Harper to Limit Bitumen Exports
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Harper to limit bitumen exports Surprise environmental election promise puts federal Tories on collision course with Alberta jurisdiction, NAFTA rules Dave Cooper, with files from Paula Simons, The Edmonton Journal; with files from Reuters, the Calgary Herald and Canwest News Service Published: Saturday, September 27 EDMONTON - Prime Minister Stephen Harper made an election promise Friday to restrict the export of raw bitumen to countries with weaker environmental standards than Canada -- a pledge that took the Alberta government by surprise. Harper promised to halt the flow of bitumen, the tar-like heavy hydro-carbon that is removed from Alberta's oilsands and upgraded into synthetic crude oil, to countries with weaker greenhouse gas emission reduction standards than Canada. Harper said the measures would keep the oilpatch from skirting Canadian emission targets by exporting bitumen, while keeping oilsands revenues and jobs in Canada. The announcement rankled the Alberta government and raised several constitutional questions about which level of government has authority over the oilsands. Alberta's resources are owned by the province, but analysts argue that Ottawa has full constitutional authority over exports, while environmental regulations are shared between the governments. Harper and Premier Ed Stelmach each have maintained their environmental regulations will trump those introduced by the other government. But the federal Tory leader served notice again Friday that Ottawa has the authority to dictate the environmental regulations, and that he expects all provinces to "accept federal targets." Harper also insisted the federal government holds the trump card on trade, and can pull "two or three constitutional levers" in case of a fight with the province over who has authority over the oilsands. "Ultimately, the federal government has significant control over exports, significant control over international trade," he added. Alberta had no warning that Harper would make his pledge, deputy premier Ron Stevens said, but officials have been in discussions about greenhouse gas emissions for several months. "There's less than 25 words on a news release. It falls sharply short of a fully developed policy," Stevens quipped. Alberta brought in its own emissions rules last year, and the federal government intends to have national rules in place by 2010. Stevens said if Harper is re-elected, "we'll be having a lot of discussions." But he said exporting bitumen "is an important issue for Alberta, as control of natural resources rests with the provincial government." Harper's announcement also stunned Barry Appleton, a Toronto trade lawyer and expert on the North American Free Trade Agreement, who said the policy is clearly inconsistent with NAFTA. "In the middle of an economic crisis, the prime minister wants to roll the dice?" he said. Appleton added that Canada can't take steps that appear to be protectionist and try to justify it on environmental grounds. "It's a disastrous trade policy. And it's an insult to people who care about the enviroment to suggest they're doing it for environmental reasons." Federal NDP Leader Jack Layton, who wants a moratorium on oilsands expansion, called it "absurd" for Harper to complain about emission rules in other countries. "He doesn't have limits on carbon emissions in Canada," Layton told reporters in Vancouver. Federal Industry Minister Jim Prentice said Friday the measures would not affect existing contracts. Alberta exports about 30 per cent of the 1.3 million barrels of bitumen it produces each day. The United States is currently the only customer for unprocessed bitumen. The Canadian Association of Petroleum Producers studied Harper's comments Friday, but decided that not enough is known to comment. "We'll have to see how this translates into policy," said spokesman Adam Sparks. "We'll be working on it." Harper's policy won applause from Neil Shelly, executive director of Alberta's Heartland, home to the upgrading and chemical industry near Fort Saskatchewan. "Our group feels this is a very progressive move. It levels the playing field for us, because we will be capturing carbon dioxide at plants in this area, and the U.S. does not have those requirements that entail an additional cost. So firms could consider shipping the bitumen for processing in the U.S. and avoid that step," he said. Chris Severson-Baker, policy director at the Pembina Institute, an environmental think-tank, said Harper's announcement "will very likely do nothing to change Canada's status as a dirty energy superpower or to reduce our greenhouse gas pollution." To avoid dangerous climate change, industrialized countries must adopt greenhouse gas emission targets of at least 25 per cent below 1990 levels by 2020, he said, but the Harper government's current target just three per cent below 1990 levels by 2020. "In asking other countries to match our targets, today's announcement sets an extremely low bar," Severson-Baker said in a statement. Alberta Liberal Leader Kevin Taft said Alberta's greenhouse gas standards are lower than the federal ones. "So is Harper saying bitumen should be processed outside Alberta in areas that have the federal standards?" Taft said since there is no agreement between Alberta and Ottawa about greenhouse gases, "Harper's pledge feels to me like federal meddling in Alberta's resource industry." And that's something the federal Liberals have been charged with in the past. "I can't help but think if Stephane Dion had proposed this, Harper would be lighting his hair on fire," said Taft. Joseph Doucet, a professor at the University of Alberta's School of Business and an expert in energy policy, said Harper's move surprised him. "Comparing different policies can be complex," he said. "If I were cynical, I might wonder at the political motivation behind this." Doucet said Harper's move could be seen as a pre-emptive strike in the greenhouse gas debate. "Harper could in fact be flipping the debate around," comparing Canada's standards with the lack of any in the U.S. Prentice said the policy is unlikely to affect exports to the U.S.: "It's clear the United States is moving gradually toward a similar policy to our policy with respect to greenhouse gas emissions." But Asian nations, which offer potential markets for Alberta bitumen, are many years behind. Harper said Friday his export-ban plan could affect those markets. Enbridge's planned $4.2-billion Gateway line would take 400,000 barrels a day of oilsands crude. The initiative is being driven by interest from refineries in such countries as Singapore and Japan, the company has said. Harper's plan surprised Enbridge and the firm has yet to determine its impact, spokesman Steven Greenaway said. [email protected] .