{"id":59750,"date":"2023-05-23T09:49:46","date_gmt":"2023-05-23T16:49:46","guid":{"rendered":"https:\/\/energi.media\/?p=59750"},"modified":"2023-05-23T09:58:48","modified_gmt":"2023-05-23T16:58:48","slug":"notleys-energy-climate-policies-laid-foundation-modern-alberta-oil-patch","status":"publish","type":"post","link":"https:\/\/energi.media\/markham-on-energy\/notleys-energy-climate-policies-laid-foundation-modern-alberta-oil-patch\/","title":{"rendered":"Notley’s energy and climate policies laid foundation for modern Alberta oil patch"},"content":{"rendered":"

“As it relates to the energy file, she has been very solid.\u201d – Dave Collyer, former Shell Canada executive, CAPP CEO, in 2018<\/strong><\/h2>\n

If the oil and gas industry has a future beyond the next few decades, Albertans can thank Rachel Notley. Her NDP government modernized provincial energy and climate policy from 2015 to 2019. As the energy transition accelerates and hydrocarbon demand destruction looms, those policies at least give the sector – and the Alberta economy – a fighting chance to survive in a low-carbon world. They were certainly not a disaster, as UCP leader Danielle Smith is claiming in the midst of a bitterly-fought election campaign.\u00a0<\/span><\/p>\n

What is a mystery is why Notley is, again, largely remaining silent about her government’s energy and climate policies. She made the same mistake in 2019. Kenney ran on a \u201cPipelines, Economy, Jobs\u201d narrative and mopped the floor with her. Read my column, <\/span>Why did Rachel Notley refuse to run on her energy policy record?<\/a>, from the day after the election.<\/span><\/p>\n

While energy isn\u2019t front and centre this campaign, the economy is, and the UCP have pounced on Notley\u2019s silence about her record while in power.<\/span><\/p>\n

To get a better sense of Notley\u2019s energy and climate policies, I reviewed Energi Media columns and news stories from 2015 to 2019. That review suggests Notley\u2019s policies stand up pretty well.<\/span><\/p>\n

Climate Leadership Plan<\/b><\/h3>\n

Launched at a press conference in late 2015, the parts of the <\/span>plan<\/span><\/a> that applied to oil and gas included a carbon tax for industry; upstream oil and gas methane emissions reductions of 45 per cent; and a 100 megatonne per year (Mt\/yr) oil sands emissions cap. Behind Notley at the podium stood four oil sands CEOs cheering heartily. The backstory about their attendance is a peek inside an industry that knows change is coming but is deeply conflicted about how to manage it.<\/span><\/p>\n

On a warm summer night in September of 2014, five CEOs met with five environmental group executive directors to discuss a truce in the \u201cdirty oil\u201d campaign against Alberta oil sands. You can read the details of their many meetings and their handshake deal, which was presented to NDP Environment Minister Shannon Phillips in the fall of 2015, in my columns <\/span>here<\/span><\/a> and <\/span>here<\/span><\/a>. Here\u2019s the bottom line: the CEOs conceded on emissions policy in return for no limits on production growth. That\u2019s the quid pro quo.<\/span><\/p>\n

\"\"As this chart demonstrates, the CEOs got their wish. Since the Climate Leadership Plan, Alberta oil production has risen by one million barrels per day.<\/span><\/p>\n

Not only has oil production risen, but so have emissions, especially from the oil sands. That isn\u2019t great climate policy (though Phillips provided<\/a> a credible defence), and the NDP are open to criticism on this point, but it\u2019s hard to see the supposed damage to the oil industry.<\/span><\/p>\n

Cutting the pipelines deal with Trudeau<\/h3>\n

Notley leveraged the Climate Leadership Plan – Canada was headed off to COP21 in Paris without a climate plan of its own and Alberta\u2019s was the most advanced provincial plan – to <\/span>secure federal approval<\/span><\/a> of the Trans Mountain Expansion and Line 3 projects. The Prime Minister <\/span>made it very clear<\/span><\/a> that Alberta\u2019s plan was key to the deal. The two pipelines added nearly 900,000 barrels per day of crude oil shipping capacity.<\/span><\/p>\n

When US President Donald Trump re-approved the Keystone XL pipeline that his predecessor Barack Obama had nixed, Trudeau allowed the Canadian government\u2019s approval to stand. Keystone XL would have added 830,000 barrels per day of capacity. President Joe Biden later nixed KXL, but that was no fault of Notley\u2019s.\u00a0<\/span><\/p>\n

Petrochemical Incentives Program<\/b><\/h3>\n

The NDP government\u2019s 2018 <\/span>Energy Diversification Act<\/span><\/a> included a new program to stimulate investment in petrochemical manufacturing.\u00a0<\/span><\/p>\n

\u201cThere\u2019s the opportunity to do things you and I haven\u2019t even dreamed of yet in terms of finding value-added products of the hydrocarbons,\u201d <\/span>said<\/span><\/a> Professor Michal C. Moore of the University of Calgary. \u201cThey\u2019re out there and it\u2019s just going to take a fair number of incentives I think that they take advantage of to actually get at them and use them, but I think that\u2019s going to happen.\u201d<\/span><\/p>\n

$300 million in royalty credits was granted to a joint venture between Pembina Pipeline Corp. and Kuwait\u2019s Petrochemical Industries Company to build a plant capable of manufacturing 800,000 tonnes a year of polypropylene, which will require 35,000 b\/d of propane. A further $200 million in royalty credits was granted to Inter Pipeline for a similar facility.<\/span><\/p>\n

The government estimated the two new manufacturing operations will create about 1,400 direct and indirect full-time jobs when they opened in 2021.<\/span><\/p>\n

The program was expanded by the UCP in 2020, increasing the grant to 12 per cent of capital costs and making it available to any company willing to invest in an Alberta petrochemical project.\u00a0<\/span><\/p>\n

Partial upgrading<\/b><\/h3>\n

The other significant initiative in the Energy Diversification Act was the <\/span>Partial Upgrading Program<\/span><\/a>. Bitumen is a gooey hydrocarbon with the consistency of peanut butter. Getting it to flow in a pipeline requires dilution with a light hydrocarbon, usually 30 per cent of the volume. Partial upgrading technology turns bitumen into medium or heavy crude oil that flows in a pipe without dilution.\u00a0<\/span><\/p>\n

Alberta exports three million barrels per day of heavy crude. Imagine if a third of existing pipeline space could be freed up using partial upgrading. Alberta would never need to build another export pipeline.\u00a0<\/span><\/p>\n

Only one project was funded. In early 2019, the NDP government <\/span>awarded<\/span><\/a> Value Creation Inc. $440 million to build a $2 billion oil sands upgrader near Edmonton. The Value Creation project <\/span>seems to have stalled<\/span><\/a>. Fractal Systems\u2019 JetShear partial upgrading regional hub, which was not funded by Alberta, also stalled despite having a non-binding commitment from Cenovus Energy.<\/span><\/p>\n