The recommendation of an Alberta review panel not to raise royalty rates paid by oil and gas companies to the province is an economic disaster and represents a capitulation to Big Oil and its financial backers, say a variety of critics.

Released last Friday, a five-month review into the royalty system argued that low global oil prices had placed Alberta in an existential quandary and that no increases should be considered in royalty rates.

Royalty rates are not costs or taxes, but a price a company must pay to the owner for the right to develop the resource.

For 35 years, the former Tory government of Alberta consistently lowered royalty rates to among the lowest in the world. At the same time it saved almost nothing for future generations.

But the long-delayed review, commissioned by the new NDP government in 2015 as the result of an election promise, concluded that the “current share of value Albertans receive from our resources is generally appropriate.”

The review added that Albertans should stop focusing “on questions of ‘are the rates right,'” and look more “on what changes need to be made to our royalty framework to position Alberta and our energy industry to address the challenges of a very different environment and outlook for the future.”

The review then recommended maintaining current royalty rates for wells drilled before 2017 and setting a generic rate — five per cent — for all new oil and gas wells drilled after 2017, a policy equivalent to grading and selling all cuts of beef as hamburger.

Such a policy, if adopted, would lower Alberta’s royalties by another billion dollars a year, estimated Jim Roy, an Edmonton-based royalty consultant and a former senior advisor on royalty policy for Alberta Energy.

The new generic rate will reduce the current 30 per cent royalty rates for high-valued products such as propane and butane to five per cent.

Alberta’s total royalty revenues from hydrocarbons in fiscal year 2015/16 were approximately $2.8 billion — a mammoth decrease from modest highs of $10 billion or more during the boom years.

Investor, not owner friendly: expert

Roy said the government’s review is completely off base and doesn’t address the real issues.

“We have low prices now. Why encourage more production and more investment which will only bring oil prices lower?” asked Roy.

Given that the global oil glut has largely been caused by overproduction by Canadian bitumen miners and U.S. oil shale frackers, Alberta should increase royalties to decrease production and thereby eliminate inefficient and high-cost energy extractors, Roy said.

Since 1998, oil sands production has soared from nearly 800,000 barrels a day to more than 2.3 million barrels a day, largely due to cheap credit, low royalties and other government incentives and subsidies.

Hydraulic fracturing and horizontal drilling in the province has also been driven by a three-year royalty moratorium imposed in 2009. That royalty holiday guarantees companies high returns up front and little for the owner of the resource until the well is exhausted.

Fracked wells typically experience 60 to 80 per cent depletion rates after three years of operation.

The review takes the perspective of an investor, not the perspective of an owner, charged Roy. “In order to optimize returns to Albertans, the government needs to think like an owner,” added the royalty expert.

Two of the review panel’s key members — Dave Mowat, president of the Alberta Treasury Branch and Peter Tertzakian, managing director of Arc Financial Corp — both work for firms that invest billions in the oil patch.

The panel’s analysis, according to Roy, “ignores the effect of increased production of Alberta bitumen on either the local price of bitumen or the world price of oil. The plan appears to be to increase Alberta production at the maximum possible rate despite low prices… This strategy may help American consumers, but does not help Alberta owners.”

Roy’s analysis, reported in The Tyee last year, found that the province’s last royalty review in 2007 actually shorted the province more than $12 billion in royalties during a time of high oil prices.

Former premier Ed Stelmach promised Albertans that the new formulas for calculating royalties would increase Alberta’s “fair share” of hydrocarbon profits by $2 billion a year, beginning in 2009.

But that didn’t happen. Instead of increasing royalties by $2 billion a year, Alberta’s “fair share” plummeted due to bad forecasting and major flaws in how the province collects natural gas and bitumen royalties, Roy said.

As a result the province, which has recorded annual deficits of billions, has failed to collect $12 billion in royalties over the last five years, he said. The new review failed to correct those problems, Roy added.

In 2010, an industry-drafted, behind-closed-doors “Competitiveness Review” further eviscerated recommended increases and made rates lower than they were before the 2007 during a period of high oil prices.

‘Shockingly bad,’ says researcher

Regan Boychuk, an independent researcher who sat on one of the review’s advisory expert panels, called the review’s conclusions “shockingly bad.”

“The review simply rearranges the chairs on the deck of the Titanic and locks in all the bad decisions and Tory giveaways of the past,” he said.

One critic interviewed by The Tyee also said that raising royalties wouldn’t affect economic activity because the worldwide average government take is already about 60 per cent.

In Alberta, the share has plummeted from a 40 per cent high during the Peter Lougheed years to less than four per cent today.

Increasing very low royalties in fiscal systems that have a low overall government take will not have any significant impact on the competitive position of such resources, said analysts.

Low royalties ‘a foot on the accelerator’

Barry Rodgers, a former high-ranking Alberta civil servant in the Department of Energy and a fiscal systems expert, noted the review barely mentions that the former Tory government consistently failed to save revenue (except under Lougheed), collect its fair share as mandated by the government policy, or report to citizens in a transparent and open manner on royalty issues.

Instead the Tories consistently lowered royalties during periods of price volatility, resulting in a downward trend for royalties over the last 35 years.

These low prices, which guaranteed companies easy returns regardless of their performance, actively contributed to over production, reduced competitiveness and encouraged little or no innovation. Low royalties also overheated the economy.

According to Rodgers, the current royalty review got off to a bad start by assuming that Alberta’s royalty system worked well and just needed some fine-tuning.

But the province’s royalty system is broken, he argued, and has been causing serious damage by subsidizing uneconomic activity. The report even notes that 27 oil sands projects, which inefficiently inject steam into the ground to melt bitumen, may never reach payout “due to excessive cost overruns.”

The new review also repeats mistakes of past royalty reviews, which repeatedly responded to earlier price collapses by lowering royalties, Rodgers said.

These low royalties, in turn, stabilized economic activity but became dismal failures when commodity prices began to rise again. Oil remains the world’s most volatile commodity.

“The lower royalties then acted like a foot on the accelerator,” explained Rodgers, “at a time when prices were already high enough to attract the levels of investment needed.”

In the process, low royalties served as a hyper growth policy that aggressively pushed into existence large, long-lived projects “that are difficult to stop and start in response to commodity price fluctuations.”

The province’s chronic low royalties also caused another problem, he said: as a declining royalty share became significant enough, it caused the public to “distrust in the resource management system.”

In other words, low royalties made it impossible for the government to earn extra revenue when prices were high and deprived the owners of the resource their fair share.

The only way for Alberta to break this disastrous royalty pattern is to slow down development, said Rodgers, as well as curtail extreme projects that need royalty relief by increasing royalties in a system that saves wealth in trust for future generations.

Alberta’s royalty policy, said Rodgers, is not consistent with the fundamental resource and environmental management notion of “In-Trust.”

That notion, long abandoned by the Tory party, reflects the principle “that current generations have a moral obligation to not leave future generations worse off.”

