{"id":62730,"date":"2024-03-30T07:54:08","date_gmt":"2024-03-30T14:54:08","guid":{"rendered":"https:\/\/energi.media\/?p=62730"},"modified":"2024-03-30T07:55:52","modified_gmt":"2024-03-30T14:55:52","slug":"calgary-chamber-of-commerce-fails-miserably-with-climate-letter-to-guilbeault","status":"publish","type":"post","link":"https:\/\/energi.media\/markham-on-energy\/calgary-chamber-of-commerce-fails-miserably-with-climate-letter-to-guilbeault\/","title":{"rendered":"Calgary Chamber of Commerce fails miserably with climate letter to Guilbeault"},"content":{"rendered":"

“Engage in further consultation with all sectors of the Canadian economy to understand the social, financial, and regulatory impacts of the proposed emissions cap…” – letter to Environment Minister Steven Guilbeault, March 27<\/h2>\n

The oil sands has a dilemma. Extracting bitumen accounts for 12 per cent of Canada\u2019s greenhouse gas emissions, a situation seriously at odds with nation climate commitments. But the cost of lowering those emissions is likely to bankrupt producers. Dirty oil or economic catastrophe, those seem to be the only two choices available. Is there not a middle way?<\/span><\/p>\n

The sector\u2019s emissions problem is top of mind because of the Calgary Chamber of Commerce\u2019s March 27 open letter<\/a> demanding that Ottawa\u2019s proposed oil and gas emissions cap be abandoned.<\/span><\/p>\n

The letter is scandalously dishonest. Nothing more than a recitation of oil company memes, really.\u00a0<\/span><\/p>\n

For example, the Chamber writes that \u201coil sands producers have continued to reduce the emissions intensity per barrel, achieving a 23 per cent reduction since 2009.\u201d This is partly true. Average emissions-intensity fell from about 83 kg CO2e\/b to the current 68 kg CO2e\/b.\u00a0<\/span><\/p>\n

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Oil Sands Dialogue, S&P Global.<\/em><\/figcaption><\/figure>\n

Accurate at the broadest level, perhaps, but averages hide the really bad actors. According to S&P Global calculations, some oil sands production is as high as 160 kg CO2e\/b. If that isn’t the dirtiest crude oil on the planet, it’s a close second.<\/span><\/p>\n

What is also conveniently not acknowledged in the letter is that oil sands production more than doubled during over the last 15 years from 1.5 million barrels per day to 3.5 million barrels per day.\u00a0<\/span><\/p>\n

As long as there has been oil sands production, improvements in emissions-intensity per barrel have been overwhelmed by growing output. The result is ever higher absolute emissions, which now sit at 83 megatonnes (Mt) per year. The only year that relationship did not hold was 2022, when emissions plateaued, probably because output rose only 50,000 barrels per day.<\/span><\/p>\n

Another serious omission from the Chamber\u2019s letter: the Alberta Energy Regulator predicts that oil sands production will rise another 600,000 barrels per day by 2032. If the historic trend holds, and given the current political and policy situation that\u2019s a reasonable assumption, then absolute emissions will rise, too.\u00a0<\/span><\/p>\n

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Alberta Energy Regulator.<\/em><\/figcaption><\/figure>\n

Imagine how frustrated Steven Guilbeault, the oft-vilified federal environment minister, must feel about that. He probably hears regularly from environment ministers in British Columbia or Quebec who are busy implementing climate plans, including entering into equivalency agreements with Ottawa, while Alberta has no climate plan and opposes most federal attempts to impose one.\u00a0<\/span><\/p>\n

No wonder he says he is determined to follow through with the proposed – or threatened, if you\u2019re Premier Danielle Smith – cap. <\/span>Why should other provinces pick up Alberta\u2019s slack?<\/span><\/p>\n

Ottawa’s oil and gas emissions cap design a mistake<\/h3>\n

Guilbeault is not entirely blameless. His preferred emissions cap is to impose a cap-and-trade carbon pricing system on top of the existing industrial emitters carbon tax. In Alberta, this tax is called the TIER (Technology Innovation and Emissions Reduction) Regulation. Critics have quite rightly pointed out that such a scheme would double reporting requirements, increase regulatory burdens, and be woefully confusing.\u00a0<\/span><\/p>\n

In the Chamber\u2019s words, it would create a \u201cpunitive regulatory environment.\u201d<\/span><\/p>\n

It didn\u2019t have to be this way.\u00a0<\/span><\/p>\n

In early 2022, Ottawa released a discussion paper<\/a> about emissions cap options. Only two were discussed: tightening up industrial emitters\u2019 carbon tax or cap-and-trade. Later that year, and already a year after Prime Minister Justin Trudeau unexpectedly announced the cap at COP26, the federal government re-negotiated the TIER equivalency agreement with Alberta, doubling the yearly increase in stringency (from 1%) of the carbon tax.\u00a0<\/span><\/p>\n

That isn\u2019t enough. The Pembina Institute calculates that stringency has to increase up to five per cent per year to be effective. <\/span><\/p>\n

Astute readers will be wondering why, with Alberta already at the table, the feds didn\u2019t simply negotiate a tougher emitter\u2019s tax when they had the chance. One system, one set of regulations, one cost.\u00a0<\/span><\/p>\n

Maybe Alberta wouldn\u2019t budge any further on TIER. Maybe the Liberals are so disorganized that the TIER negotiators didn\u2019t know what the emissions cap designers were up to.\u00a0<\/span><\/p>\n

Who knows? But here we are.<\/span><\/p>\n

Now, two things are likely.\u00a0<\/span><\/p>\n

One, the oil sands cannot be allowed to continue growing absolute emissions. Oil industry talking points like that old chestnut, \u201cCanada is only 1.7% of global emissions, why should it do anything to lower GHGS?\u201d is, frankly, embarrassing. Canada has signed international climate agreements and as a G7 nation, behaving like a responsible adult is a condition of belonging to the club.<\/span><\/p>\n

Two, if the global energy transition continues to accelerate, Canadian Energy Regulator modelling shows that oil sands production slowly declines after 2030 because of low prices.
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If \u201cCanada needs to meet net-zero by 2050 and manage those emissions, then Canadian producers are facing very real decarbonization costs and those costs are most acute for oil sands producers versus conventional producers,\u201d Jean-Denis Charlebois, CER chief economist, told Energi Media (listen to full interview below).<\/span><\/p>\n

This is the oil sands dilemma: the sector must decarbonize in the face of worsening climate change and the competitive threat posed by clean energy, but doing so probably puts it out of business.<\/span>
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