Without input from Alberta and the oil and gas industry, the Net Zero will mean nothing

Ottawa’s new emissions-accountability legislation lays out the framework for Canada to get to net-zero emissions by 2050. But it doesn’t address the elephant in the room – that the targets will only have meaning if oil-and-gas-focused Alberta is a major player.

As former premier Rachel Notley said when her New Democrats governed the province, a Canadian climate plan isn’t worth the paper it’s written on without Alberta being a part of it. Ottawa began the process of giving its 2050 climate aspirations teeth this week with the introduction of Bill C-12, the Canadian Net-Zero Emissions Accountability Act. Achieving net-zero means the country will work to reduce greenhouse gas emissions, and will somehow offset the remaining GHGs. The federal legislation enables the creation of GHG-reduction targets that almost certainly will hit industries in Alberta, the province with the highest emissions.

The environment is a shared jurisdiction and Ottawa cannot just dictate to provinces that they have to cut their emissions by a certain amount – nor would that be politically workable. But ultimately, if the federal government is serious, there will have to be collective decisions made about how to divvy up the burden of reducing emissions. Canada’s federal system means the permutations and combinations for fights in this process are endless. Hashing out how the country will reach national GHG-reduction targets while not adding to Western alienation will be a political balancing act of the highest order.

A major part of the disconnect is Canada’s oil industry is so regional. Canada produces 5 per cent of global oil production, and crude is the country’s single biggest export. But these economic facts probably don’t feel real to many people in Montreal or Kingston or B.C.’s Lower Mainland – places where you’re not likely to feel the sting of a relative being laid off at an oilfield service company. Likewise, looking to hydro-produced electricity or an appreciation in residential real estate prices to aid in the generation of wealth are, right now, alien concepts to Albertans.

There are possible paths to agreement. Alberta political leaders know that climate considerations are increasingly a part of investment decisions. Canadian oil sands companies including CNRL, MEG Energy and Cenovus have already said they want to hit net-zero by 2050 – although they also have yet to define how they will get there. Even populist extraordinaire Boris Johnson pledged this week to end the sale of new gas and diesel cars in Britain by 2030.

Alberta has been rocked by a drop in investment and a softening of oil-demand growth. A clear Canadian plan for net-zero 2050 could provide some investor certainty. If there’s a roadmap that lays out what will be permitted, and what will not, oil companies will know exactly what they’re getting into.

“In this moment, in a way that perhaps didn’t exist even two or three years ago, the table may be set to have those difficult conversations,” said University of Calgary law professor David Wright.

Right now the Alberta government is taking a wait-and-see approach to C-12. There’s nothing so prescriptive, yet, that it would be viewed as a specific volley at Alberta’s competitiveness. The Trudeau government will only have to set the first GHG target, for 2030, six months after the bill is enacted.

While Jason Kenney has made his provincial political career by pushing to defend Alberta’s oil and gas sector, the Alberta Premier has recently been more nuanced in his messaging. “We have to find a way forward for our industry where we don’t stick our head in the ground and pretend that the aspirations behind [the Paris Agreement] are not hugely influential in how capital is allocated and how market access decisions are made,” Mr. Kenney said to party members at a meeting last month.

Gary Mar, the head of the Canada West Foundation think tank and a former provincial cabinet minister, said the United Conservative Party government has so far focused its messaging on Alberta’s regulatory stringency and industry improvements. But it hasn’t seriously addressed concerns about absolute emissions. “The Premier’s statement is a good start, but his government needs to follow through with meaningful engagement with industry and the federal government to establish the measures needed to reduce GHG emissions,” Mr. Mar wrote.

The International Energy Agency has also said the key technologies needed for the world to reach net-zero emission goals include the electrification of heating and transport, carbon capture, the use of low-carbon hydrogen and hydrogen-derived fuels, and the use of bioenergy. Alberta is keen to throw its hat into the ring for at least two or three of these.

But of course, there continue to be major barriers to Ottawa-Alberta rapprochement on climate. Once politicians have more bandwidth to focus on issues beyond the second wave of the pandemic, look for disagreement over the economic costs of the federal Clean Fuel Standard to flare up.

And there’s already a potential fight brewing over who will make up the 15-member panel that will advise Ottawa on the best ways to reach the 2050 goal. At least one environmental group has said “fossil fuel executives” should be banned from serving. That position is hard to reconcile with the size of the industry, and how the sector will have to be part of Canada hitting targets. Locking oil and gas out of the conversation is a likely recipe for failure.

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