Missing comparisons

Although the review claimed that Alberta’s royalty rates are comparable to other jurisdictions, it failed to compare Alberta to the jurisdictions that matter most such as Saudi Arabia or Venezuela. The review, for example, makes but one mention of Norway.

Boychuk also said that the review failed to provide true comparisons that took a critical look at real government pricing around the world.

To gauge the appropriateness of bitumen royalty rates, for example, the review hired Wood Mackenzie, a firm that advises oil and gas companies.

It based its conclusions that current rates were adequate on the imaginary performance of a 35,000-barrel-a-day steam plant operation that might extract bitumen by 2022, Boychuk said.

“That’s not a comparison to real rates that are currently employed by other countries. Wood Mackenzie offered no meaningful comparison with other countries such as Venezuela or Saudi Arabia,” said Boychuk.

According to research by Rodgers, for example, Norway charges resource developers 78 per cent of the net income from oil and gas production while Alberta charges 50 per cent for conventional oil and 37 per cent for natural gas.

The report, however, avoided such comparisons other than noting that British Columbia has the lowest royalties for natural gas and that Saskatchewan managed its hydrocarbons to generate economic activity as opposed to wealth for the resource owners.

Gil McGowan, leader of the Alberta Federation of Labour and a long-time champion of royalty reform, rebuked the NDP government of Premier Rachel Notley for supporting the review.

“Some people say the NDP have come face to face with reality. I say what happened can best be described as the government being captured by industry,” McGowan told Calgary Sun columnist Rick Bell.

“I honestly think the government has made a profound political mistake,” he said. “We don’t believe progressive governments have to become conservative to deal effectively with economic issues or to succeed politically. That’s a fallacy.”

In its submission to the royalty review panel, the Fort McMurray First Nation called for modestly higher bitumen royalties and warned the Notley government not to listen to advice offered by financial institutions such as those represented by some members of the review panel.

“The financial institutions that constitute the capital markets obtain their revenues by providing services to savers and borrowers. Large projects such as in the oil sands, and the companies that invest in them, are valuable revenue sources and attractive clients to these institutions. The inclinations of these institutions will always be to want to see more attractive investment opportunities, from which they will benefit by providing them with financial services. They are not likely to provide unbiased, objective views on matters such as royalties.”

In another submission, the economist Mark Anielski reported how the province would have benefited if it had kept Lougheed’s approach to a robust and healthy royalty regime.

“Had Alberta maintained a 30 per cent royalty rate on the share of the value of the oil and gas produced between 1971 to 2014, Albertans would have generated $471.4 billion in oil and gas royalties. Had 50 per cent of these royalties been invested in the Alberta Heritage Savings and Trust Fund with annual average return of five per cent per annum we would now have an investment account worth over $481 billion.”

The current savings fund holds less than $20 billion.

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As leaders from around the world head to Paris in December for the COP21 UN climate negotiations, they do so with the burdensome knowledge that this is it: the big year. More than 190 nations will try to reach an internationally binding climate agreement to prevent the globe from warming to catastrophic levels.

Such high stakes haven’t pressed upon the negotiations since 2009’s Copenhagen climate summit, widely regarded as a failure after wearied countries fled the conference without producing a strong international agreement.

Perhaps that’s why this year there is little patience for the influence peddling of the world’s major fossil fuel companies, all of which are eager to play a role in the conversation.

Nearly 400,000 people have signed a petition to bar “big polluters” from the talks.

The petition, organized by Corporate Accountability International, argues the summit should be protected from corporate interests and becoming a platform for companies intending to “block progress, push false solutions and continue the disastrous status quo.”

The petition is just one of a number of public efforts designed to showcase the negative influence of industry groups on climate talks, their historic bad behaviour and a growing international impatience for meaningful climate action.

Corporate Bad Behaviour in Spotlight

The recent effort to limit the influence of industry at the upcoming talks come on the heels of an allegation that ExxonMobil intentionally deceived the public about the dangers of climate change.

Recent investigations reveal Exxon knew about the existence of ‘potentially catastrophic’ climate change since the 1970s but chose to keep that information hidden. The company is being widely criticized for misleading the public about the influence of human activity and the use of fossil fuels on the global climate.

Both Bernie Sanders and Hillary Clinton, leading presidential candidates for the Democratic party, as well as house Democrats have called for an official investigation of Exxon and now leading environmental groups, civil rights organizations and climate campaigners among others are spearheading an international call for further investigation.

Companies like Exxon are being spotlighted by Friends of the Earth France in a new ‘Pinocchio Climate Award,’ which targets industry groups most responsible for preventing or delaying action on climate.

The nominees are corporate sponsors of the COP21 climate talks, including BNP-Paribas, EDF and Engie — all of which will be judged in the Pinocchio Awards for their lobbying activities, promotion of false climate solutions and harmed caused to communities for the sake of profit. The ‘winners’ for each category will be announced at a public ceremony in Paris during the climate talks.

Industry’s “Charm Offensive” Little Help Against Critics

While members of the public cast their votes cast against major industrial polluters, companies also face an increased level of scrutiny for public relations stunts seemingly designed to purchase social favour in the lead up to Paris.

The Oil and Gas Climate Initiative, an effort of 10 top CEO’s from the energy sector, was called a “final charm offensive” before the climate talks by Reuters,

InfluenceMap, an organization that tracks the lobbying and activities of industry groups, called the initiative an attempt by leading energy companies to “improve their image in the face of longstanding criticism of their business practices” ahead of the talks.

A recent report by InfluenceMap shows many top companies in the oil and gas sector publicly support climate action but subvert those same efforts through anti-climate lobbying and the work of trade organizations.

In September a group of European investor institutions worth a collective $66 billion called on nine multinational companies to sever relationships with EU trade groups known to lobby against climate policy. The companies pressured to cut ties with the anti-climate lobby include COP21 sponsor EDF as well as BHP Billiton, BP, Glencore, Johnson Matthey, Proctor and Gamble, Rio Tinto, Statoil and Total.

Corporate Europe Observatory, an organization exposing lobby power in the EU, has already criticized the “climate unfriendly” sponsors of this year’s event, indicating France may be making a critical mistake in welcoming corporate influence.

"Most of these companies are big emitters of the very greenhouse gases responsible for climate change, such as EDF or Engie whose coal plants alone are equivalent to nearly half of France's entire emissions," said Malika Peyraut of Friends of the Earth.

“Putting the most important climate conference of the decade under the patronage of climate-incompatible businesses does not bode well.”

Fossil Fuel Industry’s Controversial Influence at Climate Talks

Pushback against industry influence at the UN climate talks has been ongoing for years.

In 2011, the Polaris Institute released a report outlining how “multinational corporations and their lobbyists have infiltrated the United Nations and are influencing the outcomes of climate negotiations.”

