Transcript Document
CLIMATE CHANGE: Managing environmental & economic risks John Donner 2002 Energy Outlook Conference April 12, 2002 Climate Change Challenge Alberta committed to managing risks of climate change Kyoto: environmentally incomplete; economically distortive Impacts: forecast + policy uncertainty Challenge: Maintaining atmospheric concentrations below dangerous levels Defining the Issue: Climate Change Concerns Environmental impacts Economic impacts associated with the nature of Canada’s response Looking for an integrated and effective path forward Action now Technology-driven De-couple emission from economy Higher Global vs Local Confidence Increasing GHG Concentrations Significance of Future Climate Change Magnitude/Rate of Global Temperature, Precipitation and Sea Level Change Discernible human Influence Amplified Polar/Continental warming Change in Regional Rainfall Patterns/Extreme Events Detailed Characteristics of Local Change Local Impacts High Confidence Level Low CO2 concentration (parts per million by volume) 100 Year CO2 Trends 380 360 Directly Measured 340 320 300 Data from ice cores 280 260 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 Year Understanding the Challenge: International Context 6000 Megatonnes CO2E 5000 Top 20 World CO2E Emitting Countries from Consumption and Flaring of Fossil Fuels (1998) 4000 3000 2000 2% of Global GHG Emissions 1000 0 Source: Energy Information Administration Cross-Canada Distribution of Emissions Megatonnes of CO2 equivalent 300 1990 2000 2020 250 200 150 100 50 0 BC AB SK MB ON QUE NB NS PEI NFL The Kyoto Triangle GHG Emissions Megatonnes of CO2 equiv Business as usual 800 810 240MT 30% 600 571 Kyoto target 400 1990 1995 Source: Natural Resources Canada 2000 2005 2010 2015 Alberta’s Emissions Other 1% Transportation 13% Upstream O&G ExAlberta 7% Agriculture 9% Upstream O&G Exports 23% 64 MT CO2 equiv. (Ex-AB and Exports) Mining/Mfg 6% 150 MT CO2 equiv. (Alberta Demand) Industrial 6% Fossil Fuels 7% Rea/Com/Inst 6% Electricity 22% 214 Mt CO2 eq. - 1999 Economic Analysis Large variation in impact estimates, depending on: Economic models used Key assumptions • Business as usual activity (economic growth and the emissions “gap”) • Reduction potential (cost-curves) • International conditions, including permit price • Investment “Leakage” • Inclusion of “benefits” Policy (and rules) implemented Modelling in absence of “policy” creates broad range RANGE OF RISK High/negative Forecasts of increased growth & gap Risk: high costs on competitive sectors leads to investment & revenue loss GHG Emissions (Megatonnes of CO2 equivalent) 850 Revised BAU Forecast (01) 800 750 BAU used in the modelling (99) -$5.5 billion 700 650 550 -$2.9 billion BAU forecast in 1997 600 1990 Baseline: 607 Mt Alberta Impact 500 450 1990 1995 2000 2005 2010 Opportunity: technology & diversification away from Low, capital & energy intensive Optimisticdevelopment The Kyoto Triangle GHG Emissions Megatonnes of CO2 equiv 800 600 400 1990 1995 Source: Natural Resources Canada 2000 2005 2010 2015 Sticking to our Principles & Defining Outcomes Principles No unreasonable burden No revenue transfer No carbon tax Enhanced competitiveness Flexibility Best efforts and innovation Shared responsibility consumer responsibility Sound analysis Meaningful consultation Respect for jurisdictions Operationalized Limit costs especially to exposed sectors Federal assumption of cost/quantity risks Provincial authority No federal revenue redistribution Harmonize with US Mechanism to encourage sinks Trading Shared domestic decisionmaking with significantly affected provinces The Domestic Response: Alberta’s Position Bottom line -- need to ensure: National, provincial competitiveness not impaired No unfair burden on any one jurisdiction or sector Limit and share liability amongst all Canadians Alberta’s Strategy: Objectives Two-pronged approach: Short-Term: • Influence and help develop strong national plan Medium- and Long-Term: • Actions to show commitment, leadership • Actions that make a difference Alberta’s Strategy: Short Term Influence decision, national policy “must”: Work with U.S. Define and limit costs to industry Minimize costs to economy as whole Work towards a national plan Manage risks Alberta’s Strategy: Action Key Focus Areas: Government Leadership (Infrastructure, Transportation, Economic Development) Energy Conservation (Energy and Environment) Carbon Management (Innovation and Science, Energy, Technology and Innovation Environment) Science) (Innovation and Frameworks to Encourage Improved Farm and Forest Management that Enhance Carbon Storage (i.e. sinks) (Agriculture, Food & Rural Development, Sustainable Resource Development, Environment) Preparing to Adapt to the Changing Climate (Agriculture, Food & Rural Development, Sustainable Resource Development, Environment, others) Summary A global response to climate change is needed – Kyoto does not include major global emitters Analysis says there is a range of potential costs to Kyoto – policies must minimize costs and manage the risk Alberta is committed to taking further action However, arbitrary emission targets and timelines will bind our ability to take meaningful action over the longer-term Implications for Oil & Gas Shared objectives of federal & Alberta Governments Development of oil and gas Effective continental energy market Maintain/enhance competitiveness Minimize/limit liabilities • Federal -- “expectation” • Alberta -- “plan” Implications for Oil & Gas Context of improving emissions performance Upstream success in reducing emissions from BAU Need to improve emissions intensity Technology Opportunities Newer energy development technologies Carbon capture and geologic storage Newer energy use technologies Integrated energy systems Hydrogen future Summary Alberta committed to manage climate change risks Climate change is a long term issue Climate change is a broad social issue, not an industry-specific issue Short term targets cannot drive shortsighted actions and loss of competitiveness, investment, jobs Need continuous action now to improve efficiency Need technology investment to develop & use energy