Varcoe: Buyers attempt to decode message despatched by Ottawa's emissions cap on oil and gasoline

As Canada’s oilpatch tries to determine how a federal emission cap will work, a extra instant concern is its influence on funding.

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Because the oilpatch tries to determine how a brand new federal emissions cap on the business will work within the years forward, their eyes are turning to a extra instant matter: its impact on funding.

On Thursday, Ottawa unveiled the framework of its incoming restrict on greenhouse gasoline emissions from the business, adopting a cap-and-trade system to decrease emissions by a goal of 35 to 38 per cent (from 2019 ranges) by the tip of this decade.

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With flexibility measures being put in place, akin to permitting corporations to purchase offsets credit, the precise emissions discount might find yourself being 20 to 23 per cent. Business executives say they might want to see the ultimate laws to know the impact on future manufacturing and compliance prices.

Nonetheless, they’re clear-eyed on the message it sends to buyers within the Canadian oil and gasoline business.

“It can make it more durable to draw international funding to return into Canada and it’ll additionally serve to cap, or make it a hindrance, to attempt to develop manufacturing. And I’m asking, why would you try this? You’ll be able to nonetheless be a world chief in local weather change,” Surge Power CEO Paul Colborne mentioned Friday.

“You bought your palms round my throat and now you’re squeezing even more durable.”

The emissions cap is a part of the federal local weather technique to decrease total emissions by as much as 45 per cent by the tip of this decade as Canada seeks to realize net-zero emissions by 2050.

Draft laws on the cap will probably be unveiled subsequent yr, with remaining laws accomplished in 2025.

“We’re doing one thing that has by no means been completed on this nation, and that nobody else on the planet has completed,” federal Atmosphere Minister Steven Guilbeault informed reporters Thursday. “So, we felt we would have liked to take the time to do it proper.”

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A cap-and-trade system will set up a complete quota of allowable emissions within the upstream business, which might fall over time. Corporations can purchase offsets or put cash into a brand new decarbonization fund in the event that they exceed their allowances.

Oilsands
View of the Syncrude oilsands extraction facility close to Fort McMurray on October 25, 2009. MARK RALSTON/AFP/Getty Photographs

Apart from the brand new coverage, Canada has a nationwide worth on carbon and clear gasoline laws that have an effect on downstream corporations.

The province has an current program for heavy emitters — the Alberta Innovation and Emissions Discount (TIER) system — and a notice from BMO Capital Markets on Friday mentioned the cap provides “one other layer within the Canadian coverage pancake.”

A report by CIBC Capital Markets analysts on Friday famous the majority of anticipated business reductions will come from chopping methane emissions and from the oilsands, the place a big carbon seize and storage community is being deliberate.

“We view the imposed reductions as largely possible from a technological standpoint, however to us the timing of the cap stays unrealistically bold and therefore would make it onerous if carried out,” the CIBC report states.

“On the finish of the day, we doubt both buyers or corporates will take a lot of this long-awaited coverage to coronary heart. Particulars stay scant, a federal election looms and a constitutional problem from the provinces is nearly sure.”

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Certainly, some business buyers in Canada say they’re not fussed but, given the ignorance accessible.

“I simply don’t suppose we now have sufficient particulars to kind an informed opinion,” mentioned Eric Nuttall, a senior portfolio supervisor with Ninepoint Companions.

“That is being put forth by a authorities that in all probability received’t exist in two years . . . I’m not shedding sleep over this in any respect.”

But, there’s concern the coverage will successfully cap future manufacturing development and make it more durable to draw capital, because the business must make important investments in carbon seize, utilization and storage tasks, and different decarbonization initiatives.

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Corporations that function on each side of the Canada-United States border level out that whereas the Biden administration is placing methane guidelines in place, the U.S. doesn’t have the identical array of local weather insurance policies directed squarely on the oil and gasoline sector.

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“They don’t have a carbon worth and so they don’t have these emissions caps in place. So, the query is: Does Canada actually wish to give the US that huge of a bonus?” mentioned Cole Smead, president and portfolio supervisor with Phoenix-based Smead Capital Administration.

“Canada has nice property. (Do) you wish to give your largest neighbour to the south — the place you promote extra oil than anyplace else — a structural benefit within the regulatory framework? I don’t suppose I’d.”

Smead, whose agency has investments in Canadian-based companies together with MEG Power and Cenovus Power, mentioned the emissions cap in Canada “simply proves that there’s a vast quantity of human foolishness potential.”

He’s undecided if the brand new cap will ship buyers in Canadian power to the exits, however it can add one other exterior value and make it a lot more durable for brand new producers to begin up or develop.

Knowledge by Raymond James reveals 49 per cent of publicly traded Canadian petroleum producers are held by U.S. buyers, 46 per cent by home shareholders and the remaining by worldwide buyers. Whereas the U.S. presence has been rising in recent times, the emissions cap is a headwind for the sector, mentioned Raymond James analyst Jeremy McCrea.

“It’s one factor to have a carbon tax the place everyone’s impacted, but it surely’s one other factor to focus on a selected business,” he mentioned.

“It feels very (a lot) within the crosshairs of the federal government. And that’s why a number of the buyers I’ve talked to have been cautious right here of how a lot capital they wish to sustain in Canada.”

Chris Varcoe is a Calgary Herald columnist.

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Varcoe: 'They must again down' — Alberta, oilpatch gear up for conflict over Ottawa's emissions cap

A protracted-simmering brawl over the cap, between the feds on one facet and the Alberta authorities and business on the opposite, is now totally underway

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The oilpatch emissions cap cometh, ushering in a Titanic wrestle between the federal authorities, the province and the nation’s oil and fuel sector.

After two years of intense dialogue, fierce debate and profound disagreement, the Trudeau authorities introduced Thursday its new framework to cap after which reduce greenhouse fuel emissions from the nation’s oil and fuel business. Ottawa billed it as the primary such coverage on this planet from a serious producing nation.

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A protracted-simmering brawl over the cap, between the feds on one facet and the Alberta authorities and business on the opposite, is now totally underway.

Ottawa will undertake a cap-and-trade system by way of laws below the Canadian Environmental Safety Act, aiming to wrestle down emissions within the sector by an anticipated 35 to 38 per cent by the tip of the last decade (from 2019 ranges).

Trade leaders expressed frustration with the plan, whereas the Smith authorities vowed to assemble a constitutional “protect” to cease it, which might contain utilizing the province’s sovereignty act.

Federal Pure Assets Minister Jonathan Wilkinson mentioned he expects manufacturing to rise as emissions fall below the plan, however Premier Danielle Smith insisted it’s a manufacturing cap that deliberately assaults the province’s financial system and will result in a nationwide unity disaster if Ottawa proceeds with it.

“There’s no query that in the event that they proceed on this path, it’ll find yourself in courtroom and I feel we’ll win,” Smith informed reporters Thursday from Dubai, the place she’s attending the COP28 local weather convention.

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“We face a disaster of the federal authorities’s making, which is why they must again down.”

