Obama's climate change plan: It's wait and see for energy industry

Analysts are mixed on whether U.S. President Barack Obama's ambitious targets to reduce greenhouse gases will even make a ripple in Canada's power industry, let alone its oil and gas industry.

Pressure on Ottawa to regulate carbon emissions, but Canadian power industry moving on from coal

Piles of coal are shown at NRG Energy's W.A. Parish electric generating station in Thompsons, Texas. U.S. President Barack Obama's greenhouse gas reduction plan targets coal plants, but Canada is already moving away from coal generation. The oil and gas production sector is the largest source of Canadian CO2 emissions. (Associated Press)

Will U.S. President Barack Obama’s push to reduce power plant emissions by 2030 by 30 per cent affect Canada’s energy industry?

Analysts are mixed on whether this ambitious target will even make a ripple in Canada's power-generation industry, let alone its oil and gas industry.

For the U.S., these are the first-ever national limits on carbon dioxide, the chief gas linked to global warming, but both Canada and the U.S. have committed to reducing greenhouse gas emissions by 17 per cent below 2005 levels by 2020.

Obama's rules target power generation and primarily the burning of coal, which makes up 38 per cent of U.S. greenhouse gas emissions.

“As far as I can see, he’s just catching up with Canada,” says Bob Schultz, an expert in the petroleum industry from the Haskayne School of Management at University of Calgary.

Federal Environment Minister Leona Aglukkaq boasted yesterday that Canada had already taken steps to regulate power plants here and urged Obama to work with Canadian officials on regulation for the oil and gas industry.

Decreased use of coal in Canada

In 2012, the government introduced new regulations to curb greenhouse-gas emissions from coal-fired power plants, putting strict emissions standards on new coal plants and setting rules that would force existing plants to shut down after they’ve been in operation 50 years.  

More effective than the federal rules have been provincial decisions to move away from coal, with Ontario’s last coal plant closing at the end of the year and even Alberta utilities, which get 60 per cent of their power from coal, planning to shift some of their aging coal plants to natural gas.

We need to regulate this sector, put a price on carbon and drive improvements in this industry. And so far our federal government has been unwilling to do that.—Simon Dyer, Pembina Institute

Warren Mabee, associate director of the Queen’s Institute for Energy and Environmental Policy, says Obama’s policy does put pressure on Stephen Harper to respond. The prime minister has said he would not move on climate change until the U.S. did, and now the U.S. has acted, he said.

“It means we will be under the gun to look at our emissions and to try to get a better handle on the emissions that are associated with our industry and our power generation,” Mabee told CBC News.

“Yes, we’re a very green country compared to other members of the G7 or the G8, but we could be greener. There are technologies and there are approaches that we could take that would do that,” he said.

The focus on coal in the U.S. may put the spotlight on some Canadian industries that still use it, including mining and metals, Mabee said.

Oil and gas industry emissions high

But Canada's single largest source of greenhouse gas emissions is the oil and gas industry, which produces 25 per cent of the total.

Simon Dyer of the Pembina Institute, an environmental advocacy group, said Obama’s move puts pressure on Harper to create tougher standards for the oil and gas industry.

“It’s the elephant in the room. We can't continue to allow the oil and gas sector to be basically unregulated when it comes to oil and gas ... climate emissions,” Dyer said. “We need to regulate this sector, put a price on carbon and drive improvements in this industry. And so far our federal government has been unwilling to do that."

If the federal government doesn’t step up on climate change and make a move to meet its own targets, it will hurt Canada's image on the international stage, Dyer added.

Although the oilsands draw most of the attention from environmentalists, Schultz said he believes Canada should look beyond the oil patch to regulate greenhouse gas emissions.

Schultz would prefer that Canadian regulations geared to preventing climate change target big emitters such as liquefied natural gas production, proposed as a means to get West Coast gas to Asia, or flaring of CO2 seen in natural gas production.

“Could the oil industry do more? Of course it could,” he added. “They know there are environmental problems, but the technology is not there for the solutions.”