Tiptoeing through a minefield

Obama, Harper decide it’s too early to walk the talk on climate-change measures, agree they need a joint approach for treaty talks

Gary Park

For Petroleum News

To bad Barack Obama didn’t have an hour or two of free time during his Ottawa visit Feb. 19.

He could have dropped in on the first Tar Sands Film Festival, which, no matter how long it lasts, is unlikely to ever rival Cannes on the film festival circuit.

But it would have been a chance for the anti-oil sands lobby to buttonhole the U.S. president and make its case to clean up or shut down development of the northern Alberta resource that accounts for half of the 2 million barrels per day of crude that Canada ships to the U.S.

Instead, Obama was more intent on starting a new chapter in U.S.-Canada relations by ending eight years of often brittle dealings between President George W. Bush and successive Canadian governments.

Treated to a rock-star reception, he returned the feelings by declaring: “I love this country and think that we could not have a better friend and ally.”

It was a charm offensive that has turned Canadians dotty. They have given Obama a higher popularity rating than any Canadian politician, maybe than Santa Claus.

The obsession with the new president was more than enough to wash away doubts or disappointment that he has, for now, apparently set aside any thoughts of a ban on U.S. imports of oil sands-derived products, as both he and Prime Minister Stephen Harper vowed to work jointly on new technology to reduce greenhouse gas emissions generated by the oil sands and U.S. coal-fired power plants.

To start meddling with the 20 percent of U.S. oil supplies that come from Canada in the thick of a deepening recession might have undercut Obama’s goal of reducing U.S. dependence on imported crude from politically volatile regions,

There was no public indication by the two leaders that they favored tougher immediate measures to curb greenhouse gas emissions, such as a cap-and-trade system for carbon.

Stelmach: “Alberta’s language”

Alberta Premier Ed Stelmach captured the sense of relief in his government and the industry by triumphantly telling reporters Obama is “clearly speaking Alberta’s language.”

“Balancing the environment and the economy, investing in carbon capture and storage and technology — they’re all things that Alberta has been talking about,” he said.

Dave Collyer, president of the Canadian Association of Petroleum Producers, suggested the technological approach to reducing greenhouse gas emissions can “find the right balance between economic growth and energy security and environmental protection. … As we move forward, we’ll have to find that right sweet spot and in a manner that allows oil sands growth to continue, but also tackle the environmental challenge.”

Collyer told the Globe and Mail that the message from the summit was “very much one of pro-actively getting after technology to see if we can address the challenges we (face) and that’s the largest lever we have.”

“And that fits very well with where our industry has been and our view that we’re not looking for special treatment for the oil sands,” he said.

In effectively agreeing to soft pedal for now on serious issues, such as putting a price on carbon and imposing tough new emissions standards on vehicles, the two leaders bought time for themselves by opening a U.S.-Canada Clean Energy Dialogue, committing senior government officials to collaborate on developing clean energy technology, led by carbon capture and storage.

It wasn’t what environmentalists were hoping for and wasn’t even close to Canadian indications that the two countries might move ahead with a cap-and-trade system.

But the fact remains that the pressure is on the U.S. and Canada to deliver more than just a sketchy outline of vague promises before international talks on a new climate-change treaty, set for Copenhagen in December.

Prentice: pivotal year

Prentice said Canada and the U.S. need technological innovation to transform their industries, which could extend to a joint approach on emissions regulation, fuel standards and energy strategy.

Echoing Harper, he said Canada still needs to see how the U.S. structures its approach, because the closeness of the two economies requires the system to be aligned.

The Canadian and U.S. strategy will be developed on a parallel path with whatever global agreement is reached in Copenhagen, Prentice said.

At his joint news conference with Obama on Feb. 19, Harper, hinting at a degree of wariness about where Obama might be heading, insisted it was too soon to talk about climate-change harmonization, while arguing that the approaches taken by the two countries are “not that different.”

“Generally, speaking the targets are more or less the same,” he said.

Harper has opted for “intensity-based” targets, lowering greenhouse gas emissions per unit of production; Obama prefers hard caps.

But Harper said those objectives are “two ways of measuring the same thing,” adding he was “convinced that we will have a great deal in common as we move forward.”

Obama: no silver bullets

Obama said he hopes the U.S. will be ready for Copenhagen by completing its “domestic debate and discussion” on a climate-change strategy and “show itself committed and ready to do its part” in a global effort.

“Increasingly we have to take into account the issue of climate change that is going to have an effect on all of us,” Obama said. “There are no silver bullets right now. Here in Canada there is the issue of oil sands. In the U.S. we have issues around coal, for example.

“If we can figure out how to capture the carbon, that would make an enormous difference in how we operate, but right now the technology is not cost-effective,” he said.

In an effort to make sure the Copenhagen treaty is truly global, unlike Kyoto, which exempted developing countries, Obama said the more “two relatively wealthy countries (can) show leadership, the more likely it is that India and China will be part of the solution.”

Harper, with Obama’s concurrence, said “there are things we can do together outside the U.S. regulatory framework,” but Canada is not prepared to impose an independent regulatory regime until it sees what course U.S. environmental policy takes.

Canadian governments, the petroleum industry and researchers have already invested millions of dollars over several years in advancing carbon capture and storage, which Prentice said has already proven successful at EnCana’s project in Weyburn, Saskatchewan, where millions of metric tons of CO2 have been buried, rebuilding reservoir pressures at an aging oil field, which is expected to yield an incremental 130 million barrels as a result.

Apache, Husky Energy, Nexen, Penn West Energy Trust, ARC Energy Trust and others have been building their own knowledge banks in Alberta and Saskatchewan, while researchers have been exploring ways to figure out the capital and operating costs of CO2-related ventures.