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'We Got that Deleted': Canada's Oil Sands Lobby Twisting Washington's Arm

US politicians bend to foreign-backed pressure to soften climate bill.

By Geoff Dembicki, 28 Jun 2010, TheTyee.ca

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As U.S. senators debate some of the most sweeping climate change laws in American history, a powerful lobbying effort led by Canadian officials and huge oil firms may be winning big concessions.

Their goal is to keep Alberta's generous "oil sands" reserves flowing south through pipelines. It's a crucial and stable energy supply for the U.S., but one often lambasted for high carbon emissions, strip-mined landscapes and giant ponds of toxic sludge.

Any attempt to close the spigot is fought by an informal coalition that includes Albertan diplomats, Big Oil lobbyists and Canadian cabinet ministers.

A key architect of that effort, Tom Corcoran, whose lobby group has some of the biggest oil companies in the world as members, details later in this story how past battles have been waged and won, and why he can say: "We've been successful."

These days, he and his allies are busier than ever.

States across the U.S. are beginning to impose more carbon restrictions on fuels -- laws that would place oil sands-derived energy at a disadvantage.

Wide-ranging climate legislation backed by President Barack Obama could set a roadmap for U.S. emissions cuts.

An energy provision from 2007 threatens to place federal limits on Alberta oil.

It all comes as world leaders struggle to cool down a dangerously-warming planet.

Many countries are looking to the U.S. for leadership. Canada claims to be one of them. Prime Minister Stephen Harper's Conservative government vows to wait for an American emissions plan before adopting its own.

Yet critics fear active lobbying on behalf of Alberta's oil sands could weaken U.S. attempts to fight global warming.

Already, one key provision has been "deleted" from pending climate legislation, Corcoran explained.

And oil sands proponents may yet win the battle to repeal other American laws.

"If it was just Canada and Alberta [lobbying], I wouldn't be too worried," said Susan Casey-Lefkowitz, a director with the New York-based Natural Resources Defense Council.

"But it's Canada, Alberta and all of the major oil companies -- and that is very worrisome."

'We got that deleted': oil sands lobbyist

In June 2009, the U.S. House of Representatives passed an ambitious climate package, known as the Waxman-Markey bill. The 600-page strategy called for a cap and trade program, where industries obtain government permits -- some at a price, some for free -- to account for the emissions they release.

Other provisions set targets for renewable energy. The goal was to reduce overall emissions 20 per cent below 2005 levels by 2020.

Even with vocal White House support, the initiative stalled in the Senate.

This May, new legislation drafted largely by Independent senator Joe Lieberman and Democrat John Kerry took its place.

The revamped bill softened emissions reductions targets -- 17 per cent by 2020 -- and called for offshore drilling expansions. (Of course, BP's gulf oil spill has since complicated matters).

The now 987-page strategy also showed evidence of oil sands lobbying. Early climate bill drafts had contained provisions for a national low carbon fuel standard. By measuring the emissions created by producing different types of oil, it would have almost certainly limited high-carbon fuel from Alberta.

"Ultimately, we got that deleted," said Tom Corcoran, executive director of the Centre for North American Energy Security. "And so what passed the House does not contain a low carbon fuel standard, and what is being considered in the Senate at the moment does not contain that either."

Corcoran, a former Republican congressman, believes American prosperity depends on the active development of unconventional fuels -- those such as Alberta's oil sands that many green groups decry for huge carbon emissions. 

Members of Corcoran's group include fossil fuel super-weights. One of them, Exxon Mobil, has spent nearly $60 million lobbying the U.S. government since 2008.

Another, ConocoPhilips, has spent about $33 million during the same period.

"There is a desire to reduce the amount of fossil fuels here in the United States," Corcoran said. "We exist to persuade the government not to do that, and so far with the Congress I think we've been successful."

2007 law still being fought

Success in the drive to make U.S. regulations more favourable to importing crude produced from Alberta's oil sands is often incremental. It can require years of dedicated lobbying.

Take Section 526 of the 2007 U.S. Energy Act. Intended to reduce the amount of high carbon fuel procured by federal agencies, the provision has become a flashpoint for industry unease.

A strict interpretation of the law could prohibit the U.S. government from using Alberta oil sands-derived crude. This in itself wouldn't hurt the sector too much, but could lead toward wider American bans.

The Centre for North American Energy Security has "undertaken a major effort to ameliorate the consequences of the section 526 issue," Corcoran said. His group helped convince the Department of Defense to review the law, with arguably favourable results.

Government analysts concluded that the law's wording on oil sands fuel is ambiguous, rather than strict.

Even still, members of Corcoran's centre are actively lobbying for a full repeal.

"We've made considerable progress," Corcoran said.

He's gotten help from high-ranking Canadian officials along the way. In 2008, then-American ambassador Michael Wilson wrote to the U.S. Secretary of Defense, arguing that Section 526 should not be used to restrict Alberta bitumen.

And just this May, Alberta Premier Ed Stelmach was the keynote speaker -- pronouncing that "it's easy to see how limits on energy are really limits on growth" -- at an energy security forum organized by Corcoran's Centre.

Green groups worry that this informal government-industry coalition will win victory against Section 526 (and indeed, the push to reduce American emissions).

