Phase-out, not expansion of fossil fuels – some recommendations for Canada

Oil, Gas and the Climate: An Analysis of Oil and Gas Industry Plans for Expansion and Compatibility with Global Emission Limits was published by the Global Gas and OilGas-ReportCoverOil Network (GGON) in December 2019.  The report analyzes the expansion plans of the oil and gas industry in relation to the global Paris climate goal of a 1.5C warming limit, and concludes that “if the world uses all the oil and gas from the fields and mines already in production, it will push us beyond 1.5°C of warming. This is true even if global coal use were phased out overnight, and if cement emissions were drastically reduced.” This report is the latest to sound this alarm: for example, Oil Change International, part of the GGON , began to publish such warnings in 2016 with The Sky’s Limit: Why the Paris Climate Goals Require a Managed Decline of Fossil Fuel Production , followed by Drilling towards Disaster in 2019.

Oil, Gas and the Climate states that from now until 2024, oil and gas companies are set to invest a further $1.4 trillion U.S.  in new oil and gas extraction projects – with 85% of that expansion in North America, and with the impact of the U.S. alone putting a 2 degree warming target out of reach.  Further, it states that over 90% of U.S. expansion would be shale production dependent on fracking.  It highlights that the Permian Basin (west Texas and southeastern New Mexico) would account for 39% of new U.S. oil and gas production by 2050. “It holds the greatest risk for new oil and gas development in the United States and in the world.”

Projected Canadian investment is a distant second to that of the U.S., but even so, the report states that “new oil and gas development in Canada between now and 2050 could unlock an additional 25 GtCO2 , more than doubling cumulative emissions from the sector.” The report highlights the approved Exxon Aspen Oil Sands project and the pending Teck Frontier Mine, but warns  “…Shale gas extraction, particularly the Montney Shale Basin in British Columbia, is a major focus of the industry…From 2020 to 2050, new gas projects could be responsible for as much CO2 as new oil projects.” (For a recent overview of the extent of Canada’s LNG infrastructure, see The New Gas Boom, published by Global Energy Monitor in June 2019).

“A better future is possible”, and here’s how to get there:

Despite the grim projections, Oil, Gas and the Climate  argues that “a better future is possible” and calls for “the launch of a well-planned phase-out of oil and gas production that addresses the needs of workers and communities impacted by fossil fuel developments. ” The report recognizes the impact of recent civil society actions such as Fridays for Future and Extinction Rebellion, and calls on governments and investors to catch up with such leadership.

Based on the findings of the report, Environmental Defence makes the following recommendations to support Canada’s phase-out:

Clear new federal rules under our environmental assessment law that review possible expansions of oil and gas projects against our commitment to climate goals. If we cannot credibly demonstrate how investing in a fossil fuel project is consistent with a 1.5C warmed world then the project should not be permitted to go ahead.

Institutional investors should apply a similar screen that will guide their decisions regarding whether to provide financing for new projects.

The federal government must invest in research and development of new energy technologies like geothermal electricity that have huge employment and energy production opportunities in places like Alberta and northern British Columbia. At a minimum, the government should make available an amount equivalent to the billions in subsidies that have been given to the fossil fuel industry through tax breaks or direct investment in pipeline infrastructure (e.g. Trans-Mountain) – subsidies that should be phased out rapidly. Success will create skills-linked jobs and massive supply of electrical energy for export to a North America that must replace the energy of fossil fuels.

Domestic demand for fossil fuels must be rapidly driven down through improved efficiency (e.g. buildings, appliances, manufacturing), electrifying transportation and home heating and increased renewables generation and storage.

The Oil, Gas and the Climate report is a project of the Global Gas and Oil Network , supported by Oil Change International; 350.org; Center for Biological Diversity; Center for International Environmental Law; CAN-Rac Canada; Earthworks; Environmental Defence Canada; Fundacin Ambiente y Recursos Naturales:FARN; Global Witness; Greenpeace; Friends of the Earth Netherlands (Milieudefensie); Naturvernforbundet; Observatorio Petrolero Sur; Overseas Development Institute; Platform; Sierra Club; Stand.Earth.