First promised by the federal Liberals through the election marketing campaign two years in the past, the coverage proposes to cut back business emissions sharply by way of this decade because the nation goals to achieve internet zero by 2050, a aim that has been adopted by Alberta and far of the business.

A cap-and-trade system will set a restrict on business emissions by establishing a complete quota of allowable emissions, which might decline over time, with the federal government distributing free allowances to regulated amenities.

Smith identified the province has the unique constitutional proper to make legal guidelines on the event of its pure sources.

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The oil and fuel sector was accountable for about 28 per cent of all emissions in Canada in 2021. With rising considerations about local weather change, environmental teams largely applauded the transfer.

“This emissions cap will lastly immediate oil and fuel firms to divert document earnings into main investments in decarbonization,” Janetta McKenzie of the Pembina Institute mentioned in a press release.

“Current insurance policies are usually not sufficient.”

The sector is lowering emissions per barrel as international demand has reached document ranges this yr. The business is a big job creator — using 412,000 Canadians straight and not directly final yr — whereas producing 30 per cent of Canada’s exports.

Ottawa estimates the cap will cowl about 85 per cent of all emissions within the upstream oil and fuel business in 2021. The coverage will apply to standard oil and pure fuel, offshore manufacturing and oilsands, in addition to LNG amenities, however to not downstream refining and distribution.

The federal authorities identified the plan will embrace a number of flexibility measures, permitting firms to purchase a restricted variety of carbon offset credit, or contribute to a decarbonization fund in the event that they exceed their allowances.

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In an interview, Wilkinson mentioned it’s not sure if the cap will apply to particular person wells or small producers, noting this can be a framework and draft laws can be developed subsequent yr. Reporting and verification necessities for the cap would begin as early as 2026.

The federal minister doesn’t assume the coverage will result in funding {dollars} flowing south of the border, saying that threat is “very low.”

“We labored very exhausting to make sure that that is centered on emissions and never on manufacturing . . . It primarily will operate as a backstop. You set your cash the place your mouth is, you do the issues that you simply say you’re going to do — or there’s a requirement that you simply really do them,” Wilkinson added.

“We’re fairly assured within the federal authorities’s potential from a jurisdictional perspective to deliver this into place.”

Jonathan Wilkinson
Jonathan Wilkinson, minister of pure sources, speaks throughout a federal authorities announcement in Calgary on Monday, June 19, 2023. Gavin Younger/Postmedia

Trade response was swift.

Oilpatch veteran Hal Kvisle, the previous CEO of TransCanada Corp. and Talisman Power — and a director with a number of oil and fuel producers — known as the emissions cap an “ill-conceived transfer” by the federal authorities.

“None of our rivals in the USA are dealing with cap-and-trade restrictions,” mentioned Kvisle.

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“It’s each bit as unhealthy because the NEP.”

If the cap causes funding within the sector to shift to different jurisdictions, it’ll result in fewer jobs and funding in Canada, warned Kevin Neveu, CEO of Precision Drilling Corp., the nation’s largest driller.

Whereas it gained’t doubtless have an effect on 2024 spending choices, it’ll make it more durable for firms to plan medium and long-term investments.

“It is a slim coverage and it’s ready below the route of an environmental activist. It’s solely centered on financially impairing the Canadian oil and fuel producing business,” mentioned Neveu.

“This may end in investments being redirected and jobs being redirected away from Canada.”

Kevin Neveu
Kevin Neveu, CEO of Precision Drilling Corp. Postmedia file

There’s loads on the road for all sides.

The Pathways Alliance, a gaggle of main oilsands producers working to attain net-zero emission by 2050, is creating a proposal to construct a $16.5-billion carbon seize community connecting the oilsands to a storage hub close to Chilly Lake.

The alliance’s president mentioned the group will analyze the federal framework, however Kendall Dilling believes the present nationwide carbon value and Alberta’s industrial emitters program “already offers applicable regulation to drive emission reductions towards internet zero by 2050.

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“Imposing an emissions cap, with extra regulatory complexity, does nothing to advance the knowledge obligatory for the deliberate multibillion-dollar decarbonization initiatives to proceed,” he mentioned in a press release.

In the meantime, producers mentioned the coverage might result in oil and fuel output being shut in or future development being stymied.

“We’re very dissatisfied,” mentioned Tristan Goodman, president of the Explorers and Producers Affiliation of Canada.

“It might have manufacturing implications. I feel due to that, it’s doubtless unconstitutional, regardless of what the federal authorities is saying, and there’s going to be plenty of authorized motion related to this.

“And much more combating to come back.”

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Would Alberta win a courtroom battle over the emissions cap? What’s a cap-and-trade system? Right here's what it’s good to know

That is what it’s good to know in regards to the new laws

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The federal authorities launched on Thursday its long-awaited draft of its cap on emissions for the oil and fuel sector.

Utilizing a cap-and-trade system, Canada is proposing a minimal 20 to 23 per cent emissions minimize from the oil and fuel sector by 2030, in comparison with 2019 ranges.

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The federal authorities has pressured it’s not a cap on manufacturing. Alberta Premier Danielle Smith and Alberta Surroundings Minister Rebecca Schulz name it “an intentional assault … on the economic system of Alberta.”

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What’s a cap-and-trade system, and what precisely are the targets? Has a system like this ever been imposed on the oil and fuel sector?

That is what it’s good to know in regards to the new laws.

What’s a cap-and-trade system?

Below a cap-and-trade system, oil and fuel operators may have a restrict — the cap a part of the equation — on the quantity of carbon they will burn. The federal authorities is focusing on a 35 to 38 per cent discount in greenhouse fuel emissions by 2030, in comparison with 2019 ranges.

However that quantity is the higher restrict; operators within the oil and fuel sector will every be given a particular variety of allowances, which add as much as the federal authorities’s complete emissions cap. Operators who decrease their emissions and have additional allowances, for instance, can promote these to different producers. That’s the place commerce comes into play.

Including to the normal system, the federal government can be proposing corporations have the choice of as a substitute buying carbon offset credit, or by paying right into a decarbonization expertise fund which might put money into “future greenhouse fuel reductions.”

What if an operator exceeds the emissions cap?

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In that case, federal officers would decide penalties relying on how extreme the infraction is. The laws fall beneath the Canadian Environmental Safety Act (CEPA), which falls beneath legal regulation — that means operators who don’t meet the targets can be breaking the regulation.

Penalties for an operator who violates these legal guidelines would depend upon the laws’ closing language, stated Eric Adams, a professor and constitutional scholar on the College of Alberta. Fines are most frequently handed out in response to CEPA violations.

Ultimate limits are anticipated to be decided subsequent yr in draft laws.

What precisely are the targets, and when do they begin?

The 35 to 38 per cent reductions would deliver down greenhouse fuel emissions from the oil and fuel sector between 106 to 112 million tonnes (Mt). The additional flexibility proposed would deliver emissions between 131 to 137 Mt.