The provision was one of the first-ever U.S. attempts to limit high carbon fuels, said Casey-Lefkowitz. "Symbolically, it's very important... To lose that would be a sign that the U.S. was backsliding," she said.    

Canada to California: Don't restrict our oil

Another arm of the oil sands lobbying push was on display in late April 2009, when a top Canadian official wrote to California Governor Arnold Schwarzenegger. The state was then considering adoption of the world's first low carbon fuel standard -- a standard similar to the one "deleted" in the proposed federal climate change legislation.

It's a complex scheme that measures the greenhouse gases emitted when different types of oil are produced. Policymakers hoped to cut emissions from passenger vehicle fuel 10 per cent by 2020.

This worried just about anyone with a financial stake in Alberta's oil sands, where sludgy bitumen is mined or steamed from sensitive Boreal forest lands. Producing and refining a barrel of this bitumen creates an estimated three times as many carbon emissions as conventional oil.

Canada's then-natural resources minister Lisa Raitt urged Schwarzenegger to back off. "Briefly stated," she wrote, "we are concerned that the proposed [low carbon fuel standard] regulation could lead to unfavourable treatment of Canadian crude oil."

One of her main arguments against the plan, and one repeated often by oil sands proponents, was it would make the region's energy supply more vulnerable to the whims of overseas fuel providers -- think Middle Eastern petro-dictators or Venezuela's Hugo Chavez.

Raitt also alluded to potential legal trouble. California produces its own heavy oil, which opponents say creates similar emissions to Alberta bitumen. Many feel California's fuel standard doesn't acknowledge this.

Raitt proposed assigning all crude sources -- including oil sands -- the same carbon intensity value. Otherwise, she wrote, policymakers "could be perceived as creating an unfair trade barrier" between Canada and America.

The letter presumably had little effect. California approved its fuel standard this January.

Alberta schmoozes governors

Meanwhile, Alberta's envoy to Washington, Gary Mar, had been crisscrossing the American Midwest with a slightly softer message. His goal was to convince policymakers -- especially in those states considering their own fuel standards, such as Wisconsin -- that Alberta oil brings big money to local economies.

Mar pointed to the $40 million shovels that scrape and scoop sandy bitumen from the ground -- made in American factories. Same with the engines whirring inside fleets of gigantic oil sands dump trucks.

Mar likely reminded those same officials that Canada supplies more oil to the U.S. than Saudi Arabia, and has the second largest known reserves on Earth.

By early March 2009, Mar had visited over 20 state governors and lobbied vigorously on Capitol Hill. He was soon aided by a team of well-connected consultants earning $500,000 annually from the Alberta government -- an ongoing contract now in its second year.

Together, they've been promoting the idea of a bountiful oil patch committed to high environmental standards. They've described, for instance, how Alberta forces industry to pay $15 for each tonne of carbon it emits and is investing $2 billion in carbon capture and storage technology.

That sales pitch may resound loudly at the state level, observers note. Could it have helped convince Wisconsin policymakers to abandon fuel standard provisions this spring?

Cultivating influence in Washington can be much harder. Members of Congress are generally focussed on their own narrow constituencies, which can make Alberta's entreaties seem like a distant concern.

But members of Congress do often listen to the biggest American oil companies. Many of those companies have huge financial stakes in the oil sands. And they're prepared to spend tens of millions in lobbying dollars to protect them.

"The oil sands [proponents] are terrified that people are going to hold them accountable for their pollution," said Graham Saul, executive director of Climate Action Network Canada. "They and the Canadian government and the Alberta government are doing everything they can to minimize the impact that climate policy will have."

Canada stalling for time?

Shortly after becoming Canada's federal environment minister, Jim Prentice ruled out any unilateral action on climate change. "We will seek to work closely with the new U.S. administration to build the North American low-carbon economy," he told a business forum in November 2008.

What that's come to mean, is Canada won't set an emissions roadmap until the U.S. does. Both countries are so economically intertwined, the government argues, it only makes sense to "harmonize" national strategies.

Officials made good on their word this January, when Canada aligned its emissions reductions target with the United States, 17 per cent below 2005 levels by 2020. While Canada's government claims that to be progress, the revised target is less stringent than what Canada agreed to under the Kyoto accord, Greenpeace pointed out. It also falls far short of the reductions deemed necessary by the Intergovernmental Panel on Climate Change.

In other areas, Canadian policy has diverged widely from American initiatives.

The Calgary-based Pembina Institute estimates the U.S government led by Barack Obama will outspend Stephen Harper's nearly 18 to one per capita on renewable energy this year. That kind of disparity is bolstering sentiment on both sides of the border that Canada's "wait and see" approach to global warming is a politically expedient excuse to do nothing.

Prentice recently indicated that his country's own climate plan won't be coming soon, even as U.S. senators vigorously debate a wide-ranging American strategy.

And a recent Environment Canada report shows officials vastly overestimated last year's actual carbon reductions.

Meanwhile, the lobbying push by oil companies, federal officials and the Alberta government shows no sign of abating. With industry now optimistically forecasting 3.3 million barrels of Canadian crude per day by 2015, neither does oil sands production.  [Tyee]

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