Canadians favour a shift away from oil and gas, 68% support federal help for worker transition

abacus 2019 just transitionAn online survey  was conducted by Abacus Data in mid- December 2019 to gauge opinion about an energy transition and compare attitudes in Alberta with those in the rest of Canada. The summary was posted to the Abacus website on January 3 and to Clean Energy Canada, which commissioned the survey, here .  Based on responses from a random sample of 1,848 adults,  a majority of Canadians and Albertans recognize that energy transition is a global issue and a necessary development, although in Alberta, only 49% see it as beneficial for the province in the long-term.

Further insights:  

72% across Canada, and 60% in Alberta would prefer to see Alberta’s economy shift over time because “global demand will change and Alberta will be left behind if the province is more dependent on oil.”

40% of Albertans want their Premier to “reject the idea of an energy shift and promote growth in Alberta’s oil sector.”  (Nationally, only 32% support promoting Alberta’s oil sector).

57%  of Albertans said an energy transition should be done more slowly or not at all, and 45% see it as intended to punish Alberta’s workers.

Nationally, 68% of respondents support federal government help for Alberta’s workers seeking new opportunities.  In Alberta, only 49% support such federal help for transitioning workers, while 51% want the federal government to help grow the province’s oil sector.

Alberta updates: Budget targets public sector, sets stage for new regime for oil and gas industry

With the federal election over, the provincial government in Alberta released two important new policies:  the Budget statement on October 26 , and the Technology Innovation and Emissions Reduction (TIER) regulation, a system for  output-based carbon pricing for industrial GHG emissions.

Alberta Budget – a recipe for a “Kenny Recession”?:

A government press release   announced the budget on October 26, with Highlights provided at a  Budget webpage here . The government states that social service programs: “will be redesigned methodically and responsibly to address economic, social and fiscal challenges, while continuing to support the most vulnerable. Countering that statement is “Alberta wants to cut public service wages. It will hit everyone from teachers to hospital support staff” in the National Observer (Oct. 30) , as well as reaction from the unions, including the Health Sciences Association of Alberta  (HSAA)  , which calls the Budget “incredibly dishonest” and details the cuts which form “the groundwork to justify a transfer of vital public services to the private sector”.  The Alberta Federation of Labour (AFL) campaign against the Budget flies under the flag of “The Kenney Recession” , with arguments built on a report prepared for the AFL by  economist Hugh Mackenzie:  The Kenney Recession: Proposed UCP cuts would hurt economy worse than oil price crash .  The report considers four different scenarios and states “ “The loss of 50,000 jobs during the oil price crash from 2014 to 2017 will pale in comparison to the estimated 113,500 jobs that would be lost in Alberta if the Kenney government goes ahead with cuts of the magnitude being considered.”   In an earlier press release, AFL President Gil McGowan disputes the  findings of a government-commissioned report by Janice MacKinnon, saying “her report is filled with distortions and outright lies about public services, public-sector spending and public-sector wages.”

As for the Budget’s impact on the energy sector, the government’s Highlights state an allocation of $601 million, yet do not directly mention the Coal Workforce Transition Program or Fund,  initiated by the previous NDP government  and flagged for concern in an October 15 article in The Energy Mix .

The Government’s Budget Highlights for  the Energy industry are:

increase focus on natural gas and pipelines by implementing a strategic plan to help reinvigorate the industry and stand up for Alberta’s economic interests

work with industry to help streamline project approvals, improve pipeline access and facilitate the construction of infrastructure to get our natural gas to international markets

review the Alberta Energy Regulator to identify changes and enhancements to its mandate, governance and operations so Alberta remains a predictable place to invest and a world leader in responsible resource development

extend the royalty credit model under the Petrochemicals Diversification Program to incent future projects and cancel the Partial Upgrading Program and Petrochemicals Feedstock Program to reduce the financial risk to Albertans

cancel the transition to a capacity market and end the rate cap program – saving Albertans about $270 million

cancel the crude-by-rail program, saving Albertans at least $300 million

establish the Canadian Energy Centre corporation to implement the “Fight Back Strategy” to proactively defend our critical energy industry and the people who work in it

TIER – the proposed new Emissions Reduction Regulation for industrial emitters: 

On October 29, the government announced the introduction of Bill 19, the Technology Innovation and Emissions Reduction Implementation Act (TIER)  , characterized in the press release  as ” the centrepiece of government’s upcoming climate strategy, .. an improved system to help energy-intensive facilities find innovative ways to reduce emissions and invest in clean technology to stay competitive and save money. TIER is a unique solution that allows the province to reduce emissions without interference from Ottawa.”

