Courage of Leadership, Alberta's Story to Put a Price on Carbon

Courage of Leadership

EDMONTON, Alberta — It was the day that Canada’s top oil-producing province evolved into a global leader on climate change.

“We understood we had done something that was monumental and that was historic,” Alberta Premier Rachel Notley said of her Nov. 22, 2015 announcement that brought carbon pricing to the home of the oil sands, the world’s third-largest oil reserves.

The Alberta Climate Leadership Plan committed the province to setting a price on carbon and limiting overall emissions from the oil sands as part of reforms that emphasized both cleaner energy and economic growth, including further oil sands development within the emissions limit.

Standing on stage with Notley that day were oil industry executives and environmental leaders in a show of unified support that would have been unimaginable just 18 months earlier.

How did Alberta, with massive oil reserves and a powerful industry pushing for growth, come to adopt progressive policies that made it the talk of the Paris climate change meeting just eight days after Notley’s announcement?

The new policy formula followed years of bitter dispute over growing development of the multibillion-dollar oil sands — a standoff that was harming the province’s future energy prospects, as well as its economy and environment.

The Beginning

Alberta first adopted an emissions trading program in 2007. Under it, industrial producers that emitted more than 100,000 tonnes of greenhouse gases a year had to trade for credits to reduce their emissions below the threshold or pay a surcharge.

While a pioneering step at the time, the system eventually failed to satisfy increasing demands for stronger policies to address climate change.

Aggressive campaigns by environmental groups, some First Nations communities and others against continued development of oil sands production contributed to an increasingly acrimonious standoff with the oil and gas industry, with neither side progressing toward key objectives.

The industry needed continued competitive growth of the oil sands development, including improved environmental performance, while environmental groups and growing public opinion across Canada sought more stringent climate policy including constraints on growth in oil sands emissions.

With global pressure for stronger climate policy increasing, some of Alberta’s major oil producers realized their future growth was in question as modern societies began the transition to a low-carbon future.

However, the dispute over climate policy had become so polarized that the two sides appeared only capable of battling from dug-in positions. Something had to give.

A Skeptical Start

In the fall of 2014, petroleum industry executive Dave Collyer asked professional mediator Daniel Johnston to reach out to environmental leaders to assess the chances for launching a dialogue.

“I think there needed to be a catalyst to get the discussion going and to start to build a level of trust that allowed us to have the conversations we needed to have, with recognition, I think by both parties, that it was quite unclear and uncertain where that conversation was going to go,” Collyer said.

Johnston put Collyer in touch with Tzeporah Berman, a longtime environmental activist, and they agreed to explore a possible way forward.

Both Collyer and Berman were skeptical when heading to their first substantive talks, a dinner with Johnston at an out-of-the-way Calgary restaurant.

“I didn’t have very high hopes,” Berman said in a joint interview with Collyer, who interjected: “If it makes you feel any better, I didn’t either.”

To her surprise, Berman realized there was potential.

Common Ground

“By the first half hour, it was clear that we did share some common ground,” she said. “We both identified very early that we were worried about Canada’s economy,that we also wanted to ensure Canada took a leadership role on some of these issues.”

They agreed to keep talking and to bring in others on their respective sides. Another dinner in the fall of 2014 at the Osteria Test Kitchen in Calgary’s Kensington neighborhood included a handful of oil industry and environmental leaders.

Arlene Strom, the Suncor vice president of sustainability and communications, remembers “a real curiosity on both side” that night, with lots of questions asked.

“It was clear we were talking different languages,” she said, adding “we had absolutely no idea where this was going to take us.”

To Ed Whittingham, then the executive director of Pembina Institute, an environmental research group, the fact that oil industry chief executives took part made a difference.

We walked out of that dinner disagreeing about most things, but agreeing about enough to have us be open to getting back into a room together. And that was really how it started
— Ed Whittingham

“We walked out of that dinner disagreeing about most things, but agreeing about enough to have us be open to getting back into a room together. And that was really how it started,” Whittingham said.

