Summary
It is important to recognize that the Federal Government in Canada is about to change the face of industry in Canada. Companies that do not have a comprehensive strategic Carbon Risk Analysis and Strategy are going to be in serious trouble. For years industry in Canada has been looking to the Federal Government for the rules in which to operate in everything from carbon capture and storage (CCS) to what constitutes clean coal. Well those rules are not coming; government seems to be leaving that up to industry. The rules that are coming are hard targets on a per unit basis. This will affect all of industry in Canada and will have a ripple effect that will reach multi-national companies to the investment community worldwide.
Analysis
The Canadian Federal Government is not just targeting the oil sands projects it is targeting coal fired power generation, upstream oil and gas, pipelines, pulp and paper, in fact just about every resource industry in Canada. This is not a tax, rather it will be hard targets at industry’s cost for emissions reductions backed with the stick of the criminal code. In other words heavy fines and board room fiduciary responsibility that if not heeded could result in jail time.
Though industry will receive some clarity on how to operate in Canada it is not the clarity that they have been seeking. Industry has been seeking rules on how they are to reduce greenhouse gasses, not hard targets per se. Industry knew that hard targets would come eventually, but they would have preferred the rules on CCS for example first so that they could reasonably negotiate with government as to the hard targets. That is just not going to happen! So how should industry react, how should multi-nationals react, how should the investment community react? The first reaction that all industry in Canada and worldwide because of the growing trend to a carbon restraint is to have a comprehensive Carbon Risk Analysis and Strategy. This should be priority one and should be demanded by the Board Room, the “C” Suite and the investment community ASAP! The Carbon Risk Analysis and Strategy must be comprehensive and not put all the eggs in one basket like CCS. There are many economical ways to reduce GHG’s, ways in which you can increase industry’s bottom line, not just being an added cost. Be assured CCS alone is an added cost to industry and though some people may argue with my point, it can be equated to a Carbon Tax! These costs will be passed on to the consumer just as any tax would be. The trend for industry in Canada and eventually worldwide now is that the status quo is no longer acceptable. Industry must seek out a strategy to employ energy efficiencies in the many forms available now in order to meet the targets as well as possibly employing a CCS strategy.