The report demonstrated industry’s influence as a driving force behind market-based rather than regulatory solutions to climate change.

In 2013, civil society groups, trade unions and environmental organizations staged a massive walk out of the climate talks in Warsaw, Poland, arguing corporate sponsorship was threatening the independence and purpose of the event.

Last year at the COP20 climate talks in Lima, Peru, more than 53,000 individuals signed a document that called on the UN Climate Secretariat to ban fossil fuel corporations and lobby organizations from the talks.

“The fossil fuel industry is actively lobbying against climate action and standing in the way of progress. When you’re trying to burn the table down, you don’t deserve a seat at it,” Hoda Baraka, global communications manager for 350.org, said at the time.

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Fracking, open pit oilsands mining, underground steam injection, mountain top removal mining, Arctic oil drilling — these are all icons of the world's recent shift to unconventional sources of energy.

Filmmaker David Lavallee recently set out on a three-year journey to track the lifecycle of our energy resources, a project he said not only revealed extreme methods of extraction but also took him to extreme places. Lavallee said filming the energy industry brought him face to face will all sorts of strange hazards, including an anti-terrorism officer with the National Security Division of the RCMP.

We caught up with Lavallee, who just launched an Indiegogo fundraiser to support his film To the Ends of the Earth, to discuss his adventure and what he learned along the way.

What's so unconventional about unconventional energy?

A number of things can make energy unconventional. What I focus on in my film are the methods and geographical extremes that make a resource unconventional.

In the 2008 presidential race, "Drill Baby Drill" was the rallying cry — but "Drill Baby Drill" is fast becoming a thing of the past — it's now "Mine Baby Mine, Steam Baby Steam, and Frack Baby Frack."

These unconventional extraction methods are far more capital intensive, more socially disruptive and also, of course, more environmentally damaging from a carbon intensity/water use standpoint.  

Photo: David Lavallee

Where did tracing our energy lifecycle take you? Anywhere that really surprised you?

There were numerous epiphanies along the way, and each one contributed to the view I now hold — that our economic system (i.e. the grow or die economy) is completely unviable. 

The energy cost of energy surprised me the most. Whether it be nuclear power plants in Utah being proposed to make oil shale (aka 'the rock that burns'), or the Site C dam, which industry wants to power shale gas extraction further north, or the tar sands, where natural gas (some of it fracked) is used to process bitumen — the most striking feature of extreme energy is that it takes so much energy to make it.

In some cases more energy is used than the energy it gives back to society. 

We need to transition to renewable energy and engage in radical conservation of resources if we want our economy to survive this new era. 

What was the most remarkable thing that happened to you while you were researching and filming?

Eating seal at a floe edge, where ocean ice meets the ocean, was a pretty cool experience. At one point an 800-pound polar bear emerged from the water and started making his way towards us, hungry for some of our seal soup. The Inuit hunter we were with fired a warning shot over its head and it sauntered off eventually. 

Meeting the Inuit on Baffin Island was also amazing. I learned about the clash between their 10,000-year old subsistence hunting culture and modern day seismic oil exploration. Seismic exploration up there basically means ships carrying large sonic arrays (air guns that blast the ocean floor looking for oil) and the Inuit have been noticing some deaf seals and confused narwhals as a result.

The mayor of Clyde River told me about a narwhal entrapment in 2008 — which was an event in which a pod of narwhal got confused and couldn't echolocate their way out of an inlet that was freezing over. He suspects it was because their echolocating capabilities were messed up by being exposed to seismic ships. About 500 whales died in this incident.  

Alberta oilsands. Photo: David Lavallee

You said you had a strange knock at your door one day because of your filming activities. Can you explain what happened?

Tensions were running high here in Vancouver during the Burnaby Mountain protest. I was filming with a quadcopter, aka a drone, trying to get footage of the tankers filling up with bitumen. I had heard that there are always supposed to be at least two tugs escorting them for safety, so I wanted to confirm that that was indeed happening. There was no tanker at the time (you can't really see in from the road) but there was an over zealous Kinder Morgan security guard who called in my licence plate.

The next day, an RCMP INSET Anti-Terrorism Unit officer showed up at my door to ask me questions. We had a long and interesting discussion about terrorism in Canada and the lack thereof, as I argued. He told me that what I was doing could be seen as "a precursor to possible terrorist activity" and as such he had to do his due diligence and investigate.

There was a leaked RCMP report a while back showing that there is increasing anxiety in the RCMP about a so-called increase in environmental extremism. The authors of that report have a rather over-active imagination, in my view. I guess when you have a hammer everything looks like a nail. 

What do you hope people understand about unconventional energy?

I hope that people understand we are in a new energy age. The economics of oil and gas simply don't work anymore, because we are down into the really dirty crud resources at this point. This transformation will have a profound effect on our society, and we need to prepare for the inevitable. 

I hope people understand that there is cost-parity now between renewable energy projects and the worst oil projects. If governments get with the program and cut subsidies to Big Oil and give them to renewable projects instead, we will be well on our way to a more positive energy future.

It is an ideal time to begin this transition. The economics are on our side. 

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After a rough year of collapsing oil prices and the embarrassing dethroning of Alberta’s longtime Progressive Conservative government, the oil and gas industry could use a win. The latest campaign from the Canadian Association of Petroleum Producers (CAPP) was probably designed to be one.

Alas.

Developed as part of CAPP's ‘Energy Citizens’ movement, the ‘Raise your Hand’ campaign is well-designed and clearly expensive. Online and off, it features smiling multiracial faces with hands raised — overlayed with hand-drawn outlines of patriotic maple leaves. There are cheerful videos, interactive bus shelter ads and an online submission form to stay connected. It even has a hashtag (#ryhcanada), the extremely limited Twitter impact of which must be giving at least one advertising executive an ulcer right now.

As Mark Hume noted in the Globe and Mail this weekend, an ad campaign that attempts to co-opt patriotism for its own ends is hardly something new. NGOs have done it for years. So have McDonalds, Molson's beer and Roots. And yet, as Hume says, “CAPP’s slogan — 'Raise your hand because you are proud of Canada’s oil and natural gas' — doesn’t quite have the same ring as one that urges you to raise your hand against racism, ignorance or disease.”

Hume writes that the campaign could have been more successful, had it not been launched in the same week as a massive oil spill in Santa Barbara, which reminded “Canadians — and especially British Columbians where two new oil pipelines are proposed — what happens when one of those .001-per-cent accidents happen.”

I’m not so sure.

While the campaign is not a failure on par with the spectacular collapse of BC Ferries ‘#NameAFerry’ contest, its inability to spark public enthusiasm is not surprising. Even without the Santa Barbara oil spill, it’s reasonable to wonder if pipelines and patriotism fit together as naturally as the industry would have us believe. After all, it’s hard to raise our hands in blind allegiance when the failures and questionable behaviour of industry executives are so hard to ignore.

