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Alberta Pipelines to be deciding factor in Alberta election

Rachel Notley began her tenure as Alberta’s Premier with a grand bargain – introducing pricey measures to cut carbon emissions in exchange for winning increased market access for her province’s vast oil reserves.

Four years later, the trade-off remains unfulfilled. Voters in the April 16 provincial election are forced to bet on whether to stay the course on energy strategy with the incumbent New Democratic Party Leader, or switch to Jason Kenney and his United Conservatives, who promise a much more antagonistic approach with Ottawa.

For the energy industry, both approaches are risky. Ms. Notley is adamant that the Trans Mountain pipeline expansion to the West Coast is as close to starting construction as it’s ever been. But the proposal has been quashed once before and is years behind schedule. Last summer, the Federal Court of Appeal set aside the National Energy Board approval, citing, partly, insufficient consultation with coastal First Nations by Ottawa. The NEB has again recommended proceeding.

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Mr. Kenney says it is time to get tough with Prime Minister Justin Trudeau’s Liberal government because trying to work collaboratively has yielded no results. However, the federal government now owns Trans Mountain and waging war over it may backfire.

New pipelines – or lack thereof – are the defining issue of the campaign and the vote will in some ways be a referendum on Ms. Notley’s pipeline diplomacy amid the lengthy industry downturn.

“In many places it certainly will be. In Leduc, in Warburg, in all of these smaller centres that depend on oil service and oil and gas industry exploration and production, it certainly will be,” said Keith Brownsey, political science professor at Mount Royal University. “But no matter what goes on, these [legal] cases are being heard in British Columbia. So excuse me, what can Jason Kenney do for this? Nothing.”

Indeed, the process for winning final approval for the $7.4-billion Trans Mountain expansion is now in the hands of the federal cabinet, which is set to make its second ruling on whether to proceed with the project by the end of May. Future court battles are a near certainty.

“The federal government bought the pipeline. The federal government is doing what it needs to do to comply with the court rulings, so it is out of the hands of Albertans in that sense," said Martha Hall Findlay, chief executive of the Canada West Foundation, a non-partisan think tank. She points out that Alberta still has a role to play influencing legislation, especially the contentious Bill C-69, which would make approvals for future projects far more difficult.

In 2015, Ms. Notley made a major political gamble by launching her Climate Leadership Plan, which instituted, among other things, an economy-wide carbon tax and hard cap on carbon emissions from the oil sands. It divided Albertans and the oil industry.

But she has also spent much of her time in office pushing pipelines, putting her at odds with NDP Premier John Horgan of British Columbia and, at times, Mr. Trudeau. Amid the delays, she has sought temporary fixes – including curtailing oil production, ordering $3.7-billion of leased rail cars and announcing incentives to kick start the petrochemical industry. When the previous Trans Mountain approval was overturned, she pulled Alberta out of the federal carbon pricing plan in protest.

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Mr. Kenney has tried to capitalize on many Albertans’ searing discontent with the federal Liberals by framing Ms. Notley and the Prime Minister as a cozy duo that has failed Alberta’s dominant industry.

He said a UCP government’s first order of business would be scrapping the carbon tax. He has announced a $30-million taxpayer-funded “energy war room” to fight against perceived attacks on the oil patch, has threatened to cut off oil supplies to B.C., and said he would try to force Ottawa into action by holding a provincial referendum on equalization.

Ms. Notley contends that the Trans Mountain project is now all but a fait accompli. “The pipeline is almost built at this point so even Jason Kenney couldn’t screw it up, I suspect," she said in an interview. “Arguably that’s the issue, but if anyone could, it would be him.”

It is not the only stalled project over which Alberta has little control. Trans Canada Corp.'s Keystone XL pipeline has the support of U.S. President Donald Trump, but faces more delays at the state level. The planned start-up of Enbridge’s Line 3 replacement project into the U.S. Midwest has been pushed back to 2020.

Mr. Kenney’s policies are seen as more pro-business, and his anti-Alberta-NDP/federal-Liberal rhetoric plays well with his voting base, said Joseph Doucet, dean of the University of Alberta’s school of business.

“It probably matters much more in terms of internal Alberta politics than actually moving the needle in Ottawa with regard to the federal government or the process – and outside of the country when we think about issues in the U.S.," Mr. Doucet said.

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- With files from Justin Giovannetti

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