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By Patrick Rucker and Nia Williams
WASHINGTON/CALGARY (Reuters) – Canada is running out of time to offer U.S. President Barack Obama a climate change concession that might clinch the controversial Keystone XL oil pipeline, as the country’s energy industry continues to resist costly curbs on greenhouse gas emissions.
Two years of negotiations between the Canadian government and the energy sector to curtail carbon pollution have not produced an agreement. Oil producers have balked at anything more than the 10-cents-a-barrel carbon tax imposed by the province of Alberta.
Late last month, Environment Minister Leona Aglukkaq pointed to “good progress” in the talks but was unable to say when a resolution might come.
Concessions from Canada would make the pipeline more palatable in Washington, experts say, since Obama has made fighting climate change a second-term priority and has said that Canada could do more to reduce carbon emissions.
By linking Alberta’s fields to refiners in the Gulf Coast, the 1,200-mile (1,900-kilometer) Keystone XL pipeline would be a boon to an energy patch where oil sands are abundant but lead to more carbon pollution than many other forms of crude.
Keystone’s foes say that burning fossil fuels to wrench oil sands crude from the ground will worsen climate change, and that the $5.4 billion pipeline, which could carry up to 830,000 barrels a day, would only spur more production.
Increasing oil sands production will put Canada on track to miss its target of curbing greenhouse gas emissions by 17 percent below 2005 levels by 2020, according to a government report (full report:tinyurl.com/mgkghtc).
Keystone supporters say that is why Canada would be wise to offer a carbon-trimming plan before the White House decides the pipeline’s fate.
“If Canada were to volunteer new greenhouse gas restrictions, that would certainly help,” David Goldwyn, a former State Department official and energy consultant, told an industry conference in late October.
But the clock is running out. The U.S. State Department is finishing work on a report that will weigh the climate impacts of the pipeline in what could be one of last words before a decision. The White House is expected to rule on Keystone by next spring.
Canada and the United States have often moved together on climate policy, developing similar rules on auto and power-plant emissions while turning their backs on the Kyoto Protocol to limit climate change.
Regulating the oil and gas sector has been thornier, though, with oil sands producers particularly concerned that higher costs will erode their already narrow margins.
“Anything more stringent than today’s system will increase costs, possibly lowering investments and reducing production,” the Canadian Association of Petroleum Producers wrote in a memo to regulators in March that was made public under a freedom of information request.
Canada’s fast-growing oil sands sector will soon exceed the capacity of existing pipelines, and analysts say producers will be forced to rely on trains, barges and other transportation alternatives if Keystone XL and related projects are rejected. Those options are generally costlier and less certain than pipelines.
Nevertheless, industry executives say they doubt yielding on tougher pollution regulations will help secure Keystone.
“I don’t know any policies in Canada with respect to (greenhouse gas) emissions that would have any sort of material impact on the approval process,” Russ Girling, president of TransCanada, the pipeline operator, said last month.
Even if Prime Minister Stephen Harper were to offer new greenhouse gas limits this year, the vagaries of the regulatory process virtually guarantee those plans will not be in place until after a Keystone decision.
Canada needed 12 months to finalize regulations curbing emissions from coal-fired power plants that were ratified last year, and the rules were significantly weaker in the end than originally proposed.
“Judging by what we saw with coal-fired power plants, there is a real risk that a proposal to limit oil and gas emissions could be watered down before it’s final,” said P.J. Partington of the Pembina Institute, a think thank that has opposed oil sands development, which reviewed the industry memos disclosed under the freedom of information request.
(Reporting by Patrick Rucker in Washington and Nia Williams in Calgary; Additional reporting by David Ljunggren in Ottawa; Editing by Douglas
WASHINGTON – A former Harper government appointee used a keynote speech at a Washington event Monday to trample Canadian authorities’ message on oil pipelines while describing the country as an environmental “rogue state.”
Mark Jaccard became one of the first people nominated by the Conservatives to the environmental file when he was named in 2006 to the federal government’s now-defunct National Round Table on the Environment and the Economy.
Seven years later, the environmental economist delivered a lengthy rebuke of Canada’s climate-change performance at Monday’s event while the Obama administration grapples with whether to approve the Alberta-U.S. pipeline.
