By Mike De Souza
CALGARY, Nov 23 (Reuters) - The Canadian province ofAlberta, holder of the world's third-largest oil reserves, hasproposed a new climate change plan that will give efficientoil-producing companies room to grow while cutting carbonemissions, experts and stakeholders said on Monday.
Long criticized as a source for "dirty oil" because most ofthe reserves are heavy bitumen deposits found in the province'soil sands, Alberta's left-leaning government created an unlikelypartnership between oil industry executives, indigenous leadersand prominent environmentalists to forge the accord.
The proposal comes as world leaders prepare to discuss plansto prevent global temperatures from rising more than 2 degreesCelsius above pre-industrial levels at a summit in Francestarting Nov. 30.
It also came as Prime Minister Justin Trudeau met withprovincial and territorial leaders to hammer out Canada'sposition at the meeting, to be held at Le Bourget, north ofParis.
"I'm convinced that the oil sands CEOs understand that youcan't be the high cost, high carbon producer in the worldanymore," said Ed Whittingham, executive director of theAlberta-based Pembina Institute.
"It was all a very tight timeline, because obviously, thepremier wanted this announcement in the bag... before she goesto Paris," he added.
The oil sands, natural deposits of tar-like heavy oil, are akey driver of the Canadian economy and put the province'sreserves behind only Venezuela and Saudi Arabia.
But environmentalists have criticized the industry's energyintensive production process, which makes it Canada's fastestgrowing source of greenhouse gas emissions.
Whittingham said many senior company executives haveaccepted, in part due to lower global oil prices, that they mustreduce their carbon footprint as well as high production andenergy costs in order to be more successful. To that end, theplan foresees an end to coal-fired power generation and a carbonprice of C$30 ($22.49) per tonne.
The proposal also includes exemptions for upgradingfacilities to encourage new investments within Alberta and comesafter Premier Rachel Notley's government, which won an electionin May to end 44 years of Conservative rule, was stung with theUnited States' rejection of TransCanada Corp's KeystoneXL pipeline. Notley called that decision a "kick in the teeth."
Paul Boothe, who was the top bureaucrat in Canada's federalenvironment department as it developed the country's emissionsstandards for coal-fired power plants and its attempt to draftsimilar oil and gas regulations, said Alberta has taken animportant first step with the plan.
He said the proposal helps firms make a transition with whathe described as "subsidies" for the best-performing companies.
"Basically, it gives back to (companies), some of the carbontax that they pay," said Boothe, now an economics professor atthe University of Western Ontario. "The least-emitting firms dothe best, and the top-emitting firms don't do as well... So Ithink that frankly, the oil and gas industry did very well inthis announcement."
At least six energy companies - Canadian Natural ResourcesLtd, Cenovus, Enbridge Inc, RoyalDutch Shell Plc, Suncor Energy and TransCanadaCorp - publicly supported the plan.
Two other companies - Imperial Oil Ltd andCanadian Oil Sands Ltd - declined to say whether theysupported or opposed the proposal. Husky Energy Inc said it would continue to work constructively with the province.
"What's critically important here is there's no cap onproduction, it's a cap on emissions," said Cenovus presidentBrian Ferguson in a CBC radio interview on Monday.
Notley must still unveil full details about how much spaceeach company would get in a proposed 100 million ton annual capon oil sands carbon emissions - an increase of about 40 percentabove current annual emissions - as well as incentives toeliminate pollution from coal-fired power plants by 2030.
"These things don't pop up overnight," said AlbertaEnvironment Minister Shannon Phillips at a news conference inEdmonton on Monday. "They are the product of negotiations and Ithink that what we have been able to achieve here is an historicagreement and a significant path forward to de-escalate conflictover Alberta's energy resources." (Reporting By Mike De Souza)
