The Liberals’ proposed oil and gas emissions cap, announced Monday, is not just an issue for Alberta, although it will hit Alberta and Saskatchewan particularly hard.
It’s a national issue.
First, the cap will harm the national economy. It will slow Canada’s already sluggish growth because oil and gas activity, both domestic and export, are major drivers of economic activity across the country. Anything that slows growth, as this cap will do, will also raise prices and taxes and cost jobs nationwide.
The Alberta government estimates “the average Canadian family will be left with up to $419 less every month for groceries, mortgage payments and utilities.” That may be an overestimate (and it may not), but anything that adds to family costs at this time should be avoided.
These regulations will require a cut to production of about a million barrels a day, according to S&P Global. That works out to a reduction of about 20% — from five million barrels currently to four million.
That will produce a loss of about $28 billion a year in Gross Domestic Product, which the Conference Board of Canada believes will lead to a loss of up to 150,000 jobs.
The cap will also spark a constitutional crisis that could have implications for national unity. Alberta Premier Danielle Smith has called this a “vendetta” against her province, which it clearly is.
The emissions targets are so severe they cannot be achieved without reductions in oil and gas production.
The two federal ministers involved, Environment Minister Steven Guilbeault and Natural Resources Minister Jonathan Wilkinson, both insist the reductions can be achieved by applying technology that already exists. However, that is just so much pie-in-the-sky thinking. It’s on a par with the feds insisting their carbon tax has no impact on inflation and rebates more money back to ordinary families than they spend paying the tax.
Since production limits are entirely within provincial jurisdiction, the new cap represents yet another intrusion by the federal government into powers granted exclusively to provinces by the Constitution.
Moreover, the new regulations — a 35% emissions reduction below 2019 levels over the next five years — are written in such a way that most oil and gas activity in central and eastern Canada is exempt from its mandates. Refineries in Ontario, Quebec and Atlantic Canada aren’t covered, for instance, while large-scale natural gas plants and heavy-oil upgraders in the West are whacked — and whacked hard.
It’s difficult to escape the impression this is a direct and deliberate attempt to beggar the West yet again, by a government that is known to be hostile to Western Canadians and their prime industries. That impression is reinforced by the fact that emissions caps on central Canada’s manufacturing and transportation sectors were not released at the same time.
Caps on manufacturing and transportation may follow, but they are not expected to be anywhere near as severe.
It is equally hard to escape the impression this is mostly a political move; an attempt by a desperate federal government to paint Alberta and Saskatchewan — provinces in which they are unlikely to win a single seat in the next election — as Confederation’s bogeymen, to shore up the Trudeau Liberals’ sagging support in fashionably “green” locations such as Toronto, Montreal, Ottawa and Vancouver.
The Liberals have played regional favouritism before on the energy file. Last year, of course, with their poll numbers collapsing in Atlantic provinces, they removed the carbon tax from home heating oil, which is mostly only used in Atlantic Canada. Meanwhile, they retained the full tax on propane, natural gas and other fuels that are popular in other regions.
I know it’s hard to whip up much sympathy in other regions for yet another attack by Ottawa on Alberta. However, this time it has real, material consequences for Canadians across the country.