Two Tracks

The process quickly became two tracks, with the industry chief executives and environmental leaders continuing their talks and appointing a working group to hammer out details.

“At the outset, you are dealing with a significant amount of apprehension and fear,” said Johnston, emphasizing the painstaking effort to build trust between longtime adversaries conditioned to talking past each other.

Tim Gray, the executive director of Environmental Defense Canada, said the oil industry views of environmentalists were “unsophisticated and uninformed” at the start.

“It took a little while for them to realize that perhaps there was a rationality behind the approach we bring to environmental campaigning, and that we’re not quite the nut jobs that are often portrayed in the media or the common political discourse,” Gray said.

Strom of Suncor said her side needed to understand the strategy of the environmentalists.

“For us, it was understanding how campaigns work and what the cycle of campaigns look like,” she said. “What are the outcomes the environmentalists are actually trying to achieve?”

At the same time, the business executives found the environmentalists equally uninformed and mistrustful of oil industry desires to compete in a low-carbon future.

Tough Times

It wasn’t easy. Johnston recalled “periods of incredible frustration, lots of times where there was a sense expressed to me by all involved that there’s no way we’re going to be able to do this.”

“And you just keep chipping away,” he said.

Part of chipping away meant humanizing those on the other side.

“Until you actually sit down and have a conversation and try and understand each other, you perpetuate the myths,” Collyer said.

For Whittingham, “trust-building was critically important to ultimately this process producing any kind of results.”

“And you can’t rush trust-building. Nor can you prescribe it,” he continued. “It’s putting people together in a room with a little bit of process and seeing if they have enough commonality so that they don’t hate each other.”


A key breakthrough occurred several months in when the focus of the talks shifted to reducing carbon emissions, rather than reducing oil production.

The new paradigm provided the oil industry with the opportunity to continue producing and even increase production, as long as resulting emissions remained within agreed levels.

“What that did was unlock the ability for industry to say look, if we can advance technology and innovation and in doing so reduce carbon emissions intensity, that allows us to pursue our objectives,” Collyer said. “It holds industry accountable for delivering on the technology we believe we can deliver to be competitive going forward, relative to other jurisdictions.”

Working out an acceptable level of emissions “triggers alignment in other areas, like agreeing to a carbon price for the oil sands,” Berman said. “The carbon price can stimulate innovation, new technology and reduce emissions. And that was in part how we got to having detailed conversations on a carbon price, because we had a shared agreement that we have to reduce emissions.”

From there, the talks moved to setting a limit on overall oil sands emissions to provide certainty that the continued development of oil sands reserves wouldn’t undermine broader emission reduction efforts in the province or nationwide.

Emissions Limit

Strom said the issue of an emissions limit came down to addressing uncertainty.

“The environmental community did not have the same faith we did that innovation and technology could reduce emissions intensity,” she said. “We felt that a backstop in emissions growth was an extension of what we knew innovation and technology could deliver. It was how we dealt with uncertainty. That was one of the breakthroughs in really thinking about an emissions limit.”

To Whittingham, “industry realized that for it to get the social license that it needs in order for pipelines to be built and justifiable in our carbon-constrained economy now, it needed to offer that certainty” on overall emissions by agreeing to a limit.

Chris Harrison, vice president for sustainable development and regulatory for Shell Canada’s heavy oil business, said the breakthrough involved gain and sacrifice for all involved, as progress occurred “once both parties kind of had some skin in the game.”

The process received a major sense of urgency in May 2015, when Notley’s New Democratic Party won provincial elections on a platform of progressive climate change policy.

New Government

Notley immediately appointed a government advisory panel under Andrew Leach, a professor at the University of Alberta School of Business, to draft recommendations in time for the Paris climate talks in late November.

Leach’s panel conducted a series of public hearings and other consultations, and also heard from the industry and environmental leaders who had been working together for the past year.

