Alberta addresses battered environmental reputation with climate plan

By Mike De Souza
CALGARY, Nov 23 (Reuters) - The Canadian province of
Alberta, holder of the world's third-largest oil reserves, has
proposed a new climate change plan that will give efficient
oil-producing companies room to grow while cutting carbon
emissions, experts and stakeholders said on Monday.
Long criticized as a source for "dirty oil" because most of
the reserves are heavy bitumen deposits found in the province's
oil sands, Alberta's left-leaning government created an unlikely
partnership between oil industry executives, indigenous leaders
and prominent environmentalists to forge the accord.
The proposal comes as world leaders prepare to discuss plans
to prevent global temperatures from rising more than 2 degrees
Celsius above pre-industrial levels at a summit in France
starting Nov. 30.
It also came as Prime Minister Justin Trudeau met with
provincial and territorial leaders to hammer out Canada's
position at the meeting, to be held at Le Bourget, north of
Paris.
"I'm convinced that the oil sands CEOs understand that you
can't be the high cost, high carbon producer in the world
anymore," said Ed Whittingham, executive director of the
Alberta-based Pembina Institute.
"It was all a very tight timeline, because obviously, the
premier wanted this announcement in the bag... before she goes
to Paris," he added.
The oil sands, natural deposits of tar-like heavy oil, are a
key driver of the Canadian economy and put the province's
reserves behind only Venezuela and Saudi Arabia.
But environmentalists have criticized the industry's energy
intensive production process, which makes it Canada's fastest
growing source of greenhouse gas emissions.
Whittingham said many senior company executives have
accepted, in part due to lower global oil prices, that they must
reduce their carbon footprint as well as high production and
energy costs in order to be more successful. To that end, the
plan foresees an end to coal-fired power generation and a carbon
price of C$30 ($22.49) per tonne.
The proposal also includes exemptions for upgrading
facilities to encourage new investments within Alberta and comes
after Premier Rachel Notley's government, which won an election
in May to end 44 years of Conservative rule, was stung with the
United States' rejection of TransCanada Corp's TRP.TO Keystone
XL pipeline. Notley called that decision a "kick in the teeth."
Paul Boothe, who was the top bureaucrat in Canada's federal
environment department as it developed the country's emissions
standards for coal-fired power plants and its attempt to draft
similar oil and gas regulations, said Alberta has taken an
important first step with the plan.
He said the proposal helps firms make a transition with what
he described as "subsidies" for the best-performing companies.

"Basically, it gives back to (companies), some of the carbon
tax that they pay," said Boothe, now an economics professor at
the University of Western Ontario. "The least-emitting firms do
the best, and the top-emitting firms don't do as well... So I
think that frankly, the oil and gas industry did very well in
this announcement."
At least six energy companies - Canadian Natural Resources
Ltd CNQ.TO , Cenovus CVE.TO , Enbridge Inc ENB.TO , Royal
Dutch Shell Plc RDSa.L , Suncor Energy SU.TO and TransCanada
Corp - publicly supported the plan.
Two other companies - Imperial Oil Ltd IMO.TO and
Canadian Oil Sands Ltd COS.TO - declined to say whether they
supported or opposed the proposal. Husky Energy Inc HSE.TO
said it would continue to work constructively with the province.

"What's critically important here is there's no cap on
production, it's a cap on emissions," said Cenovus president
Brian Ferguson in a CBC radio interview on Monday.
Notley must still unveil full details about how much space
each company would get in a proposed 100 million ton annual cap
on oil sands carbon emissions - an increase of about 40 percent
above current annual emissions - as well as incentives to
eliminate pollution from coal-fired power plants by 2030.
"These things don't pop up overnight," said Alberta
Environment Minister Shannon Phillips at a news conference in
Edmonton on Monday. "They are the product of negotiations and I
think that what we have been able to achieve here is an historic
agreement and a significant path forward to de-escalate conflict
over Alberta's energy resources."