That’s in comparison with 2019 emissions of 171 Mt.

The draft laws will probably be phased in between 2026 and 2030, based on the draft.

Has one of these cap-and-trade system ever been applied?

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Cap-and-trade programs aren’t a brand new idea — Ontario applied a model of 1 in 2017, which the Doug Ford authorities shortly scrapped in 2018.

However a particular system imposed on the oil and fuel sector doesn’t have a direct analog, stated Dale Beugin, government vice-president of the Canadian Local weather Institute.

“I believe it’s just a little bit completely different than what we’ve seen elsewhere … to go up a stage, I believe numerous sectors and many international locations have some mixture of pricing insurance policies and regulatory insurance policies,” he stated.

How vital are emissions from the oil and fuel sector?

The oil and fuel sector is Canada’s largest contributor of greenhouse gases, making up 28 per cent of all emissions as of 2021. Behind it’s transport (22 per cent) and buildings (13 per cent).

That quantity is considerably larger in Alberta, the place 52 per cent of emissions come from the sector.

Complete emissions from the sector peaked in 2018 when it hit 201 Mt of carbon dioxide, based on an Surroundings Canada report. That quantity dropped to 189 Mt in 2021.

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The Pathways Alliance, a coalition of Canada’s largest oil sands producers, stated in a background doc this week that manufacturing elevated about 220 per cent from 2005 to 2021. A latest evaluation by S&P World discovered GHG emissions per barrel of oil have dropped about 23 per cent since 2009.

The overwhelming majority of power manufacturing is centred in Western Canada, making up 80 per cent of all Canadian crude oil manufacturing as of 2020.

And, based on Surroundings Canada information, Alberta’s greenhouse fuel emissions have elevated 19 per cent since 2005.

Does Alberta have authorized standing to problem the emissions cap?

The province’s greatest and solely hope of defending itself from the cap is a constitutional problem in courtroom, authorized specialists say.

Alberta has the inherent capability to problem the laws’ constitutionality, however finding out whether or not it interferes with the province’s jurisdiction over pure assets will probably be a difficult puzzle.

“Alberta may have an inexpensive argument — it received’t be a slam dunk — and it’s going to be unattainable to forecast till the ultimate model of the provisions can be found,” stated Adams, the U of A constitutional scholar.

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Alberta’s argument can be that the laws intrude with the province’s jurisdiction, as Premier Smith has already stated, whereas the federal authorities will probably say it’s an try to cut back the harms created by greenhouse fuel emissions, Adams stated.

In an interview with Postmedia, Andrew Leach, an power and environmental economist at U of A, stated latest rulings on the Influence Evaluation Act and plastics aren’t sturdy comparators for a possible case over the emissions cap.

Premier Smith hasn’t but dedicated to utilizing the sovereignty act as a way of protesting the laws — but when the courts discover it legitimate, Alberta must adjust to the emissions cap, Adams stated.

“If (the laws is) legitimate, then there’s nothing that the Alberta authorities can do to choose out of the legitimate software of federal regulation — no button it will probably push, no sovereignty magic it will probably weave.”

What’s the response been thus far?

The Alberta authorities and oil and fuel sector have put the draft laws within the crosshairs since Thursday’s announcement.

Smith instructed reporters Thursday that the federal authorities “will find yourself in courtroom” if it continues with the laws, and stated it should harm Alberta’s funding local weather.

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The Canadian Affiliation of Petroleum Producers (CAPP) stated the proposal is “successfully a cap on manufacturing.”

“CAPP believes the proposed coverage dangers triggering unexpected socioeconomic penalties not the least of which is prone to be larger power costs for Canadians,” wrote Lisa Baiton, CAPP president and CEO.

The Pathways Alliance stated in an announcement that the prevailing programs equivalent to carbon pricing and Alberta’s Know-how, Innovation and Emissions Discount (TIER) system “already present applicable regulation to drive emission reductions.”

“Imposing an emissions cap, with further regulatory complexity, does nothing to advance the understanding mandatory for the deliberate multi-billion-dollar decarbonization initiatives to proceed.”

Danielle Smith
Alberta Premier Danielle Smith says Ottawa’s proposed cap on greenhouse fuel emissions from the oilpatch singles out her province for punitive measures and she or he guarantees one other courtroom struggle with the federal authorities over it. Smith speaks in Edmonton on Monday, Nov. 27, 2023. Jason Franson./The Canadian Press

In the meantime, the renewable power sector and local weather teams say they approve of the coverage.

The federally funded Canadian Local weather Institute referred to as the strategy “cheap and mandatory.”

The Pembina Institute, a clear power think-tank, additionally stated it helps the measures.

“Authorities insurance policies that decrease the emissions depth of Canada’s oil and fuel manufacturing will assist to make sure Canada’s oil and fuel sector is aggressive in a lower-demand and carbon-constrained future on the finish of this decade,” its assertion stated.

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Varcoe: 'Nothing in need of the NEP' — Oilpatch girds for Ottawa's new cap-and-trade emissions plan for sector

‘It is the single-biggest existential menace (to the sector). An emissions cap is a cap on manufacturing. It is so simple as that,’ mentioned Ensign Vitality Providers president Bob Geddes

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Premier Danielle Smith was in a automobile on Wednesday night heading down a seven-lane freeway in Dubai for a dinner with Alberta Atmosphere Minister Rebecca Schulz and different Canadian policymakers.

The occasion was being hosted by federal Atmosphere Minister Steven Guilbeault, whom the premier has beforehand referred to as a “maverick” and “renegade.”

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The dinner with about 24 different Canadian politicians and officers, on the sidelines of the COP28 local weather summit this week, occurred on the eve of an announcement from Guilbeault of Ottawa’s controversial emissions cap for the nation’s oil and fuel sector — and a showdown between the feds and the province.

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“I noticed him briefly (this week) and mentioned hi there, and he’s internet hosting a dinner this night,” Smith mentioned in an interview shortly earlier than the occasion, which additionally included Saskatchewan Premier Scott Moe.

“I’m very upset that he got here right here clearly with an agenda to unilaterally announce main reductions in emissions that we see will probably be manufacturing caps.”

The framework for the emissions restrict on the oil and fuel trade, which would require the sector to cap after which reduce them, will probably be launched Thursday. It can use a cap-and-trade regime, in keeping with federal sources.

It’s certain to result in a nasty tussle between Alberta and the Trudeau authorities, though each side have adopted a goal of net-zero emissions by 2050.

Steven Guilbeault
Minister of Atmosphere and Local weather Change Steven Guilbeault speaks throughout a media availability on Parliament Hill in Ottawa, on Monday, Nov. 27, 2023. Canada is poised to stipulate on Thursday a federal emissions cap on the oil and fuel sector utilizing a cap-and-trade framework that might start no sooner than 2026, says a federal authorities supply. Photograph by Justin Tang /The Canadian Press

The oil trade is the most important emitting sector within the nation. The Canadian authorities has vowed to chop total emissions within the nation by 40 to 45 per cent by 2030.

