UPDATE 1-Alberta mulls tougher carbon rules on oil -report

Thu Apr 4, 2013 2:22pm EDT

* Report says levy could rise to C$40/tonne from C$15

* Minister looking a range of options to meet targets

* Analyst calls amount "not inconsequential"

By Jeffrey Jones

CALGARY, Alberta, April 4 (Reuters) - Alberta is considering a major increase in the carbon levy it charges oil producers as it seeks to show Washington that it is serious about meeting emission-reduction goals, while promoting the contentious Keystone XL pipeline to Texas refineries.

Alberta Environment Minister Diana McQueen offered the levy proposal at a meeting in Calgary last week with oil executives and federal Environment Minister Peter Kent, the Globe and Mail newspaper said on Thursday.

Such a move would be in line with comments that the Canadian province's envoy to Washington made in a February interview with Reuters. David Manning said Alberta may adopt more stringent environmental policies to help producers in the oil sands increase access to lucrative markets such as the U.S. Gulf Coast.

In the subsequent weeks, the government brushed aside media queries about what new moves were under consideration.

Wayne Wood, McQueen's spokesman, did not dispute that the minister had floated the idea of a higher carbon levy, but would not comment on the details and said no decision had been made.

"The minister is looking at any number of options, and it's really premature to speculate on any kind of option that might be settled on," Wood said.

The Globe and Mail said McQueen proposed an increase in that levy to C$40 a tonne, as well as a requirement to cut per-barrel emissions by 40 percent over time.

Alberta currently charges C$15 per tonne for carbon emissions above limits and puts the money into a technology fund. The program has generated C$312 million, though environmental groups have said the levy is far too small.

ALBERTA WANTS PIPELINE

Speculation on new moves by Alberta to improve its record on meeting emission reduction targets has increased since U.S. President Barack Obama named John Kerry, seen as a supporter of tougher climate policy, as secretary of state.

His department is responsible for ruling on TransCanada Corp's 830,000 barrel-a-day Keystone XL pipeline from the oil sands to the Gulf Coast, which has been under regulatory review for more than four years.

Keystone XL has met with staunch opposition from U.S. environmentalists, who say it will encourage more carbon-intensive production in Alberta's vast oil sands, the world's third largest crude deposit, at a time when Americans should be making a wholesale shift to green energy.

The government of Alberta has faced big problems in recent months as a shortage of spare export pipeline capacity has pressured prices for the bitumen produced from its oil sands, lowering the revenue take, and as the Obama administration has pushed back a decision on whether to approve the $5.3 billion pipeline. It is now expected to rule during the summer.

Alberta Premier Alison Redford is set to visit Washington next week for the fourth time in 18 months to press U.S. lawmakers to support Keystone XL. Last month, a State Department environmental assessment concluded that the project in itself would not drive a major increase in greenhouse gas emissions.

HIGHER LEVY "NOT INCONSEQUENTIAL"

In a note to clients, TD Securities analyst Menno Hulshof estimated that such new regulations would add less than $2 per barrel to the cost of producing a barrel of oil sands-derived crude, an amount he called "not inconsequential".

The Canadian Association of Petroleum Producers, the industry's main lobby group, declined to comment.

Cenovus Energy Inc, one of the largest oil sands producers, said a hike would not be surprising, given that the initial program was seen as a first step. Executives have run the numbers on its business model assuming both a C$15 and a C$65 per tonne payment, Cenovus spokesman Brett Harris said.

"Every company is different, but for our business we think we're pretty well positioned to compete at either of those levels," Harris said.

Kent is also expected to announce long-anticipated new federal emission rules for oil and gas at some point. His spokesman declined to comment on McQueen's remarks.

Wood said Alberta is looking at a range of options to meet carbon reduction targets as part of a review that began earlier this year. He had no timing for the results of the review.

Keystone XL opponent Danielle Droitsch, a director at the Natural Resources Defense Council in Washington, said Alberta's proposal was lacking, as C$100 to C$150 a tonne would be needed to make a serious dent in emissions.

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (4)
TomHarrisICSC wrote:
It is bad enough that the Alberta government misleads its public about the supposedly settled science of climate change. But in mid-March, they took the same flawed message to the United States in one of the worst public relations mistakes of all time: supporting the climate scare in America’s premier newspaper, the New York Times.

When Alberta Premier Alison Redford travels to Washington D.C. next week to lobby for the Keystone XL Pipeline, she must say nothing that would support the controversial idea that humanity’s carbon dioxide (CO2) emissions are causing dangerous climate change. After all, the ultimate aim of climate activists is to end our use of fossil fuels. Why would a province that derives most of its income from those resources support a movement that is trying to kill the market for the same resources?

Redford should prepare for the upcoming meetings by reviewing the strategic mistakes in the advertisement her government took out in the Times on March 17, 2013. Here is what happened:

On March 10, the New York Times editorial staff came out firmly against the Keystone XL pipeline. Their main argument was that the project would encourage expansion of Canada’s oil sands, thereby enhancing dangerous man-made climate change.

