Oil sands, Prospects for a New Collaboration

Oil Sands 2013: Prospects for a New Collaboration

Public Policy Forum Brief

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Table of Contents

Acknowledgements....................................................................................................................................... 1 Overview ....................................................................................................................................................... 2 Main Points of Discussion ............................................................................................................................. 3 Value and Timeliness of a Dialogue ...................................................................................................... 3 Potential Focus...................................................................................................................................... 3 Possible Approaches ............................................................................................................................. 5 Conclusion ..................................................................................................................................................... 6 Appendix ....................................................................................................................................................... 7

Acknowledgements I wish to thank the individuals who participated in this dialogue on the prospects for further multi-sector collaboration on the future development of the oil sands sector.

This report summarizes the discussions of a small group of industry, government, and environmental leaders who are engaged in the Alberta oil sands. The meeting was held on the evening of March 21, 2013 in Calgary.

A reference point for the gathering was a two and a half-day retreat held in Fernie, B.C. at the end of August 2011, which focused on the potential for collaborative efforts in the management of, and policies related to, oil sands developments.

David Mitchell President and CEO Public Policy Forum

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Overview On March 21st the Public Policy Forum convened a small group of leaders from multiple sectors in Calgary to discuss what more can be done collaboratively in the area of oil sands performance and related issues.1 In a sense, this was a follow-up meeting to an event that took place in August 2010 in Fernie, BC, the purpose of which was to bring together senior leaders, from the private, public and nonfor-profit sectors, to discuss the opportunity to collaborate on key issues.2 The Fernie meeting provided a ‘call for action’, helping frame what were perceived as the key challenges at the time.

But the context within which the dialogue took place has changed significantly in the past two and a half years. While progress has been made in some aspects of oil sands performance, collaborative efforts have dissolved, and have been replaced with increasingly polarized debates and positioning on key issues such as climate change and the pace of development of the oil sands resource. What was once more of a regional issue, the development of the oil sands has now gained international interest, particularly from the ENGO community that opposes further development. Therefore, the ability to find common ground among the multiple sectors involved has become even more challenging.

Progress has been made towards improving regional oil sands performance, as demonstrated by initiatives such as the Lower Athabasca Regional Plan (LARP), Canada’s Oil Sands Innovation Alliance (COSIA), and more recently, the Governments of Canada and Alberta’s Joint Canada-Alberta Implementation Plan for Oil Sands Monitoring. Much attention and expectations have been placed on COSIA to deliver outcomes in the short term.

Similarly, some efforts have been made, moving Canada towards a pan-Canadian energy strategy with attention by premiers at the Council of Federation meeting in the summer of 2012. However, efforts on implementation of a comprehensive, collaborative climate change plan have fallen short of expectations. Some provinces, such as Alberta and B.C., have implemented carbon pricing, and the federal government continues to develop sector-specific regulations for greenhouse gas (GHG) emission reductions, with the next set of regulations for the oil and gas sector expected in 2013.

At our Calgary roundtable meeting, we discussed the possible timing, refocus and approach to commencing, or recommencing, a dialogue. Is now the time to re-engage? If so, what would be the focus of a new dialogue? What approach could be envisioned for re-starting a collaborative effort to work together?

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For a list of participants, see Appendix.

For background on the Fernie retreat, see: Oil Sands: From Debate to Dialogue, report by the National Round Table on the Environment and the Economy and the Public Policy Forum, 2010.

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Main Points of Discussion Value and Timeliness of a Dialogue The first question of discussion at our Calgary roundtable was: “Is it timely to now consider a more sustained dialogue on oil sands performance issues?” Participants also responded with commentary regarding the value of engaging in another dialogue process. The answers varied; however, many agreed that there is a need for new a multi-sector dialogue, some suggesting that current discussions need to be “re-set”. However, the time for any such dialogue is likely not now, but perhaps on the near horizon.