Jaccard, an adviser to different governments and a professor at B.C.’s Simon Fraser University, said he doesn’t want the oilsands shut down — he just doesn’t want them to grow.
“On climate, Canada is a rogue state,” Jaccard said.
“It’s accelerating the global tragedy … The U.S. government should reject Keystone XL and explain to the Canadian government that it hopes to join with Canada (on a global climate plan).”
That message stands in sharp contrast to that of the Canadian government, which has spent millions to publicize the benefits to both countries of developing the oilsands.
Jaccard was the headline speaker at a summit tied to a well-connected Democratic donor, the so-called “green billionaire” Tom Steyer, and attended by a number of U.S. media outlets.
Jaccard has become an increasingly bitter critic of the federal government. He was even arrested last year after joining a blockade on a train carrying U.S. coal from B.C.
His disenchantment with the Conservative government reached a boil after the 2011 election, Jaccard said in an interview after his speech.
He said he tried to work with the government — not only at the Round Table, but as an adviser to then-environment minister Rona Ambrose. But after the Conservatives won a majority in 2011, the rhetoric hardened, the Round Table vanished and it became clear they had no interest in tackling climate change, Jaccard said.
“In 2011, the gloves came off.”
In his career as an author, academic, and adviser to different governments since the Mulroney era, Jaccard also criticized the Liberals for a climate approach he still derides as a “labels-on-fridges-and-Rick-Mercer-ads” strategy to encourage behaviour changes.
More drastic policies are in order, he told his audience: greenhouse-gas emissions need to drop 50 to 75 per cent by 2050 to limit temperature growth to a 2C target — an impossible task with a growing oilpatch, Jaccard said.
The event, and the choice of location, were designed to arm-twist the Obama administration as it faces its Keystone dilemma.
Last June in Georgetown, President Barack Obama delivered a speech in June saying Keystone would not be approved if it significantly increases greenhouse-gas emissions.
The title of Monday’s event was, “Can Keystone Pass The President’s Climate Test?” One speaker after another suggested that, no, Keystone cannot be approved without a significant increase in carbon pollution as a result.
In the hallways, the many Obama supporters speculated about when the long-awaited decision might finally come down. And some suggested they’ve become increasingly hopeful the project will be blocked, given Obama’s choice of words.
Former Michigan governor Jennifer Granholm even allowed herself to daydream about what an eventual presidential rejection might sound like. A decision is expected in early 2014.
“I think he could deliver a speech that could give him a legacy he would be proud of,” Granholm, the event moderator, said from the stage.
Earlier, Steyer described Keystone as a logical investment for the oil industry that would drive up the value of Canadian oil and ramp up development — which is precisely why he believes it shouldn’t be allowed to proceed.
“(Keystone) is a literal and a figurative line in the sands,” Steyer said. “Keystone is the economic key to unlocking the tarsands and, as such, it fails the president’s test.”
The other side of the Keystone debate was not represented at the event. TransCanada boss Russ Girling (TSX:TRP) and Gary Doer, Canada’s ambassador to the U.S., both declined to attend.
The federal government later issued a lengthy statement condemning the characterization as a “rogue state.”
Natural Resources Minister Joe Oliver said that, whether or not Keystone goes ahead, the Canadian oil industry will represent a minuscule fraction of global emissions. His statement also noted that 62 per cent of Canada’s electricity is generated from renewable sources — first in the G8, compared with 12 per cent in the U.S.
Canada has taken action to shut down coal plants, the largest source of greenhouse gases in the world, he added. While the Obama administration has taken steps to impose emissions restrictions and is believed to be planning more, coal remains an important source of energy in the U.S.
TransCanada, for its part, derided Monday’s event as a sham.
It said the project had been reviewed for five years by nearly two dozen state and federal agencies and that the “professional opponents” of Keystone are obscuring the central question: “about where America wants to get a source of oil from that it clearly needs.”
- Keystone XL: Pipeline opponent challenges TransCanada boss to live debate (thestar.com)
- Anti-Keystone XL billionaire challenges TransCanada CEO to live debate (calgaryherald.com)
- Steyer challenges pipeline boss to debate (metronews.ca)