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Danielle Smith celebrates after being chosen as the new leader of the United Conservative Party and next Alberta premier in Calgary on Oct. 6.Jeff McIntosh/The Canadian Press

The energy sector wasn’t a huge talking point during the United Conservative Party leadership battle, but as the dust settles and Alberta mulls over what a new, Danielle Smith-led government might mean, one of the province’s largest economic drivers can expect hydrogen, carbon capture, nuclear energy, oil and natural gas to form the backbone of energy policy.

It’s not a huge departure from the Alberta government’s current direction; it has been a cheerleader for oil and gas, but also makes a point of pushing petrochemicals and carbon capture, and has a hydrogen strategy. But two of Ms. Smith’s major promises – another legal challenge to the federal carbon tax and her controversial plan for an Alberta sovereignty act – are stark departures from where the province has been headed.

While talk of the energy sector took a backseat to COVID-19 and fights with Ottawa during the campaign, the new leader of the UCP supports emissions-reduction goals, and has said clean technology and innovation will help reduce greenhouse gas emissions and usher in carbon neutrality across the economy.

In an interview with The Globe and Mail before her win, Ms. Smith lauded the net-zero pledge oil sands operators made via the Pathways Alliance, as well as Dow Chemical’s planned carbon-neutral petrochemical plant outside Edmonton.

But, much like Jason Kenney before her, Ms. Smith won’t be setting net-zero goals for the province.

“I think that the industry has set those aggressive targets themselves. And so I would do whatever we can to support them and to celebrate their successes,” she said.

Ms. Smith has been a vocal supporter of small modular nuclear reactors, and using natural gas to produce hydrogen for long-haul transportation, heating and electricity. She has also pointed to carbon capture as key to reducing emissions. At one debate during the race, for example, she said captured carbon could also diversify the economy turned into useful products like nanofiber, industrial minerals or even alcohol.

While those ideas jibe with Alberta’s current energy strategies, the most prominent Smith campaign plank was the sovereignty act, which she billed as a means for the Alberta legislature to refuse to enforce specific federal laws or policies.

Other candidates and academics said it would be unconstitutional and a veiled attempt at separation that would destabilize the Alberta economy. Ms. Smith argued that hundreds of billions of dollars in investment and tax revenues – as well as hundreds of thousands of jobs – have been lost due to federal government policies “as investors around the world find it too risky to do business in Alberta’s energy industry.”

The act could be used to authorize the “immediate commencement of private and public projects” that federal policies have delayed, and to challenge mandatory caps on oil and gas emissions or production cuts, according to her campaign website.

At a leadership debate in Medicine Hat, she posited that a sovereignty act was “absolutely essential” to getting Alberta’s fossil fuels to market.

“Part of our strategy in reducing greenhouse gas emissions is exporting our clean LNG to displace coal in India and China. We cannot do that because Ottawa keeps standing in our way,” she said.

But the promise to pick more fights with Ottawa via such an act and to re-litigate the federal carbon tax worries the Calgary business community.

The city’s Chamber of Commerce president and chief executive officer, Deb Yedlin, says the uncertainty caused by yet another court challenge would make companies reevaluate investment plans.

“Anything that causes pause and causes capital to go south – because the opportunities are there and the certainty’s there – is not helpful for Alberta,” Ms. Yedlin said before this week’s vote.

“We need to move forward, and that would put plans on ice.”

But Ms. Smith told The Globe her government would “bring new information” to a court challenge, including the global energy crisis caused in part by the war in Ukraine, and the resulting price spikes in hydrocarbon fuels.

“In my view, I think we’d be able to make a strong argument, especially since Alberta – when you look at our oil sands companies – they all have a carbon-neutral objective. And all of our energy companies are working on ways that they can reduce CO2 emissions,” she said.

Despite the looming threat of a court case and sovereignty act, federal Natural Resources Minister Jonathan Wilkinson expects the good working relationships he has fostered with Alberta energy and environment ministers to continue.

He told The Globe before the vote that “Canada functions better – much better – when we can find ways to isolate our differences and really emphasize how we move forward on some of the things we agree on. And so I’ll be looking to do that with whoever wins.”

As for the carbon tax challenge, he told media in Calgary on Tuesday that the federal government’s view is that the issue is settled.

“We need to carry on with our focus on reducing emissions and growing the economy,” he said.

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