Its emissions discount plan final 12 months modelled a 42 per cent reduce from the oil and fuel trade (from 2019 ranges) by the tip of the last decade.

Alberta sees the cap as unconstitutional, as provinces can solely make legal guidelines associated to the exploration and growth of non-renewable pure sources.

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“I hear that he’s meaning to announce an emissions cap, which we see as a manufacturing cap on oil and fuel . . . It’s a fairly outrageous factor to do, to come back to a convention like this with out having shared the small print with us,” Smith mentioned earlier than heading into the dinner.

“I’ll be well mannered, as I at all times attempt to be, however I’ve to be agency, that they’ve continued to violate our jurisdiction, they lose in court docket after which they act as if they will function outdoors the regulation.”

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Federal sources mentioned that 42 per cent is not going to be the ultimate quantity for emissions cuts by 2030, and confused the framework will probably be technically achievable with some flexibility mechanisms put in place for trade.

“We’ve made certain it’s a cap on air pollution, not on manufacturing,” mentioned one supply.

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The federal authorities examined two potential choices final 12 months for the coverage, however has determined to make use of a cap-and-trade system, the sources confirmed. Such a course of would probably set a tough restrict on trade emissions, establishing a complete quota of allowable emissions, which might fall over time.

As soon as a baseline quantity of emissions is about, corporations will be capable to purchase offset credit — and Ottawa may even create a decarbonization fund — to make sure predictable cuts.

Regardless of discuss of additional session with the sector because the laws are developed, the oil and fuel trade is annoyed by the transfer. The sector additionally faces a rising nationwide carbon value, clear gas requirements and new guidelines to chop methane emissions.

“We strongly oppose an emissions cap and it’s pointless to fulfill Canada’s Paris commitments,” Tristan Goodman, head of the Explorers and Producers Affiliation of Canada, mentioned Wednesday.

“It’s merely a punitive strategy, not according to different international locations.”

The president of considered one of Canada’s largest drilling companies blasted the concept of a cap, saying it’ll push trade funding into different international locations.

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“It can put 1000’s of Albertans out of labor, and a cap on manufacturing is nothing in need of the NEP (Nationwide Vitality Program) over again,” Ensign Vitality Providers president Bob Geddes mentioned Tuesday evening.

“It’s the single-biggest existential menace (to the sector). An emissions cap is a cap on manufacturing. It’s so simple as that.”

Tristan Goodman
Tristan Goodman, president of the Explorers and Producers Affiliation of Canada (EPAC). Gavin Younger/Postmedia file

Trade leaders are anxious in regards to the impact of the emissions cap, as Canada is the fourth-largest oil producer on this planet, however the one main exporter dealing with such a measure.

Nonetheless, there’s additionally rising stress for all the fossil gas sector to chop emissions shortly as issues over local weather change develop. One debate going down at COP28 focuses on a push to section out fossil fuels, whereas some international locations are advocating for a much less aggressive “section down” over time.

Smith mentioned she is assured the trade can meet its decarbonization goals by 2050. By setting a shorter 2030 timeframe, there’s a threat that know-how “doesn’t materialize in seven years” and manufacturing can be shut in.

Her authorities will take steps to make sure that doesn’t occur and is ready to make use of the Alberta Sovereignty Inside a United Canada Act in one other power confrontation with Ottawa.

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“The Sovereignty Act movement is the best way we might litigate it, as a result of what we might say is that is what we’re doing as an alternative. And it’ll be as much as the federal authorities to take us to court docket in the event that they suppose one way or the other they’ve a proper to remove our constitutional authority,” Smith added.

“The Structure issues, and in the event that they don’t respect it they will create a nationwide unity disaster.”

Danielle Smith on carbon capture
Alberta Premier Danielle Smith. David Bloom/Postmedia

The Worldwide Vitality Company forecasts that demand for oil and fuel will peak later this decade. But, there are questions on assembly the rising international urge for food for oil within the brief time period and if the cap will push manufacturing — and carbon emissions — into different producing international locations.

Whole Canadian oil manufacturing is anticipated to rise by greater than 300,000 barrels per day subsequent 12 months, topping 5.4 million barrels, mentioned Kevin Birn, a vice-president with S&P International Commodity Insights.

Birn mentioned if the notion is the emissions cap is just too steep or unachievable, it might have an effect on the movement of funding into Canada. However particular particulars of the initiative will decide the way it impacts the trade.

“If the coverage units expectations which can be too stringent or too rigid, then it has the potential to negatively influence capital flows,” Birn mentioned.

“The chance right here is that we undermine the flexibility to finance the very initiatives that we need to carry ahead to decarbonize, to enhance the (trade) competitiveness.”

Chris Varcoe is a Calgary Herald columnist.

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Breakenridge: No clear purpose for federal emissions cap

Whereas the Alberta authorities has been extra centered as of late on the federal Clear Electrical energy Rules, this may occasionally change into a extra pressing matter

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We could also be nearer to some readability across the specifics of Ottawa’s proposed emissions cap on the oil and fuel sector. What stays elusive, nonetheless, is a logical or coherent purpose for why such a coverage is important and even advisable.

Maybe the silver lining to many in Alberta will probably be that the Liberals proceed to undermine their very own carbon pricing system, however there’s good purpose to be involved about Ottawa’s plans.

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Studies final week urged the feds would possibly use the COP28 summit as a chance to formally announce the emissions cap, however the full and last particulars will doubtless nonetheless be months away.

Whereas the Alberta authorities has been extra centered as of late on the federal Clear Electrical energy Rules (CER), this may occasionally change into a extra pressing matter. Whereas the electrical energy rules don’t take impact till 2035, the Liberals have eyed 2030 because the deadline for this emissions cap with a rumoured goal of a 42 per cent discount in emissions.

This could symbolize an unrealistic goal and timeline that might symbolize a big blow to not simply Alberta’s economic system, however Canada’s general GDP. Furthermore, although, it represents a extra expensive and fewer environment friendly strategy to emissions reductions. And it’s not clear what the purpose is to start with.

Final week, Prime Minister Trudeau gave a complicated — but additionally revealing — reply about why his authorities is pursuing this coverage course.

“It doesn’t make any sense to anybody that (the) oil and fuel sector ought to have an infinite capacity to pollute,” he declared, “And it doesn’t make any sense that any sector have an infinite quantity to pollute.”

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Both the prime minister momentarily forgot about carbon pricing or maybe he’s written it off altogether. Regardless, it’s weird to recommend there may be an “limitless capacity to pollute” when there’s a vital value hooked up to these emissions.

Trudeau additionally inadvertently makes the case in opposition to his authorities’s personal industry-specific strategy. When he refers to “any sector,” he appears to be suggesting there needs to be equity and consistency in how sector-specific emissions are handled. However that’s the precise reverse of how they’re continuing.

No different sector is or will probably be subjected to an emissions cap. Why ought to Ontario’s auto sector or Quebec’s cement sector proceed to “have an infinite capacity to pollute” underneath this authorities?