• Raise your hand if you remember that two years after it became public, CNRL is still unable to stop a slow leak at its Cold Lake in-situ drill site.
• Raise your hand if you recall how Plains Midstream — the Canadian analogue of Plains All American (the company whose failed pipeline spilled all that oil in Santa Barbara) — was fined $1.3 million for two giant pipeline spills in Alberta and was recently ordered to undergo an independent review of their safety procedures?
• Raise your hand if you remember how the industry leaders in oil and gas fought hard to keep employing temporary foreign workers, limiting opportunities for those smiley Canadians featured so prominently in their advertising?
• Raise your hand if you’re doubtful of the capabilities of Western Canada Marine Response Corporation touted by CAPP in the campaign after its slow response to Vancouver's relatively minor English Bay oil spill?
• Raise your hand if you saw the news this week that federal Industry Minister Greg Rickford spoke to an October 21, 2014 closed-door meeting of CAPP executives encouraging them to "work harder and spread the message of the oil industry?"

I could go on.

If recent polling is correct, 72 per cent of Canadians want to see more jobs created in the renewable energy industry. Fifty-eight per cent of Canadians go even further, wanting to see oil and gas use phased out in favour of renewable solutions. And even the Harper government has publicly acknowledged that climate change demands at least a little immediate attention.

So to the folks at CAPP and their marketing agency of record, may I humbly suggest an edit to your ask? Something a little more measured, a little more Canadian.

Raise your hand if you acknowledge that while oil and gas and other extractive industries are a big part of the Canadian energy mix now, they don’t have to be forever. That pipelines fail and transporting oil and gas is inherently dangerous. That if Canadians want to meet our climate goals without having to buy carbon credits from other countries, we need to start investing more in renewables.

Raise your hand if you agree we all deserve a more nuanced conversation about Canada's energy future.

Image Credit: CAPP

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While Jim Prentice and his Progressive Conservative cadre lick their wounds after last night’s landslide victory by the New Democratic Party and leader Rachel Notley, punditry about the oil industry’s place in the transformed province is in full force.

Even before the results were in, Canadians were being warned new leadership in Canada’s oilpatch will mean very scary things for the economy: fleeing investors, abandoned projects, market uncertainty.

Now that the victory bells have rung, the hand-wringing has leveled up.

The NDP win is “completely devastating,” for the energy industry, Rafi Tahmazian, fund manager for Canoe Financial LP, told Bloomberg.

“The oil patch will pack up and leave,” Licia Corbella, editor of the Calgary Herald’s editorial page, tweeted. “Woe is us.”

Yet many other onlookers are saying fresh leadership in Alberta could bring long-overdue policy changes that not only benefit a broader cross-section of society, but industry itself, by remedying systemic imbalances that have granted an unhealthy amount of power to oil interests for far too long.

NDP Win a “Clear Negative”?

Notley, who has promised to review the royalty regime around oil and gas production, raise corporate taxes, ban corporate political donations and stop pushing for the Keystone XL and Northern Gateway pipelines, is poking an exposed nerve for companies already feeling on the outs after the oil economy’s dramatic downturn.

“The perception from the market based on their comments is they’re extremely dangerous,” Tahmazian said.

Bloomberg reports the NDP victory could result in a massive sell off of Canadian energy stocks and stall investment in the oilsands (Cenovus stocks dropped four per cent on the TSX on Wednesday).

“It’s a clear and material negative,” Martin Pelletier from TriVest Wealth Counsel Ltd. opined. “Just when we’re starting to look like we’re recovering here, we get another layer of uncertainty.”

Jeff Gaulin, vice president of communications at the Canadian Association of Petroleum Producers, Canada’s largest oil and gas lobby, echoed those concerns, saying a change in Alberta’s royalty regime would be dangerous for industry.

“Now is not the time for a royalty review,” he told Reuters. “The uncertainty that that would create for investment would jeopardize jobs in Alberta.”

According to Jeremy McCrea, analyst with AltaCorp Capital Inc. in Calgary, American investors began dropping stocks even before the elections results were in. Energy shares, McCrea warned, are threatened by Notley’s royalty review — and a potential hike in rates.

But not all commentators see such doom and gloom in the NDP’s sudden rise to power.

New NDP Rule Could be “Good for Pipelines”

The Progressive Conservatives and the Wildrose parties have been called out for running what amounts to a “fear campaign” based on threats the NDP would wreck the economy.

But with the Albertan economy already in shambles — with a deficit running at $5 billion — voters were apparently left unconvinced that sticking with the status quo would be in their best interest.

“The fear of the unknown was a big factor the NDP had to overcome,” Chris Hall, national affairs editor of the CBC said. “I think what people voted for was change.”

Hall acknowledged that Notley’s campaign promises could be a “disincentive” for new investors looking to get involved in the oilpatch, but he added Notley is “not a particularly radical New Democrat.”

“The environment, for example, comes in under ‘other matters’ on their platform.”

Andrew Coyne said he anticipates Notley will proceed with caution as she presumably doesn’t want to be a “one-term premier.”

“This is still an oil-producing province,” Coyne said. “She can’t just step all over that.”

He added: “What she may have an advantage of is presenting a more environmentally friendly face in terms of the outside world and if she plays her cards right could actually increase the odds of getting a pipeline built if that’s the way she’s inclined.”

Max Fawcett, editor of Alberta Oil, said industry’s “nervousness is a gut reaction” and that he anticipates measured policy under Notley.

The new premier isn’t likely to “pick a fight” with industry and represents policies that are actually much closer to the PCs than one might think.

Fawcett points to Andrew Leach’s detailed analysis on the NDPs position, saying “they’re not the fire-breathing leftist radicals some might think.”

As Leach puts it, “an NDP government would certainly lead to changes in Alberta, but perhaps not of the radical sort feared by many in the province.”

So, despite the gnashing of teeth, the new guard doesn’t necessarily represent doom and gloom for the oil industry. After all, much of Alberta’s former policy (with ample help from the federal Conservatives) has put the oil industry in hot water.

Notley Promises to be Good Partner to Industry and First Nations

In her victory speech, Notley promised to maintain good working relations with industry, but also emphasized her hope to repair long-damaged relationships with First Nations in Alberta.

“To Alberta’s Indigenous peoples,” she said, “the trust we have been given tonight is a call to be better neighbours and partners. I’m looking forward to consulting with you and learning from you.”

Currently oilsands operators are facing two major legal challenges from First Nations with traditional territory in the oilsands region.

The Athabasca Chipewyan First Nation (ACFN), whose legal challenge was thrust into the spotlight with Neil Young’s Honour the Treaties tour last summer, is arguing the cumulative impacts of rampant oilsands development threatens their treaty rights.

Although the Albertan and Canadian governments fought to have the case dismissed, the Alberta Court of Appeals decided the case was legitimate — with potentially huge implications for all oilsands operators.

