Ottawa's plan to regulate carbon dioxide emissions from Alberta's oil and gas production could jeopardize the sector's voluntary efforts to cut greenhouse gases, say some industry and legal experts.

In proposing to change the law before releasing a detailed plan on how emissions will be cut, the federal government is imposing regulations before Kyoto is even implemented, they say.

Ottawa has proposed regulating the greenhouse gas carbon dioxide (CO2) as a pollutant under the Canadian Environmental Protection Act (CEPA) - legislation that's now used to control air pollutants and toxic substances such as lead and mercury.

"To put in what's essentially a penalty provision before you even define how you're going to deal with the problem is really putting the cart before the horse," says Scott Miller, senior lawyer with Petro-Canada Inc.

Greenhouse gases are industrial emissions that are blamed for global warming.

To avoid labelling greenhouse gases as toxic, the federal government proposes to drop all references to the word "toxic" in CEPA and instead substitute the word "harmful" for substances to be regulated under the legislation.

That means companies that emit more than what Ottawa permits would be subject to penalties.

The move has raised suspicions about the federal government's motives, and whether Ottawa really intends to offer the oil and gas industry incentives to cut greenhouse gases or give any credit to companies that have already spent money on cutting emissions, Miller says.

"When their first step is a prohibition step, it does cast doubt about whether they're earnest with respect to the other areas."

Pierre Alvarez

Ottawa's plan to avoid using the word toxic appears to be an attempt to accommodate the position of the Canadian Association of Petroleum Producers (CAPP), the powerful lobby group representing Canada's upstream petroleum industry.

In a letter to federal Natural Resources Minister John Efford and Environment Minister Stéphane Dion on how to achieve greenhouse gas reductions, CAPP president Pierre Alvarez noted the only way the oil and gas industry would accept a legislative method or instrument to regulate emissions is if greenhouse gases were not labelled as toxic.

"It has been and continues to be CAPP's position that a decision on the legislative instrument at this time would be premature," Alvarez wrote.

Whatever federal regulatory method is used, it must work in harmony with provincial legislation and must specify the emission-reduction targets that will be required of each industrial facility, he wrote.

Petro-Canada's Miller says Ottawa's eventual regulatory method should be part of a comprehensive approach to dealing with Canada's obligation under the international Kyoto treaty to reduce greenhouse gas emissions.

"Let's figure out what it is we have to achieve and the best way to achieve that and a reasoned approach to do it before we start dealing with the prohibition sections," Miller says.

Canada's major environmental groups also oppose the federal government's plan, albeit for different reasons than industry.

Environmentalists argue that based on scientific evidence of the impact of greenhouse gases on human health and the environment, such emissions already meet the definition of toxic under CEPA - so there's no need to change the legislation.

Groups registering their opposition to Ottawa's proposal include the Alberta-based Pembina Institute for Appropriate Development, as well as the Canadian Environmental Law Association, David Suzuki Foundation, Environmental Defence, Great Lakes United, Greenpeace, Pollution Probe and the Sierra Legal Defence Fund.

"The federal government already has the necessary authority to establish a regulatory framework to control and reduce emissions of toxic greenhouse gases from industrial sources," the groups said in a joint news release last week.

Allan Amey

The federal government made the proposal "in the absence of meaningful public or parliamentary discussion," and it will undermine the upcoming five-year parliamentary review of CEPA, they added.

"In our view, the proposed amendments to CEPA are creating an unnecessary and divisive debate regarding the legislative mechanism for the regulation of (greenhouse gases) from industry sources."

Ottawa should be focusing instead on how adequate Canada's emissions-reduction targets are, and ensuring that an effective regulatory system is implemented to cut emissions, the environmentalists said.

Oil and gas production and distribution account for 16 per cent of Canada's greenhouse gas emissions and are projected to double between 1990-2010, largely due to development of the oilsands, noted Matthew Bramley, director of climate change at the Pembina Institute.

"Getting the targets right for the oil and gas sector is especially important," he said.

As an example of what the sector can accomplish, Bramley pointed to efforts by global oil giant BP, which has voluntarily cut its emissions by 10 per cent below its 1990 levels while adding $650 million US value to the company.

Bryan Forsyth, a specialist in energy efficiency and emissions at BP Canada in Calgary, says the company achieved its target both in Canada and in its worldwide operations eight years ahead of schedule, in 2001.

BP's goal now is to keep its greenhouse gas emissions at the 2001 level while maintaining corporate growth and improving energy efficiency across its operations by 10 to 15 per cent by 2015, he says.

To reach that goal, BP in 2000 set aside $350 million over five years to use for new energy-efficiency and greenhouse gas-reduction projects.

To date, 400 projects have been completed, paying for themselves in about 30 months on average and achieving a total reduction of 300,000 tonnes of greenhouse gases, Forsyth says.

Allan Amey, president and CEO of Climate Change Central in Alberta, says all the players in Canada need to stop bickering about how to implement Kyoto and get on with taking action to cut greenhouse gases.

"Right now we're wandering," he told an environmental research workshop presented recently by Mount Royal College in Calgary.

Government, industry and consumers all need to view the challenges of reducing emissions as "potential economic opportunities," Amey said.

Alberta can lead the world in employing new technologies such as capturing carbon dioxide and permanently storing it underground, and developing emission-free coal-fired power generation, he said. "There's a huge market for this type of technology going forward."

The opposition Conservatives had been threatening to oppose the Liberals' budget bill that includes the greenhouse gas legislation by voting against it in the House of Commons.

The Conservatives now say they'll try to change the bill in committee rather than force an election by voting against it, according to reports last week.

Parliament is scheduled to vote on the federal Liberals' bill's second reading later this month. It will then be sent to the Commons finance committee for hearings and potential amendments.

(Mark Lowey can be reached at mark@businessedge.ca)