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Canada’s oil industry has never shown much of a talent for reading the room, but it took its political tone-deafness to new depths this week. With parts of Europe literally ablaze and the United Kingdom having faced the hottest temperatures it’s ever seen, our oil industry’s leaders decided it would be a good time to explain why they can’t afford to reduce their emissions as quickly as the federal government would like — and might not be able to do it at all.
On Tuesday, Environment and Climate Change Minister Stephen Guilbeault announced his government would consult with the industry, along with other key stakeholders, in advance of deciding how to implement its overdue oil and gas emission cap.
The consultations will revolve around two options: a cap-and-trade system that sets a ceiling on emissions from the oil and gas industry and then continually lowers it, or an industry-specific carbon price that drives them down at a similarly brisk pace. Unfortunately for the industry and its proxies, the magic beans and empty promises option they would clearly prefer to use is not on the table.
The Alberta government responded with its usual brand of bravado. Energy Minister Sonya Savage and Environment Minister Whitney Issik released a joint statement reiterating the province’s constitutional rights and refusal to allow any encroachment on them by Ottawa, and said: “Alberta has always taken responsible energy development seriously and that’s why we’ve been taking action on climate change for more than two decades.”
Most of said action was taken by their NDP predecessors, of course, and the UCP either repealed or watered down most of it when they came into office. On the plus side, at least they’ve evolved to the point where they’re pretending to support climate regulations and policy.
Reaction from the two front-runners for Jason Kenney’s job was even more removed from reality. Brian Jean, the UCP MLA for Fort McMurray, tweeted: “A mandated production cut is unacceptable. And Liberal consultations are fake consultations.” As has been the case for the entire leadership race, former Wildrose leader Danielle Smith did him one crazier, tweeting, “Justin Trudeau wants to decimate Alberta’s economy with a nearly 50% cut to oil production. This is another unprovoked assault on Albertans.”
But while the overwrought reaction from Alberta’s right-wing politicians was entirely predictable, it’s the response from the comparatively progressive — or, at least, realistic — portions of the oil and gas ecosystem that should raise some eyebrows.
In an interview with the Globe and Mail, Mark Cameron, senior adviser for external relations with the Oil Sands Pathway to Net Zero, essentially admitted Alberta’s large oil companies might not be able to reduce their emissions without cutting production. “Mr. Cameron added that if the government doesn’t ensure the industry has the means of meeting new regulations,” the Globe’s Emma Graney and Marieke Walsh wrote, “then ‘they are in fact going to require production cuts,’ he said.”
In other words: any attempt to meaningfully reduce overall emissions in the near future will expose just how far these companies are from living up to their promises. It’s understandable why they’d want to keep stalling for time, but as far as the climate is concerned, we’re well past the point of having run out of it.
More to the point, it’s not clear that they’d do much with that additional time other than continuing to pump oil and collect the profits from it. Dan Wicklum, the co-chair of Ottawa’s Net-Zero Advisory Body, told the Globe that “a cap is necessary because 30 years of voluntary action from the oil and gas sector has not done enough to reduce emissions.”
He would know better than most, given that he served seven years as the founding CEO of the Canadian Oil Sands Innovation Alliance (COSIA), an organization dedicated to sharing technology and other emissions-reducing ideas.
The time for talking here, in other words, is long past over. If anything, the Liberals have set themselves up here as an ideal target for provincial conservatives looking to gin up anger against Ottawa in the run-up to October’s UCP leadership vote. As pundit and podcaster Scott Reid said on the latest edition of Curse of Politics, “I think they’ve got themselves in close to the worst of all possible worlds, where they’re going to bear all of the political brunt but possibly not get credit for action.”
If Ottawa ever tires of having the carrots it keeps dangling in the industry’s face get swatted away, it can always deploy the stick that other countries have already brandished. The oil companies complaining about the cost of reducing emissions are the same ones making near-record profits and shovelling billions into the pockets of their investors through share buybacks and dividends right now. That’s already driven the U.K. (under a Conservative government no less) to implement an “excess profits” tax on oil companies headquartered there. Key Congressional Democrats have advanced a similar idea in the U.S., one that would pair an excess profit tax with rebate cheques to all Americans.
The prospect of a similar tax in Canada would be seen in Alberta as an unambiguous declaration of political war, one that would further empower and embolden the province’s far-right politicians and personalities. As former PC cabinet minister and “firewall letter” co-author Ted Morton said, “You think separatist sentiment is already on the rise in the West? You ain’t seen nothing yet.”