The Alberta government requested a guest column in the Times to respond to the editorial but were turned down. So they paid $30,000 to the newspaper to buy advertising space to counter the editorial. However, the real cost to Albertans was many times this amount since the Government’s ad effectively supported the climate scare and directed readers to a government website that boosted climate alarmism.

This approach will sway no one. Yet the Government gives the impression that they would prefer to see Keystone XL die rather than risk the unbridled wrath of the project’s opponents by daring to strike at the heart of the anti-Keystone campaign: the flawed science supporting the climate scare.

Here are correct, responsible messages that Redford could deliver. They portray the government as an honest broker working to do what is best for their electorate and the environment:

Climate change science is immensely complex. While the field is advancing, it is not yet possible to make meaningful forecasts of future climate. The influence of human-induced CO2 emissions is even less well-understood.

However, we recognize that many people are concerned about the possibility of climatic problems due to CO2 emissions from the oil sands. Consequently, the Government of Alberta is taking the following steps:

1. We are convening open, unbiased hearings into the climatic impacts of the oil sands. Qualified scientists will be invited to testify, regardless of whether they do, or do not, support the hypothesis that CO2 emissions are a significant cause of climate change.
2. We will continue to take “no-regrets” actions to save energy and reduce air, land and water pollution. This will also reduce GHG emissions, including CO2, as we increase efficiency.
3. We will continue to fund research into the causes of climate change with a goal of eventually being able to more accurately forecast future changes.
4. We will continue to implement adaptation measures to prepare for future challenges—cooling and warming, drought and flood, and other changes possible in our highly variable and unpredictable climate.

It is perhaps understandable that the Redford government is so frightened of activists that they dare not contest the science foundation of the climate scare. But they do us all a great disservice when they promote it and thereby feed the fire that threatens to destroy the province’s, and ultimately Canada’s, main source of wealth. This immense blunder is a one-way ticket to a future with no Keystone XL, no Northern Gateway Pipeline, no oil sands and ultimately no “have” provinces at all.
____________________
Tom Harris is Executive Director of the International Climate Science Coalition.

Apr 04, 2013 4:24pm EDT  --  Report as abuse
kann wrote:
The above comment from TomHarrisICSC should not be associated with ‘skepticism’ in the scientific sense. Skepticism implies considering all the facts and evidence; this commenter and the website he represents is not skepticism, but flat out denialism regardless of facts. Climate Change is a real problem and there is massive scientific consensus around that. Saying there isn’t is akin to saying you don’t believe in basic physics like the Greenhouse effect. To the extent that there are dissenting opinions, it is with respect to the rate at which warming is happening, not whether it is man-made or if temperatures aren’t increasing.

Worse, following his suggested ‘strategy’ would achieve nothing but make Albertans and Canadians look completely oblivious to scientific realities. How that would play in Washington compared to the current approach of half-hearted action, but at least acknowledging that some emission controls are necessary should be obvious to intelligent commentators.

Apr 04, 2013 7:03pm EDT  --  Report as abuse
TomHarrisICSC wrote:
Kann writes: “this commenter [i.e. me] and the website he represents is not skepticism, but flat out denialism regardless of facts.”

Response: No, we are not into denialism, except that we deny that we deny climate change. We do however question that causes. Considering the fact that there has been 17 years with essentially no global warming, despite continuing carbon dioxide rise, something none of the climate models predicted, is it not sensible to question whether or not the models work? This is rational thought in most circles, though not among most climate campaigners, of course.

Kann: “Climate Change is a real problem and there is massive scientific consensus around that.”

Response: CC always has and always will be a problem so we must prepare for it and adapt. To think we are the master controllers of the climate of planet Earth is not supported by the science. We cannot even forecast climate properly. How can we control it? What scientific consensus do you speak of, Kann? Most of that consensus argument is just an urban legend.

Kann: “Saying there isn’t is akin to saying you don’t believe in basic physics like the Greenhouse effect.”

Response: The so-called basic physics of the greenhouse effect is not so basic. Serious holes are beginning to appear in the theory, to say the least.

Kann: “To the extent that there are dissenting opinions, it is with respect to the rate at which warming is happening, not whether it is man-made or if temperatures aren’t increasing.”

Response: Yes, of course, the debate is whether the man-made component of the change is small, medium or large, in which case the issue is far from settle since, unless it is dangerously large, it should not be a public policy issue, let alone worth billions of dollars spent on it.

Kann: “Worse, following his suggested ‘strategy’ would achieve nothing but make Albertans and Canadians look completely oblivious to scientific realities. How that would play in Washington compared to the current approach of half-hearted action, but at least acknowledging that some emission controls are necessary should be obvious to intelligent commentators.”

Response: Many more in Washington that in Ottawa understand, and area actually prepared to say so publically, that science is a very long way indeed from being able to forecast, let alone control climate. That is what we call the real “climate reality.” It may be uncomfortable for people who want easy answers, but science is often like that, especially in such complex areas.

Apr 05, 2013 2:32am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.