Leftwingers’ shock victory in oil-rich Alberta signals energy sector shake-up as anticipated carbon taxes defy PM Harper
By Alex Pashley
Canada and its retrograde climate agenda baffles many.
On track to blow through its carbon-cutting goals having quit the Kyoto treaty on the way, the North American country under prime minister Steven Harper has become something of a pariah.
Soaring emissions from its abundant tar sands concentrated in conservative heartland Alberta are at the core.
That’s why when a leftwing party ended 44 years of Conservative government in Tuesday’s provincial election, it sent shockwaves through the energy industry and right to Ottawa.
The incoming New Democratic Party is calling for a review of tax royalties paid by oil and gas firms and earlier coal phase-out than its predecessors.
And provincial NDP leader Rachel Notley has promised to stop using taxpayers’ money to lobby for the controversial Keystone XL pipeline.
Exploiting its tar sands, the world’s third largest proven reserves, would be “game over” for avoiding dangerous climate change, leading scientist James Hansen has warned.
Alberta voters kicked out the incumbents amid a slump in the oil industry with drilling drying up, as well as a backlash against perceptions of overly light regulation over the industry.
The NDP’s vow to ramp up environmental protection adds to the drumbeat of dissent by the provinces against the Harper government, an ally of the oil lobby who has disputed the legitimacy of carbon taxes.
The election of Notley was a “political earthquake”, said Karel Mayrand, Quebec director at environmental group David Suzuki Foundation.
“We were looking for something significant in order to regain the social license of the oil sands industry, but we never expected this,” he told RTCC.
Canada is the world’s fifth oil producer, with 75% of crude production coming from Alberta, according to the Canadian Energy Research Institute. Four-fifth of that comes from oil sands, which produce 17% more greenhouse gas emissions from extraction to consumption than regular oil.
NDP leader Notley’s election has caused consternation in the oil patch, after she pledged to make producers clean up their environmental record. The Canadian Association of Petroleum Producers has said it will work with her, but will put up roadblocks along with the lobby.
As it stands, oil sands emissions are set to drive a 38% surge in Canada’s release heat-trapping gases by 2030.
The country is set to miss its target to slash emissions 17% from 2005 levels by 2020, Climate Action Tracker estimates. It is yet to submit its pollution reduction targets under a UN pact to be signed in December.
With the federal government standing accused of climate inaction, individual provinces have pushed forward their own climate agendas.
Quebec has an emissions trading scheme, linked with California, which Ontario is fixing to join. The two Canadian provinces account for 20 million people and half of Canada’s GDP.
British Columbia has a CA$30 a tonne carbon tax covering 70% of its economy. New Brunswick and Nova Scotia are also planning to bring in carbon taxes, Mayrand said.
“The federal government has completely marginalised itself and the provinces are building their own type of power in the field. It’s a federal country: if one level doesn’t do something, others will occupy the field,” Mayrand added.
Michael Edwards, a policy analyst with Fairweather Hill, a research institute in New Brunswick, said the election defeat dealt a blow to Harper’s conservative stronghold.
“The challenge is going to be in maintaining a sense of credibility that his western base is rock solid behind him.
“The economies of Ontario and Quebec are in many ways much more important, though psychologically, this government has used the strength of Alberta economy as a proxy that they are good economic managers.”
Industry investment is expected to fall from CA$69 billion in 2014 to $36 billion this year, while lay-offs have climbed into the thousands, the Globe and Mail newspaper reported.
The Canadian Association of Petroleum Producers has warned against changing royalty rates following an oil price slump that bottomed near US$40 a barrel earlier this year.
Elizabeth May, Canada’s only Green MP, told RTCC a “disconnect” existed between provinces and the Harper administration, with zero discussions on the climate taking place with regional chiefs.
“Provinces can do things within their own areas of jurisdiction… some have taken impressive steps though it’s cumulatively insufficient to meet our Copenhagen targets,” May said.
A general election penciled in for October was Canada’s opportunity to deny Harper a third term, with the Greens playing a role in reversing the country’s record.
Harper’s Conservatives are leading the polls, though the contest is wide open, Mayrand said.
“The right is united, the left divided,” which could see the incumbents winning with progressive voters splitting the ballot.
Provinces can set emissions targets, though it’s Ottawa that decides the permits for inter-provincial pipelines.
Canada has a series of billion-dollar projects under review. Notley has rejected the polarising Keystone XL, which would transport up to 830,000 barrels a day from Alberta to Nebraska, and the Northern Gateway pipeline, transporting oil to British Colombia to be shipped to Asian markets.
Though another, the Energy East pipeline which would run to its Atlantic coast, finds support from Notley.
These conduits for carbon-intensive tar sands darken the outlook for Canada to comply with emission targets.
Canada has been remarked for its clean energy potential. Last April, 65 scientists put forward a roadmap for decarbonising its electric grid to slow global warming.
In the ‘Acting on Climate Change’ Plan they said Canada could reach 100% reliance on low carbon electricity by 2035, making possible Canada’s option to follow the US’ targets in reducing 26-28% from 2025 on 2005 levels.
Though nevertheless, provincial collaboration should force a more climate-friendly approach, whatever the election result.
“Everything is in flux in Canada right now,” Mayrand said.
“The important thing is 5 years ago, only Quebec and British Colombia were moving in direction of putting a price on carbon — now everyone assumes that a price on carbon is impossible to avoid. You’ve got to prepare for it.”