SHAWN MCCARTHY AND DAVID EBNER, Globe and Mail, TORONTO and CALGARY — The Conservative government has signalled that it won't let its climate change plan derail aggressive oil sands expansion, exempting new projects from greenhouse gas emission targets until three years after they are up and running.
Under regulations announced yesterday by Environment Minister John Baird, large industrial emitters will have to reduce their emissions per unit of production at existing facilities by 18 per cent in the first three years, and then a further 2 per cent a year.
Companies that can't meet those so-called intensity targets, however, will be able to purchase credits from more efficient ones or contribute to a technology fund, at an initial cost of $15 a tonne, rising to $20 in 2013.
For new plants, corporations will face only a traditional environmental assessment process, and then will have three years before they must begin reducing their emissions.
Calgary-based petroleum companies had warned that Prime Minister Stephen Harper was prepared to get tough on the oil sands, which account for the fastest-growing component of Canada's greenhouse gas emissions.
Mr. Baird said the new plan seeks to balance the environmental goals with the needs of a growing economy.
The industrial targets are "concrete, challenging, yet realistic," he said.
He said the government felt it was necessary not to impose initial emission limits on new plants in order to allow for economic growth.
Critics said Canada will not be able to meet the government's emission targets - which environmentalists consider to be woefully inadequate - unless emissions from the oil sands are somehow reined in.
"I'm afraid that the entire [industrial emitters] program is a sequence of loopholes," said Julia Langer, director of the World Wildlife Fund's global threats program.
She said the initial exemptions for new plants and the $15-a-tonne maximum payment into the technology fund seriously undermine the plan.
"This is a regulatory plan that is geared to business as usual for the tar sands sector," Ms. Langer said.
However, industry spokesmen said the government's targets represent a realistic "stretch" goal for industry.
Senior oil patch executives, including Ron Brenneman, chief executive officer of Petro-Canada, and Clive Mather, the retiring CEO of Shell Canada, met at a downtown hotel in Calgary with Jim Prentice, the Conservatives' senior minister from Calgary, and Natural Resources Minister Gary Lunn.
The oil patch executives said the targets were tough, but likely do-able, and said they were happy to see the energy business wasn't singled out with specific targets.
"They're aggressive targets, but as you know our company supports government frameworks for greenhouse gas reductions," said Kevin Meyers, president of ConocoPhillips Canada, one of the country's biggest energy firms and a leading oil sands player.
"We believe what's been presented here is a good start toward slowing our emissions and hopefully eventually stopping them and reversing them. We've got to work through a lot of details and they are aggressive targets."
Petrocan is preparing to unveil details of its planned Fort Hills oil sands project and Mr. Brenneman said the new rules are only "one factor" in the company's overall thinking.
"We need some time [to weigh it]," he said in a brief interview with reporters.
Pierre Alvarez, president of the Canadian Association of Petroleum Producers, said the ability to offset emissions rather than just reducing them internally is key for oil companies, but industry data will take time to compile.
"I don't think anyone's going to be putting hard numbers out there for a while."
Environment Canada officials said the new climate change plan will stabilize Canada's greenhouse gas emissions by as early as 2010, and reduce them by 20 per cent of 2006 levels by 2020, or a decrease of 150 megatonnes.
The Pembina Institute has forecast that the expansion of the oil sands - where production is expected to triple in the next 10 years - could increase emissions by as much as 142 megatonnes by 2020.
Companies will initially be able to meet 70 per cent of their target by paying into the fund, which will in turn finance research and development into technologies, including the capture and underground storage of carbon dioxide. By 2017, they would be able to meet only 10 per cent of their regulatory obligation through fund contributions.