CALGARY (CP) - The Canadian oilpatch remained very leery Wednesday about Ottawa's apparent intentions to sign the Kyoto climate change protocol, fearful of becoming uncompetitive with the U.S. and other countries not involved in the accord.
The energy industry coolly welcomed Environment Minister David Anderson's offer to further discuss options for meeting the protocol's emission reduction targets. However, their underlying concern is that the federal government does not fully understand the costs and potential economic ramifications of Kyoto.
"From our point of view, the way to approach it would have been to work through, what are our achievable reduction measures that make economic sense that can be done recognizing the Canadian resource base," said Pierre Alvarez, president of the Canadian Association of Petroleum Producers.
"Instead, what the approach is, is the desire to meet the Kyoto targets and then look at policy measures that'll achieve that."
The oilpatch argues that emissions have been reduced significantly in recent years by its own initiatives, and that further, economical reductions will be made in the future without any mandates from an international protocol.
And in the five years that Canada has been considering Kyoto ratification, the energy industry has radically changed, said Alvarez.
Offshore Atlantic Canada is now producing oil and has large gas reserves, Alberta's northern oilsands have seen a plethora of multi-billion dollar megaprojects started and exploration has been renewed for natural gas in the Arctic.
"So there are some economic circumstances that have changed dramatically in the intervening period as well," Alvarez said.
The oilsands, which has more energy reserves trapped in the oily mud than Saudi Arabia, is a particular dilemma. Though the oil produced there will bring billions of dollars in royalty revenues to all levels of government, production adds greatly to greenhouse gas emissions.
Suncor Energy, which just completed a $3.4-billion dollar expansion late last year, said further talk on Kyoto must balance Canada's aspirations for a strong economy with a healthy environment.
"We're making large capital investments to develop the oilsands resource for the benefit of all Canadians," said Gord Lambert, Suncor's vice-president of sustainable development.
"And we think it's vitally important that there not be a burden imposed on oilsands development that would result in that resource not being able to play a significant role in the North American energy picture."
Along with competing for a share of the energy market, Canadian companies also must compete for capital on the stock markets, said Lambert.
"And any new potential costs impact on our ability to do that."
One of the biggest concerns for energy producers is that they compete in a North American market where the prices for oil and gas are set internationally, yet the United States has already backed out of the Kyoto accord on the grounds that it would be too onerous on industry.
"We've got to make awfully sure that the climate change plan, whatever it ends up being, maintains the competitiveness of the Canadian industry," said John Richels, president and chief executive of Devon Canada. "Especially in light of the U.S. decision to opt out."
While Devon is based in Oklahoma City, Canada now makes up 40 per cent of the global energy company's production and is a key growth strategy.
"We can't afford to become less competitive than the oil and gas industry is in other parts of the world," said Richels.
And while Canada is not the cheapest place to find oil and gas, it's an attractive place to do business, he said.
"We're excited to be in Canada, we want to be in Canada, but you have to be careful that you don't make the industry uncompetitive through any regulatory enactment."
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