Does Jim Prentice have a carbon policy to persuade Kathleen Wynne?

Or is the Alberta premier all hat and no cattle?

Jim Prentice

Premiers Jim Prentice and Kathleen Wynne plan to meet on Wednesday to discuss pipelines and the environment. It’s bound to be a tricky meeting for Prentice.

Why? Because nobody buys the contention of the industry or his predecessors that the issue is all about pipeline safety and has nothing to do with oil sands greenhouse-gas emissions. Prentice knows that when it comes the challenge of climate change, Alberta has long exhibited the “big hat, no cattle” swagger that attracts so much derision in Calgary. As a former federal environment minister who tried to make real progress on the climate front, he is well aware of the facts.

What are the facts? To find them, look no further than Environment Canada’s 2013 Emissions Trends Report. In 2005, Alberta’s total emissions were 232 million tonnes of CO2e[1] or 69 tonnes per person. Ontario, with more than three times the population, emitted 202 million tonnes or 16 tonnes per person. Fast-forward to 2011. Alberta’s total emissions have risen by 14 million tonnes to 246 million. With its fast-growing population, emissions per person fell to 64 tonnes per person. In Ontario, emissions declined by 35 million tonnes to 171. Emissions per person fell to 12 tonnes. The result? Ontario’s per capita emissions are the equal of European environmental leaders, while Alberta’s are among the highest on the planet—substantially higher than, for example, the world’s largest emitter in absolute terms, the China.

What explains the difference in the paths chosen by the two provinces? Ontario took action by voluntarily closing its coal-fired electricity plants in advance of any federal regulation, accepting the corresponding impact on consumer and industry electricity bills. It invested heavily in wind and solar energy. Alberta, on the other hand, fought hard behind the scenes to thwart Prentice’s coal-fired electricity regulations. Further, his Alberta predecessors worked tirelessly to frustrate any regulation of the expanding oil sands sector, ensuring that Canada had no chance of meeting Prime Minister Stephen Harper’s promise in Copenhagen.

All the while, Alberta has claimed that it was a leader in tackling the issue of carbon emissions. The rhetoric around its so-called carbon tax of $15 per tonne (the Specified Gas Emitters Regulation) was a masterstroke of misdirection. The regulation does charge $15 per tonne, but only on a small share of a project’s emissions. The $15 per tonne is not indexed to inflation, and has not been increased since the regulation was introduced in 2007. In fact, as a recent analysis by Andrew Leach of the Fort Hills oil sands project shows, the average cost over the life of the project could be as low as three cents per barrel, and the total impact on the industry works out to less than $2 per tonne on all oil and gas emissions. In contrast, B.C.’s carbon tax is $30 per tonne. Big hat, no cattle.

So what are Premier Prentice’s strategy options, as he prepares to make his pipeline pitch to Premier Wynne? Does he play the “economic growth” card? Perhaps, although Wynne knows that the bulk of economic benefits accrue in Alberta rather than in Ontario. In Ontario, consumers are worried about the impact that an Energy East pipeline will have on home-heating charges. Does he play the “equalization” card, arguing that any benefits to Alberta will be shared with the rest of Canada through federal transfers? Likely not, since Wynne is well aware that Ontarians, not Albertans, are the largest net contributors to the equalization program.

In fact, likely the only viable offer he can make is for Alberta to take dramatic action on CO2 emissions. Two obvious options would be to match B.C.’s carbon tax or to join Quebec and California in their continental cap-and-trade scheme. Prentice understands that it is Alberta’s big-hat, no-cattle approach to carbon that is underlying much of the opposition to building pipelines to export markets. The province desperately needs to get in front of the carbon issue if it is to have any chance of success with new pipelines.

Will Calgary’s oil patch support dramatic action? Unlikely, even though a B.C.-style carbon tax of $30 would add about $2 to a barrel of synthetic oil from the oil sands and less to a barrel of conventional oil—in line with the weekly variation in prices. Rather, the industry will likely argue that, with the current low-price environment, the “time is not right” to take action on the environment—a refrain repeated whenever its seems as though we might be getting close to making progress.

Lacking an offer of dramatic action, what should Prentice expect will come of his Wednesday meeting with Wynne? A polite reception, certainly, since that is Wynne’s style. But he is unlikely to get what he really wants—Ontario’s unequivocal support for pipelines to export markets—until he is able to tackle the carbon issue, as his central Canadian colleagues have.

Paul Boothe is Professor and Director of the Lawrence National Centre for Policy and Management at Western’s Ivey Business School. He has served as a deputy minister in both federal and provincial governments.

[1] Carbon dioxide (CO2) and other greenhouse gases in CO2 equivalents.

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