Big Oil’s push for a carbon tax a pragmatic move, not just PR, experts say

It may seem odd to hear Big Oil tout a policy that would make it costlier to do business.

CALGARY — It may seem odd to hear Big Oil tout a policy that would make it costlier to do business.

But experts say recent calls for a carbon tax have pragmatic — not just public relations — motivations.

Michal Moore, an energy economist at the University of Calgary’s School of Public Policy, said savvy companies see a higher price of carbon as “inevitable” and want to influence how those policies take shape.

That’s why the likes of Suncor Energy (TSX:SU) boss Steve Williams have been publicly advocating tougher carbon pricing, Moore said.

When it comes to the impacts of climate change, there’s no “plausible denial anymore,” he said. Take, for instance, the drought ravaging California.

“I can’t read Steve’s mind of course, but I can certainly create good reasons why it makes sense to get out ahead of this and to send a signal to your investors: ’Look, we’re not going to be blindsided by whatever comes down the road,” Moore said.

Williams, whose company is Canada’s dominant oilsands producer, made his carbon price pitch at a speech in Calgary last month, the sentiments of which were echoed by an executive with Cenovus Energy (TSX:CVE), another major oilsands player.

But the push came with a caveat: that any carbon tax be “broad-based” — applied to consumers and industry alike.

Alberta’s current carbon pricing regime expires at the end of this month, and it’s not clear yet how exactly it will change under the province’s newly elected NDP government.

The Specified Gas Emitters Regulation, the first scheme of its kind in North America, currently charges $15 a tonne for large industrial emitters that exceed a certain threshold. There have been calls to replace it with something more stringent and far-reaching.

“If you’re a policy taker, sometimes you don’t like the policy that you get,” said Ed Whittingham, executive director at the Pembina Institute, an environmental think tank.

Suncor has not only come out in favour of stronger carbon pricing, but has stated how it wants such a policy to look, he said.

“I’m sure that was heard up in Edmonton.”

Last month, the CEOs of six major European energy companies signed a letter to the United Nations making a similar pitch ahead of the Paris climate change talks later this year.

“Pricing carbon obviously adds a cost to our production and our products — but carbon pricing policy frameworks will contribute to provide our businesses and their many stakeholders with a clear road map for future investment, a level playing field for all energy sources across geographies and a clear role in securing a more sustainable future,” the letter said.

Energy firms want certainty and consistency, said Warren Mabee, an energy policy expert at Queen’s University.

“Nobody wants a situation where there are a few jurisdictions where there is no carbon price, and yet the companies are playing on the international market,” he said.

Dave Sawyer, an environmental economist with CMC Research Institutes, said companies like Suncor are trying to show they’re “good corporate citizens” and are onside with public sentiment.

But they’re also “afraid of bad policy.”

“Are they going to try to influence the design of that policy and minimize the impact? Absolutely. That’s their job.”

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