$2 billion federal Low Carbon Economy Fund hoping to emulate Alberta successes?

Low Carbon Economy Fund
Catherine McKenna, Canadian environment minister.

Alberta showing way by helping industry to decarbonize oil sands bitumen, Low Carbon Economy Fund should take same approach

The Canadian government announced the $2 billion Low Carbon Economy Fund Thursday, hoping to support innovation and new technologies in a wide range of industries. The funding is spread over five years and at least one project on the government’s radar – Western power grid tie-ins – will suck up hundreds of millions to complete. That leaves a lot less for some very worthy innovation and technology projects. Environment Minister Catherine McKenna may want to rethink how much can be done with the small pot of money – or enlarge the pot.

Low Carbon Economy Fund
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The Justin Trudeau Liberals are treading the same path as the Rachel Notley NDP in Alberta: trying to reduce greenhouse gas emissions while the same time lowering energy costs, encouraging innovation and new technology development, and creating new jobs and business opportunities.

That sounds like a tall order, but Alberta is showing that it can be done.

Take the new oil sands emissions cap and output-based allocation system, which basically subsidizes producers that adopt new technologies to lower the carbon-intensity of their crude oil and penalizes those who don’t. What it means in practice is that in situ producers are substituting solvent for steam and miners are adopting the paraffinic froth treatment process or something similar.

A recent study from the Canadian Energy Research Institute showed that in situ companies can essentially “take carbon out of the barrel” – lowering carbon-intensity to that of the average American crude oil – while dropping production costs 34 to 40 per cent.

And if decarbonized Canadian heavy crude oil displaces crudes from Nigeria and Venezuela with a high carbon-intensity, for example, then it’s an even bigger win for international climate mitigation.

Talk about a win-win for government and industry.

“Projects that will be considered under the Fund will reduce emissions, create jobs and save Canadians and companies money by making homes and buildings more efficient; help companies innovate or use technologies to reduce their emissions; and support the forest and agriculture sectors to enhance stored carbon in forests and soils,” the feds said in a release.

Low Carbon Economy Fund
Alberta Premier Rachel Notley and Prime Minister Justin Trudeau shaking hands.

The Liberals have split the Fund into two parts.

An envelope of $1.4 billion will support provinces and territories that are on board with the Pan-Canadian Framework on Clean Growth and Climate Change. This summer, the government will talk to them about proposed projects, then enter into bilateral funding agreements so that the projects can begin in the fall and winter.

Saskatchewan, which has not signed on to the framework, cried foul over being excluded.

“This is not how I think Canadians expect the federal government to operate,” Scott Moe, Saskatchewan environment minister, told reporters. “It doesn’t speak to the collaboration that was put forward at the beginning of this process.”

The second part of the Fund is set aside for the Low Carbon Economy Challenge, which will begin this fall.

Funding that supports planting seedlings on Non-Sufficiently Restocked land in Western Canada, for instance, would be a very good use of those funds. Young, vigorous forests act as carbon sinks, sucking carbon from the atmosphere, while mature forests do the opposite.

According to “Climate Change Mitigation Options in British Columbia’s Forests: A Primer” by Guillaume Peterson St-Laurent and George Hoberg, “BC forests were a sink between 1990 and 2002, but became a net carbon source in 2003 and have emitted more than they sequestered since then,” mainly due to forest fires and insect infestations.

Low Carbon Economy FundPeterson and Hoberg suggest a number of ways British Columbia forests can be used for carbon mitigation, including acceleration of reforestation through increased tree planting, reducing the build up of fuels for forest fires (which release great volumes of carbon), and more harvesting of trees killed by natural disturbances such as fire and insects.

Other measures that will be considered under the Challenge include rebates for installing high performance equipment, incentives to retrofit homes and commercial buildings, and energy efficiency projects for industries.

As the province with far and away the highest GHG emissions per capita, expect Alberta to aggressively compete for its share of the funding. (I’ll be interviewing Alberta Environment Minister Shannon Phillips Tuesday and will ask her about Alberta’s plans)

Low Carbon Economy Fund
Brian Jean, Wildrose leader, left, and Jason Kenney, PCAA leader, announce creation of new United Conservative Party. Photo: www.daveberta.ca

Perhaps just as important are the politics of programs like this. Trudeau and Notley are moving in lockstep on energy and climate policy, taking the approach that the Canadian and Alberta economies can be decarbonized and growth encouraged at the same time.

Not everyone agrees. Conservative politicians – especially Wildrose leader Brian Jean and PC leader Jason Kenney in Alberta – have ridiculed carbon taxes and other regulations designed to reduce emissions. New Conservative leader Andrew Scheer is expected to join that particular bandwagon.

So, a political line has been drawn.

On the one side are Notley and Trudeau, whose positions were summarized by McKenna this way the release: “We understand that a clean environment and a strong economy go hand in hand.”

On the other side are their conservative opponents who are suspicious of climate science and prefer to let markets decide winning and losing technologies without government intervening in the form of heavy-handed regulations and taxes.

If Notley and Trudeau hope to win their respective political battles, Alberta in particular must show results, and quickly.

Efforts to lower oil sands emissions are off to a good start. More of that sort of success, please.

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