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There is one thing Alberta and Ottawa should be able to agree on after Teck Resources withdrew its application for its Frontier oil sands project: They’re stuck in a political feedback loop that is destined to repeat.
Teck’s chief executive, Don Lindsay, made that point in the letter withdrawing the project, suggesting “Canada’s potential” will not be realized “until governments can reach agreement” around climate policy.
A big chunk of Canada’s population will cheer at the prospect that future oil sands projects will be stymied. Another big chunk will feel climate-change policies must be set aside to let projects go ahead.
Those are now political forces beyond the full control of politicians.
No wonder Alberta Premier Jason Kenney, who represents mad-as-hell Albertans, threatened Ottawa that they’d better approve the Frontier mine or it would be a betrayal. Of course, Prime Minister Justin Trudeau, who knows potential Liberal voters turned away from him for buying a pipeline, didn’t want to approve a new oil sands project unless it came with conditions about emissions.
As it turns out, the Frontier mine was a peculiar test case. It wasn’t going to be built any time soon, anyway, Mr. Lindsay had said, because the price of oil is still too low to make it profitable. But what happened in this case is still a warning that Canada’s natural resources policy is caught in repetitive conflict.
Goldy Hyder, the president of the Business Council of Canada, thinks “blue and red” politicians are trapped in the conflict, too, playing to polarized constituencies. “They’re followers,” he said.
He has ideas about how to defuse the conflict – more on that later – but it is worth noting that Teck’s Mr. Lindsay diagnosed the same problem.
Teck clearly didn’t like being the football tossed around by politicians. The Vancouver-based company’s core business is mining, not oil. It had already taken a big writedown on Frontier and didn’t know if it would ever be worth developing. Why suffer uncertainty and court controversy for that?
Even if the business case were better, there’d be a risk, and therefore a cost, to the political conflict – which probably would have continued even if Ottawa had approved Frontier. There would almost certainly have been conditions, not just on Teck, but also on Alberta, requiring the province to show the project would not push the oil sands over the emissions cap legislated by Alberta.
That would have led to more back-and-forth on policy between Edmonton and Ottawa – the kind of thing, Mr. Lindsay wrote, that should be worked out, but when there isn’t a project such as Frontier in the middle.
Mr. Kenney had said he will keep the 100-megatonne cap on oil sands emissions legislated by the former NDP government, but there are still no regulations established to enforce the cap.
In the case of Frontier, Mr. Kenney argued the cap isn’t an issue, because oil sands emissions only amounted to 68 megatonnes in 2018, so the 100-megatonne limit is a long way away. Federal Environment Minister Jonathan Wilkinson replied that oil sands emissions will reach 86.5 megatonnes in 2020 and could be 100 megatonnes by 2030, so time is running out.
There are differences in the way each government counts oil sands emissions, but officials from both agree on an important point: If all approved projects are built, it would increase oil sands emissions to roughly 130 megatonnes and blow through the cap. Those projects won’t all be built, not unless oil prices boom again. But when any new project is approved, no one can say whether it will push emissions over the cap. Or higher. That fuels political conflict.
It’s worth going back to Mr. Hyder’s suggestion: defuse the political conflict. His idea is for governments to agree on carbon taxes but also that Canadian oil will be in demand for decades. Both would accept that oil will be developed, but emissions will be addressed.
Teck’s Mr. Lindsay also called for such an agreement and noted the company favours an emissions cap. If Alberta enforced a cap, and Ottawa accepted it as the limit on oil sands emissions, it may cool the climate politics around projects. It may shift the political focus about reducing emissions to cars or coal. Maybe. It’s a risk. And governments may find it less politically risky to keep the conflict going.
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