But when entirely reasonable things like emissions caps and carbon pricing are also seen in that light, never mind the purchase and construction of a major (and majorly expensive) oil pipeline, maybe it’s time to stop letting the tail wag the dog here.
Comments
"It’s understandable why they’d want to keep stalling for time, but as far as the climate is concerned, we’re well past the point of having run out of it. " This is the under statement of the month. We need meaningful climate action NOW.
The writing has been on the wall for decades. The O&G industry had decades to evolve. Instead of preparing for the energy shift, it chose to stall, obstruct, and delay.
Carbon Tracker 2019: "Every oil major is betting heavily against a 1.5 degree C world and investing in projects that are contrary to the Paris goals."
*
Among oilsands leaders, Cenovus Energy CEO Alex Pourbaix has made no secret of his opposition to the energy shift:
"Cenovus CEO says future of energy is diversification, not transition" (Canadian Press, June 8, 2022)
https://financialpost.com/commodities/energy/oil-gas/cenovus-ceo-says-f…
Nobel-Prize winning economist Paul Krugman on the fossil fuel industry's "predatory delay":
"Earth, Wind and Liars"
"In the long run, these tactics probably won't stop the transition to renewable energy, and even the villains of this story probably realize that. Their goal is, instead, to slow things down, so they can extract as much profit as possible from their existing investments.
"… Every year that we delay the clean-energy transition will sicken or kill thousands while increasing the risk of climate catastrophe.
"The point is that Trump and company aren't just trying to move us backward on social issues; they're also trying to block technological progress. And the price of their obstructionism will be high."
• www.nytimes.com/2018/04/16/opinion/trump-energy-environment.html
Climate intransigence is not limited to O&G. Canada's Big Banks, media pundits, and network of neoliberal extractivist thinktanks have given the industry every encouragement.
Then there's Ottawa.
Climate Action Tracker's 2021 report rates Canada's efforts overall as "highly insufficient". Same rating since 2011 -- in every year but one in the last decade.
www.climateactiontracker.org/countries/canada/
Climate leaders don't build pipelines.
Or approve offshore oil projects. Greenlight LNG. Shield the O&G industry from significant carbon pricing. Grossly under-report emissions.
Or funnel billions of dollars to the industry setting record profits to fund fake climate solutions like carbon capture, SMRs, and blue hydrogen.
Or try to "green" fossil fuels.
Or hope to sell more fossil fuels to fund climate action. Or seek to expand oilsands export markets.
Or shovel billions of tax dollars into the pockets of largely foreign-funded oil companies reporting record profits.
Trudeau (2016): "There is growth to be had in the oilsands. They will be developing more fossil fuels while there's a market for it, while we transition off fossil fuels."
Trudeau (2017): "No country would find 173 billion barrels of oil in the ground and just leave them there."
When the IPCC issued its latest report, then-Environment Minister "Wilkinson reaffirmed Canada's commitment to phasing out fossil fuels and achieving net zero carbon emissions by 2050, but said achieving that target will require money generated by fossil fuels."
"Ottawa says it must maximize revenue from the Trans Mountain pipeline to fight climate change" (CBC, 9-Aug-21)
Up until the last minute before Pres. Biden cancelled Keystone XL, the Trudeau govt was still advertising that Canada's climate plan had room for new export pipelines transporting oilsands bitumen.
Kirsten Hillman, Canada's ambassador to the U.S.: "Keystone XL fits within Canada's climate plan"
If Ottawa is serious about climate action, it has yet to show it.
Good link; Krugman makes sense here in that the sacred "market" all these guys have lived for will ultimately do them in because the shift has truly begun.
The Liberal strategy seems to be slowly but surely cornering the oil industry by giving it enough rope to hang itself; Trudeau did suggest they call on their engineers more rather than their lobbyists.
As far as the tendentious right wing here in Alberduh goes, they're busy getting ever more strident, edging closer to promoting actual separatism which is ultimately a non-starter. Bottom lines loom now on all fronts; that's just one of them.
Separatist sentiment in "the West" . . . as usual, Albertans prefer to pretend BC doesn't exist. Well, until they need to ram pipelines down our throats.
In a weird way I almost agree that cutting emissions in the tar sands is pointless. When demand dries up, so will the tar sands bitumen production, and once it isn't happening it won't have any emissions. Spending a bunch of money reducing tar sands emissions is kind of pointless for the same reason spending a bunch of money building them new pipelines is kind of pointless--it requires the production infrastructure to keep on being used for long enough to make that extra spending worth your while. If you spend billions building emission reductions into tar sands extraction equipment that then just stops being used in ten years, that's not what I'd call efficient.
