Federal Environment Minister Catherine McKenna vowed on Wednesday to impose carbon pricing on Alberta should Jason Kenney’s United Conservatives make good on a campaign pledge to scrap the provincial levy.
“I don’t want to speculate on what’s going to happen, but we’ve been clear that it should not be free to pollute anywhere in the country and we have a backstop should provinces not have a price on pollution,” Ms. McKenna said in a telephone interview from Vancouver.
She said Ottawa hopes to work with Mr. Kenney, although relations between the federal Liberals and conservative governments in other provinces have been antagonistic.
Mr. Kenney swept to power Tuesday on a promise to immediately repeal Alberta’s carbon levy and he has pledged to sue Ottawa to prevent the federal backstop from taking effect, joining conservative premiers from Ontario and Saskatchewan who have already challenged the Liberals’ climate plan in court ahead of a federal election this fall.
The premier-designate said Wednesday that he plans to introduce Bill 1 to scrap the carbon tax when the first sitting of the provincial legislature is convened in the third week of May.
He reaffirmed the pledge one day after insisting in his victory speech that Albertans “have been had” by signing on to toughened climate regulations in exchange for pipeline expansions that have yet to materialize.
And, in that speech, he promised to use “every legal tool at our disposal” to silence critics of the province’s dominant oil industry, which has been battered by weak prices and pipeline constraints.
The rhetoric comes at a time a growing number of investors and some of the world’s largest energy firms have shunned Alberta’s bitumen deposits in favour of oil projects that emit less carbon while still returning money to investors.
Canada’s largest oil companies face mounting pressure from pension funds and other large investors who view the sector as off-limits for environmental, social and governance (ESG) reasons. The concerns encompass everything from carbon disclosure to Indigenous relations and are playing a bigger role in how and where investors allocate money.
Indeed, Mr. Kenney could further unsettle international investors, who are increasingly concerned about such risks in their portfolios, said Jeremy McCrea, a financial analyst at investment dealer Raymond James Ltd. in Calgary.
“He will probably be a louder advocate for the industry, but needs to be careful in terms of unintended consequences related to rising ESG concerns around the world,” he said.
Still, the lobby group representing the industry’s largest companies cheered the more antagonistic approach and rejected the notion that investors would balk at weakened regulations.
“Anyone that wants to take a shot that’s not founded at our industry will be held accountable,” Tim McMillan, president of the Canadian Association of Petroleum Producers (CAPP), told reporters on Wednesday.
He said the industry had made strides in improving its environmental performance and noted Mr. Kenney plans to retain a carbon levy on large emitters. “As long as it is driving emissions reductions and enabling investment in Alberta, I think that we’re going in the right direction and I think that will be well-received by investors,” he said.
This week, Canada submitted its latest national tally of greenhouse gas emissions to the United Nations. It showed oil sands emissions increased by eight million tonnes in 2017 from the year prior. While individual operations have grown more efficient, carbon emissions from the oil and gas industry as a whole have surged in the past decade and now account for nearly one-third of Canada’s total, followed closely by those from the transportation sector.
CAPP has pushed for policies that would double the rate of industry growth, but its forecast of steadily rising global energy demand assumes a level of planetary warming that climate scientists say would result in irreparable harm to the world’s ecosystems.
Mr. Kenney inherits stewardship of an industry that has also struggled with mounting environmental and financial liabilities tied to tens of thousands of aging oil and gas wells and sprawling oil sands tailings pits.
Alberta’s carbon tax stands at $30 a tonne. In its place, the UCP has proposed a lower levy on industrial emitters that environmental groups say will result in significantly fewer emissions reductions.
With a report from Shawn McCarthy