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Chemical firms assail oil sector’s green plan
News Articles | Shawn McCarthy | The Globe and Mail | October 20, 2009
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Canada’s two biggest chemical companies are urging Ottawa to adopt a single, national emissions cap for greenhouse gases (GHG), rejecting the oil industry argument that the oil sands sector needs an “intensity-based” system to continue its growth.
DuPont Canada Inc. and Dow Chemical Canada Inc. joined with a handful of other companies and environmental groups in supporting a national regulatory system with “common definitions and standards.”
“The cap-and-trade system should place an absolute, national cap on covered emissions,” the group said in a statement released Tuesday. It added that intensity measures are “not suitable” for determining caps faced by large emitters, such as oil companies, chemical producers and power companies.
Different types of caps – absolute versus intensity – would create “equity issues” as by allocating greater emissions room for some sectors at the expense of others. It could also undermine the efficient trading of emission credits, a system designed to encourage the most cost-effective, economy-wide reduction of emissions, the group warned.
In addition to the two chemical companies, the statement was signed by Catalyst Paper Corp., Direct Energy, Spectra Energy, Rio Tinto PLC, Enmax Corp., Royal Bank of Canada and Toronto-Dominion Bank.
Federal Environment Minister Jim Prentice has yet to unveil its new regulatory plan for larger greenhouse gas emitters, but is expected to provide broad outlines prior to a climate change meeting in Copenhagen in December.
Those regulations “must be stringent enough to achieve necessary emissions reductions within time frames that prevent an unacceptable level of GHG concentrations and climate change,” the group’s statement said.
The Calgary-based oil industry is urging Mr. Prentice to follow Alberta’s lead in setting specific, intensity-based targets for each major emitter.
The intensity approach, which would apply on a per barrel basis, would reduce the cost of complying with emission regulations in the rapidly expanding oil sands sector. But other provinces and industries worry they would be required to pick up the burden in order to meet overall national caps.
Under provincial regulations, Alberta requires its oil sands producers to reduce their greenhouse gas emissions by 12 per cent per barrel of oil produced. As production grows in the oil sands, emissions will be allowed to rise dramatically, than less rapidly than under a “business-as-usual” scenario.
Under a cap-and-trade system, the government would set a national emissions level, and then require industry to acquire permits for each tonne of carbon emitted below that cap. Governments could either provide free allocation initially, or auction the allocation permits. “We do not believe that caps for individual sectors are appropriate,” DuPont spokesman Roger Goodman said.
“The benefits of cap and trade are the opportunity to seek out the lowest-cost reductions available in the economy at any given time, while ensuring adequate overall reductions in emissions.”
Dow Chemical spokesman Jonathan Moser said intensity targets are incompatible with a national cap-and-trade plan, particularly given the desire to make it compatible with a proposed regulatory system in the United States.
“If there is a sector that foresees large new investments that entail large growth in GHG emissions, it is essential that these new investments already incorporate the needed [greenhouse gas] mitigation options up front,” Mr. Moser said.
By doing so, he added, they would not need intensity targets.
Tagged with: climate policy, jim prentice, cap and trade, dow chemical canada, dupont canada