In response to the NDP victory, the ACFN said they are “optimistic to finally have a government that that recognizes and respects Indigenous rights and territories.”

“While the ACFN have raised multiple issues over the years relating to land management, environmental, health and education, we are finally looking forward to possibly resolving our concerns through a meaningful working relationship with the NDP government.”

The Beaver Lake Cree First Nation is also taking its oilsands fight to the courts, a challenge given greater weight since the unstoppable CNRL bitumen leak began on its territory in 2012.

Alberta’s “black eye” reputation when it comes to climate and the environment hasn’t been doing industry any favours.

Obama’s ambivalence on Keystone XL, Europe’s efforts to label oilsands crude as “high carbon,” and the explosion of major climate and pipeline protests across Canada are all symptom’s of Alberta’s failure to get the oil industry on a 21st century track.

A lack of social licence for oilsands operators has meant “uncertainty” for industry (to the tune of $17 billion by some estimates) long before the NDP took their seat at the throne.

Clearly the status quo wasn’t working perfectly — for anybody. While entrenched oil interests are fearing the worst, there’s obviously plenty of room for improvement.

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Clean energy advocates transformed one of Western Canada’s oldest oil derricks Monday by draping it with pro-solar banners and surrounding it with solar panels that powered sun-themed music.

“It was a really nice day here,” Greenpeace Canada energy and climate campaigner Melina Laboucan-Massimo told DeSmog Canada, “and so sunny.”

Despite the November chill, Laboucan-Massimo said the day was perfect for capturing solar energy. 

"Even though it’s chilly there’s still sun,” she said. “You actually increase efficiency for solar panels when it’s cold, because they don’t overheat. So when it’s cold it’s still fine to produce energy, as long as you have the sun.”

Laboucan-Massimo and the other campaigners are working to demystify solar energy in Alberta, a province with massive untapped solar potential.

“I think a part of what Greenpeace and other organizations and First Nations have been really successful at is pointing out the problem, but I think we need to start pointing to solutions and really articulating what those are and how to implement them,” she said.

People often point to wind and solar power as potential alternatives, without them actually coming to fruition. This is the case, “especially in Alberta,” Laboucan-Massimo added.

“What we’ve learned is that Alberta has one of the highest solar potentials across the country but utilizes only one per cent of that solar potential.”

Laboucan-Massimo stands with the oil derrick in the background. Photo by Greenpeace Canada.

According to the European Photovoltaic Industry Association, the world’s cumulative photovoltaic capacity has more than doubled each year for the last four years. Each year, new global solar installations prevent more than 53 million tons of carbon dioxide from entering the atmosphere.

However, the association notes solar energy in Canada “has expanded slower than some have expected.”

Laboucan-Massimo says the slow growth of solar in Canada, especially in Alberta, makes little sense.

“In Alberta, which is one of the sunniest provinces in the country, why is that happening?” she asks.

“We know it’s because of a lack of political will and because of a lack of policy that works to stymie renewable energy, and solar energy in Alberta.”

Alberta could and should be a green jobs and climate leader, Laboucan-Massimo said. But the reality is so far from that.

“We’re the number-one growing source of greenhouse gas emissions from tar sands as well as the number-one climate polluting province in the country because of tar sands.”

“I think that the fossil fuel industry has really had a stranglehold on the Alberta government,” she said.

That’s part of the reason Laboucan-Massimo and other solar advocates staged their solar action yesterday in Edmonton, a city with a long history of oil and gas development.

Laboucan-Massimo said is was in part to “really proclaim the power of the sun.”

“We know that solar energy and the solar viability is here and now.”

The team dropped several banners from a 70-year old oil derrick, reading “Solar: Alberta’s Next Economy” and “Solar: 100% Climate Safe.”

The group also set up solar panels on the site to power a radio and their phones. While they hung the banners they took music requests from the public using the hashtag #CatchUpAB.

“What we’re saying now is it’s time to transition away from dirty fossil fuels and transition to the renewable energy economy that is here and now,” Laboucan-Massimo said, adding Albertans are ready for economic alternatives.

“We look at Germany that has almost 400,000 jobs in the solar sector. Why doesn’t Alberta have that? We actually have a better solar potential than Germany and yet we don’t utilize that at all.”

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According to British Columbia’s auditor general, the province has handed out $1.25 billion in financial incentives to the oil and gas sector since 2009 to encourage production.

Auditor General Carol Bellringer outlined the incentives in her 2013-2014 summary of the province’s financial statements.

“To encourage production of oil and natural gas in B.C., the province provides financial incentives to oil and gas producers,” she said in the report.

“Producers have incurred expenditures that will qualify for $1.25 billion in incentive credits,” she said, “but have not yet produced enough oil or natural gas to claim these amounts.”

That means as producers generate revenue, they can simply claim their incentive credits, reducing how much money the B.C. government collects on the resource.

“In this case,” she notes in the report, “this represents a reduction of $1.25 billion in revenue in future years if all the incentives are used.”

B.C. LNG not the economic saviour premier promises

B.C Premier Christy Clark has portrayed liquefied natural gas, or LNG, as an economic saviour for the province, although her government has consistently made financial and environmental concessions to the natural gas industry to attract business to the province.

In a recent interview with Global News, Clark said: “I will do everything in my power to make LNG work.”

“LNG will transform our economy, pay off debt, and create a better future for our children,” she said.

Clark’s promise of a debt-free future for B.C. rests almost solely on the creation of an LNG export industry. But to date, that industry remains almost entirely speculative in nature. Although several companies have invested large amounts of money for the prospect of exporting B.C.'s natural gas, none have made any final investment commitments.

This summer, major gas developer Apache backed out of a partnership with Chevron to construct an LNG plant in Kitimat, citing a weak gas market. Malaysian gas giant Petronas also recently threatened to back out of its proposed $10-billion LNG plant near Prince Rupert — and perhaps would have had the Clark government not dropped income tax rates for the industry by 50 per cent.

B.C.’s questionable accounting

In her report, Bellringer also noted B.C. has some questionable accounting methods.

“The bottom line is certainly an important element of looking at a set of financial statements, but there’s a huge amount of rich information that can be taken out of the financial statements,” she told The Canada Press.

“I hope that the report does show that, you know, there are lots of things that need to be very carefully looked at in a set of financial statements.”

Bellringer added that the incentives paid to the oil and gas industry “tell an interesting story.”

Since 2009 the province has paid industry, in the form of credits, a total of $1.25 billion with $587 million of that handed out to industry last year alone.

Screen shot of the auditor general report, outlining oil and gas incentives for 2013-2014 fiscal year. Click here for report.

“Of interest,” Bellringer noted in the report, “is how government records the royalty revenues and the incentive expenses. The incentive expenses are deducted from the royalty revenues, and only the net amount is shown in the statement of operations.”

“The incentives claimed are quite large,” she added, “almost 30 per cent of the gross royalty revenue received by government in fiscal 2014.”

