[R-G] Oilsands activity not likely to decline in near term, political economist says

[Anthony Fenton]

Latest Headlines
Sep 29, 2008 4:26:00 PM MST
Oilsands activity not likely to decline in near term, political  
economist says (Fed-Elxn-Oilsands)
http://www.oilweek.com/news.asp?ID=18851
	
CALGARY _ No matter which of the top three national parties emerges  
victorious in the federal election Oct. 14, oilsands output will  
likely keep on rising _ at least in the near term, a political  
economist says.

Gordon Laxer, director of the University of Alberta´s Parkland  
Institute, says the policies announced by the Conservatives, Liberals  
and New Democrats vary from each other but none of them would prevent  
oilsands output from growing over the next few years.

It will be "absolutely full-steam ahead" in the oilsands under a re- 
elected Conservative government but even the Liberal and NDP programs  
would have minimal impact on output in the short run, he said.

The Tories are calling to reduce greenhouse gas emissions by 20 per  
cent compared with 2006 by 2020. That means projects starting up in  
2012 will need to capture their carbon dioxide emissions and store  
them, rather than releasing them into the atmosphere.

But in Laxer´s opinion, there´s no credibility to the Conservatives´  
proposed targets since "the steps to get there are not in place."

He said the outlook for the oilsands would not be much different under  
the Liberals´ Green Shift plan.

The Liberals are calling for a levy of $10 tax for each tonne of  
carbon output at the outset and ramp up to $40 per tonne within four  
years. The new levy wouldn´t apply to gasoline, which the Liberals say  
is already taxed at a rate of $40 per tonne.

Laxer said the Liberals´ carbon tax would only affect tar sands  
production if it raises costs so much that they slow down development,  
adding he doesn´t think that´s going to happen.

"The tar sands will still be profitable unless oil s down to $60 to  
$70 a barrel or less . . . If the bottom really ped out of it, then  
the carbon tax might start to bite," Laxer said.

The New Democrats have both called for a moratorium on new oilsands  
developments, until tough new emissions standards can be met.

But even under the NDP plan, Laxer said, output from the oilsands will  
still likely increase over the next few decades, since the many  
projects that have been approved or are under construction will still  
go ahead.

"We may still have a doubling of tar sands production, even with no  
new approvals," he said. "You would still have a fair degree of  
expansion, but it wouldn´t be unlimited expansion."

University of Calgary professor Bob Schulz, however, said the high  
price tag of some of the emission-reducing technologies will likely  
factor into spending decisions in the oilpatch _ but not as much as  
the world price of crude.

"Irrespective of political party issues and the election issues, the  
world price for oil is going to be a more significant factor than any  
of the political parties would raise," Schulz said.

The Green party, which is fielding candidates in nearly every federal  
riding, is calling for a moratorium on oilsands development, a cap on  
any increases in annual production and a carbon tax that would also be  
much steeper than the Liberals´ _ $50 a tonne in 2009.

Companies that reduce their carbon emissions under the Green plan  
would see their taxes cut by the same amount.

Environmental think-tank The Pembina Institute lauded the Green  
approach as having the necessary policies to fight climate change.

"The Greens propose to put a serious price on pollution, and back it  
up with strong laws and investments to scale up renewable energy,  
energy efficiency and public transit," the group said in a statement.

The Bloc Quebecois, which only runs candidates in Quebec, said it  
would apply the Kyoto Protocol, a 1997 treaty that called for  
emissions to be reduced by five per cent of 1990 levels in the 2008 to  
2012 time frame.

It has also proposed a cap and trade system and called for Quebec to  
reduce its reliance on fossil fuels.

The Conservatives have said they would ban exports of bitumen, the  
viscous heavy oil extracted from the oilsands, to countries that have  
less stringent emissions targets than Canada.

Laxer dismissed that proposed policy as an "empty idea."

"Canada has one of the loosest rules there is. We only export to one  
country, which is the United States," he said.

The Tories would also have to iron out the details of that policy with  
the provincial government in Alberta, which actually owns the bitumen  
and relies on royalty revenues from the tarry substance.

Alberta Premier Ed Stelmach said Monday he would not spar with Harper  
during a federal election campaign over the issue, but would want to  
discuss its implications for the province afterward.

"When it comes time after the election to sit down and do the overall  
review of whatever this policy means, then we´ll put our shoulder to  
it," Stelmach said.