Trudeau, Smith meet with working group under pressure to sort out energy issues

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On the first day of the Calgary Stampede this month, there were the smallest of baby steps toward some Alberta-Ottawa agreement on climate policies. But there was no budging from the combative language employed by the Danielle Smith government.

Justin Trudeau is in town for the 10-day event, in what has become an annual appearance since even before he was Prime Minister. On Mr. Trudeau’s agenda: the midway; an event with the Liberal candidate for the Calgary Heritage by-election this month, almost certainly a fruitless quest in a solidly blue riding; and a Friday evening Laurier Club reception, where hundreds of dollars in annual dues to the party were a prerequisite for attendance. (No matter how few MPs the governing Liberals elect, fundraising is always a worthy cause in the city where incomes are above average. Conservative Leader Pierre Poilievre is scheduled to speak at his own fundraising barbecue on Saturday evening.)

But the first stop for the Prime Minister was the McDougall Centre, the seat of the provincial government in Calgary, to meet with Premier Danielle Smith. They made a few short remarks in front of the cameras and didn’t take questions from reporters. At least the handshake wasn’t painfully awkward this time, as was the case when the two met in Ottawa in February.

As of Friday, the two have agreed on a bilateral working group – something Ms. Smith asked for last month – to try to sort out their issues on energy and climate, including how to incentivize carbon capture and other emissions-reducing technologies.

“It’s going to make sure we’re responding to the energy needs of a growing economy around the world, while at the same time making sure that we get to that net-zero by 2050 that we all agree on,” Mr. Trudeau said.

The stakes are high. Both levels of governments are aiming for carbon neutrality by 2050. But there’s a wide divide about the goals, or lack thereof, in the intervening years. Ottawa wants measurable actions by 2030 and 2035, and Alberta argues the only way to do that is to force unrealistic measures on it – the province that contributes the most to Canada being the world’s fifth-largest producer of oil and natural gas. At the same time, the province hasn’t adopted any alternative nearer-term goals.

There are two main beefs the Smith government has regarding federal climate policy. First comes the industry-specific emissions cap on the oil and natural gas sector that will demand a greenhouse-gas reduction of more than 40 per cent by 2030 – which the Alberta government argues will amount to a cap on production in the province.

The second is net-zero power grid regulations that Ottawa wants in effect across the country by 2035. While the federal government has seemingly kicked the can down the road when it comes to the emissions cap – now saying no specifics are likely for months – draft regulations on electricity are likely to be released this summer, which could make the conflict with Alberta more imminent.

“The federal government has yet to formally recognize Alberta’s exclusive jurisdiction to set its own emissions-reduction targets and milestones on the path to a carbon-neutral energy sector and electricity grid by 2050,” says the readout from the Smith government late Friday.

Ms. Smith is also keen on a plan that would see Canada receive credit for exporting liquefied natural gas, should it be somehow provable that the LNG is displacing coal-fired power in Asian countries. The premise – which some argue isn’t feasible – is about employing Article 6 of the Paris climate agreement, a mechanism that allows countries to participate in a global carbon market.

There are pros and cons to Canada opening up this can of worms; trying to count and trade credits on a global basis is no easy task. But Alberta and perhaps British Columbia, the country’s natural gas producers, are keen to the idea – and the federal government isn’t totally cool to it, either. Last October, federal Natural Resources Minister Jonathan Wilkinson said Article 6 discussions in relation to Canada’s LNG exports are back in play.

But even agreeing on a starting point when it comes to energy matters is difficult for Alberta and Ottawa. The Prime Minister said this working group will be about experts from both the province and federal government sitting down to figure out where there is common ground. This is perhaps a nod to the fact that, behind the scenes, the two governments sometimes cannot agree on basic data, such as baseline emission measurements.

The policy divide was shown in the Smith government’s readout Friday.

“If Ottawa does not recognize and support Alberta’s exclusive right to regulate these sectors of our economy, our province will have no choice but to use alternative policy options to protect our rights independent of federal interference.”

No one from Ms. Smith’s office explained what alternative policy options might be, but the Premier has talked about court action or her controversial Sovereignty Act as two possible tools.

Last fall, Ms. Smith won her United Conservative Party’s leadership race in large part by arguing that she wouldn’t play nice with the federal government, especially on climate policy. The most right-wing elements of her party believe former premier Jason Kenney was far too conciliatory at the height of the COVID-19 pandemic.

At the same time, the federal Liberals don’t win votes among their base in the rest of Canada by appearing to play nice with Alberta’s oil-focused government.

The hope for the working group is that both Mr. Trudeau and Ms. Smith are likely some distance from an election or leadership review. That provides space for some serious work to be done.