Varcoe: A 'nastier struggle' — Right here comes the emissions cap and a high-stakes federal-provincial donnybrook

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The vitality battle between Alberta and Ottawa has centred on the Clear Electrical energy Laws over the previous two months, however one other, doubtlessly “nastier” struggle is coming quickly.

Prepare for the Eruption over the Emissions Cap.

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On one aspect is federal Setting Minister Steven Guilbeault, who’s in Dubai this month for the COP28 local weather convention.

He’s anticipated to launch particulars on the long-awaited emissions cap on the nation’s oil and gasoline trade this month, however has additionally seen his authorities lose two high-profile court docket rulings on the environmental entrance lately.

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On the opposite aspect is the Alberta authorities, with Premier Danielle Smith and Setting Minister Rebecca Schulz additionally attending the United Nations Local weather Convention, vowing to struggle the feds if its deliberate emissions restrict turns right into a manufacturing ceiling.

And watching carefully is the nation’s oil and gasoline trade, which has been ready to see particulars of the proposal because the federal Liberals initially promised throughout the 2021 election marketing campaign to “cap and lower” emissions within the sector.

“Now we have executed quite a few issues to deal with the emissions from the oil and gasoline sector. However sadly, that’s not sufficient,” Guilbeault advised reporters from the convention on Friday.

Schulz stated it will be “embarrassing for Canada” to launch the long-awaited plan on the world summit, whereas different Canadians are busy explaining to a world viewers how the nation will develop the financial system and cut back methane and CO2 emissions.

“That is what he does. He flies all over the world and goes and makes these commitments and statements to appease all of his local weather activists, after which comes again and tells the provinces, ‘Yeah, we’re going to let you determine how you can how you can do it,’ ” she stated in an interview Thursday.

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Alberta politics
Alberta Premier Danielle Smith, with Minister of Setting and Protected Areas Rebecca Schulz and Minister of Affordability and Utilities Nathan Neudorf, at a information convention the place they outlined the Alberta sovereignty act movement that will probably be introduced earlier than the Alberta Legislature, in Edmonton, Monday Nov. 27, 2023. Picture by David Bloom/Postmedia

“We’ve been clear. We’re not accepting an emissions cap from the federal authorities.”

It’s shaping as much as be one other provincial-federal fracas, coming within the wake of the continued scrap over the federal Clear Electrical energy Laws. The Trudeau authorities is pushing for a net-zero energy grid by 2035 as an alternative of the 2050 timeline favoured by Smith.

“That is completely different,” stated Mount Royal College political scientist Duane Bratt, noting the battle over electrical energy is about what yr the grid should attain net-zero emissions, whereas the cap might immediately have an effect on Alberta exports, jobs and authorities revenues properly into the longer term.

“It’s going to be a way more nastier struggle as a result of the stakes are a lot greater.”

The oil and gasoline sector was accountable for about 28 per cent of all emissions within the nation in 2021, making it the biggest emitting sector in Canada. Most of the sector’s producers, together with oilsands operators, have adopted a goal of reaching net-zero emissions by 2050.

The Worldwide Power Company stated in a latest report that to align with worldwide targets to restrict world warming to 1.5 levels Celsius, emissions from trade operations have to fall by 60 per cent by 2030.

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“That is the make-or-break regulation,” stated Simon Dyer of the Pembina Institute. “That is the regulation that may truly drive the investments that we have to see from oil and gasoline firms in decarbonization.”

The oil and gasoline sector additionally immediately employs 177,000 Canadians, together with 128,000 in Alberta. Over the previous yr, oil and gasoline represented about 17 per cent of whole Canadian exports.

oil
The oil and gasoline sector employs round 177,000 Canadians, 1280,000 in Alberta. Picture by Larry MacDougal/THE CANADIAN PRESS

In its mid-year replace Thursday, the province projected useful resource revenues will hit practically $20 billion this yr.

There may be additionally a authorized aspect at play. The Structure says provinces can completely make legal guidelines associated to the exploration, improvement and administration of non-renewable pure assets.

Whereas Ottawa received a lawsuit permitting for a nationwide carbon worth, the federal authorities has misplaced two key lawsuits previously two months: one over the Affect Evaluation Act and the opposite over the federal government deeming plastic gadgets as poisonous.

On Friday, Guilbeault acknowledged he needed to have the ability to introduce the framework for the emissions cap earlier.

“The federal authorities can definitely intervene in terms of issues simply of air pollution, and together with local weather air pollution. However now we have to be very cautious to not impede on provincial jurisdictions,” her stated, noting the latest court docket rulings.

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“It has meant now we have to guarantee that our regulation does precisely that — that it tackles air pollution with out infringing on provincial jurisdiction, and that has meant that it has taken a bit of bit extra time than perhaps we had initially anticipated.”

The federal authorities’s emissions discount plan launched final yr modelled a 42 per cent discount in emissions from the oil and gasoline trade by 2030.

A report by S&P International Commodity Insights final fall indicated the oilsands could have to scale back potential manufacturing by as much as 1.3 million barrels per day (bpd) to fulfill that concentrate on.

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“We’re nervous that an emissions cap will create a manufacturing decline and, second, we’re involved it is going to create unfavorable investor sentiment,” stated Tristan Goodman, president of the Explorers and Producers Affiliation of Canada.

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Equally, Canadian Affiliation of Petroleum Producers CEO Lisa Baiton stated the group doesn’t see a path to realize the emission reductions required by the federal cap with out manufacturing being curtailed.

Tamarack Valley Power CEO Brian Schmidt identified the oil and gasoline sector is the one Canadian trade dealing with such a restrict on emissions, whereas producers are actively investing extra to chop methane and CO2 emissions.

“I simply don’t get why we’re handled in another way. A molecule of carbon dioxide from a cement plant isn’t any completely different from a molecule of carbon dioxide from the oil trade. So why don’t we deal with them the identical?” Schmidt stated.

“I don’t even know the way you place that cap in place . . . How is that this all going to work, as an organization? How are you going to determine who’s going to chop? We within the trade simply can’t determine (it) out.”

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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