A tonne of carbon is similar, no matter the way it’s generated or the place it comes from. Carbon pricing displays that actuality. This emissions cap rejects it.

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The federal government’s allies on this file aren’t serving to, both. The environmental teams cheering this on are the identical teams who argue that the period of fossil fuels is coming to an finish, and that we should always count on to see a fast drop in demand adopted by manufacturing. Why, then, would there be a have to impose an emissions cap on a sector that’s fading into oblivion?

This all appears to disregard the very actual progress being made within the oil and fuel sector and the continued want for these assets. Emissions in standard oil and fuel are down 24 per cent over the previous decade and oilsands emissions had been flat final yr, regardless of elevated manufacturing. The six largest oilsands gamers are transferring ahead on a $16.5-billion carbon seize and storage mission.

Why isn’t the federal government holding up its carbon pricing as a contributor to that progress reasonably than undermining its signature coverage and ignoring these optimistic developments?

Ottawa and Alberta are on the identical web page in relation to assist for carbon seize know-how, and a collaborative strategy to incentivizing its improvement and deployment may very well be a much more efficient — and much much less economically damaging — strategy to curbing oil and fuel emissions.

Extra sovereignty act theatrics most likely aren’t the reply, however Alberta positively must push again onerous on this plan.

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Varcoe: A 'nastier struggle' — Right here comes the emissions cap and a high-stakes federal-provincial donnybrook

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The vitality battle between Alberta and Ottawa has centred on the Clear Electrical energy Laws over the previous two months, however one other, doubtlessly “nastier” struggle is coming quickly.

Prepare for the Eruption over the Emissions Cap.

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On one aspect is federal Setting Minister Steven Guilbeault, who’s in Dubai this month for the COP28 local weather convention.

He’s anticipated to launch particulars on the long-awaited emissions cap on the nation’s oil and gasoline trade this month, however has additionally seen his authorities lose two high-profile court docket rulings on the environmental entrance lately.

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On the opposite aspect is the Alberta authorities, with Premier Danielle Smith and Setting Minister Rebecca Schulz additionally attending the United Nations Local weather Convention, vowing to struggle the feds if its deliberate emissions restrict turns right into a manufacturing ceiling.

And watching carefully is the nation’s oil and gasoline trade, which has been ready to see particulars of the proposal because the federal Liberals initially promised throughout the 2021 election marketing campaign to “cap and lower” emissions within the sector.

“Now we have executed quite a few issues to deal with the emissions from the oil and gasoline sector. However sadly, that’s not sufficient,” Guilbeault advised reporters from the convention on Friday.

Schulz stated it will be “embarrassing for Canada” to launch the long-awaited plan on the world summit, whereas different Canadians are busy explaining to a world viewers how the nation will develop the financial system and cut back methane and CO2 emissions.

“That is what he does. He flies all over the world and goes and makes these commitments and statements to appease all of his local weather activists, after which comes again and tells the provinces, ‘Yeah, we’re going to let you determine how you can how you can do it,’ ” she stated in an interview Thursday.

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Alberta politics
Alberta Premier Danielle Smith, with Minister of Setting and Protected Areas Rebecca Schulz and Minister of Affordability and Utilities Nathan Neudorf, at a information convention the place they outlined the Alberta sovereignty act movement that will probably be introduced earlier than the Alberta Legislature, in Edmonton, Monday Nov. 27, 2023. Picture by David Bloom/Postmedia

“We’ve been clear. We’re not accepting an emissions cap from the federal authorities.”

It’s shaping as much as be one other provincial-federal fracas, coming within the wake of the continued scrap over the federal Clear Electrical energy Laws. The Trudeau authorities is pushing for a net-zero energy grid by 2035 as an alternative of the 2050 timeline favoured by Smith.

“That is completely different,” stated Mount Royal College political scientist Duane Bratt, noting the battle over electrical energy is about what yr the grid should attain net-zero emissions, whereas the cap might immediately have an effect on Alberta exports, jobs and authorities revenues properly into the longer term.

“It’s going to be a way more nastier struggle as a result of the stakes are a lot greater.”

The oil and gasoline sector was accountable for about 28 per cent of all emissions within the nation in 2021, making it the biggest emitting sector in Canada. Most of the sector’s producers, together with oilsands operators, have adopted a goal of reaching net-zero emissions by 2050.

The Worldwide Power Company stated in a latest report that to align with worldwide targets to restrict world warming to 1.5 levels Celsius, emissions from trade operations have to fall by 60 per cent by 2030.

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“That is the make-or-break regulation,” stated Simon Dyer of the Pembina Institute. “That is the regulation that may truly drive the investments that we have to see from oil and gasoline firms in decarbonization.”

The oil and gasoline sector additionally immediately employs 177,000 Canadians, together with 128,000 in Alberta. Over the previous yr, oil and gasoline represented about 17 per cent of whole Canadian exports.

oil
The oil and gasoline sector employs round 177,000 Canadians, 1280,000 in Alberta. Picture by Larry MacDougal/THE CANADIAN PRESS

In its mid-year replace Thursday, the province projected useful resource revenues will hit practically $20 billion this yr.

There may be additionally a authorized aspect at play. The Structure says provinces can completely make legal guidelines associated to the exploration, improvement and administration of non-renewable pure assets.

Whereas Ottawa received a lawsuit permitting for a nationwide carbon worth, the federal authorities has misplaced two key lawsuits previously two months: one over the Affect Evaluation Act and the opposite over the federal government deeming plastic gadgets as poisonous.

On Friday, Guilbeault acknowledged he needed to have the ability to introduce the framework for the emissions cap earlier.

“The federal authorities can definitely intervene in terms of issues simply of air pollution, and together with local weather air pollution. However now we have to be very cautious to not impede on provincial jurisdictions,” her stated, noting the latest court docket rulings.

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“It has meant now we have to guarantee that our regulation does precisely that — that it tackles air pollution with out infringing on provincial jurisdiction, and that has meant that it has taken a bit of bit extra time than perhaps we had initially anticipated.”

The federal authorities’s emissions discount plan launched final yr modelled a 42 per cent discount in emissions from the oil and gasoline trade by 2030.

A report by S&P International Commodity Insights final fall indicated the oilsands could have to scale back potential manufacturing by as much as 1.3 million barrels per day (bpd) to fulfill that concentrate on.

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“We’re nervous that an emissions cap will create a manufacturing decline and, second, we’re involved it is going to create unfavorable investor sentiment,” stated Tristan Goodman, president of the Explorers and Producers Affiliation of Canada.

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Equally, Canadian Affiliation of Petroleum Producers CEO Lisa Baiton stated the group doesn’t see a path to realize the emission reductions required by the federal cap with out manufacturing being curtailed.

Tamarack Valley Power CEO Brian Schmidt identified the oil and gasoline sector is the one Canadian trade dealing with such a restrict on emissions, whereas producers are actively investing extra to chop methane and CO2 emissions.