He called the contributions from the industry and environmental talks the most significant for his panel “because they brought the largest players to the table, they were able to reach consensus, they were able to go back and forth collectively to the government.”

Participants recalled tense moments in the discussions.

“It was a very difficult meeting, and we all felt pretty shaky and were uncomfortable, but in the end we all decided to support the government’s direction on carbon policy” Berman said. “And we stood up from the meeting and the mediator turned to one of the industry representatives and said, ‘Okay, are you comfortable?’ And he looked at him and he was pale and sweating and he said, ‘Comfortable? I think I’m going to vomit.’ And the whole room burst out laughing, me too.”

Berman continued: “It was just one of those moments where you realize you’re on the edge, and that is what leadership looks like. It’s not easy. … It requires being willing to step out front and sometimes that can be scary.”

“It was very challenging,” Collyer said, “but we were able to come up with a package that worked for all parties at the table.”

The Big Day

A photo of Notley announcing the climate leadership plan, surrounded by oil industry, environmental and First Nations leaders, has become an iconic keepsake for all involved.

Details of the plan included a 100-megatonne annual limit on oil sands emissions, which Notley noted was 30 megatonnes more than current levels, providing a buffer for industry to grow while continuing to develop low-emission technology.

She also announced an economy wide carbon price that started at $20 per tonne in January 2017 and will rise to $30 a tonne a year later.

We’re going to reduce pollution by putting a price on it. We all contribute to carbon pollution and we can all be a part of the solution.
— Rachel Notley, Alberta Premier

“We’re going to reduce pollution by putting a price on it,” Notley declared that day. “We all contribute to carbon pollution and we can all be a part of the solution.”

A week later in Paris, the Alberta delegation led by Notley was much in demand for its new leadership posture.

“Instead of going there to keep a low profile and hide from anyone, we were doing the exact opposite,” said Shannon Phillips, the province’s minister of environment and parks who oversees the climate leadership plan. “I remember our meeting with (California) Gov. Jerry Brown, and he looked at me and he said, ‘Do you think you can do it?’ And I said, ‘I think we can.’ And he said, ‘All right, I wish you well.’”

Lessons Learned

Looking back, those who took part in the lengthy collaboration cited the convergence of events that made such policy reform possible.

“At the end of the day, there has to be a case for change, and there has to be, in the case of this work at least, governments who wish to advance an agenda that’s aligned with the work that’s being done,” Collyer said. “So a lot of things have to line up, but if you don’t do the homework and don’t build the platform, then frankly you haven’t got the opportunity to strike when the iron is hot.”

He cited the multiple components of the plan that would apply to the oil sands — a progressive and competitive carbon pricing structure; the opportunity to continue to grow oil sands and related infrastructure within the bounds of the emissions limit; incentives to accelerate technology and innovation to make oil sands development more competitive — as vital to its acceptance by the oil industry.

Berman advised any process taking on climate policy or carbon pricing to “step back initially from the details and instead to create a conversation around where you’re trying to get to.”

“What is the common ground? What is your shared vision amongst different players of the future? And then work backwards from there, because that can create some foundational agreements and trust,” she said.

Whittingham called participation by top leaders vital to breaking through the inevitable stalemates that arise “because they’re the ones who are paid to make the tough decisions.” And he warned of a hostile reaction to any agreement from those outside the process, saying: “A lot of people will be caught flat-footed and will be very surprised and will react very, very badly.”

“That’s Leadership”

For Johnston, the mediator, the key was for participants to “be outrageously intellectually curious about a number of things.”

“Be very curious about how these types of conflicts have unfolded previously in different circumstances,” he said. “Be very curious about the people that you’re dealing with that represent different organizations. Ask lots of questions. Questions are hugely powerful.”

Collyer warned: “You’re going to be uncomfortable.”

 “You’re not going to feel good in a lot of meetings” said. “But that’s leadership. That’s what it’s about. You’ve got to have the courage to lead and the courage to stick with it.”

Berman and Collyer