The battle against Canada’s consumer carbon tax is the cornerstone of Jason Kenney’s political personality. In his early days as Premier, he vividly described the tax as “a dead-weight cost that punishes hard-working people for living ordinary lives.” He framed the province’s dealings with Ottawa on energy and the environment files as one, extended barroom brawl.
Spring forward two years to now, and it might appear little has has changed. Mr. Kenney’s United Conservative Party introduced legislation that killed the former NDP government’s version of the tax as one of its first actions in office (even if Ottawa reimposed its backstop carbon pricing system months later). Alberta has joined the conservative governments of Ontario and Saskatchewan in bringing the battle against Ottawa’s carbon pricing system to the Supreme Court of Canada. And the Premier and his cabinet are still inclined to adopt a confrontational tone with the federal Liberals.
But these days, there are quiet signs the province is looking beyond the high court’s decision – win or lose – to work with Ottawa on a more nuanced take on the climate file, focusing on industrial emissions.
It’s a mostly business-friendly strategy, unlikely to satisfy those who believe Canada’s export-focused oil industry is in its death throes. And collaborating with Ottawa to reach the country’s climate goals will rile some parts of the UCP base. But it’s at least opening the door to a coherent plan that seeks to bridge the gap between keeping the province’s economy going and the federal government’s climate targets.
News of this plan came in a discussion paper obtained by The Globe outlining Alberta’s ask for Ottawa to commit $30-billion in spending or tax incentives over the next decade to spur the construction of large-scale industrial carbon capture projects, to help meet climate goals.
The paper argues Canada could join an international push toward using the expensive technology that captures carbon from an industrial source and injects it into geological formations, such as depleted oil and gas fields. Someday, Canada could even export its carbon capture, utilization and storage (CCUS) technology as well as its expertise. The document also said Alberta is committed to significant emission reductions “in line” with the country’s climate obligations.
Of course, a federal-provincial agreement is predicated on Alberta asking for a huge infusion of cash. And as much as asking Ottawa for billions of dollars for CCUS is about a climate strategy, it is also a strategy for making (or keeping) work and investment in a province that has been stung by oil-price drops and environmental campaigns to keep its crude products land-locked.
Mr. Kenney argues the technology is becoming less expensive and more scalable, and the energy industry’s contribution to government coffers warrants the long-term investment. The plan would both reduce emissions and shore up the province’s trade-exposed oil sector. There was still the characteristic dig from the Premier this week, with him stating a $3-billion annual contribution from Ottawa is not out of line with “the kind of industrial support that the government has given in the past to the high-emitting aviation and auto sectors in central Canada.”
There is definitely no commitment on cash yet but federal Natural Resources Minister Seamus O’Regan said at the same time “this is exactly the right direction that we should be heading in,” adding the size of the ask demonstrates the seriousness of the intent by both levels of government. It also comes at a time when Ottawa is looking to prove its climate bonafides to the administration of U.S. President Joe Biden, and when the federal government is looking to spread tens of billions of dollars in stimulus spending across the country this year.
This frenemies-like plan on CCUS follows other areas of energy policy where there’s been some agreement between the federal government and Alberta, including the province’s acceptable-to-Ottawa version of a carbon price on heavy industrial emitters.
There are still big questions about the efficacy, and safety, of CCUS. It will be judged against other climate solutions. But the potential for federal-provincial mutual understanding in the realm of industrial emissions is important because Alberta’s are so big, and because the province is so different from others in the makeup of its GHGs.
Unlike other big provinces, where the largest share of emissions come from transportation, buildings, or agriculture, most of Alberta’s emissions come from industrial activities. The GHGs from Alberta’s oil and gas sector, particularly the oil sands, have grown in leaps and bounds in recent decades. Total industrial emissions make up about 70 per cent of Alberta’s overall emissions, and one-quarter of Canada’s total, according to the province.
Going back to the Supreme Court case, a decision is expected in the weeks ahead. But whatever the outcome, it’s important to remember that Alberta joined the fray not so much because it wants to keep its oil and gas industry chugging along as is, but because a significant portion of the province’s voters don’t want new taxes on items such as gasoline, diesel or natural gas for home heating.
As is the case in other provinces, the groups who tend to vote for conservative governments, including farmers, seniors and business owners, believe they carry a disproportion burden from the carbon tax, even with the system of rebates.
Fighting against consumer carbon taxes makes for clear and powerful political messaging. But for significant GHG reductions in big-emissions Alberta, what happens quietly on the industrial file is more important.
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