Ottawa's plan to impose national greenhouse-gas emissions targets will spark a fierce political battle among the provinces if it puts too much of the burden on oil-producing provinces, a Calgary-based think tank is warning.
In a report to be released Thursday, the Canada West Foundation slams proposals that would require Alberta and Saskatchewan to match emission reduction targets of provinces that are less dependent on fossil fuel production.
The two prairie provinces also say that any national climate-change plan must "acknowledge and accommodate regional differences."
Failure to do so could be lead to national unity problems.
"If we don't, the residents of Alberta and Saskatchewan will suffer unduly and the federation will be severely strained," it concluded.
Foundation president Roger Gibbins said the federal Conservatives are planning to impose national caps on emissions that would pummel producers of energy and leave consumers largely off the hook.
If Ottawa does not turn back from this course, "we're going to be mired in a swamp of regional and interprovincial conflict," Mr. Gibbins said.
To date, provincial differences have been somewhat muted because the federal government has not unveiled its plan for reducing emissions by 20 per cent from 2006 levels by 2020.
Faced with a political minefield, Ottawa has twice delayed the release of its plan, now saying it will come in 2010.
Environment Minister Jim Prentice said he is waiting for the United States to settle on its climate regulations because Canada's system should be comparable with that of its largest trading partner.
But a looming political battle is clearly a concern for Mr. Prentice and Prime Minister Stephen Harper, both of whom represent Calgary ridings.
The governments of Quebec and Ontario - which have embraced more ambitious targets than Ottawa - have expressed concerns that emissions from Alberta's expanding oil sands industry will swamp their reduction efforts.
Alberta and Saskatchewan insist that any national plan must take into account regional differences, including higher population and economic growth over the past two decades, as well as their reliance on the oil industry and oil-fired electricity.
The Canada West report notes that international negotiators at the Copenhagen climate summit have recognized the need for differing levels of emissions reductions depending on national circumstances. And it said a similar approach should be adopted in Canada so that the costs are roughly comparable across all provinces. But Canadian environmental groups want provinces that pollute the most to pay the most.
In a report released this fall, the Pembina Institute and the Suzuki Foundation, said Canada could meet Ottawa's targets and go much further while still enjoying economic growth.
But that report, which was financed but not endorsed by the TD Bank, suggested that Alberta and Saskatchewan would bear the brunt of the costs associated with meeting those targets.
While both provincial economies would continue to grow, Alberta's economy would be 8.5 per cent smaller in 2020 than it would be without emission constraints, while Saskatchewan's would be 2.8 per cent smaller, according to the Pembina/Suzuki report. In contrast, Ontario's economy would get a 0.9-per-cent bump compared with business-as-usual, while Quebec's would lose only 0.3 per cent of its potential growth in 2020.
Average salaries in Alberta would be 6.2 per cent lower in 2020 than they would be without carbon constraints, while Ontario residents would lose only 0.2 per cent off the average pay cheque.
The approach laid out by the environmental groups - in which each province would contribute a proportionate amount of emissions reductions - would result in a massive transfer of wealth from Alberta and Saskatchewan to other provinces.
Mr. Gibbons said Ottawa should equalize the impact by imposing a combination of a carbon tax on consumers and emission caps on large emitters, similar to the plan adopted by British Columbia.
"The perception is that Alberta can afford to pay for these emission reductions," he said. "The reality on the ground here is that the economy and province are hurting and therefore the negative impact on the province will be greater, and the political push-back will be greater as well."
In a release last night, the Pembina Institute criticized the Canada West report for its "doom and gloom" outlook.
"Their critique seems to be more about protecting Alberta's status quo as a major polluter than advancing solutions that will allow Alberta to prosper and be an environmental leader," Pembina executive director Marlo Raynolds said.
He said the Alberta economy would still lead the country in growth, and the oil sands would double in production under the scenario laid out in the Pembina/Suzuki report.