“I simply don’t get why we’re handled in another way. A molecule of carbon dioxide from a cement plant isn’t any completely different from a molecule of carbon dioxide from the oil trade. So why don’t we deal with them the identical?” Schmidt stated.

“I don’t even know the way you place that cap in place . . . How is that this all going to work, as an organization? How are you going to determine who’s going to chop? We within the trade simply can’t determine (it) out.”

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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Opinion: Oil and fuel emissions cap by 2030 'not attainable', says Alberta setting minister

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Simply over a month in the past, Premier Danielle Smith proposed establishing a bilateral working group between Canada and Alberta to deal with points associated to emissions and the pure useful resource sector.

The premier made it clear that Alberta was keen to pursue a carbon-neutral economic system by 2050. We additionally made it clear that the federal authorities should not unilaterally legislate an oil and pure fuel emissions cap — an space of provincial jurisdiction.

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The federal authorities informed us that they heard our considerations about insurance policies that had been unaffordable and unachievable, and acknowledged the financial penalties {that a} cap would have on Alberta’s economic system, in addition to the uncertainty it could create for future emissions discount investments and initiatives. We had been informed that our suggestions can be shared with their colleagues, and hoped it could result in significant recognition.

It seems that message was not handed alongside, or hasn’t been heard.

Federal Surroundings and Local weather Change Minister Steven Guilbeault appears intent on pursuing an oil and fuel cap, however a 42 per cent discount in emissions within the oil and fuel sector by 2030 is just not attainable.

The know-how and infrastructure wanted to make this occur is just not in place. It might take tons of of thousands and thousands of {dollars} and a versatile regulatory regime. On each counts, the federal authorities is failing Canadians and ignoring Albertans.

The USA and the European Union launched industrial insurance policies which have attracted tons of of thousands and thousands of {dollars} in investments. Canada, then again, nonetheless hasn’t fulfilled a two-year-old promise to implement a “Clear Know-how Funding Tax Credit score.”

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Canada’s regulatory system is without doubt one of the most complicated on the planet and solely getting worse. This ranges from Invoice C-69, the “no extra pipelines act,” to an virtually weekly announcement from Surroundings and Local weather Change Canada of some new, bureaucratic set of Byzantine guidelines.

The one choice left seems to be the federal authorities’s most well-liked one — a manufacturing reduce. Alberta won’t settle for that.

Each credible forecast of future world vitality consumption continues to see oil and fuel dominating the provision combine for many years to come back. Alberta and Canada, with excessive environmental requirements and modern know-how, ought to be the provider of selection for the world.

Alberta may even not stand by and watch because the federal authorities condemns Albertans and Canadians to poverty. Impartial evaluation by S&P International forecasts that an emissions cap would imply a discount of a couple of million barrels per day and the lack of a minimum of 10,000 direct jobs and numerous oblique jobs. That may devastate whole municipalities and Indigenous communities.

Canada-wide, the oil and fuel sector accounts for seven per cent of Canada’s financial exercise, or $168 billion in GDP. The Public Coverage Discussion board estimates that it might result in a $100-billion loss in GDP by 2050, with about $60 billion coming from Alberta.

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These tax {dollars} fund every part from well being care to training and infrastructure. That could be a stage of financial destruction that no province would settle for.

Canada doesn’t have to decide on between chopping manufacturing and chopping emissions. We will attain carbon neutrality, innovate and hold our vitality sector working — and that’s what Alberta’s emissions discount plan is about.

Alberta is main the nation in pursuing emissions reductions. We’re world leaders in carbon seize, utilization and storage; lead the nation in renewable vitality development; and have surpassed methane discount targets. This doesn’t need to be an either-or dialogue.

It is a once-in-a-generation alternative for Alberta and Canada to be world leaders. We will scale back emissions right here and worldwide, shield our surroundings, be innovators in clear vitality know-how and meet the world’s vitality wants.

To understand this chance, we’d hope for commonsense, cheap discussions with the federal authorities on insurance policies which are reasonably priced and achievable. In any other case, we are going to use any and all instruments we have now to defend towards federal insurance policies that may hurt Albertans.

Rebecca Schulz is Minister of the Surroundings and Protected Areas.

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Varcoe: 'A substantial amount of concern' — Oilpatch meets with Guilbeault with emissions cap in intense highlight

Whereas it does not sound like numerous tangible progress was made, it is encouraging the assorted sides are literally speaking

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Steven Guilbeault met with oilpatch leaders and Alberta’s atmosphere minister in downtown Calgary on Wednesday in some of the scrutinized political-industry occasions of the summer season.

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It didn’t precisely rival the discharge of the brand new Barbie and Oppenheimer motion pictures by way of public hype. There’s far much less popcorn and a a lot harder crowd concerned.

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However it comes at a important second.

The federal atmosphere minister is liable for setting up a brand new obligatory emissions cap on the nation’s oil and gasoline sector.

The sector and province are doubtful that Ottawa’s anticipated 2030 targets — the feds have modelled a 42 per cent discount in emissions coming from the {industry} — will be reached with out considerably curbing output.

The reporting of a guide’s examine earlier within the week, displaying as much as 1.3 million barrels per day of oilsands manufacturing might be “in danger” with the federal cap in place, solely added to the stress.

“It was an excellent assembly . . . very constructive conversations,” Guilbeault mentioned after gathering with a number of oilpatch executives.

“A part of the explanation I’m right here is to take heed to what individuals should say — issues, concepts, how we might do issues — and that clearly was achieved.”

Draft rules on the emissions cap will possible come out within the fall, he added.

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Whereas it doesn’t sound like numerous tangible progress was made, it’s encouraging the assorted sides are literally speaking.

Michael Belenkie, chief government of Benefit Vitality Ltd. and subsidiary Entropy Inc., a carbon seize and storage developer, mentioned the assembly was an try and be collaborative, which was appreciated.

Nonetheless, the incoming cap “appears fairly actual” and Canada is the one main oil and gasoline producer going through a nationwide carbon tax and a tough restrict on emissions that should fall over time.

“Not one of the main exporters are being held to the identical normal that Canada is being held to,” Belenkie mentioned after the session.

“There’s quite a lot of courtesy and mutual respect. In all probability slightly little bit of frustration, and quite a lot of concern.”

Michael Belenkie
Michael Belenkie. Photograph by Azin Ghaffari /Postmedia

The oil and gasoline sector is the nation’s highest-emitting industrial {industry}, though most of the gamers — together with main oilsands producers — have already adopted a net-zero goal for 2050.

Final yr, the Trudeau authorities launched its Emissions Discount Plan, displaying {industry} emissions would tumble by 42 per cent by 2030 from 2019 ranges.

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“It’s impactful and one thing we’re all involved about,” Surge Vitality CEO Paul Colborne, who didn’t attend Wednesday’s assembly, mentioned in an interview.

With the sector warning will probably be unable to hit the interim goal in simply seven years with out manufacturing doubtlessly being throttled again, {industry} gamers and the Alberta authorities have puzzled if there can be any flexibility with the federal figures.

