Prentice plans to have announced a greenhouse gas emissions plan for all sectors of the economy before the Copenhagen meeting. The details of the regulations will be worked out in 2010, with an eye on what the U.S. is doing, and will be implemented in 2011. “Those decisions will be made on the basis of Canada’s national interests. But we will be fully mindful of what is going on with our major trading partner. It is certainly the case that we will want to know what U.S. legislation looks like.”
Meanwhile, Alberta is engaged in a delicate task of trying to influence America’s domestic climate change legislation to go easy on oil sands while still trying to look green. Mar insists that Alberta is not flat-out opposed to cap-and-trade or even a low-carbon fuel standard. “We don’t necessarily object—it depends on what principles are set out in the bill,” he says. The best case scenario for Alberta would be a bill that does not single out oil sands or unconventional fuels for tougher treatment, and an outcome that would recognize Canada’s own efforts, whatever they end up being, as “comparable” to the U.S. system. So far, Rob Renner thinks the province is not getting a fair shake. “We believe we are not getting a fair reflection in the court of world public opinion about what we are doing here in Alberta. We are more regulated and responsible than what is being portrayed. But we can do better. And we are striving,” Renner told Maclean’s.
He wants American legislators to know that Alberta has a $15-a-tonne tax on CO2 and is putting the money into an emissions management fund aimed at developing carbon capture and sequestration technology, not to mention billions more in climate change initiatives. “Our premier is committed,” Renner says. “I’m committed to staying as visible as I can in Washington. We simply have to be cognizant of the fact that we are a relatively small sprocket in this giant wheel.”
Alberta has assembled a cavalcade of officials and hired lobbyists—including former American ambassadors to Canada—to track the issue aggressively as the bill moves through Congress. At a cost of US$40,000 per month, Alberta has also hired two firms—DLA Piper, with former U.S. ambassador Jim Blanchard, and MCapital, with Paul Frazer, a former senior official at the Canadian Embassy in Washington, to provide “strategic advice” and to help monitor the legislation. (Saskatchewan has also gotten in on the act, hiring David Wilkins, Bush’s ambassador to Canada, to watch its own oil sands and uranium interests.) This mobilization has drawn fire from U.S. environmentalists. “It’s discouraging to see them so actively engaged in promoting the tar sands when I think they know it’s incompatible and will undermine our efforts to address one of the serious threats our planet faces,” says Barratt-Brown, who recalls seeing Canadian and Alberta officials popping up at hearings all over Capitol Hill. But those on the other side of the debate say the Canadian effort is not nearly enough. “We need help,” says Corcoran. “I think it would be beneficial for the Canadian commercial interests to get involved in this battle. You have to get around to every legislator to educate them, answer any questions they have, respond to arguments in favour of low carbon fuel standards that Waxman and Pelosi and others are making. It’s hard work. It requires resources. I think it would be money well spent.”
Alberta’s and Canada’s representatives are currently touting two recent studies. One, by the respected Cambridge Energy Research, notes that the emissions profiles of the oil sands are comparable or better than some other sources of U.S. oil supply. And another report by the New York-based Council on Foreign Relations makes the case that the oil sands are a strategic source of energy and more secure than sources in the Middle East, Venezuela or Nigeria. It also makes the point that American economic interests are better served by importing oil from Canada—because for every dollar spent, more gets returned to the U.S. through cross-border trade and even direct profits. Smith argues that the U.S. will need to keep importing oil even as it transitions to a greater share of renewable sources: “Conventional oil supply in North America continues to decline by at least three per cent per year. You have to replace that and right now oil sands are still your best bet,” said Smith.
There are many other potential impacts of the legislation on Canadian energy producers. The climate change bill includes a provision to hand out free emissions credits to the coal industry, rather than auctioning them, which reduces the relative attractiveness of the clean-burning of natural gas over coal. (The legislation’s emphasis on developing solar and wind, however, could help natural gas, since both those sources can be unreliable and natural gas is used to cover gaps in generation.) Canadian officials are also fighting to get hydroelectricity from Canada approved as a renewable resource. “We have the capacity to bring on as much as 25,000 megawatts of hydroelectricity over the next 25 years from Newfoundland, Quebec, Manitoba, and B.C. It’s a significant contribution. We need to make sure that it is a continental regime that develops,” says Prentice.
Some observers say the Alberta oil patch needs to hedge its bets. “I think it’s a great opportunity for Canada to start exploring a Canadian energy market strategy,” says Murray Smith. “Right now we import 1.3 million barrels a day from places like Kuwait, Algeria, Norway and the North Sea. With the new pipeline structure going in, it is conceivable that we could send Alberta crude to Eastern Canada and we could work on our own carbon profile.” The other strategy, of course, is to explore new markets—such as sending oil to West Coast ports where it can be exported to Asia. “We think the U.S. is the natural market for Canadian energy exports. But if that good relationship was threatened in some way, and if it made sense in the market, then folks would find ways to export to other markets,” says Tom Huffaker, vice-president for policy and environment at the Canadian Petroleum Producers’ Association. That, of course, would mark a stark shift from the decades spent focused on the United States. It might also mean that U.S. climate legislation resulted in Canadian oil being sent to Asia by tanker, which would increase emissions even more. “You’d end up with an outcome that would be less economically efficient and less carbon efficient,” said Huffaker. “I think irony is a reasonable word for that.”
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