Welcome back to the twilight zone

This has so far been a very eventful week for those interested in climate policy and Alberta politics/sabre-rattling. First, on Monday, we heard from Environment Minister John Baird that Ottawa will be putting in place new regulations that as of 2012 will require oilsands operators and coal-fired electricity generators to use new technology to reduce their carbon dioxide emissions. And now today, I read a read a headline in the Journal that made me think I was in Bizarro World:  oilsands operators have announced their support for the implementation of a nation-wide carbon tax. Wow.

In a nutshell, Monday's new regulations break down as follows:

• Starting in 2012, new oilsands extraction operations will be required to install carbon capture and storage systems to capture "the bulk" of their carbon emission. "The bulk" has yet to be specifically defined.
  
• Also starting in 2012, new coal-fired electricity generation plants will be required to reduce their carbon emissions (again no solid number) through the implementation of a combination of new technologies, which I'm assuming mainly means carbon capture and storage and coal-gasification processes (i.e. the infamous and so-called "clean coal" mentioned by Klein in his last state-of-the-province-type address to Alberta)
• Existing facilities and those oilsands operations that will be coming online before 2012 will be required to "reduce emissions using cleaner fuels," according to yet to be determined rules that will be finalized at some point next year.
• The government reaffirmed it's decision to create a carbon offset/cap and trade system at some point in the future.

Some initial impressions: first of all, it's important to remember that despite all the fancy talk and government programs with "eco" prefixes, Canada still has no intention of setting a hard cap on emissions any time soon, which means absolute GHG emissions will likely continue to rise. Additionally (and ironically), the news release accompanying Monday's announcement, Government Delivers Details of Greenhouse Gas Regulatory Framework, uses language like "effectively bans" and "will effectively require" but doesn't effectively contain many firm details. Looking at some of the attached policy documents gives one the impression that there's a lot that's still TBA.

Second, although some environmentalists have raised legitimate criticisms around the 2012 start date (as by this time most planned new oilsands operations will already be online), one benefit is that it provides an early signal to oilsands and electricity generators to start getting their act together -- early plans can do a lot to minimize the economic costs of environmental actions.

Third, it seems the federal government is putting a tonne of stock into new and unproven technologies. To use an variation of an oft-repeated phrase from fellow Alberta blogger Ken Chapman, this is good politics but bad policy. Carbon capture and storage is the mother of all end-of-pipe solutions -- it does nothing to address the root of the problem, i.e. insatiable consumer demand for energy.

The only mechanism contained in the new regulations for addressing consumer demand comes in the form of a cap and trade system, which again is still without elaboration.  Cap and trade systems, however, are generally regarded by economists and climate policy experts as being less efficient than the primary alternate option: a carbon tax. For these reasons, I'm shockingly inclined to agree in principle with today's call from the oilsands companies; hence, the title of this post.

Although it appears that Alberta's status as the twilight zone has now been officially affirmed, it's important to acknowledge the obvious self-interest embedded into today's announcement. Firstly, the Canadian Association of Petroleum Producer's Pierre Alvarez has mused about about the need for a carbon tax in the past as an attempt to scare-monger. Moreover, while I agree that the costs of emissions reductions should indeed be shared across society, I subscribe to the "polluter pays" principle so I don't think that the proceeds from a carbon tax should be used to fund carbon capture and storage for oilsands and electricity operators. I prefer the revenue-neutral concept advocated by the BC Liberals and the Green Party: net proceeds from the tax should be used to apply an across the board corporate and/or income tax cut. If there is one things corporations (and some people) hate more than anything it's taxes, so creating a policy that would give these entities the opportunity to reduce their tax load in way that would benefit society at large just makes sense to me.

I would hope this would make sense to our Premier as well, but I'm not optimistic. Instead, I'm looking forward to more of the international oil industry taking the lead on our province's environmental file.