“For Canada to have the ability to meet its 2030 targets, each sector of the Canadian society must do its justifiable share,” Guilbeault mentioned when requested about it.

“What we mentioned within the Emissions Discount Plan was that the 42 per cent was not a goal nevertheless it was a pathway. So we are going to see with the oil and gasoline cap — will it’s precisely that, will it’s one thing completely different? That’s one of many many issues that stay to be outlined.”

Guilbeault additionally met with officers from the electrical energy sector and the Calgary Chamber of Commerce throughout his two-day go to to town. He made an look Wednesday on Actual Speak with Ryan Jespersen, the place he flatly rejected the notion Canada’s oil and gasoline {industry} sector is being singled out by the cap.

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The federal minister expressed skepticism with an S&P International examine that signifies Ottawa’s acknowledged 2030 targets might put as much as 1.3 million barrels per day of oilsands manufacturing in danger.

“It fascinates me that individuals would come to these conclusions with out even understanding what the goal is,” he instructed Jespersen.

“I don’t even know what the goal is.”

It’s price noting that in a written submission to the federal authorities, the Canadian Affiliation of Petroleum Producers (CAPP) mentioned evaluation by Navius Analysis signifies the emissions cap would result in home oil manufacturing being lowered by greater than 600,000 barrels per day, and pure gasoline by two billion cubic toes per day by 2030, in contrast with a base-case situation.

“The oil and gasoline {industry} isn’t unfairly focused. We’re working to cap emissions within the electrical energy sector. We’re speaking about that, (to) have a internet zero grid by 2035,” Guilbeault instructed Jespersen, noting Ottawa additionally plans to require all vehicles and light-duty vans bought in Canada by 2035 to be zero emissions.

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Given the dynamics at play, Whitecap Sources CEO Grant Fagerheim referred to as it a “courageous state of affairs” for the federal minister to sit down down with sector leaders, however confused it’s merely not sensible to succeed in such emissions targets inside such a brief time frame.

“They are saying the vitality sector isn’t being unfairly focused. I don’t agree with that. I feel it’s being focused. What are the measures being placed on all different industries?” Fagerheim mentioned in an interview.

Grant Fagerheim
Grant Fagerheim. Photograph by Todd Korol /PST

The Alberta authorities has additionally been against Ottawa’s plan for a net-zero electrical energy grid by 2035, saying the province — which depends on pure gasoline to generate energy — can’t make the shift with out huge prices for customers.

After her separate assembly with the federal minister, Alberta Atmosphere Minister Rebecca Schulz famous a number of the excellent points, together with the net-zero grid and emissions cap, can be mentioned additional by a working group between the federal and provincial governments within the coming weeks.

And he or she reiterated the province has jurisdiction over useful resource improvement in Alberta, not Ottawa.

“The indication we obtained from the minister was that there’s nonetheless time for negotiation and discussions,” mentioned Schulz.

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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Varcoe: Federal-provincial atmosphere ministers meet this week, as battle flares over emissions cap

This week’s sit down between Schulz and Guilbeault will likely be intently watched by business and authorities for alerts on what’s going to occur subsequent

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This week’s face-to-face assembly between federal Atmosphere Minister Steven Guilbeault and his provincial counterpart Rebecca Schulz needs to be an intriguing one, as sparks fly once more over the vitality and atmosphere information.

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There’s sufficient flamable materials to set off one other federal-provincial firestorm, regardless of the progress noticed in current weeks throughout different official gatherings between the 2 sides.

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Nevertheless, current feedback by Guilbeault over Ottawa’s plan for a net-zero electrical energy grid by 2035 prompted a blast from the premier’s workplace on Saturday.

Add to the combo the publication Monday of a examine, ready by S&P World Commodity Insights final fall. It signifies the oilsands sector could need to throttle again potential manufacturing by as much as 1.3 million barrels per day (bpd) to satisfy the Trudeau authorities’s emissions goal for Canada’s oil and fuel business by 2030.

Put all of it collectively and this week’s sit down between Schulz and Guilbeault will likely be intently watched by business and authorities for alerts on what’s going to occur subsequent.

“It’s going to be very tense,” predicted Martha Corridor Findlay, a former Liberal MP and lately retired chief local weather officer at Suncor Power.

“Forcing the business to chop manufacturing is nonsensical. Whether or not it’s politics, whether or not it’s enterprise, for gosh sakes, sit down on the desk and work out the best way to make this work.”

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Corridor Findlay’s feedback come as a report by S&P World warned that the Trudeau authorities’s emissions goal for the sector — a deliberate 42 per cent discount by 2030 — would result in oilsands manufacturing being “put in danger.”

On Monday, Schulz referred to as the numbers stunning, saying such a reduce might devastate the economies of Alberta and Canada, doubtlessly impacting as much as 9,500 direct jobs.

Rebecca Schulz
Rebecca Schulz. Photograph by Jim Wells /Postmedia

The examine, first reported within the Globe and Mail, signifies the oilsands sector can use carbon seize, utilization and storage (CCUS) and different possible abatement expertise to chop shut to fifteen megatonnes of emissions by the tip of this decade.

But, it leaves the sector about 29 megatonnes shy of Ottawa’s interim goal — a 2030 aim on the highway to Canada reaching net-zero emissions by 2050, a place additionally adopted by main oilsands producers.

In line with the S&P examine, if the oilsands gamers put money into abatement measures, reaching the federal goal might result in 800,000 bpd of manufacturing being decreased.

That’s in comparison with its base-case state of affairs the place output is predicted to achieve 3.7 million bpd by the tip of this decade — up 24 per cent from 2019 ranges — below current insurance policies.

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Such a loss in output would have an effect on 5,400 jobs and the cumulative potential income influence can be $530 billion by 2050, it states.

Nevertheless, if the sector decides to reduce its funding in emissions abatement, manufacturing can be curbed by 1.3 million bpd, impacting 9,500 positions — and rising the cumulative potential income influence to $960 billion, the report notes.

Officers with S&P declined to touch upon the specifics of the examine.

In an interview, Schulz stated the lack of about a million bpd of potential manufacturing and virtually 10,000 jobs, “can be devastating for Alberta’s financial system … that is one thing that ought to concern Canadians as properly.”

The emissions cap, together with the federal minister’s plan for a net-zero electrical energy grid by 2035, will likely be on the agenda of Wednesday’s assembly in Calgary.

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“What the federal authorities is proposing is only a manufacturing cap, primarily,” Schulz stated Monday.

“What I’m hoping for is that the federal authorities chooses widespread sense and dealing with Alberta over ideology.”

It stays to be seen if the 2 atmosphere ministers can see eye-to-eye on these insurance policies.

Premier Danielle Smith sat down with the prime minister initially of Stampede and the 2 leaders apparently made progress. Justin Trudeau famous a joint working group between the 2 governments was being established to seek out widespread floor on energy-environment issues.