Reaction comes in  “Alberta bets the house on technology to help province slash carbon pollution” in the National Observer , and in a lengthly  Opinion piece by Andrew Leach, “Alberta’s TIER regulations good on electricity, not so good on oilsands” at the CBC. Leach  characterizes the TIER policy as “a serious greenhouse gas policy in Alberta” but states that it is “backwards”:  “TIER makes emissions-reducing innovation less advantageous than it would be under CCIR [the existing system], since the better performing your new facility is, the lower your emissions credits will be every year for as long as the policy remains in place. “

The Smart Prosperity Institute  provides an explanation of the complexities of the proposed system, which if passed, would take effect in January 2020:  “TIER in a nutshell – The Alberta Technology Innovation and Emissions Reduction regulation” (Oct. 30) . More briefly, CBC published  “How Alberta will keep its $30-per-tonne carbon tax but make it easier for some big emitters to avoid paying” .

Deep decarbonization is possible: Suzuki Foundation presents a litmus test for climate change policies in Canada’s 2019 election

Suzuki zeroing-in-on-emissions-canadas-clean-power-pathways-reviewIf, as a new article in The Conversation argues, “To really engage people, the media should talk about solutions”  (May 30) , then the report published by the David Suzuki Foundation on May 29 is right on target.  Zeroing in on Emissions: Charting Canada’s Clean Power Pathways  argues: “Responding to the urgency of climate change can feel overwhelming, but our research confirms we have the solutions and strategies needed to drive national actions and innovations to meet our climate commitments.”  It is important to note that the commitment under consideration is reduction of  greenhouse gas emissions by 80 per cent or more by 2050, and the study focuses only on energy policy, not all sectors of the economy.

The report examines academic, government and business models and studies related to  deep decarbonization for Canada, with special reference to the Deep Decarbonization
Pathways Project , the Trottier Energy Futures Project  and the
Perspectives Énergétiques Canadiennes . The full list of referenced publications takes up 15 pages of the report.  Based on this review of expert research, recommendations are presented, in ten essential policy priorities: 1.  Accelerate clean power  2. Do more with less energy  3. Electrify just about everything  4. Free industry from emissions 5. Switch to renewable fuels  6. Mobilize money  7. Level the playing field  8. Reimagine our communities  9. Focus on what really matters and # 10. Bring everyone along, which  opens with a quote from Canada’s 2018  Task Force on Just Transition Report. The section states: “If well-managed, the clean-energy transition can be a strong driver of job creation, job upgrading, good jobs and reducing inequality. Conversely, a poorly managed transition risks causing unnecessary economic hardship and undermining public support for needed emission-reduction policies. Transition should be seen as part of a broader green economic development strategy that supports community economic development and diversification.” The discussion includes the issues of justice and equality, and Indigenous rights.

According to the press release, this report is meant to influence the discourse in the upcoming election: “These 10 strategies are a litmus test that all climate plans during the 2019 federal election should be held accountable to…. “Actions such as pricing and limiting carbon pollution, prioritizing electrification with clean energy sources and accelerating industry investment in zero carbon solutions must be part of any credible climate plan in 2019.” In addition, it lays the foundation for a three-year project called Clean Power Pathways, “to transition Canada’s energy system at a scope, scale and speed in line with the scientific consensus to avoid climate breakdown.”  The report has grown out of collaborative research sponsored by the Trottier Family Foundation, which remains involved in the upcoming Clean Power Pathways research.

Zeroing in on Emissions: Charting Canada’s Clean Power Pathways is accompanied by a 4-page Executive Summary  and was also summarized by The Energy Mix here  (June 2).

New Alberta government all-in for oil and gas, beginning with repeal of carbon tax

Jason-Kenney Open for businessThe new UCP government of Alberta, led by Premier Jason Kenney,  kicked off  its legislative session agenda on May 22  with a Throne Speech  promising to “show the world that Alberta is open for business by restoring investor confidence and re-establishing the province as a job-creating investment magnet.” That “open for business” approach, applied to the oil and gas sector, includes some ominous statements : …”Protect and maximize the value of Alberta’s resources – including using, as necessary, the Preserving Canada’s Economic Prosperity Act” (Rachel Notley’s law which gives Alberta the right to restrict oil and gas exports to British Columbia)…. “Challenge those who misrepresent our industry and launch a public inquiry into campaigns to landlock Alberta’s energy”…and “Make life more affordable for Albertans by repealing the carbon tax and focusing climate change action on large emitters.”  More positively, “Be transparent and honest about how Alberta produces energy to the highest environmental, labour and human rights standards on earth” ….”Take action on climate change by introducing the Technology Innovation and Emissions Reduction Fund through regulation targeting large emitters.”  Columnist Chris Varcoe provides one Alberta viewpoint  in “Throne speech ‘roadmap’ to revive oilpatch hinges on pipelines” in the Edmonton Journal (May 23) .

