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Energy and Resources Trudeau’s new ministry for climate change spooks oil patch

Canadian Prime Minister Justin Trudeau congratulates Environment and Climate Change Minister Catherine McKenna at Rideau Hall in Ottawa on Nov. 4.

Sean Kilpatrick/THE CANADIAN PRESS

Prime Minister Justin Trudeau's decision to elevate climate change in his first cabinet threatens to deepen fissures between the incoming government and the energy industry.

Mr. Trudeau, who on Wednesday created a new ministry dubbed Environment and Climate Change, put rookie member of Parliament Catherine McKenna in charge of the department. Jim Carr, another new face in the House of Commons, will serve as Minister of Natural Resources. Ms. McKenna is from Ontario and Mr. Carr from Manitoba.

The Liberal Prime Minister's decision to add the phrase "climate change" to the environment department's official name is the strongest signal yet that Canada's new government is serious about tackling carbon emissions. The portfolio's new name alone immediately worried executives in the oil patch, which has already been battered by low crude prices and is nervous about the Alberta NDP government's plans to crack down on carbon.

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Mullen Group Ltd.'s chief executive viewed Mr. Trudeau's language as a threatening message and plans to hold back on investing in the oil and gas sector until the Liberals unveil specific policies.

"You're really attacking the energy industry. That's what climate change is all about," Murray Mullen said. "It is all about attacking carbon."

The executive, however, is not concerned that Ms. McKenna and Mr. Carr do not have deep roots in the oil patch, arguing the ministers are there to execute the Liberal plan and geography makes no difference.

Ms. McKenna – a lawyer, teacher at the University of Toronto's Munk School of Global Affairs, and a legal adviser to the UN in East Timor – will immediately face a major challenge: the 12-day climate-change summit in Paris beginning at the end of the month. Ms. McKenna beat New Democratic Party incumbent Paul Dewar in the riding of Ottawa Centre.

Allan Adam, the Athabasca Chipewyan First Nation's chief, argues the Liberal government's message on climate change is good for the oil sands industry.

"We're all going to be affected by climate change," he said, noting Athabasca Chipewyan has energy-service companies that benefit from the oil sands industry. "If we don't get a grip on it, we're going to send this province into another recession. … We're going to hurt ourselves."

Some oil sands companies have thrown support behind a carbon tax that spreads the burden beyond just industrial emissions across the entire economy. Suncor Energy Inc., for instance, has called such a tool the "most effective way to change the investment and operating decisions that drive real emission reductions."

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The Liberal government did not change the name of the department of natural resources, another portfolio that has profound implications on oil and gas companies. Winnipeg's Mr. Carr, a former Liberal member of the legislature, is the Business Council of Manitoba's founding chief executive and a former board member at the Canada West Foundation. People who have worked with him argue that while he may not know energy policy inside and out, his strength is in his ability to communicate and listen. Mr. Carr captured nearly 60 cent of the vote in Winnipeg South Centre, ousting Conservative incumbent Joyce Bateman.

"Jim Carr is fundamentally a bridge-builder," said Dylan Jones, chief executive of the Canada West Foundation. "He did a spectacular job of connecting aboriginal people and unions and civil society and government when he was the president of the Manitoba Business Council."

Mr. Carr is able to get people to back off entrenched positions by asking thoughtful questions, puts forward creative ideas while still being challenging, Mr. Jones said.

"That's as much what the energy sector in Alberta needs as just someone who is a fearless champion."

Alberta Premier Rachel Notley's initial statement on the new federal cabinet did not mention oil, gas or pipelines. Instead, the release referenced only one energy policy: "We're also looking forward to working with the new federal government on climate change."

With a report from Jeff Lewis

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