Smith additionally reported constructive discussions with Pure Assets Minister Jonathan Wilkinson and federal Intergovernmental Affairs Minister Dominic LeBlanc final month.

Nevertheless, Smith’s workplace despatched out a press launch on the weekend, criticizing feedback made by Guilbeault, by which he reiterated Ottawa’s intention to require provincial energy grids to achieve net-zero emissions inside a dozen years.

Prime Minister Justin Trudeau, right, meets with Alberta Premier Danielle Smith in Calgary on Friday, July 7, 2023.
Prime Minister Justin Trudeau, proper, meets with Alberta Premier Danielle Smith in Calgary on Friday, July 7, 2023. Photograph by Jeff McIntosh /The Canadian Press

Smith insists Alberta can’t attain that quantity with out important financial ache and needs the goal prolonged till 2050. She additionally blasted the incoming oil and fuel emissions cap, saying it will create investor uncertainty.

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In an interview with the European information web site Euractiv, Guilbeault famous the provinces have jurisdiction over pure useful resource manufacturing, however stated the federal authorities can play a job in limiting air pollution, resembling by making a nationwide worth on carbon and pursuing a net-zero electrical energy grid by 2035.

“We may also be introducing regulation to cap the emissions of the oil and fuel sector — a cap and reduce regulation — within the coming months. Our aim is that no matter occurs to manufacturing, we have to be sure that the emissions from Canada’s oil and fuel sector go down over time.”

On Monday, Guilbeault’s workplace launched a press release saying the federal division is working to develop a cap that reduces emissions from the sector “in a means that helps competitiveness and reaches net-zero by 2050, each of that are objectives clearly articulated by the business.

“The cap will goal emissions, not manufacturing, aligned with assembly our Paris targets.”

However the federal authorities is sending blended messages, Corridor Findlay stated bluntly.

“You possibly can’t have some senior (federal) ministers saying we don’t wish to reduce manufacturing, and you’ve got different ministers saying and doing all the things that may, actually, power a reduce in manufacturing,” she stated.

This units the desk for Wednesday’s assembly between the atmosphere ministers, one other high-profile gathering as each side stake out their floor on these contentious points.

“You recognize, it’s one factor to be making grand pronouncements on the worldwide stage,” added Schulz.

“We have to take a look at what’s truly occurring right here in Canada and Alberta.”

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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Braid: Excessive-level assembly introduced glimmer of hope for Alberta-Ottawa emissions deal

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Monday’s Alberta-Ottawa mini-summit on local weather motion got here with a maxi-surprise. It went very effectively.

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The 2-hour Calgary assembly started cordially and bought higher because it went alongside, in response to folks aware of the session at McDougall Centre.

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May an agreed deal on emissions be within the works? It begins to appear doable.

There have been indicators of realism and adaptability from a federal authorities that has been making ridiculous calls for on emissions targets for oil and fuel.

This happy the Alberta facet, which included Premier Danielle Smith, Vitality Minister Brian Jean and Atmosphere Minister Rebecca Schulz.

Federal Pure Assets Minister Jonathan Wilkinson stated Ottawa agrees with the province gaining emissions credit for exports of liquid pure fuel.

This can be a essential matter. Credit score for LNG offers with different international locations is crucial to Alberta’s rising coverage to go net-zero by 2050. With out that settlement, the province must radically scale back oil and fuel manufacturing.

After the assembly I requested Wilkinson if he’s onside with the credit-for-export plan.

“Completely, beneath sure situations,” he stated. “It has to interchange coal, we’ve bought to confirm that, and likewise account for the home challenge of lowering emissions.

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“As quickly as you try this, you can also make it slot in Canada’s carbon discount plan, and you may have a web good thing about lowering emissions globally.”

There was additionally flexibility on two different key issues: Ottawa’s plan to part out pure fuel for electrical energy by 2035, and the parallel demand to cut back oil and fuel emissions by 42 per cent by 2030.

Smith insists these targets couldn’t be met with out extreme cuts to manufacturing and harm to the nationwide financial system. They may set off UCP use of the Sovereignty Act.

Requested particularly in regards to the 2035 goal, Wilkinson stated, “I believe there’s a continued want for pure fuel. There’s completely a necessity for fuel, each as a supply of energy, with carbon seize, but additionally as backup.

“In that context I do suppose there’s a want for flexibility. And I believe that’s one thing the federal authorities is considering within the context of the electrical energy laws.”

There’s nonetheless loads of room for dispute. The UCP envisage a protracted phase-out for hydrocarbons burned as gas. A brand new examine exhibits Ottawa’s present plans would result in earlier manufacturing cuts.

“On the finish of the day,” Wilkinson stated, “the federal authorities must hear and must attempt to handle a number of the issues that Albertans have and positively that Alberta trade has, and I’m very, very open to that dialog.”

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Jonathan Wilkinson
Jonathan Wilkinson, minister of pure assets, speaks throughout a federal authorities announcement in Calgary on June 19, 2023. Gavin Younger/Postmedia

All this comes after final week’s launch of the federal Sustainable Jobs laws, which dropped the offensive “simply transition” label.

It’s now extra a plan to arrange commissions and targets than a direct federal hand on job transition from oil and fuel.
Ottawa’s document on direct assist for job transition has been dismal in each coal and fisheries industries, in response to the federal auditor common.

Wilkinson sidestepped a query about big quantities of federal assist going into battery vegetation in Ontario. He wasn’t eager on my suggestion that Ottawa again a battery plant in Alberta to point out goodwill.

“We’re very focussed on tasks right here in Alberta,” he stated, citing Dow and Air Merchandise tasks. “I have a look at the Strategic Innovation tasks, most of them are literally in Alberta.”

(Dow plans a zero carbon emissions ethylene cracker and derivatives website at Fort Saskatchewan. Air Merchandise has a hydrogen mission in Edmonton.)

Wilkinson added: “Anyone who thinks there’ll be no persevering with position for hydrocarbons higher take into consideration what they placed on their bike chains. There are every kind of non-combustion makes use of for hydrocarbons.”

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The minister and his sidekick at this assembly, Infrastructure Minister Dominic LeBlanc, now take their views again to Prime Minister Justin Trudeau and the Liberal caucus, the place they could not get a joyous reception.

Accepting Smith’s proposal for a joint working group – or rejecting it – would be the actual check of Ottawa’s budding goodwill.

Smith stated this group would “work on a collaborative strategy to incentivize carbon seize, utilization and storage and different emissions-reducing infrastructure for the oil and pure fuel and electrical energy sectors, in addition to to set affordable and achievable milestones for emissions reductions in these sectors by to 2050.”

The bottom has shifted considerably since Smith gained the Might 29 election. The Liberals now need to take care of her for 4 years, by an eventual election marketing campaign of their very own.

The feds could decide {that a} stable settlement with Alberta will do them extra good than one other battle. Or possibly it’s simply one other gust of wind from the east.

However there, at the least, is a glimmer of hope for joint settlement on these urgent points.

Don Braid’s column seems frequently within the Herald.

Twitter: @DonBraid

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