“When these producers claim their incentive credits, that money will be deducted from the royalties that they owe, thereby reducing the amount of money government will generate,” Bellringer said in her report.

A 2012 report released by Blue Green Canada, a coalition of environmental and labour groups, noted that Canada’s existing tax incentives for the oil and gas sector frustrates the creation of new jobs in the emerging clean energy sector.

The report, called More Bang for our Buck: How Canada Can Create More Energy Jobs and Less Pollution, stated oil and gas incentives are “the wrong direction if we hope to tap into a growing share of the jobs and opportunity of the global transition towards renewable energy.”

Image Credit: Christy Clark during Encana tour summer 2014 via Flickr

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One of British Columbia’s most effective climate regulations is at risk.

Even though fuel providers make more profit off drivers in B.C. than anywhere else in Canada, industry is requesting the province review low-carbon fuel standards, which require vehicle fuels to become cleaner.

As energy experts recently wrote in an op-ed for the Vancouver Sun, B.C.’s policy has been effective at cutting greenhouse gas (GHG) emissions from vehicles without people even noticing a change in their lifestyle.

Most British Columbians don’t even realize their fuel is becoming cleaner. By all accounts, the clean fuel rules have been a quiet success story.

And yet, those rules have come under threat.

Fuel providers in B.C. are asking the provincial government to review its ‘renewable and low-carbon fuel regulations.’

According to John Axsen, professor of sustainable energy at Simon Fraser University, some fuel providers “want the B.C. government to weaken [the policy].”

But fully one-quarter of B.C.’s recent success at reducing climate pollution is due to ramping up the use of low-carbon fuels.

In fact, each year low carbon fuels have kept roughly 900 kilotonnes of carbon emissions from entering the atmosphere. This has reduced the province’s GHG impact by the equivalent of 190,499 passenger vehicles or all passenger vehicles in the city of Vancouver.

Yet, certain fuel providers claim the rules are uneconomic and are requesting the provincial government review the low-carbon policy.

B.C. pays more for fuel than anywhere else in Canada

Critics have been quick to point out the oil and gas industry is especially profitable in British Columbia:

As the chart above demonstrates, the petroleum industry makes more profit from Vancouver drivers than drivers in any other city in Canada — almost double the national average.

B.C. consumers would have saved $905 million since 2010 if oil companies in B.C. had made the Canadian average profit (for both refining and selling gasoline and diesel) according to data gathered from Statistics Canada.

Despite gaining nearly a billion dollars since 2010 in “extra” profit in B.C., industry is still lobbying against B.C.’s clean fuel rules.

According to Matt Horne, B.C. associate regional director with the Pembina Institute, a clean energy consulting and advocacy group, the province held a workshop with industry representatives around one year ago to discuss the fuel regulations.

“There were lots of concerns expressed that companies weren’t able to comply with the policy,” he said.

“To the extent I’ve looked at it, the concern as I understand it is that it’s not economic to comply with the policy.”

Horne says representatives with the province and with low-carbon fuel providers have argued the policy is in fact economic and works well as it’s intended: as a long-term strategy.

“This policy gives B.C. the ability to plan going forward. It’s a long-term policy, it has a ten-year time stamp and it has a lot of flexibility,” Horne said.

“There are lots of ways to comply with the policy as long as companies get their carbon down.”

He added B.C. has committed to the Pacific Coast Action Plan on Climate and Energy.

“The province made a pretty clear commitment to Washington, Oregon and California that it’s going to stay committed to its low-carbon commitment and I think it will stick to that.”

“I think Washington, Oregon and California are expecting the same,” he said.

Industry pushback

According to B.C.’s Ministry of Energy and Mines spokesperson David Haslam, “petroleum suppliers have expressed concerns regarding their ability to comply with existing standards given options currently available.”

Haslam told DeSmog Canada the review is intended to “identify how to best enable and support compliance.”

”This past spring, the province conducted a thorough consultation process to review the ability of fuel suppliers to comply with existing standards,” Haslam said, “given the options currently available for generating low-carbon fuel credits.”

He said the province will release a report and recommendations based on consultation “shortly.”

Industry can’t afford clean fuels?

The oil and gas industry in B.C. is suggesting it cannot afford low-carbon fuel rules or that such rules are unrealistic, following a pattern of pushback already seen in both Oregon and California.

In fact both the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) launched legal challenges against the U.S. Renewable Fuel Standard in 2012, calling renewables “phantom fuels.”

The API even sued the U.S. Environmental Protection Agency over a minimum renewable fuel requirement in the U.S. transportation fuel supply.

Canadian oil industry groups have also pushed back against mandatory low-carbon and renewable fuel requirements. In 2011, the Canadian Petroleum Products Institute (CPPI) criticized the federal government’s biodiesel requirements as ‘unfeasible.’

The Canadian Fuels Association maintains “new fuel standards and specifications should be based on sound science and credible cost-benefit analyses,” indicating a strong concern with profitability for industry. When it comes to renewable fuels such as biodiesel, they state “wishful thinking will not get us there.”

It’s worth noting a full 75 per cent of the emissions avoided in B.C. due to the fuel standards resulted from the use of biofuels.

Member companies of the Canadian Fuels Association, which include Husky Energy, Imperial Oil, Shell and Chevron, overlap with both the API and AFPM, which are active in fighting low carbon and renewable fuel standards in the U.S.

Oil industry controls access to markets

Only five companies control 85 per cent of crude refining capacity in Canada. Those companies include Suncor, Imperial Oil, Irving and Shell.

University of Alberta economist Andrew Leach summarizes the ways to deal with this “oil-igopoly:”

“If you want to decrease refinery margins, the only guaranteed ways to do it are by increasing the elasticity of gasoline demand through more public transit, denser communities, more flexible work environments, or by deploying alternative energy sources for means of transportation.”

This last point, “deploying alternative energy sources for … transportation,” is exactly the purpose of the clean fuel rules that are now under threat.

This summer, the B.C. government announced the province met its 2012 climate targets, reducing greenhouse gas pollution even as the economy grew — challenging claims that putting a price on carbon weakens the economy.

Overwhelming public support for clean fuels, climate action in B.C.

Luckily in B.C., good economic management and public opinion agree.

Fully 88 per cent of British Columbians support the clean fuel rule and in a succession of recent polls, a strong majority of British Columbians think hitting the province’s GHG targets is a priority and we should transition off fossil fuels to clean sources of energy.

As for the provincial government itself, not only has B.C. brought in a number of regulations to reduce the province’s contribution to climate change since 2007, it also remains committed to the western states to align carbon pricing efforts and deepen actions to address climate change, including low-carbon fuel standards.

The oil and gas industry has successfully requested the province review the low-carbon fuel standards and elected officials are scheduled to consider the review and recommendations this fall.

Industry is often successful at forcing quiet ‘technical’ changes to important regulations that weaken strong policy.

