Ottawa’s proposed clean fuel standard could force Alberta’s oil and gas sector to face hurdles their competitors don’t have to deal with, according to an industry expert.
The policy is part of the federal government’s effort to reduce greenhouse gas emissions and hit the targets set under the Paris Agreement.
“Clean fuel standards are trying to lower the carbon dioxide intensity of the fuel that you burn in your gas tank,” said Richard Masson, who is the former head of the Alberta Petroleum Marketing Commission and now an executive fellow at the University of Calgary’s School of Public Policy.
“The federal government is trying to enhance those standards, to make the gasoline, diesel and jet fuel that we burn here in this country less CO2 intense, and also to apply it to natural gas and eventually coal.”
Carbon taxes target the person using fuel, while clean fuel standards are aimed at the companies that supply it.
The problem, Masson said, is the current system for production and refining is set to a certain standard, and to lower CO2 intensity would require companies to buy ethanol or biodiesel to blend into their products — which are expensive and in short supply.
And, many other countries don’t have the equivalent of Canada’s federal carbon tax, not to mention additional uncertainty coming with the National Energy Board’s revamp and new regulatory processes.
‘Fewer jobs and less investments’
“[When] we compare it to what’s going on in the U.S. with deregulation … it really does put Canada’s industry at a bit of a competitive disadvantage. And that results in fewer jobs and less investments,” said Masson.
Masson said it’s important to remember that adding ethanol into the mix can come with unintended environmental consequences.
“Pretty soon you’re growing a lot of corn to make ethanol or you’re importing ethanol from tropical rainforest countries, and it doesn’t necessarily help the planet overall. So, a clean fuel standard on the face of it sounds like a good idea but you need to make sure that it’s implemented in a wise way so that you don’t end up with consequences that hurt consumers and hurt other parts of the overall environment system.”
Alberta’s government has raised concerns the standards could knock off as much as a full percentage point of the province’s GDP by 2030.
The United Conservative Party also criticized the proposed policy.
“It comes as no surprise to see the Trudeau Liberals poised to implement yet another policy that will harm the Alberta economy along with the Canadian energy industry. It’s also a bit rich to see the Alberta NDP feigning objection after allowing the Trudeau Liberals to walk all over Alberta for more than three years,” said UCP caucus spokesperson Christine Myatt in an emailed statement.
“The many Albertans that are already struggling don’t need a further hike in gas prices on top of the Liberal-NDP carbon tax.”
Natural Resources Minister Amarjeet Sohi said the federal government will keep Canadian competitiveness in mind.
“I will advocate for the best interests of the natural resources sector, including the oil and gas sector, and whatever we put forward will be appropriate for every sector and it will make sure that we’re keeping our competitiveness in mind and there are not disproportionate effects on industries,” he told the Calgary Eyeopener.
“But at the end of the day, we need to take action and need to make sure that high intensity, high carbon fuels are not as much used. And we need to transition to less polluting fuel sources.”
The government’s proposed clean fuel standard regulations for liquid fuels are set to be announced in spring 2019, and regulations for gas and solid fuels will follow in fall 2020.
With files from Anis Heydari, Calgary Eyeopener.