With Donald Trump as the U.S. president-elect, Prime Minister Justin Trudeau has lost an environmental ally in the White House. Trump has called global warming a hoax and vowed to “cancel” the Paris Agreement, but that isn’t dissuading the federal government from moving ahead on its environmental plan, including a national carbon price.
At the provincial level, Alberta’s environment minister, Shannon Phillips, also said in November that the results of the U.S. election won’t alter Alberta’s climate efforts.
“The world is much larger than one election in one country,” Phillips told reporters on a conference call from Morocco, where she was attending the United Nations’ COP 22 summit.
If provinces fail to act on climate change, the federal plan will impose a national floor price that will start at $10/tonne of carbon emissions and increase $10 annually until reaching $50/tonne in 2022.
Alberta was a carbon-levy early adopter, but the NDP’s more aggressive Climate Leadership Plan posed some serious challenges to the oil and gas industry, despite the high-profile endorsements of the plan by some oil and gas heavy hitters.
Alberta’s Climate Leadership Plan calls for phasing out emissions from coal-fired power generation by 2030 and reducing methane emissions from oil and gas operations by 45 per cent by 2025. Power generation switching to gas will likely benefit the oil and gas industry, and no one is particularly perturbed by the methane reduction target, but there is a lot of concern over the plan’s other two tenets: the higher carbon price on greenhouse gas emissions and the oilsands carbon emissions cap
A higher carbon levy on fuels goes into effect in January 2017 at a rate of $20/tonne in Alberta. In 2018, that will increase to $30/tonne.
The proposed oilsands emissions annual cap of 100 megatonnes could also limit oilsands growth without major improvements in extraction efficiencies.
“There is a serious imbalance between the high costs of Alberta’s proposed carbon emissions cap to the economy and the minimal benefits that could be realized in greenhouse gas emission reductions,” Ken Green, senior director of natural resource stuies at the Fraser Institute, said in a statement.
The research and educational organization estimates that $150 billion will be lost in production revenues under the plan. At most, it will only reduce carbon emissions by 236 megatonnes cumulatively between 2025 and 2040. Under one scenario, the Fraser Institute anticipates oilsands producers will surpass the 100-megatonne limit in 2027, despite incremental annual improvements in emissions intensity.
According to Oilweek's 2017 Oil & Gas Industry Outlook Survey , the majority of respondents said that Alberta’s Climate Plan and the carbon tax will lead to significant shut-ins of scattered low-producing wells. Of the total responses, 52 per cent held this view, led by 68 per cent of surveyed executives. The analyst/adviser/consultant group was the least pessimistic, but 39 per cent of them also predicted this outcome.
When asked about where Canada should focus its efforts to promote energy diversification, the top answers more or less negated the question. Just under a quarter of the total sample said that Canada should maintain focus on non-renewables. Another 20 per cent of the total sample chose nuclear as a way to promote energy diversification. So 43 per cent of the total sample effectively dismissed renewable energy as a path to energy diversification.
Of those who felt renewable energy could play a part in Canada’s energy diversification, solar was the top choice at 14 per cent, followed by hydro at 12 per cent and wind at nine per cent.
Analysts/advisers/consultants were the most bullish on renewables out of all the employment groups surveyed.
The weak support for renewable energy development was also echoed in low levels of participation in company clean tech initiatives. Twenty-one per cent of the total sample said their organizations did not participate in any clean-tech initiative. Thirteen per cent said they weren’t sure what clean tech initiatives their companies were involved in, and only a scattering of single-digit-percentage responses indicated that some companies were actively pursuing energy-efficiency technologies such as low-grade heat recovery, advanced methane monitoring and mitigation, and next-generation oilsands extraction.
Most tellingly, of all the survey questions, the highest consensus response spoke to whether the NDP’s efforts to improve Alberta’s environmental image will lead to increased or quicker pipeline approvals. Eighty per cent of the total sample said no.
There's also more to come from Oilweek's 2017 Oil & Gas Industry Outlook Survey on jwnenergy.com.