A tarnished reputation
As UN climate talks began in Cancún, Mexico this week, international environmental groups and some of Canada’s most important trading partners continue to see the Alberta tar sands as a major blemish on our global reputation. Public relations campaigns, no matter how well funded by Canadian taxpayers, cannot erase the images in people’s minds of deforestation, toxic tailings ponds, dead ducks and dwindling water supplies. The social and health impact on First Nations communities across Alberta is by far the worst spinoff of runaway tar sands development.
Unfortunately, stricter tar sands regulation at home, and stronger climate policy abroad, will be much more difficult if the proposed Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, is completed as planned.
Already the CETA negotiations have frozen efforts by the EU to penalize tar sands products for their high carbon intensity. But according to a new legal opinion, commissioned by the Council of Canadians and The Indigenous Environmental Network, CETA would also freeze future provincial and federal regulatory efforts to slow down or clean up tar sands production.
The goal of the EU Fuel Quality Directive, which the federal and Alberta governments have lobbied in Europe to undermine, is to reduce emissions from ground transportation, a fast-growing source of greenhouse gasses largely due to ever increasing trade flows. The EU policy does not just look at the end result in terms of emissions from vehicles, but the life-cycle greenhouse gas emissions from the production of fuel.
The legal opinion by trade lawyer Steven Shrybman, which is based on a leaked early draft of the CETA text, states that this type of discrimination would be illegal under market access rules proposed by Canada. ‘Canada seeks to preserve the status quo which it argues prohibits measures that take into account the environmental impacts of extracting and processing bitumen from the oil sands,’ it says. An October draft of CETA tells us that EU Commission attempts to strengthen the language in CETA’s environmental chapter, to take into account national responsibilities under multilateral environmental agreements, have been successfully watered down by Canadian negotiators.
CETA would establish a typical trade in goods regime that refuses countries, and in this case the provinces and territories, the freedom to discriminate between more or less carbon-intensive versions of the same product. An effective means of accounting for carbon emissions through trade slips out of view if CETA is passed.
A second, more immediate threat to effective climate action is the extent to which CETA would encourage and then lock-in investment in the tar sands by European energy firms – a scenario predicted by a draft sustainability impact assessment of the agreement. This scenario comes into view as BP announced this week it will be going ahead with its investment in the Sunrise project in northern Alberta.
The proposed investment rules in CETA, which exist already in NAFTA (the North American Free Trade Agreement) and have been used extensively by US firms to challenge environmental and resource-related policy in Canada, would allow European investors to block future provincial or federal measures attempting to address the enormous environmental impacts of the Canadian oil industry. These could include cutbacks in the amount of water used to extract bitumen or general production limits.
EU-based companies seeking to increase their investment in the sands would be able to invoke international arbitration to challenge and seek monetary compensation for such environmental or conservation measures that directly or indirectly affect their current or future profitability. The chilling effect alone of this investment protection mechanism will be enough to discourage new environmental policy, a fact also recognized by the sustainability impact assessment’s latest draft report.
‘The extension of the network of in situ extraction could contribute to further habitat fragmentation and eventually to the disappearance of vulnerable species such as the Caribou in Northern Alberta,’ says that report, outlining the consequences of combining strong investment protections with market opening in CETA. ‘In water usage, the Agreement could contribute to water withdrawals, groundwater depletion and freshwater contamination, especially in the Athabasca basin which is currently under stress.’
Clearly the ability of both Canada and the EU to meet international climate obligations will be significantly influenced by CETA and yet there has been no national debate about these negotiations. ‘If CETA is to serve rather than undermine the goals of combating climate change, Canada’s position on trade-in-goods rules must be rejected, as must the position both Parties have apparently adopted on investment and services rules,’ concludes Mr. Shrybman in his legal opinion.
Aggressive international lobbying for and against tar sands production will get the Harper government and environmental groups only so far. But reframing how we negotiate trade agreements, if only to strengthen protections for environmental policy relative to investment, must remain a priority of those seeking effective climate policies in Canada and abroad.
Stuart Trew is Trade Campaigner at the Council of Canadians.