By Andrew
Mayeda
Justin Trudeau says he would
bolster Canada’s case
for approval of the Keystone XL pipeline by introducing financial incentives to
curb greenhouse-gas emissions in the oil and gas industry.
Canada should establish a price
for carbon emissions to show it’s addressing climate change and
to give President Barack
Obama political
“cover” to approve TransCanada
Corp. (TRP)’s $5.4 billion project, Trudeau, leader of Canada’sLiberal Party said yesterday in an interview in Fort
McMurray, Alberta. He
said he was “agnostic” about how the price should be set.
“The way to promote Keystone XL
is not to be shouting, ‘You need to approve this.’ It’s to actually get our own
house in order and demonstrate we’re serious about the responsibilities that
come with carbon emissions,” said Trudeau. “That’s why it’s become politically
untenable to approve something that should have been approved years ago.”
Trudeau’s call to action
contrasts with Prime Minister Stephen Harper’s
position that he won’t regulate oil and gas emissions without similar U.S.
measures because it would put Canadian producers at a competitive disadvantage.
Harper and his ministers have continued to press for Keystone in speeches and
meetings with U.S. officials.
The State Department said in
April it would again delay a decision on Calgary-based TransCanada’s conduit in
order to give parties more time to comment. That further stalled a project
first proposed in 2008 and originally intended to come online in 2012. Obama
has said he won’t approve the pipeline if it significantly adds to carbon
emissions linked to global warming.
Crude
Discount
Canada has the world’s
third-largest crude reserves, much of it in the oil sands near Fort McMurray.
The area’s heavy crude has traded at an average of $18.70 per barrel below
the U.S. benchmark over the last five years due in part to transportation
bottlenecks. The discount costs Canada’s economy as much as C$50 million a day,
according to the Canadian Chamber of Commerce. Keystone XL would carry 830,000
barrels of crude a day from the oil sands to Gulf Coast refineries.
Finance Minister Joe Oliver,
Natural Resources Minister Greg Rickford and Foreign Affairs MinisterJohn Baird all traveled to New York this month, arguing in media interviews and
at an energy conference that Obama has unfairly entangled the $5.4 billion
pipeline with U.S. politics.
“It’s not moving forward,”
Trudeau said of the pipeline. “We’ve never had a worse relationship with theUnited States,
because perhaps our entire continental relationship has been reduced to not
just one industry or one company but one single project.”
Obama
Moves
Trudeau, son of former Prime
Minister Pierre Trudeau, cited moves by Obama this month to cut emissions from
U.S. power plants, that country’s largest source of greenhouse gases.
Harper said June 9 that the
U.S. moves don’t go as far as Canada’s regulations in the power-generation
sector. He said Canada would deal with climate change in a way that protects Canadian jobs, not
destroys them.
Trudeau, 42, said his Liberals
would spell out in an election platform how they would go about putting a price
on carbon. Former Liberal leader Stephane Dion lost the 2008 election after
proposing a carbon tax that was vilified by the Conservatives.
The Liberals have held a
consistent lead in public opinion
polls since Trudeau became leader in
April last year. While the next general election is scheduled for October,
2015, there are partial elections scheduled June 30 to fill four vacancies,
including the district containing Fort McMurray.
“The Liberal Party is somewhat
agnostic,” Trudeau said. “We recognize the fact that the discussion around
carbon pricing has been incredibly polarized politically.”
Carbon
Options
Harper’s Conservative-Party
government has been regulating greenhouse-gas emissions on an
industry-by-industry basis. The main opposition New
Democratic Party has
proposed a cap-and-trade system, which Conservative lawmakers have labeled a
“tax on everything.”
At the provincial level,
Alberta requires companies that emit more than 100,000 metric tons ofgreenhouse gases a year to cut emissions per barrel by 12
percent or pay a penalty of C$15 per ton. The proceeds of the levy are paid
into a fund that invests in technologies that cut carbon output.
British Columbia established a carbon tax in
2008, which is imposed on fossil-fuel consumers and designed to encourage use
of alternative fuels.
Whatever form the carbon price
takes, businesses need clarity, Trudeau said. Companies “want to know where the
benchmarks will be, what the expectations will be, for the next 10 years, for
the next 25 years.”
Clarity
Needed
“That kind of clarity will allow
industry to make a business model, invest in capital upgrades they need to
justify to their shareholders,” he said. “That kind of clarity is exactly what
this government hasn’t given.”
While Trudeau has joined Harper
in supporting Keystone XL, he reiterated his intention to kill another proposed
pipeline: Enbridge Inc.’s Northern Gateway, which was approved by Harper’s
cabinet earlier this month.
Trudeau said the project, which
would cross the mountains of British Columbia and bring oil sandscrude
to the Pacific Coast for export by tanker, never had local support and was
“doomed” from the beginning.
“There are a lot of tools at a
prime minister’s and a government’s disposal,” Trudeau said when asked how he’d
stop Northern Gateway. “We’ll use the most appropriate one that has the lowest
impact and cost for Canadians.”
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