Federal-provincial conflicts heat up over energy policy

Top-down demands and impositions from the feds, by way of Trudeau’s climate czar Steven Guilbeault (pictured), has several provincial leaders up in arms. Photo credit: The Canadian Press/Justin Tang


Recent weeks have seen a sharp increase in disagreements between some provinces and the federal government over the Liberal push to achieve its net-zero goals – goals that many informed experts believe are impossible within the time frames indicated and prohibitively expensive even if they were possible. The main reason for increasing conflict is that some more concrete details are being discussed about plans that were earlier rather vague, and various provinces that had previously asked the federal Liberals for some flexibility are now seeing there is likely no flexibility to be had. 

As expected, most of the fireworks are taking place between Alberta Premier Danielle Smith and federal Environment Minister Steven Guilbeault. The federal government announced some time ago that they were planning to impose an “emissions cap” on the oil and gas sector of 42 per cent below 2019 emissions levels by 2030, but the details as to exact timing and other considerations had yet to be determined. Smith had repeatedly asked for a more reasonable timetable and a factoring in of new technology being developed in Alberta on such things as carbon capture, utilisation and storage (CCUS) and other innovations that are reducing emissions from the fossil fuels sector. Considerable discussion had taken place about whether or not the emissions cap imposed by Ottawa would mean an actual production cut in the sector, which would lead to job, royalty and tax dollar losses for both federal and provincial governments. 

Subsequent pronouncements by Guilbeault have confirmed that the federal government has no intention of being reasonable or flexible and wants to impose draconian restrictions on the oil and gas sector such that production cuts of $1.3 – $1.5 million barrels/day will be necessary to achieve the 2030 emissions targets. This would represent the loss of up to about 10,000 well-paid jobs. Alberta has repeatedly made the case that the 42 per cent reduction target could be met by 2035 or 2040 by the use of various technologies including small modular nuclear reactors to generate electricity and do much less damage to the sector. 

Considering that the oil and gas sector represents about 10 per cent of Canadian GDP, this will not only damage Alberta but the entire country. It would also inhibit Alberta’s ability to transfer billions to the other provinces in the form of equalization payments, something it has done for decades. Statistics show foreign investment has been driven away from Canada in recent years as a result of onerous regulatory requirements on any large project and long delays to have any project accomplished, and this dearth of investment will hamper Canada’s economic growth for years to come. 

Although the most acute conflicts exist between Alberta and the federal government, Saskatchewan has come out swinging as well. Saskatchewan currently generates about 40 per cent of its electricity from coal, and a further 44 per cent from natural gas. Guilbeault recently made the ridiculous statement that it would be a criminal offense for Saskatchewan to continue to operate its coal-fired plants past the year 2030 without adopting emissions-capturing technology for the plants. Saskatchewan Premier Scott Moe found that those were fighting words. Moe responded that he had every intention of running the existing coal and gas plants through to the end of their operational life, which is in the early 2040s – well past Guilbeault’s deadline. Moe also added that if the federal government didn’t like that, they could “Come get me.” This could get interesting. 

Opposition to the federal energy plans is not limited to the Prairie provinces. The recent imposition of the second carbon tax, the so-called Clean Fuel Standard, on July 1 has also gotten the Atlantic provinces up in arms. Unlike Alberta and Saskatchewan, the Atlantic provinces still vote predominantly Liberal, so their opposition to federal Liberal policies could have significant electoral ramifications. The four Atlantic Premiers have gotten together to oppose the double carbon tax the federal government is forcing them to impose. As well, about a third of Atlantic Canadians still use home heating oil, which attracts a higher tax than natural gas, so they will be disproportionately negatively affected. The Premiers favoured slowing down the imposition of the carbon tax but, as usual, the federal government wouldn’t budge on its timetable. Nova Scotia Premier Tim Houston has been especially vocal in calling out the federal government for their punitive and rigid policies. 

Globally, the last few weeks have also seen a number of European countries back off on their climate commitments as they have seen the negative impacts such policies have on employment and their domestic economy. The EU’s “Green Deal” is starting to fall apart as several countries including France, Germany and Spain calling for a “pause” in the implementation of climate targets. Part of the motivation for this came from representatives of the farming sector, who fear draconian restrictions on farm emissions will lead to food insecurity. Poland has submitted legal complaints against EU climate policies, considering them to be too authoritarian. Seems that Europe is catching on that all those virtuous climate policies that sounded good in theory are quite a problem in practice. 

The federal Liberals seem bound and determined to do the most damage to the Canadian economy they possibly can in the name of climate change, when many of our global competitors are backing off unrealistic goals that are hurting their economies and citizens. Of course, this foolish approach will only take place if the Liberal government remains in power following the expected next election in 2025 or earlier. The reason Guilbeault is currently ramping up his demands may be because he foresees a potential election loss in a couple of years time, which will likely scupper his unrealistic and harmful climate plans. We Canadians who value a decent standard of living and sane economic policy can only hope. 

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