Oil sands no longer easy sell in Washington: 'Green' Obama administration puts lobbyists on defensive

Sheldon Alberts, May 23, 2009, Canwest News Service--When the government of Alberta opened its Washington offices inside the Canadian Embassy four years ago, its mission was challenging, if relatively straightforward: Promote a little-known but secure source of petroleum to an at-war nation itching to break its addiction to Middle East oil.

At first, it seemed Alberta could do no wrong in Uncle Sam's eyes. There were invitations to meet at the White House with Dick Cheney, then vice-president and the string-pulling architect of Bush-era energy policy. CBS's 60 Minutes aired a documentary advising Americans that the province's vast oil sands were about "to become more important to the United States than all the oil that comes to us from Saudi Arabia."

And then there was Alberta's controversial postcard moment in July, 2006 -- parking a giant oil sands dump truck on the National Mall, an iconic urban green space framed by the dome of the U. S. Capitol and the Lincoln Memorial.

But all that is so last administration.

With the House of Representatives' energy and commerce committee advancing climate-change legislation this week that sets a hard cap on greenhouse-gas emissions, Alberta is scrambling to fight perceptions it is a peddler of "dirty oil" and waging an intense campaign to convince Congress to resist measures aimed at oil sands.

If that task wasn't big enough, the province is grappling with how to convince a clean-energy president that the carbon-polluting oil sands are integral to the United States' energy future.

"This job used to be about selling oil," says Gary Mar, the Alberta government's D. C. representative. "Now it's about defending oil."

For Alberta and other oil-rich Canadian provinces -- most notably Saskatchewan -- 2009 has the makings of a year where legislative battles won and lost could have dramatic impacts on their long-term prosperity.

Barack Obama, the U. S. President, has placed climate change at the centre of his domestic policy agenda, investing billions of dollars and spending significant political capital to hurry the development of wind, solar and other alternative sources of energy.

He has urged Congress to pass a final version of its climate legislation in time for this December's United Nations global warming summit in Copenhagen, with the tentative goal of cutting U. S. carbon emissions 17% below 2005 levels by 2020.

The intense push toward clean and renewable energy across the United States -- combined with a vigorous environmental campaign targeting oil sands -- has left Alberta's Mr. Mar playing the role not of salesman but fireman -- always looking for signs of smoke on the vast U. S. horizon.

Already this year, Alberta has lost a high-profile fight to convince California to abandon a low-carbon fuel standard that seeks to eliminate transportation fuels with high "life-cycle emissions." The province and the government of Canada unsuccessfully argued that the rules discriminate against fuel refined from Alberta's unconventional oil-sands oil, which has life-cycle emissions up to 30% higher than conventional oil.

Sharp on the heels of the skirmish with California, Mr. Mar flew to Minnesota to urge state lawmakers there to drop a low-carbon fuel standard modelled after California's rules.

"I think they were surprised to find out that 83% of their crude oil consumed in the state comes from Western Canada. The biggest part of that would come from the oil sands," says Mr. Mar, a former provincial environment minister.

But the biggest challenges, and opportunities, emanate from Washington. The province of Saskatchewan, which is seeking to develop its own oil-sands reserves, last month hired former U. S. ambassador David Wilkins to help navigate the potential minefield of competing interests on Capitol Hill and within the Obama administration.

Canada is the largest supplier of oil to the United States, exporting 1.9 million barrels of crude a day in February. About 1.3 million barrels a day come from Alberta, with the province eyeing continued expansion of oil sands production.

But one constant theme running through Mr. Obama's energy message has been simple. He wants to begin moving the United States off its reliance on fossil fuels -- no matter their source.

"The most exciting thing happening right now in the United States is that there is no longer a battle between the economy and the environment," says Susan Casey-Lefkowitz, director of the Canada project at the Natural Resources Defence Council in Washington. "The Obama administration has made it clear that the path toward economic recovery is through building a clean-energy economy."

The oil sands' environmental black eye has forced Alberta to adopt a new strategy in its efforts to promote and protect oil exports to the United States. While the province still touts the benefits to the United States of having a secure source of 173 billion barrels of recoverable oil at its doorstep, it places far more emphasis on its efforts to pursue green technology to reduce its carbon footprint.

During a spring visit to Washington and New York, Rob Renner, the Alberta Environment Minister, heavily promoted the province's plans to invest $2-billion to develop carbon capture and sequestration as a way to lower emissions from oil sands extraction.

But Ms. Casey-Lefkowitz says Alberta is playing a game of smoke and mirrors with U. S. policymakers by touting carbon-capture technology as a "silver bullet" when its effectiveness is unproven.

"When you look at statements by Alberta officials, they often are saying this is about telling a better story about what's happening in the tar sands," Ms. Casey-Lefkowitz says. "It's a public relations exercise.... We don't feel Alberta and Canada are listening to the changed mood in the United States."