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Oil and gas industry resists new oil sands emissions standards, claims opposition is "ideological"

The oil and gas industry in Canada claims opposition to the oil sands, the world’s second largest reserve of oil and Canada’s fastest source of greenhouse gas emissions, is merely “ideological,” according to new internal documents released under Access to Information legislation.

In the documents the Canadian Association of Petroleum Producers (CAPP), Canada’s largest oil and gas lobby body, suggested that because “the objection to the oil sands is ideological” and “not a concern that Alberta’s current framework is not stringent enough,” there is no guarantee that a stricter regulatory regime for the development of the oil sands will “’secure’ social license and forestall negative policy action.”

Alberta, required to renew its oil and gas emissions regulations in 2014, is proposing a new greenhouse gas target that would see a reduction of 40 per cent per barrel of oil produced and a maximum penalty price of $40 per tonne of CO2 above that level by 2020. Currently, Alberta enforces a reduction of emissions by 12 percent with a max price of $15 per tonne.

According to the newly released documents, CAPP is fighting for a weakened regulatory position, one that requires a 20 per cent reduction with a $20 penalty fee.

As the Pembina Institute points out, CAPP's proposed regulatory fees would be merely a token, only just keeping up with the price of inflation.

In the collection of documents released to Greenpeace’s Keith Stewart – containing correspondence records between the government of Alberta and CAPP from January to May of this year – CAPP says stricter regulations might cost industry a lot without winning over the public.

In a section of a document entitled “Framing the Right Questions” CAPP questioned Alberta’s proposed emissions targets:

“Will higher stringency requirements ‘secure’ social license and forestall negative policy action elsewhere? Unlikely. The objection to the oil sands is ideological; not a concern that Alberta’s current framework is not stringent enough. Put another way, if the 40/40 guidelines were enacted, oil sands opponents would claim that they too were insufficient.”

Beyond concerns with public perception, CAPP argued that a more advanced set of regulations on greenhouse gas emissions wouldn’t necessarily lead to a reduction in CO2 pollution. The lobby group also warned that stricter environmental regulations could restrict investment in oil sands research and development.

“Will higher stringency requirements deliver greater GHG reductions? Unlikely. The challenge with the oil sands is that current technology is not yet available for deployment to a significant degree.”

CAPP, however, threatened new regulations might be disadvantageous to industry operating in Canada.

“Will higher stringency requirements impact production and revenue? Very likely. Adding a regressive charge to the oil sands, one that bites harder at low prices than high prices, introduces additional cost and risk. This will impair recovery of marginal resource associated with existing projects. And make new projects less competitive from a portfolio perspective. And the higher costs associated with additional stringency can also impair the resources devoted to research.”

Yet a growing carbon pollution problem might in fact be the largest looming threat to the oil and gas industry, rather than tougher emissions standards.

Recently, a group of 70 investors worth $3 trillion publicly pressured 45 of the biggest oil and gas companies to respond to the concern of ‘stranded assets’ – oil and gas reserves made un-exploitable due to international efforts to manage global climate change.

Investments in fossil fuel reserves have become increasingly insecure in the move toward a low-carbon economy.

Canada is heavily invested in the oil and gas sector, with a total market capitalization of $400 to $500 billion.

Despite CAPP’s positioning on the issue of “opposition to the oil sands,” it may be anemic oil and gas regulations that actually threaten the industry. Without strengthened emission’s standards, oil and gas reserves will become an increasingly dangerous investment, compromising financial markets. And the absence of a more ambitious regulatory regime guarantees that both Alberta and Canada will continue to fail to meet greenhouse gas emissions targets.

As the Pembina Institute reports, CAPP’s proposed standards “would see oil sands emissions grow from 55 million tonnes (Mt) today to between 95 and 98 Mt in 2020. The cost to companies would grow from 10 cents a barrel today to a maximum of 23 cents a barrel. Overall, the proposal would fail to even achieve Alberta’s 2020 target – a goal that’s far weaker than the 2020 target that Ottawa has adopted.”

Alberta accounts for 48 per cent of Canada's total greenhouse gas emissions.  A new poll also shows a majority of Canadians feel climate leadership on the international stage should be a high priority for the nation.

This article originally appeared on DeSmog Canada.

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