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Canada oil sands rules get UK backing

Financial Times: Canada oil sands rules get UK backing

By Jean Eaglesham, Chief Political Correspondent
Published: April 9 2008 02:53 | Last updated: April 9 2008 02:53

Tough environmental regulations that will increase significantly the costs faced by two British companies, BP and Royal Dutch Shell, in exploiting Canada’s huge oil sands reserves were on Wednesday backed by Malcolm Wicks, the energy minister.

In an interview with the Financial Times, Mr Wicks also sought to justify the government’s lobbying in Brussels to allow carbon capture and storage projects to count towards the UK’s target for renewable energy.

Speaking during a visit to Canada, the minister lauded the “very far-sighted” move by Canada’s federal government to force new oil sands projects to capture and store their carbon dioxide emissions after 2012. “Canada’s oils sands could provide up to 5 per cent of global supply … [but] I understand the concerns about the environmental impact,” he said.

Canada’s stringent carbon capture requirements will add to the costs of the projects planned by BP and Shell in the sands, an environmentally sensitive reserve that is the largest outside Saudi Arabia.

Mr Wicks admitted the regulations had commercial consequences, saying: “if you look at it very narrowly, it will impact on the costs of the companies.” But he stressed the “prohibitive” long-term cost of failing to address climate change, including a failure to find sustainable ways of exploiting fossil fuels.

Market mechanisms, such as the European emissions trading scheme, would play a main role in making low carbon technology more affordable, Mr Wicks said. “The smart money will be on the development of a North American carbon market, including the US and Canada,” he said.

Mr Wicks set out plans to use this week’s bilateral talks in Canada to explore how the UK could work with Canada on developing global agreements to mandate “clean” coal-fired power plants, in China as well as the west. The UK is “seeking to build consensus around a strong package” of carbon capture measures at June’s G8 meeting of energy ministers, “en route to a meaningful global emissions deal” next year, the minister writes in an article in Wednesday’s Toronto Star.

Green groups argue that Britain’s moral authority to lead such talks is undermined by its stance in Europe. Ministers are lobbying the European Commission to allow carbon capture projects to count towards the UK’s target of increasing its energy from renewable sources from 3 per cent to 15 per cent by 2020.

Copyright The Financial Times Limited 2008

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