to the reductions that science and equity demand.”
The Solar Energy Society of Alberta pointed out the plan will phase out coal by 2030–a “commendable” step–but will include the use of natural gas for the baseload of Alberta’s electrical grid.
“Unfortunately, Alberta will continue to expand its natural gas electrical generation, which will only hinder our ability to meet science-based emissions targets, instead of investing more ambitiously in renewables,” said Leon Milner, assistant executive director of Solar Energy Society of Alberta, adding emissions will still exceed 2013 levels by 3 Mt by 2030.
“The best science from the United Nations Intergovernmental Panel on Climate Change (IPCC) to limit global temperature rise to 2 degrees Celsius or below is that global greenhouse gas emissions must fall 20 to 40 per cent below 1990 levels between 2020 and 2030. As Alberta’s 1990 emissions were 175 Mt of CO2e, the target of the Alberta government of limiting 2030 emissions to 270 Mt will exceed this target by about 50 per cent,” said Godo Stoyke of Carbon Busters.
For its part, the Pembina Institute applauded the 45 per cent target for the reduction of oil and gas methane emissions by 2025.
“The methane reduction target for the upstream oil and gas industry positions Alberta as a leader among fossil fuel producing jurisdictions worldwide on this critical issue,” said Ed Whittingham, executive director of the Pembina Institute in a statement. “It makes sense to focus on the biggest sources of greenhouse gas pollution in this sector — methane — because it offers the biggest reduction per dollar and the goal is achievable using technology and practices that are commercially available today.”
Watch below: Notley says the province will legislate an overall emissions limit of 100 megatonnes.
Alberta Liberal Leader David Swann called the plan welcome and ambitious, but called for more details on the government’s proposed “adjustment fund” for small businesses and lower-income Albertans. Swann also questioned the mandate of the government’s appointed negotiator for coal phase-out.
“These are the largest question marks that the government needs to provide answers on,” said Swann in a release.
“We need to know what the process will be for this adjustment fund to make sure there isn’t undue hardship on lower income families and small businesses. We also need to see what the mandate of this ‘negotiator’ will be, particularly when it comes to what compensation will be provided to companies and communities – if any.”
Watch below: Notley says revenue will go into an adjustment fund
Alberta Party Opposition Leader Greg Clark also supported the plan, hoping the strategy will be used to “unapologetically promote market access for Alberta industry.”
Watch below: Notley says Alberta will be phasing in a $30 per tonne economy wide carbon price.
Calgary Mayor Naheed Nenshi said Monday the city is still analyzing what the plan will mean for the city’s operations.
“Our fuel costs are certainly going to go up, so as they reallocate some of the money from the carbon price back to people who can’t afford it, I hope they remember to allocate some of that back to the city,” Nenshi said. “Because imagine how many tanks of gas and natural gas that the city needs every single day.”
Nenshi said about 40 per cent of City of Calgary (as a corporation) emissions come from electricity generation.
“So certainly, the end of coal-based generation is going to drastically reduce our emissions as a very large organization.
“Enmax will be analyzing, over time, what the change to the generation mix means for them; I happen to think they are very well-positioned here. But it cannot be underscored what a big deal the electricity changes are, and how that’s going to impact Calgarians everywhere.”
Ontario Premier Kathleen Wynne congratulated Alberta for taking on a “leadership role” and said Sunday’s announcement would “pave the way for further progress on the Canadian Energy Strategy, including the ongoing conversation on energy transportation like pipelines and hydro transmission.”
“Alberta’s new climate strategy, combined with a new federal government that is a true climate change partner for the provinces and territories, positions Canada to enter the Paris conference with a united voice,” said Wynne.
“This unity is a departure from the past. As evidenced by Premier Notley’s climate strategy, the united Canadian voice is one that is taking the swift and meaningful actions needed to fight climate change.”
Prime Minister Justin Trudeau added his support in a tweet, calling the plan a “very positive step in the fight against climate change.”
Outside Canada, former U.S. vice president Al Gore said the plan represents an “inspiring addition to the legacy of leadership and forward thinking action by Canadian provinces to speed our transition to a low carbon economy.”
“This is also another powerful signal — well-timed on the eve of the Paris negotiations — that humanity is beginning to win our struggle to solve the climate crisis. … I encourage Premier Notley, and all of Alberta, to follow this first step with continued bold action to transition away from fossil fuels.”
With a file from The Canadian Press