As premier of Alberta, Danielle Smith has made it abundantly clear that she’s interested in reducing emissions, not oil and gas production. In what may come as a shock to her supporters, the federal government obviously agrees. Its newly released emissions cap on oil and gas activities requires only a 20 to 23 per cent reduction in field-level emissions by 2030 from 2019 levels, with the rest coming in the form of credits or contributions to a decarbonization fund. "If you're asking to be done something that simply can't be done, then what you're going to do is shut down production and simply send it to other countries," Natural Resources Minister Jonathan Wilkinson said.
If you didn’t know Smith, you might think she would call this a win. But she was determined to portray it as a loss for Alberta no matter what the cap looked like, and she didn’t disappoint. Smith pledged to protect Alberta with a “constitutional shield” that she has already admitted is just about attracting attention to her cause rather than advancing it in the courts. “Albertans will not tolerate it,” Smith said.
Her proxies (or is it patrons?) in the oil and gas industry struck a similarly overwrought tone. “It will put thousands of Albertans out of work, and a cap on production is nothing short of the NEP (National Energy Program) all over again,” Ensign Energy Services president Bob Geddes said. “It’s the single-biggest existential threat (to the sector). An emissions cap is a cap on production. It’s as simple as that.”
This is the essence of the argument being made by Smith, her environment minister and the rest of her government: any cap on emissions is effectively a cap on production. But this is, as they say, a tell — one that calls their bluff on the lofty promises they’ve made to achieve net-zero emissions further down the road.
It’s also at odds with what the Pathways Alliance, a group of the five largest oilsands producers in the province, has said it can achieve. Its members claim they can reduce emissions by 22 megatonnes by 2030 without shutting in production, a 27 per cent decline that actually exceeds what the proposed federal cap would require. When combined with the methane reductions the oil and gas industry has already said it can achieve (and gently called out the premier for opposing), that gets the oil and gas industry to 39 megatonnes of field-level reductions by 2030, which actually exceeds the proposed requirement under the federal emissions cap.
But all this talk about federal regulations and constitutional shields misses the most important part here: none of this political gamesmanship matters. Pierre Poilievre could win the federal election in 2025 and wipe these regulations off the books and it still wouldn’t matter. Why? Because countries and consumers that buy Canada’s oil and gas will be calling the shots. They’re the ones who will enforce the real emissions cap that no politician in Alberta or Canada can control.
If Alberta wants to export any oil and gas to Europe, after all, it must meet their increasingly stringent standards under the Carbon Border Adjustment Mechanism. More importantly, there’s growing support for similar legislation in the United States — by far Alberta’s largest export market — backed by both Democrats and Republicans. Take the Foreign Pollution Fee Act, a wildly complicated and byzantine piece of proposed American legislation that’s clearly aimed at China but also covers crude oil and natural gas — and potentially Canada’s high-emission exports. Donald Trump might not care at all about climate change, but there are few things he loves more than economic protectionism — and picking fights with Canada. And remember: for all the progress that industry says it’s made in reducing upstream emissions, Canada’s average barrel is actually more carbon-intensive today than it was in 1990.
Here’s the real kicker, though. Even if Alberta’s oil and gas industry finally gets religion here and manages to meet the federal government’s 2030 target, it will still have to contend with the de facto production cap that declining global demand (and declining prices) will enforce. Electric vehicles have already destroyed nearly two million barrels per day of demand for oil, and they’re still in the early stages of their adoption curve. China, meanwhile, seems determined to wean its billion-plus citizens off foreign oil imports as quickly as possible, both through the growth of its domestic electric vehicle industry and its increasingly monumental wind and solar deployment targets. If anyone in the oil and gas industry still thinks the growth of the middle-class in China or India is going to ensure decades of demand growth for their product, they have a rude awakening in store.
Rather than wasting everyone’s time with talk of “constitutional shields” and ever-increasing demand for Alberta’s oil and gas, Smith should be helping her province understand the competitive landscape. She should push the oil and gas industry to decarbonize as quickly as possible and stop enabling its efforts to slow-roll that necessary work. And she should help Albertans understand the biggest existential threats aren’t actually coming from Ottawa, especially when it’s showering the province with tens of billions of dollars for carbon capture technology and pipelines.
Fat chance of that happening, though. Instead, she’ll keep picking fights with Ottawa and pretend they’re the only thing standing in the way of Alberta’s economic prosperity. Ironically, that’s a far bigger threat to the province’s economic future than anything Justin Trudeau could possibly muster.
Alberta’s emissions cap freakout is a tell
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12.12.2023
As premier of Alberta, Danielle Smith has made it abundantly clear that she’s interested in reducing emissions, not oil and gas production. In what may come as a shock to her supporters, the federal government obviously agrees. Its newly released emissions cap on oil and gas activities requires only a 20 to 23 per cent reduction in field-level emissions by 2030 from 2019 levels, with the rest coming in the form of credits or contributions to a decarbonization fund. "If you're asking to be done something that simply can't be done, then what you're going to do is shut down production and simply send it to other countries," Natural Resources Minister Jonathan Wilkinson said.
If you didn’t know Smith, you might think she would call this a win. But she was determined to portray it as a loss for Alberta no matter what the cap looked like, and she didn’t disappoint. Smith pledged to protect Alberta with a “constitutional shield” that she has already admitted is just about attracting attention to her cause rather than advancing it in the courts. “Albertans will not tolerate it,” Smith said.
Her proxies (or is it patrons?) in the oil and gas industry struck a similarly overwrought tone. “It will put thousands of Albertans out of work, and a cap on production is nothing short of the NEP (National Energy Program) all over again,” Ensign Energy Services president Bob Geddes said. “It’s the........
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