Better to tax their windfall profits and use the money to push the clean/renewable energy economy, not just electricity production but stuff that uses that electricity instead of burning fossil fuels, like making heat pumps and electric delivery trucks and mass transit systems and more rail infrastructure. And specifically, spend a bunch of it in Alberta creating non-oil jobs.
There's a lot of cultural nonsense in Alberta, but in the end, the root of all the denial and craziness is "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." So, make their salaries depend on other things.
Indeed; the largest solar installation in Canada just started up here last week.
Well, how long will that take? It's no secret that, when pressed - by economics - these corporations will come up with new ways to drain the stuff from under Alberta. Meanwhile everything on earth is TOAST!!
All this haggling about dollars spent here and there only gets in the way of any ACTION, which is what is needed IMMEDIATELY!!
Cutting production to cut emissions? Good grief! The *increase* in emissions came about from increasing production, so why on earth would that necessity come as a surprise to anyone.
The oil companies complaining about the cost of reducing emissions are the same ones making near-record profits and shovelling billions into the pockets of their investors through share buybacks and dividends right now."
And when oil prices drop again and it's time to shut in wells and clean up well sites and spills and tailings ponds, the same companies will cry poor and foist the costs on the public.
Exactly.
Gov'ts need to start collecting contributions for the eventual decommissioning and "cleanup" now. 'Cuz past experience should have made clear that they're not capable of doing it themselves, just 'cuz that was a condition of the arrangement: then again, there really was no incentive, was there.
According to the federal government the percentage emissions by sector nationally are primarily from stationary combustion (45% - primarily for power generation) and transportation (28%), totalling 73% in 2020. This narrows to coal, gas and refined oil products. Obviously these are the sectors to focus on domestically, but with 40% of bitumen exported and combusted outside the borders (the great majority in the US), international policy is also key.
The writing is on the wall, mainly on money alone. Coal and gas are now outcompeted by wind and solar in price per kilowatt hour. The very competitive renewable prices in power supply auctions in windy, sunny Alberta make that jurisdiction one of the best places to build wind and solar farms. How ironic that the Edmonton legislature echos every day with loudmouths fulminating about the Trudeau "attack" on the hegemony of oil, when the lad has really nothing to do with solar and wind and is too busy building gold-plated pipelines just for them. Perhaps the backdraft from wind turbines will muss up his hair.
The wall writing is international in scope too. While there will be some long term supply issues with lithium and rare materials, the car industry is dealing with them by investing in lithium mines (hopefully in stable nations), eliminating cobalt from batteries and improving efficiency. The international battery research effort is phenomenal. The current microchip supply issues will be coming off within two years as the largest companies making the most powerful blue laser etched circuits also complete their new plants outside of China. Canada also has enough rare metals surveyed for possible in house mining and refinement, as well as lots of iron, copper, nickel, zinc and other more common metals to attract battery manufacturers. Grid-scale stationary battery power storage is now advancing out of the lab and into commercialization, and the most promising among them use common, inexpensive materials like iron, metallic calcium, magnesium, salt and so forth. Tesla will have no place in vast power storage farms once these new players start throwing thousands of megawatt hard balls.
There are those who would urge caution about too much faith in renewables and EVs, and that is good advice. But when cities and several senior governments are budgeting big time for transit and charging networks, the advent of affordable electric cars with built-in low operating costs and affordable rental housing built near transit start arriving mid-decade, Alberta needs to prepare for a very rude awakening.
Someone should urge UCP and CPC candidates to call up the CEOs of VW, GM, Toyota and Elon Musk to ask their opinions about extending highly subsidized oil production to 2050 ... or not. Take it from Elizabeth Warren, they need to have a plan for that.
On Alberta "western" separation, that is an old and tired chestnut tossed into the wind every time the feds twitch. I heard that growing up in Calgary when Woodstock rocked the world.
Go ahead. Make our day. Pop the question. On the way to the referendum, though, they'll need to answer a few simple questions about the loss of a million or more citizens who would prefer Canadian citizenship over passports for rubes, and the division of federal resources like national parks, airports, highways, armed forces bases and yes, a pipeline that pulls oil out of the ground and pumps gobs of public debt right back in.
It's time for the media to stop giving Alberta discontents so much attention and call their bluff. Put up or shut up.
Max's comment on new depths of tone deafness made me think again - and start laughing again - at how two clever lads argued at length about a blue parrot who might not be dead!