It was noted that there are some timing considerations that need to be taken into account in deciding when to embark on such a conversation, and to do so now would probably be premature.

First, there is a need to wait upon the upcoming American decision on TransCanada’s Keystone XL Pipeline project. All participants agreed that clarity on this decision would be helpful before further dialogue on oil sands development take place. A decision is currently anticipated later this year.

Secondly, it was noted that the federal government is close to releasing its GHG emission regulations for the oil and gas sector. Depending upon the details of these regulations and how they are received, it was suggested that this policy may also have an impact on the nature of any future oil sands performance dialogues. Therefore, it would be useful to await the release of these new regulations before any further formal dialogue is pursued.

In the end, there was some strong sentiment of the value and merit of continuing multi-sector discussions, but perhaps only after these two noted events occur. However, not all participants agreed that waiting was necessary or a good idea.

Further, on the point of the value of a new dialogue, it was pointed out that if properly structured with clearly defined objectives, a collaborative dialogue could bring value to the oil sands sector and organizations involved. However, without clarity going into such discussions, the effort could create further risks to relationships. Clear objectives were noted by all as critical for any prospective discussion.

Not knowing what the ultimate outcomes might be, however, was not seen as an impediment for starting the conversation.

Potential Focus Participants discussed the possible focus of a new dialogue among multi-stakeholders, one that would add value to existing and on-going efforts. There was no interest in pursuing a broad, open-ended dialogue; however, there may be some appetite for a more focused and targeted discussion.

Progress in the areas of oil sands regional performance, as well as a pan-Canadian energy strategy, were noted. However, participants agreed that one critical issue remaining — the one that must be addressed — is climate change policy and the role of oil sands development in this regard. The essence of the 3

challenge in this discussion will be the fundamental differences of perspective on the growth of the oil sands sector. On one hand, there are firmly entrenched ENGO views that there should be limitations to the overall growth, as well as the pace of development. This contrasts sharply with industry’s desire to develop the resource and to grow. Finding common ground on this issue will be particularly challenging.

There was some skepticism regarding the feasibility of tackling such a significant, complex issue as climate change. Some noted that it was too broad and complex to be addressed by a small group of individuals, while others pointed out that there are federal GHG regulations about to be implemented that could help address climate change issues significantly.

Some participants expressed the view that climate change and GHG emission reduction policies must be led on a national basis, which is not currently the case. As noted, provinces and the federal government are taking some actions, but they are not well coordinated or comprehensive. Furthermore, it was noted that the challenge of addressing GHG emission reductions is in the details – the “how and at what pace” is a needed discussion, but still hotly debated and very polarized. The division of views is largely influenced by the values that people hold regarding economic versus environmental considerations.

Some expressed the opinion that at present there exists too large of a gap between different sides of the debate — too large to find common ground or common interests.

Regarding the sector’s environmental performance, including GHG emissions, some discussion revolved around how this has significantly affected the oil sands sector’s social licence to operate; and in turn, how this has challenged Canada’s oil “brand”. This discussion highlighted the link between environmental performance and economics. A key future challenge for the sector is getting product to market. Recent opposition to pipelines, as a result of the loss of the sector’s social licence, has had an impact on the prospects of future developments related to access to markets. Therefore improvements in the areas of environmental performance, specifically GHG emissions, will be necessary to regain the social licence to operate.

One participant noted that there have been significant efforts made in environmental performance and that, with forthcoming GHG regulations, these efforts will be recognized internationally, in time. It was acknowledged that the federal government is focused on the “branding” of the Canadian oil sands, and is advancing efforts to improve upon this through a regulatory approach.

Along a similar line of thinking, regarding the “brand” of Canadian oil sands, there was a suggestion that there may be an opportunity to develop a “code of practice” for the sector. This would provide aspirational goals for the oil sands and would drive the sector to develop a product that would become a preferred source of oil globally, while the world transitions to a lower carbon future. It was suggested that such an aspiration could be developed to incorporate the existing efforts of COSIA, the GHG Technology Fund design, as well as all the other regional industry and government efforts to date. This objective — the development of a code of practice — would potentially be quite bold and would entail some risks. However, it could also be more impactful, especially when compared to more cautious, incremental approaches.

