Peter Kent’s 30/30 experience

The search for oil and gas regulations continues

John Ivison suggests that Peter Kent had some agreement to move forward with a “30/30” plan to regulate carbon emissions from the oil and gas sector.

By all accounts, Mr. Kent had most provinces onside for a regulatory regime that would have seen the introduction of a “30/30” regime – that is, a 30% reduction in emissions levels by large emitters in the oil and gas sector or a $30 a tonne levy into a technology fund. Provinces would have been responsible for administering the regulations and all the proceeds of the levy would have been re-invested within provincial borders. Mr. Kent’s hope was that this would deflect accusations that Ottawa was imposing its own carbon tax — though that may have been wishful thinking.

The point is now moot because the Prime Minister nixed the idea, in part because of concerns that any increase in the cost-base in the oilsands might kill future investment, given massive discount on the world oil price that producers were receiving at the time for Canadian crude (the discount between Western Canada Select and West Texas Intermediate has narrowed from $40 to a still whopping $22 a barrel).

In April it was reported that Alberta had floated the idea of a “40/40” plan. The Canadian Association of Petroleum Producers was reported to prefer a “20/20” plan.

Later that month, Mr. Kent mused aloud about there being a lack of subtlety in the debate around carbon pricing. At the time, he ventured there was some kind of difference between a price “where the revenues go into general revenue and do not guarantee the reduction of a single ton of greenhouse gases” and what Alberta has setup with its technology fund, “wherein their revenues are focused only, and in isolation, on technology to achieve further GHG reductions than the emitters in that province are already able to achieve.”

Would the Harper government consider such a levy? I asked the office of Mr. Kent’s successor as environment minister, Leona Aglukkaq: Is the Harper government open to considering a levy on carbon emissions? “As the regulations are still being developed, it would be premature to comment further,” the department responded. I followed-up: Is the Harper government open to considering a tax on carbon emissions? “No,” came the response from Ms. Aglukkaq’s office. “Unlike other parties, our Government does not support a job killing carbon tax. We will continue to fight for Canadian jobs while protecting the environment.” So I returned to my original question: But the Harper government is open to considering a levy on carbon emissions? “The previous answer provided by the department stands,” explained Ms. Aglukkaq’s office.

Meanwhile, there is another question here: would even a 40/40 plan be enough to meet Canada’s targets for GHG reductions by 2020? When Alberta’s proposal was reported, the Pembina Institute said it wouldn’t be enough.

Alberta’s 40 per cent target is in the range we recommended, but its technology fund price – if left unchanged between now and 2020 – falls well short of what’s needed to get us on track to Canada’s 2020 target that we agreed to in Copenhagen.

Pembina’s counter proposal was a “40/40 plus 10” plan with the price increasing $10 per tonne until it reached $100.

The Harper government, of course, is twice overdue on the promise of new regulations for the oil and gas sector and, according to the CBC’s report last week, the Conservatives are now looking to President Obama for guidance.

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