The first legislation to be introduced, on May 22, was Bill 1, An Act to Repeal the Carbon Tax . The government press release claims that “Scrapping the carbon tax will free up nearly $1.4 billion of tax burden, create 6,000 jobs, save the average small business $4,500 annually and save Alberta families up to $1,150 a year.”  Even before the Bill was passed in the legislature, the Kenney government ended collection of the tax, on May 30.  In a press release titled “Albertans lose more than they gain with carbon tax repeal”, the Pembina Institute disagrees: “With the tabling of Bill 1 to repeal the Climate Leadership Act, the Alberta government is cutting existing jobs, stunting innovation, removing financial benefits for small- and medium-size businesses, families and communities, and is allowing greenhouse gas emissions to continue to increase. The government has yet to produce a plan that will make up for these losses and build on previous progress.” The National Observer summary is here  . And of course, there is also the issue that, by repealing Alberta’s own carbon tax, the government has made the province subject to the federal backstop carbon levy.

Without the revenue stream of the carbon tax, energy efficiency programs initiated by the NDP government are in jeopardy. On May 24, the Calgary Herald reported  “UCP steps back from scrapping NDP’s Energy Efficiency Alberta; will look at programs ‘with an open mind’” .  Although Jason Kenney derides the Energy Efficiency Alberta programs  as “subsidizing showerheads and lightbulbs”, in fact, the agency supports major economic programs, including those encouraging  the growth of Alberta’s solar industry.  Efficiency Canada documents the benefits for Alberta and points out that Alberta would be the only jurisdiction in North America not to have an energy efficiency program if it is scrapped .

On May 23, the Alberta legislature gave unanimous approval of a motion condemning federal bills C-69 , An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act,  and C-48, the Oil Tanker Moratorium Act . The Alberta government  claims that the legislation “poses a very real threat to hundreds of thousands of jobs in Alberta and across Canada, and the $16 trillion in economic potential within Alberta’s oilsands that could be lost if they proceed.”  After the Senate Committee tabled its controversial amendments to C-69, the Alberta party leaders sent a joint letter to Prime Minister Trudeau on May 28, stating: “While we remain concerned about the overall spirit of Bill C-69, we believe that with the inclusion of all these amendments, that the bill would be acceptable to the interests of Albertans” . The letter is summarized by Energy Mix in “Alberta Party Leaders Unanimously Back C-69 Amendments from Unelected Senate Committee”.  The marked-up version of Bill-69 with the Senate Committee amendments is dismaying to environmentalists;  a 2018  analysis of the original Bill-69 by Environmental Defence is here .  (The complicated issue of the unelected Senate’s hearings and recommendations regarding Bill C-69 will be the subject of a future WCR report.)

Other  new Alberta legislation in the ”Open for Business” agenda: On May 27,  Bill 2, the Open for Business Act,  promises to “reduce unfair burdens on businesses and give workers more rights in unionized workplaces. Recent changes to employment rules, such as requiring employers to provide holiday pay even if they are not open that day, created an unfair cost burden on job creators.”  The Alberta Federation of Labour reacted,  as did The Parkland Institute in a blog: “Bill 2 grinds wages, complicates payroll, and impedes union drives” .  On May 28, Bill 3: the Job Creation Tax Cut (Alberta Corporate Tax Amendment) Act  was introduced, promising to  lower the corporate tax rate from 12% to 8% over the next 4 years. The Alberta Union of Provincial Employees calls the tax cuts “corporate welfare” in Bill 3 Is UCP’s Second Gift In As Many Days To Wealthy Corporations.  And on May 29, Bill 4, The Red Tape Reduction Act was introduced.

None of these Bills have been passed or enacted as of May 30, although Premier Kenney announced that Albertans were “liberated” from the carbon tax as of May 30,  according to a CBC report , and retailers were forbidden from collecting it.