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The conversation led to some discussion of the idea that perhaps a more detailed focus on oil sands development would be more feasible at this time, allowing for a better chance of success. Some suggested that building on recent successes, momentum and opportunity may be found in specific technical and regional issues. However, it was clearly stated that a dialogue focused purely on regional oil sands performance, given progress in this area over the last couple years, would be generally less meaningful and relevant today.

Regardless of the focus such a prospective dialogue may take, collaboration among the key stakeholders in the oil sands will be necessary to achieve many objectives, notably building relationships and trust, and working towards gaining the social licence to operate in the sector, something that appears to be more elusive as time passes. In reference to the existing polarization of the oil sands debate, participants largely agreed that the status quo was not acceptable, and a change to a more collaborative approach was both desirable and necessary.

Possible Approaches Considering the possibility of a dialogue among interested parties, several ideas were discussed regarding how this might be initiated and, furthermore, different approaches that could be considered.

It was recognized that there are on-going processes dealing with many oil sands issues, both regulatory and voluntary. However, concern was expressed that there is a disconnect between efforts on the ground, and rhetoric and public perception. It was also noted that while there may be significant efforts underway to affect climate change policy, the current approach, at least at the federal level, is not an open, transparent and engaging process for civil society and ENGOs. Hence the possible need for a different avenue of collaboration on this front.

Given the strong positions and polarization of many issues in the oil sands sector, one suggestion for finding the focus of a future dialogue was to take an approach of “conflict management�. This process might start by compiling a list of critical issues under the categories of regional oil sands performance, Canadian energy strategy, and climate change. Next, identify issues that are already being addressed, or have the potential to be addressed. What is left over, the residual list, are those issues where conflict needs to be managed. It was specifically noted that, given the distance between stakeholders on some issues, conflict management -- rather than resolution – might provide the most practical and feasible objective for a dialogue at this point, one that could possibly serve to de-escalate conflict.

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Conclusion It was acknowledged that, due to international demand for petroleum products, much of the current conflict in the sector is focused on issues of a global nature, including climate change and pace of development. Based upon this, one participant suggested we are now living in an era of ‘carbon wars’, where global demand is driving the industry’s growth. At the same time, GHG emission reductions are top of mind for many policy leaders. Hence, the discussion circled back to the idea that it may be useful to await decisions such as the Keystone XL pipeline and the release of federal GHG regulations for the oil and gas sectors before moving ahead with a new collaborative policy dialogue. To enter into a serious multi-sector policy discussion in advance of such initiatives could be premature. However, it was agreed that the prospect for such a dialogue should be reviewed again in the months ahead.

Further conversations with participants following the March meeting revealed a strong consensus that reconvening the group for a discussion focused on values would be an important next step. While it will be critical to have the facts and data on the table for future policy dialogue, there is also a basic need to compare and understand the values of individuals and stakeholders. This will underpin prospective collaborative approaches and may also help build the necessary ingredient of trust.

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Appendix

Meeting Participants Jill Baker

Vice President, Public Policy Forum

Dave Collyer

President, Canadian Association of Petroleum Producers

Judy Fairburn

Executive Advisor, Cenovus Energy Inc.

Daniel Johnston

Managing Director, Pacific Resolutions

Michael Keenan

Associate Deputy Minister, Natural Resources Canada

Gord Lambert

Vice President, Sustainable Development, Suncor Energy Inc.

David Mitchell

President & CEO, Public Policy Forum

Merran Smith

Director, Clean Energy Canada, Tides Canada

Ed Whittingham

Executive Director, Pembina Institute

Dana Woodworth

Deputy Minister, Environment and Sustainable Resource Development, Government of Alberta

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