If B.C. wants to stand behind its climate commitments, it will also have to stand behind its clean fuel regulations.

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Alberta Energy Minister Diana McQueen toured key U.S. cities this week in an effort to gain the interests of major oil refiners and producers before an auction Wednesday will see the sale of 1,300 acres of new oil and gas leases. The leases overlap 650 acres of critical boreal caribou habitat as well as mountain caribou ranges. 

Caribou is an endangered species in the province, with a long history of being placed second to the province’s oil and gas priorities. Last week Alberta put 1,235 acres of mountain caribou range up for auction despite a recent Environment Canada report that called for the restoration of the region given the threat of local herds disappearing.

Both Alberta and the Government of Canada have consistently failed to stem the rapid decline of the province’s endangered caribou, a species now protected under the federal Species at Risk Act. An Environment Canada recovery plan, released in 2012, advanced habitat protection as one of the only means available to protect the vanishing species.

According to Carolyn Campbell conservation specialist at the Alberta Wilderness Association adequate habitat protection measures have yet to be put into place while oil and gas development continues to dramatically outpace conservation efforts.

“New leasing in caribou range should halt,” she said, “until there are real rules to prevent new footprint and restore old footprint.”

Although new project-level guidelines require industry to at times delay or coordinate new projects that will impact habitat, Campbell says the rules “still allow for a lot of harmful footprint.”

Both Alberta Energy and Canada’s Oil Sands Innovation Alliance (COSIA) were asked about the leasing of land in caribou habitat but were unable to provide comment by the time of publication. 

Caribou are naturally timid creatures, their grazing and mating patterns easily disturbed by human and industrial activities. The rapid expansion of Alberta’s oilsands, including open-pit mines and infrastructure-heavy in situ extraction, as well as far-reaching oil and gas exploration in the region including the creation of seismic lines cut through large portions of the boreal forest, has dramatically reduced safe caribou habitat in which herds can persist at healthy levels.

Oil and gas industry activity in caribou ranges. Map by Global Forest Watch.

According to Campbell, the linear footprint caused by seismic lines and other surface disturbance “stimulates populations of deer, moose and predators” and “provides easy access for predators to reach caribou.” But the overwhelming scientific evidence, she said, “is that loss of habitat is the ultimate cause of caribou population declines.”

In 2011 the Canadian government released a draft recovery strategy that was heavily criticized for recommending a province-wide wolf cull as a means of supporting flagging caribou populations without addressing habitat loss. The plan drew wide-ranging condemnation from the scientific and environmental communities as well as First Nations who held industrial development was to blame for caribou declines, not the province’s wolves.

An independent study later confirmed Alberta’s wolves eat very little caribou and sustain themselves on a diet of deer, moose and elk. Although the fragmentation and disturbance of caribou habitat put caribou and wolves in closer quarters. 

"Caribou and wolves have co-existed over thousands of years,” Campbell said, “but too much human footprint robs the caribou of their ability to minimize overlap with wolves.”

In late 2012, five years after it was due, Environment Canada released a revised recovery strategy that called the oil and gas industry and the government of Alberta to work together to ensure at least 65 per cent of caribou habitat remain undisturbed to ensure caribou survival.

Critics were quick to point out the federal recovery strategy did not outline how Alberta should implement the 65 per cent strategy, leaving the plan largely undefined. Since then industry in Alberta has continued to operate mostly unimpeded, putting the caribou on a “collision course” with oil and gas interests, as Simon Dyer from the Pembina Institute put it at the time.

“The provincial government has previously not followed it scientists’ recommendations, nor even multi-sector groups’ recommendations, to temporarily stop leasing and logging until range plans are developed that focus on habitat recovery,” Campbell said. 

Mountain caribou populations have declined by more than 60 per cent since 2002. Boreal herds are in a similarly precarious state. In 2011 the Canadian government placed 70 per cent of Alberta’s boreal woodland caribou herds in or on the border of a ‘not self-sustaining’ category.

Although caribou declines have been tracked by scientists and conservationists for decades, the province’s emphasis on oil and gas development, coupled with loose and undefined recovery plans, has left the species struggling. And according to Campbell, this could have wide-reaching consequences for the surrounding ecosystem, even across provincial boundaries.

“If you look at the attached Environment Canada map (above) of boreal woodland caribou across Canada, it’s Alberta where most of the herds are at highest risk of dying out under current policies. This affects the genetic diversity and viability of neighbouring B.C., the North West Territories and Saskatchewan caribou populations. 

Beyond that, caribou are indicators of whether the boreal and foothills forests are healthy. If we change how these forests are managed so that caribou populations can recover (which Alberta states is its policy goal), then our northern Mackenzie watershed will be healthier, and many other species will benefit too, such as migratory birds that depend on old growth forest and intact wetlands.” 

Under Canada’s new caribou recovery strategy Alberta is legally required to develop plans to preserve and restore caribou ranges within five years. The province has yet to demonstrate how these plans will move forward in the face of new energy leases and land sales.

Although some basic changes could make a bit difference, Campbell said.

“In 2012, in response to thousands of Canadians speaking up for a strong boreal caribou recovery strategy, the federal government did strengthen the strategy to be more habitat-focused. Second, to its credit, in 2013 the Alberta government stopped new energy leasing in two west central Alberta caribou ranges and deferred some logging in one of those ranges until range plans are developed for those caribou.

This is a start, and it shows how important it is for citizens to get involved.”

But, she added, these efforts need to be backed up by “real rules to reduce footprint” which might mean a “re-thinking of forestry and energy.” Ultimately, resource managers are going to have to work together to more responsibly manage industry impacts and reduce disturbance to caribou habitat, she said.

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A new Ipsos Reid poll released today shows 76 per cent of Albertans are in favour of stronger greenhouse gas (GHG) emissions regulations for industrial facilities.

The federal government has faced scrutiny for failing to release GHG performance regulations for the oil and gas sector for several years. Alberta’s existing rules, the Specified Gas Emitters Regulation (SGER), are set to expire on September 1, 2014.

Facing the release of a new climate plan and potential new carbon tax arrangement, Alberta premier Dave Hancock said his government is in talks with industry.

“There are some producers – there are lots of producers – who would say: ‘Don’t do anything, this is already a cost to us, and we can’t afford to pay more because we don’t have any room to innovate, so it’s just a cost to us.’ The more progressive operators would say: ‘If incented appropriately, we can look harder,’” Hancock said.

“How do you actually create a process where big emitters can find a way to meet standards? It’s not a tax, it’s an alternative way of meeting the outcome,” he said.

A Progressive Conservative Party leadership vote is scheduled for September 6, leading some to speculate new emissions regulations will be left off the table until a later date.

“Waiting for consensus means waiting indefinitely,” Simon Dyer, the Pembina Institute’s regional director for Alberta and the North, said. “Albertans clearly want their government to make a decision and move forward with stronger greenhouse gas rules for industry.”

