The Red Chamber Reaches Out on Canada’s Energy Future

Our interview with Richard Neufeld, Chair of the Senate Committee on Energy, the Environment and Natural Resources

January 18, 2017

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Senator Richard Neufeld, Chair of the Senate Committee on Energy, the Environment and Natural Resources
Photograph Courtesy of The Senate of Canada

Richard Neufeld is used to being the focus of attention. From 2001 to 2009, Neufeld served as British Columbia’s Minister of Energy, Mines and Petroleum Resources at a time when Premier Gordon Campbell introduced North America’s first revenue-neutral carbon tax. The province was then enjoying a newfound boom in its industrial and energy sectors.

More recently, he toured the offices and town halls of Western Canada’s energy, mining and forestry economies, listening once again to the arguments for and against carbon pricing and its potential impacts on economic growth. A federal Conservative, Neufeld was appointed to represent B.C. in the Senate in 2008 on the advice of Prime Minister Stephen Harper, whose government was then advocating for a national cap and trade system to regulate carbon. During a recent visit to Calgary, Neufeld sat down with Alberta Oil to discuss his committee’s recommendations for the government on pursuing a low-carbon economy.

What’s the purpose of the Senate committee on energy and who’s on it?
The mandate of the committee is to deal with such issues relating to energy, the environment and natural resources. It is officially composed of 12 members (there is currently one vacant seat). Senate committees have the luxury of taking a more long-term approach to studies since senators don’t have to worry about reelection like their colleagues in the House of Commons. In the summer of 2013, our committee tabled a report on the safe transport of hydrocarbons by pipelines, tankers and railcars in Canada with 13 recommendations. Some of these recommendations have since been adopted. For example, our report called for the National Energy Board to create an online interactive pipeline incident map which it did earlier this year. We also recommended that Transport Canada review the use of CTC-111A and DOT-111 tank cars and remove the old fleet from service. Not long after, in April 2014, the government announced new regulations tightening safety standards and ordering the removal of 5,000 of the most dangerous tanker cars from the rails. Transport Canada also required that all DOT-111 tank cars that do not meet the industry’s tough new standards be phased out within three years.

What is the goal of the current “Low Carbon Economy Study” and when will it be completed?
The committee’s main objective is to examine and report on the effects of transitioning to a low-carbon economy as required to meet the Canadian government’s targets for greenhouse gas emission reductions. More particularly, we are seeking to find out the costs and impacts of this transition on Canadian energy end-users including households and businesses. We hope to table our final report, with our recommendations to the federal government, by the end of 2017.

What has surprised you most about the process so far?
One of our committee’s objectives is to try to find out what the cost of transitioning to a lower-carbon economy will be for households and businesses. I was surprised that a lot of the people we met while in Western Canada haven’t been all that forthcoming in sharing with us the increased cost to their businesses under a carbon pricing system. Many businesses have simply said their operational costs would increase without providing any details, or perhaps they simply chose not to share the information with us for a variety of reasons. They have, however, been quite vocal about not adding more costs to their operations that would make them uncompetitive in the marketplace. Nevertheless, it continues to be a challenge for our committee to identify how a price on carbon would affect the bottom line of businesses and industries and how that cost may trickle down to the end-user.

Liquefied natural gas production is pretty carbon intensive but it’s also seen as a “bridge” fuel to a clean energy future. How is your study treating LNG?

I believe we need to consider Canadian LNG within a global context. While emissions may increase at home, they would significantly decrease abroad. The last time I checked, our atmosphere does not have any borders. We need a global effort to a global problem and LNG is one answer among many. In the case of Canadian LNG, I also believe, as others have told us, that fair credit agreements should be signed between Canada and countries who import our clean natural gas if Canada is to meet its 2030 GHG targets. It would be unfair for Canada to receive no credit whatsoever for helping clean Asia’s energy.

What are you hearing from the energy sector about carbon taxes?
I think it’s safe to say that there was no consensus on the best carbon pricing model among the experts and businesses we met with while in B.C., Alberta and Saskatchewan. Many were strongly against the tax while others thought we should move more aggressively on it. If Canada is to put a price on carbon, I think the one thing I took away from our many meetings is the need for a proper pace for the taxation. Canada should not move too quickly in increasing the price on carbon if it wants the businesses that rely on oil and gas to remain globally competitive. Likewise, if we want to limit the financial burden on Fred and Martha, your average Canadians, who will ultimately end up having to pay more for most of their goods and services under any carbon pricing scenario.

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