Ottawa hopes for collaboration as Danielle Smith vows to stop federal energy and climate policies

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Alberta Premier Danielle Smith pledged to put a stop to two of Prime Minister Justin Trudeau’s marquee energy policies in her election night victory speech, running headlong into new emissions reduction rules that are key to Ottawa achieving its climate targets.

Ms. Smith opposes both the federal government’s plan to force provinces to slash emissions from their electricity grids starting in 2035 and the emissions cap for the oil and gas sector, slated to take effect in 2030.

“As premier I cannot under any circumstances allow these contemplated federal policies to be inflicted upon Albertans, I simply can’t and I won’t,” Ms. Smith told a cheering crowd of supporters overnight on Monday, as she invited Ottawa to negotiate with her.

The gulf between the two governments is extensive, with the newly re-elected United Conservative Party wanting much longer time frames for the policies than Ottawa’s emissions-reduction plan allows. But the Trudeau government believes it can bridge the divide without budging on its timelines by promising federal cash to pay for the required power grid investments and by making separate concessions to the oil and gas industry around the emission cap implementation.

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On Parliament Hill Tuesday, the two ministers responsible for the most contentious files with Alberta played down the potential for a rift with Ms. Smith, who cemented her political comeback with Monday night’s majority government win.

“I’m confident that we will be able to work our differences out with them,” said Environment Minister Steven Guilbeault, noting that they have previously been able to reach an agreement on industrial carbon pricing.

“I’m not looking to pick a fight,” said Natural Resources Minister Jonathan Wilkinson, “I’m interested in working collaboratively.”

Greening Canada’s electricity grid is an economic imperative, he said, because it’s key to attracting new investment. Mr. Wilkinson noted that Ontario’s clean power grid helped persuade Volkswagen to set up shop in Canada. He said beyond mandating the change through regulations, Ottawa will also incentivize co-operation with federal cash.

The proposed Clean Electricity Regulations are expected this summer. At issue in Alberta is its reliance on natural gas-fired power. The federal government wants to restrict the use of the fuel, absent carbon-capture technology (though Ottawa has also indicated that it will allow gas plants commissioned prior to 2025 to keep operating for an unspecified period of time past 2035).

The government has also signalled that it will craft the rules in a way that will allow continued unabated use of gas during limited periods of peak electricity demand, and as an emergency fallback.

Ottawa’s commitment to its energy policies was underscored Tuesday by the Prime Minister’s decision to promote the deputy minister of natural resources to the top job in the federal bureaucracy. John Hannaford will assume the role of Privy Council clerk effective June 24, when Janice Charette retires.

Given that the regulations are not yet finalized, a senior federal source said there is still room to negotiate with Alberta. But they insisted that changing the implementation timelines would be a non-starter as it would scuttle Ottawa’s economic and climate strategy.

The Globe and Mail is not identifying the source because they were not authorized to speak publicly on the internal deliberations.

In the case of the emissions cap, the source said the federal government is flexible on compliance, for example, allowing companies to buy credits to offset their emissions. They said those talks will happen in concert with those on the planned contracts for differences – which would act as an insurance policy for oil and gas companies’ clean technology investments.

The source also said that while Ms. Smith has used heated rhetoric in public, her government has been more collaborative and easier to work with than that of her predecessor, Jason Kenney.

While the Alberta Premier is committed to working with Ottawa, Jason Lietaer, who advised Ms. Smith during the campaign, told The Globe Tuesday she is serious about her objective: “Protect Alberta’s energy industry and protect Albertan consumers from skyrocketing costs.”

He noted there’s a growing contingent of premiers sounding the alarm on the pace of Ottawa’s climate policies and their impact on the cost of living. Last week the Atlantic premiers asked Ottawa to delay implementing its clean fuel regulations.

On Monday night, Ms. Smith said if the Prime Minister persists with his plans for the power grid and emissions cap, he will “strain the patience and goodwill of Albertans in an unprecedented fashion.”

Christine Myatt, who worked in Mr. Kenney’s government during his fights with Ottawa over energy policy, said Ms. Smith’s comments are much more than just bluster. “These are two policies where she most definitely is drawing a line in the sand,” Ms. Myatt said.

“Her speech last night was a warning shot to the federal government.”

Alberta’s opposition will likely lead to yet another court challenge of federal policy, much like previous legal spats over Ottawa’s consumer carbon tax and environmental impact legislation, said University of Calgary energy law professor Kristen van de Biezenbos.

“One of their unofficial platform positions is that the UCP fights for Alberta against an oppressive federal government,” she said Tuesday.

The federal Liberal government is likely thinking very carefully about how the emissions policy and electricity regulations are being drafted, given that it will probably be taken to court over them, Prof. van de Biezenbos said.

Only three provinces in Canada rely heavily on non-renewable electricity: Alberta, Saskatchewan and Nova Scotia. That makes them the main targets for Ottawa’s net-zero power policies. In that sense, Ms. van de Biezenbos said, Alberta’s new government has a very real ability to stymie federal policies around reducing emissions and meeting climate goals.

“Whether it’s a delay or whether it’s totally derailing it, we’ll have to wait and see,” she said.

But if the Alberta government fights back against clean electricity regulations, it stands to undermine its own pro-business, pro-investment rhetoric by working against one of the most rapidly growing industries in the province, she said. Even as the province embraces oil and gas, it is by far and away the leader in wind and solar power investment in Canada.