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Oil sands, green groups unlikely allies in push for carbon tax

Stephen Harper signs a "No Carbon Tax" sign at a campaign rally in Cornwall, P.E.I. on Oct 13, 2008. Mr. Harper's government is facing growing calls for a carbon tax from some surprising quarters as it pursues plans to regulate industrial sources of greenhouse-gas emissions.

Tom Hanson/THE CANADIAN PRESS/Tom Hanson/THE CANADIAN PRESS

Ottawa is facing growing calls for a carbon tax from some surprising quarters as it pursues plans to regulate industrial sources of greenhouse-gas emissions.

Oil sands producers and some environmental groups that agree on little else have opposed the Conservative government's regulatory approach and endorsed the idea of carbon pricing. Now, that idea is being pushed in a new paper to be released Thursday by the University of Calgary's School of Public Policy.

The author, Simon Fraser University's Nancy Olewiler, urges Ottawa to scrap energy subsidies, streamline regulations and implement "full-cost pricing" on air contaminants, water use and greenhouse-gas emissions. The paper was sponsored by the Manning Foundation for Democratic Education, although the foundation took no responsibility for its conclusions.

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Ms. Olewiler will have the opportunity to present her views directly to Natural Resources Minister Joe Oliver on Friday at a Manning Centre conference, when she shares the stage with him to speak on "energy development through smart regulation."

The full-cost pricing approach would see the government set a price on pollution and carbon-dioxide emissions as a means to encourage industry to invest in abatement measures, and for consumers to reduce their use of polluting products.

With greenhouse gases, the market-based approach could be accomplished either with a direct tax on emissions, or with the kind of cap-and-trade approach Ottawa was considering two years ago.

"The task is daunting to say the least, but the sooner we get started, the better in terms of using all our natural resources wisely and insuring they'll be here for future generations," Ms. Olewiler said in an e-mail.

"Once destroyed, it's very tough and costly, if not impossible" to reclaim the clean water and air and pristine state of the natural environment, she said.

The government is promising a sector-by-sector slate of climate regulations, including the oil sands and starting with the coal-fired power sector. Power companies – along with several provinces – have raised significant concerns about draft rules released last August. Industry and provincial critics say Ottawa's plan involves far too much bureaucratic involvement in their operations and lacks flexibility.

Organizations as diverse as the Pembina Institute think tank and Imperial Oil Ltd. have criticized the federal regulatory approach and endorsed a "market-based" mechanism to reduce greenhouse gas emissions.

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Imperial Oil believes any climate policy should ensure the cost is applied evenly across the economy, maximize market mechanisms and minimize complexity and administrative costs, company spokesman Jon Harding said.

A carbon tax "is aligned with more of these key principles" than the cap-and-trade systems or regulatory approaches, Mr. Harding said in an e-mail.

Manning Foundation CEO and Reform Party founder Preston Manning said he supports the idea of full-cost pricing "in principle."

"It's eventually got to come," Mr. Manning said. "It's just fairly basic concept that, with any production of energy, you've got to figure out what are the environmental impacts and then the cost of avoiding or mitigating them and then integrating that into the price of the product."

The Conservative government has rejected the carbon tax, and savaged former Liberal leader Stéphane Dion in the 2008 federal election for proposing one. Ottawa's principle aim is harmonizing the Canadian system with whatever emerges in the United States. For now, that appears to be regulation by the Environmental Protection Agency.

Jack Mintz, who heads the University of Calgary's School of Public Policy, said a carbon tax would allow Ottawa to cut subsidies to all forms of energy and allow the market to function.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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