Harper, Mulcair, Trudeau clash over battered energy sector

Share

Stephen Harper's rivals blasted the Conservative Leader's record on pipelines in a debate on the economy, and argued he has done more to hurt the energy sector than help it by giving the oil sands a free pass on carbon emissions and weakening environmental rules.

For full Globe coverage of the debate, click here.

Alberta's battered energy sector – reeling from waves of layoffs and deep spending cuts – was a flashpoint in the second leaders' debate, on Thursday in Calgary. While both NDP Leader Thomas Mulcair and Liberal Leader Justin Trudeau have argued against individual pipeline projects, they said a weakening of environmental laws in recent years has made it more difficult to build public support for major new infrastructure projects.

Even before the energy industry had to grapple with the sharp plunge in U.S. and world oil prices, Enbridge Inc.'s $7.9-billion Northern Gateway and TransCanada Corp.'s contentious Keystone XL pipeline faced years of regulatory delays. Projects such as Kinder Morgan Inc.'s TransMountain pipeline expansion or TransCanada's Energy East project – which would create Canadian refining jobs – have also faced fierce opposition.

In a sharp exchange during the debate, Mr. Harper said the energy industry is in the midst of a significant downturn and needs a "government that's on its side."

"We want to see this sector grow and develop," the Conservative Leader said.

"The problem is," Mr. Mulcair shot back, "that under Stephen Harper's stewardship, we have not built one kilometre of pipeline to tidewater, and it's easy to understand why. He's gutted environmental laws."

In a post-debate scrum, Mr. Mulcair said he would be a "champion" for the resource sector "but we'll make sure that the development continues responsibly and sustainably."

Mr. Trudeau said in the debate that Mr. Harper has failed on pipelines.

"He talks about being the best friend that Calgary has ever had, that Alberta has ever had, but he hasn't gotten pipelines built," Mr. Trudeau said. "He has made the oil sands an international pariah, and with friends like Stephen Harper, Alberta doesn't need enemies."

Carbon policy also surfaced during the debate. Mr. Harper has long promised new emissions regulations for the oil and gas sector but failed to deliver, making it harder for Canada to meet its international commitments to reduce carbon. Critics also say the Harper government has weakened the Navigable Waters Protection Act and Canada's environmental assessment process.

Mr. Mulcair said he supported a cap-and-trade program to reduce carbon emissions but declined to provide specifics on what it might cost. Mr. Trudeau rejected the idea of imposing new costs on provinces that already have systems to curb emissions growth. Mr. Harper has said he favours a sector-by-sector approach to regulating greenhouse gases.

The exchanges come as the oil and gas sector faces severe competitive headwinds due to the sharp plunge in U.S. and world oil prices to less than $50 (U.S.) a barrel.

In the oil sands, billions of dollars' worth of expansion projects have been scrapped, while layoffs number in the thousands.

Oil-rich Alberta is now forecast to slide into recession this year, and the provincial NDP has forecast a deficit of at least $6.5-billion (Canadian). The number of people collecting employment insurance in the province rose 1.8 per cent in July from a month earlier, Statistics Canada said on Thursday. That's the ninth-consecutive month of increases and about 72 per cent higher than July of last year.

Oil-sands production continues to climb for now, but the outlook for future growth is murky. New projects will require substantial cost reductions – between 20 per cent and 40 per cent – to generate acceptable returns, even if oil prices bounce back to between $65 (U.S.) and $75 a barrel, analysts at Citigroup say. U.S. crude settled on Thursday at $46.90 per barrel.

Natural gas exports to the United States, once a key market for producers and Alberta and British Columbia, have plunged sharply in recent years. Exports to the U.S. east coast, for example, tumbled 65 per cent between 2007 and 2014, according to the National Energy Board.

Meanwhile, efforts to expand markets to Asia have stalled – despite Conservative attempts to accelerate development.

In February, Mr. Harper's government granted substantial tax relief to multibillion-dollar natural gas-export plants proposed for B.C.'s northern coast. Industry lobbied hard for the concessions, which allow export proponents to take advantage of breaks pegged to asset depreciation rates.

It is unclear whether an NDP government led by Mr. Mulcair would roll back that break. The NDP has promised only to end "the subsidization of fossil fuels by the federal government" – a move the party says will result in at least $240-million in savings each year.