To say that it hasn’t been a good year for Jason Kenney’s much-touted “war room” would be like saying that 2020 has been a bit of a challenge for the rest of us. The initiative, which marked its first anniversary on Friday, has endured the embarrassment of two logo imbroglios and an ill-advised attack on The New York Times, and has repeatedly ventured into disseminating misinformation and making unforced errors. In short, the war room has spent far more time being the story than correcting the one about Alberta’s energy sector that it was given $30-million a year to address in the first place.
But the war room should take heart. After all, it received a huge anniversary present from an unexpected source: the federal government.
On that same Friday, Ottawa released the latest iteration of its climate plan, one that will help Canada reach its 2030 targets and eventually get us to a net-zero economy by 2050. Unsurprisingly, the carbon tax will be doing much of the heavy lifting there: Starting in 2023, it will increase by $15 a tonne each year until it reaches $170 a tonne by 2030. Canadians, in turn, will receive ever-larger rebates in provinces where the federal carbon tax applies. In Alberta, for example, a family of four will get a whopping $3,242 in 2030.
At first glance, this might not seem like a gift for Alberta’s energy sector. But first and foremost, it gives them a compelling story to tell about Canada’s commitment to reducing emissions – one that is far more important now that U.S. president-elect Joe Biden gets to decide the fate of the Keystone XL pipeline. It also gives them something new to talk about with the growing list of major institutions that have either pledged to divest from fossil fuels or are strongly considering it – one that added New York state’s US$226-billion pension fund to its ranks just last week.
It will also create a clear price signal for oil-sands companies that will drive the very emissions reductions that they’ve spent so much time talking about lately. Indeed, as University of Alberta economist Andrew Leach noted on Twitter, the breakeven price of a net-zero oil-sands project actually drops under this proposed change. “If you can drive your emissions down quickly, you’re going to be at a competitive advantage,” he wrote. “This is a put-up-or-shut-up moment for a lot of emissions reduction tech cheerleaders.”
But true to form, Alberta’s government seems determined to step on this rake. Environment Minister Jason Nixon described the federal strategy as “another attack on Alberta’s economy and jurisdiction,” and suggested that “the Prime Minister continues to impose his Ottawa-knows-best attitude on Alberta at a time when Albertans can least afford [it].” Mr. Nixon’s boss, Jason Kenney, indulged in a weird victory lap of sorts, tweeting that “we always predicted the carbon tax would reach an unsustainable level – today is proof of that.”
And his government’s war room? Well, it marked the occasion on Twitter by gazing enviously at Russia, where the government-controlled Rosneft Energy has announced plans (with help from CEO Igor Sechin’s good friend Vladimir Putin) to invest in a new oil project in the Arctic. In a video it posted on Friday, it spells out the economic benefits associated with Rosneft’s Vostok project, which include 400,000 jobs, two new airports, and 15 new towns – and wonders why Canada isn’t increasing its own production. It makes no mention of the fact that the project wouldn’t have been investable without trillions of rubles in tax breaks from Mr. Putin’s government, to say nothing of the fact that, prior to COVID-19, Russian oil production had increased by less than 5 per cent over the preceding five years. (Canada’s grew by nearly 10 per cent over the same period.)
In other words, it’s unlikely that the war room will know what to do with the gift the federal government just handed it. Instead, like Mr. Kenney and Mr. Nixon, they’ll probably frame it as an affront to Alberta’s oil and gas industry. If they do so, the province would miss a golden opportunity to change the story that’s being told about Alberta’s resources. At the same time, they will lose whatever leverage they might be able to claim in their continuing conversations about divestment and market access with U.S. stakeholders, who are increasingly concerned about financial risk from climate change. Worse, in blaming Ottawa and attacking its bold climate initiative, they will instead reaffirm the story that those outside of Alberta – who are, after all, the people the war room claims to want to reach – already believe.
All of which raises an important question for the industry itself: With friends like these, who needs enemies?
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