Investors Cheer, Greens Jeer Canada Emissions Plan
Author: Jeffrey Jones
Environmentalists were angered with the C$8 billion (US$7 billion) Green Plan, released Thursday by Environment Minister John Baird, saying it would not stop rising emissions.
It features industry-friendly targets based on emission intensity, or per unit of production, rather than absolute reductions of carbon dioxide. Under the intensity strategy, emissions can rise if economic output is at a brisk enough pace.
Some industry officials had feared the government would force more stringent reductions of carbon dioxide, a gas blamed for global warming, forcing them to cancel plans for multibillion-dollar Alberta oil sands projects.
Officials in Prime Minister Stephen Harper's Conservative government began the selling Canadians on the plan on Friday.
"I would suggest we're on a very responsible track in terms of our obligations as stewards of the environment. But it will also allow us, in an equitable way across Canada to protect our economy," said Jim Prentice, Indian Affairs and Northern Development minister and member of Parliament from oil-rich Alberta.
The government plan aims to reduce nation-wide emissions to 20 percent below 2006 levels by 2020. Industry will be responsible for 60 megatonnes of the planned 150 megatonne cut.
At that level, Canada will renege on its commitments under Kyoto.
"Everyone agrees for Canada to meet its Kyoto obligations in the next three years is essentially impossible without completely eviscerating the Canadian economy," Prentice said.
David Suzuki, Canada's best-known environmentalist, called Baird's plan an "embarrassment" that will allow emissions to rise for several years.
"Calling this plan a strategy is actually giving it far too much credit," Suzuki said in a statement. "It's a sham, and a complete abdication of our international commitment."
Energy bosses said they favored the intensity-based cuts, but pointed out they will not come without costs to producing electricity and fossil fuels, like oil sands, the target of billions of dollars of investments.
The Toronto Stock Exchange's oil and gas subgroup, which includes such big-name stocks as Petro-Canada, Suncor Energy Inc. and EnCana Corp., rose 1 percent as expected costs under the plan came in under what investors feared.
Emissions cuts could add 44 Canadian cents to the cost of producing a barrel of crude from mined oil sands and 53 Canadian cents a barrel to steam-driven oil sands, predicted Andrew Potter, analyst at UBS Securities.
The utilities group, with such companies as TransAlta Corp. and Fortis Inc., eased half of 1 percent.
TransAlta Chief Executive Steve Snyder was among many industry officials who said he was pleased that Baird employed many of the ideas gleaned in consultation with industry.
The plan will boost prices for electricity, however, said Hal Kvisle, CEO of TransCanada Corp. which like TransAlta produces power at gas- and coal-fired plants.
"The right strategy, we believe, in Alberta is to continue running the existing coal plants more or less as is and to pay into the technology fund C$15 or C$20 a tonne for the CO2 emissions," Kvisle said on Friday.
The fund for environmental technology development is one way under the plan companies can meet targets. They will also be able to make straight cuts and trade emissions.
(Additional reporting by Scott Haggett)