Alberta’s oilsands represent Canada’s fastest growing source of greenhouse gas emissions.

Canada has committed to reducing greenhouse gas emissions to 17 per cent below 2005 levels by 2020 under the Copenhagen Accord. Environment Canada’s most recent emissions report, released in October 2013, shows Canada’s current measures are inadequate for reaching our emissions reductions targets.

Emissions trends reported in Environment Canada's 2013 Emissions Report.

A new study released by Globe International that examined nearly 500 pieces of climate legislation in 66 countries found Canada had “no flagship legislation” for climate despite being in the top 20 worldwide emitters. The report also notes Canada’s decision to withdraw from the Kyoto Accord in 2011.

According to the Pembina Institute, “if Alberta were a country, its per capita greenhouse gas emissions would be higher than any other country in the world.” They also report “7 per cent of Canada’s total greenhouse gas emissions came from oilsands plants and upgraders in 2010.”

Emissions from the extraction and upgrading of oilsands bitumen is estimated to be 3.2 to 4.5 times as intensive on a per barrel basis than conventional crude produced elsewhere in Canada or the U.S.

Alberta’s favoured “double-double” emissions reduction plan would require companies to pay a $30 per tonne penalty if emissions were not reduced by 24 per cent per unit of production, according to the Pembina Institute.

“Another delay to improving Alberta’s emissions rules represents a liability for an industry that thrives on certainty and is under scrutiny for its climate impacts. Strengthening these rules would send an important signal to Alberta’s customers that taking action on climate change is a priority,” Dyer said.

The new poll shows strengthening emissions standards is strongest among university graduates, 83 per cent of whom support stronger regulations. Just 6 per cent of poll respondents opposed or were strongly opposed to stronger rules, while 18 per cent said they were unsure whether or not they were in support.

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Professors at the University of Victoria (UVic) are demanding the school’s administration freeze all new investment in fossil fuels and initiate a three-year divestment of all fossil fuel holdings.

The university endowment fund has approximately $21 million currently invested in fossil fuels.

In an open letter addressed to Lisa Hill, Chair of the University of Victoria Foundation and copied to university president Jamie Cassels, faculty members voiced concerns over the ethical and financial viability of fossil fuel investments, noting “the growing North American movement, led by students, to see their universities act as moral leaders for their communities by disinvesting from such companies.” The full list of signatories can be seen here.

Kelsey Mech, Divest UVic student organizer and chair of the UVic student society, said such strong faculty support for the campaign comes as a surprise. “I am floored. I am so blown away,” she told DeSmog Canada.

“Our goal was to have 100 faculty sign on by April 30th. We just blew that target out of the water as we are already at 160, representing just shy of 20 per cent of faculty,” she said. Nearly 2000 UVic students have signed a petition in support of the divestment campaign.

“I’ve been organizing on campus at the University of Victoria on various environmental issues for the past five years, and I have never seen something light up the campus like divestment has,” Mech told DeSmog Canada. “I’m beyond thrilled, and so grateful for everyone who is willing to take a public stand for our collective futures.”

In their open letter faculty members state “the science is clear” on human-caused climate change, which is expected to cost the Canadian economy $5 billion per year by 2020. The adverse effects of a warming planet, they note, has already killed thousands and creates vulnerable environmental refugees. The burning, transportation and refinement of fossil fuels, they add, perpetuates these negative impacts. 

“We should not support, let alone profit from, companies responsible for this suite of effects.”

The divestment campaign will be presented to the board of the endowment fund and the board of governors at UVic this summer.

Environmental studies professor and letter signatory Jessica Dempsey said faculty support for the initiative is growing: “everyday there are more signatories as more faculty become aware of the issue.”

“I think both students and faculty are looking for ways to seriously engage and confront the climate crisis, in a time when we have no governmental leadership, and no signs of it on the horizon,” she told DeSmog Canada.

Although there has been some resistance on campus, says Dempsey, the majority of it has not been against divestment in principle.

“There is pushback on campus, of course,” she said. “But what is surprising is how much of that pushback – at least so far – comes not in terms of outright disagreement, but rather is focused on the difficulty of implementation. A common refrain is that ‘it’s complex.’”

The UVic endowment and pension investments are managed by trustees with a fiduciary duty “that legally enshrines them to maximize returns,” Dempsey explains, leading to questions about how these and similar funds can account for ethical considerations as well as their legal mandate to maximize returns to the beneficiaries. Pensions, she notes, are governed separately from the university's endowment.

According to Kelsey Mech “the university has asked fund managers to consider environmental, social and governance factors when deciding on investments, but there is no formal or mandatory screening process to follow.”

These kinds of investment ‘complexities’ should be confronted, according to Dempsey, and the university is an ideal place to do so.

“Surely fiduciary duty needs to be revised, or reinterpreted so that we don’t retire to an increasingly uninhabitable planet,” she said.

And concerns surrounding investment in fossil fuels bring up a host of other considerations for Dempsey, especially in terms of employee pensions.

“If you can believe it, my faculty pension has no ethical screens. We can invest in arms, tobacco, and so on. It’s outrageous, really. But of all places in society, the university is well-positioned to lead, to find creative solutions to these complexities.” She clarified that her UVic pension is not, as far as she knows, invested in arms or tobacco, but there is no screen in place that would prevent the pension trustees from doing so.

She added, “who is better placed than UVic law faculty and students to innovate and propose concrete changes to currently unethical but legal mandates like fiduciary duty to maximize returns?”

James Rowe, another professor at the School of Environmental Studies and lead organizer for the campaign, said there is also a strong financial case to be made for divestment.

“The current valuation of oil companies includes huge reserves of fossil fuels that cannot be burned if humanity wants to avoid run-away climate change. When policy making inevitably catches up with the scientific consensus on climate change, share prices for oil companies will be negatively impacted, generating losses for investors,” he said.

Investment in fossil fuels “conflicts” with the university’s environmental leadership role on campus, the open letter states, including the housing of the influential Pacific Institute for Climate Solutions.

“As with the movement against apartheid in South Africa, students have challenged the university to fulfill its role as a leader on issues of justice. And as with the anti-apartheid movement, this movement will not retire until it has succeeded,” the letter reads.

Divestment, according to Mech, is not only practical, but gives institutions like the university a productive way to move the climate conversation forward.

“Divestment is an extremely impactful way to shift the narrative around our reliance on fossil fuels and to force people to recognize the urgency of the climate change crisis,” she said.

“When major institutes, like universities, choose to divest from these dirty industries it sends a strong message that we are no longer willing to accept the status quo and are demanding a transition to a clean energy future,” she said.

More than 300 other North American universities are currently home to a divestment campaign. Recently the Simon Fraser University Faculty Association voted to create a fossil fuel free option in their pension and the City of Seattle voted to divest from fossil fuels.

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