FEATURE STORY

Oil-Rich Alberta Finds Common Ground on Climate Action

April 17, 2017

World Bank Group

STORY HIGHLIGHTS
  • Oil industry, environmentalists worked together for change
  • Provincial Climate Plan puts price on carbon and a cap on emissions
  • Breakthrough involved focusing on limiting emissions, not production

Alberta Premier Rachel Notley stood on a stage with oil industry executives and environmental leaders to announce a new climate change policy for Canada’s top oil-producing province, home to the world’s third largest oil reserves.

The Nov. 22, 2015 unveiling of the Alberta Climate Leadership Plan committed the province to both setting a price on carbon and limiting overall emissions as part of reforms that emphasized cleaner energy and economic growth, including further oil sands development within the emissions limit.

“We don’t know of any jurisdiction that has taken such a large step to address the problem anywhere, at any time,” said Ed Whittingham, an environmentalist who was executive director of the Pembina Institute when he stood beside Notley that day.

The new policy formula followed years of bitter dispute over growing development of the multibillion-dollar Alberta oil sands — a standoff that was harming the province’s future energy prospects, as well as its economy and environment.

In part, the Alberta policy emerged from eighteen months of discussions between a handful of leaders from the oil industry and environmental organizations that sought to overcome their stalemate for the good of the province and Canada.

Moving Past Long-Held Positions

Participants in the lengthy collaboration cited a series of factors that contributed to its success — the willingness of all parties to move past long-held positions; a commitment of time and resources; alignment with government aspirations, and an opportunity to move ahead.

“A lot of things have to line up, but if you don’t do the homework and don’t build the platform, then frankly you haven’t got the opportunity to strike when the iron is hot,” said Dave Collyer, a petroleum industry leader who played a key role in the talks with environmentalists.

Tzeporah Berman, an environmental advocate who worked with Collyer to get the talks going, said any process taking on complex issues of climate policy such as carbon pricing should “step back initially from the details and instead create a conversation around where you’re trying to get to.”

“What is the common ground? What is your shared vision? And then work backwards from there, because that can create some foundational agreements and trust,” she said.

Whittingham called participation by top leaders on both sides vital to breaking through the inevitable stalemates that arise “because they’re the ones who are paid to make the tough decisions.”

“You’re going to be uncomfortable,” warned Collyer. “But that’s leadership, that’s what it’s about. You’ve got to have the courage to lead and the courage to stick with it.”

An Economy-Wide Carbon Price

The Alberta Climate Leadership Plan called for a 100-megaton annual limit on oil sands emissions. In announcing it, Notley noted the limit was 30 megatons more than current production levels, providing a buffer for industry to grow while developing low-emissions technology.

She also announced an economy wide carbon price that started at $20 per ton in January 2017 and will rise to $30 a ton a year later.

“We’re going to reduce pollution by putting a price on it,” Notley declared that day. “We all contribute to carbon pollution and we can all be a part of the solution.”

Alberta had first adopted an emissions trading program in 2007 in a pioneering step that eventually failed to satisfy increasing public demands for stronger policies to address climate change.

Aggressive campaigns by environmental groups, some First Nations communities and others against continued development of oil sands production increased pressure for clean energy policies.

At the same time, some of Alberta’s major oil producers realized they faced an existential threat as modern societies began the transition away from fossil fuels to cleaner, renewable sources.

The initial talks began in the fall of 2014 after Collyer asked mediator Daniel Johnston to reach out to environmental leaders on launching a dialogue. Johnston put Collyer in touch with Berman, and they brought in others after quickly realizing the potential for common ground despite the history of bitter dispute.

Breakthrough: Limiting Emissions

A key breakthrough occurred after several months when the focus settled on reducing carbon emissions, which provided the opportunity for the oil industry to continue producing and to increase production as long as the resulting emissions remained within agreed levels. 

“What that did was unlock the ability for industry to say look, if we can advance technology and innovation and in doing so reduce carbon emissions intensity, that allows us to pursue our objectives,” Collyer said. “It holds industry accountable for delivering on the technology we believe we can deliver to be competitive with other jurisdictions going forward.”

Working out an acceptable level of emissions “triggers alignment in other areas, like agreeing to a carbon price for the oil sands,” Berman noted.

The process got a major sense of urgency in May 2015, when Notley’s New Democratic Party won provincial elections on a platform that included a more progressive climate change policy for energy rich Alberta.

She immediately appointed a climate advisory panel to draft a set of climate policy recommendations in time for the U.N. climate talks in Paris in November 2015.

In ensuing months, the government’s climate advisory panel heard from interested stakeholders including the ad hoc grouping of industry leaders and environmentalists that had achieved consensus on underlying principles regarding carbon pricing and limiting oil sands emissions.

“It was a very challenging process,” Collyer said, “but there was a strong case for change and we were able to come up with a package that worked for industry — a progressive and competitive carbon pricing structure; the opportunity to grow oil sands and related infrastructure within the bounds of the emissions limit; and incentives to accelerate technology and innovation to make oil sands more competitive.”