Kenney must come up with some way to retain oil sands’ political legitimacy if he wins in 2019
Let’s extend congratulations to Jason Kenney, crowned new leader of the PC party of Alberta this weekend. The ex-federal cabinet minister is reportedly diving right into the merger of his party and the Wildrose, better to present the NDP with a united conservative front in 2019. He may want to take a moment and ponder his climate and energy policies because the next election will undoubtedly be fought on them and he has a problem.
The problem actually put down roots during his tenure in the Conservative Party of Canada government of Stephen Harper, which dates from January, 2006.
That year, Calgary-based Enbridge announced it would build the 1,176 kilometre Northern Gateway pipeline from Edmonton to Kitimat on the British Columbia. Two years later, TransCanada, also based in Calgary, submitted its applications to the Canadian and American regulators to build the Keystone XL pipeline from Edmonton to Nebraska. By 2010, the review processes were underway for both projects.
Then all hell broke loose and life has never been the same for Alberta and the oil sands industry.
Keystone XL and Northern Gateway were targeted by a loose alliance of eco-activists, First Nations, Hollywood celebrities, youth concerned about climate change, Nebraska landowners, and many ordinary citizens who for the first time were forced to think about fossil fuels and their effect on the global climate system.
The pipelines became proxies for the battle against the Alberta oil sands, which were variously demonized as a “carbon bomb” capable of destroying the planet and “dirty oil” because of its higher carbon intensity.
President Barack Obama sided with the Keystone opponents. Prime Minister Harper backed both pipelines, to the point of souring his government’s relationship with the Democratic White House.
What became clear to everyone but Albertans after 2010 is that the anti-oil sands campaigns were working. Public support for the oil sands dropped in the USA and Canada.
But it wasn’t just the relentless campaign of Big Green that did the most damage.
By 2011 or 2012, the Energy Transition showed up on the public radar. Wealthy “Innovators” – the folks who just have to have the latest tech gadget – bought Teslas. Wind turbines and natural gas (and solar to a lesser extent three or four years later) began to replace coal power plants. Elon Musk of Tesla Motors introduced the Powerwall battery for home solar applications, then built a $5 billion Gigafactor in Nevada to produce batteries for his EVs.
For the first time, the average Joe and Jane could contemplate a future without oil.
That new mindset is the foundation for the oil sands’ loss of political legitimacy, the declining public support in both countries, the refusal of state and provincial governments to simply roll over for pipeline projects (acknowledging the odd exception, like North Dakota and the Dakota Access project).
If there is one example that drives home the oil industry’s declining political legitimacy, it was the campaign by the US oil and gas industry to persuade President Donald Trump to remain in the Paris climate accord.
Trump faces the same division within industry faced by Premier Rachel Notley Prime Minister Justin Trudeau: small to medium-sized companies dislike climate policies because they raise costs, while the global majors recognize the need to reduce greenhouse gas emissions and want a rigorous global standard that applies to all markets, including the USA and Canada.
“There are two classes of companies – the independents, which are much more influential with this administration, and the global oil companies. The independents are anti-climate change … all this stuff costs them money,” J. Robinson, former chairman of Magellan Petroleum Corp., told Reuters.
“The global companies operate all over the world. They have to operate at one standard – the highest standard – wherever they operate.”
Trump is reportedly now mulling over staying in the Paris accord, but lowering American commitments as a compromise.
If Jason Kenney wants to become Alberta premier in 2019, he has to confront this same dilemma.
Notley and her NDP government, animated by their acceptance of the Energy Transition worldview, chose rigorous climate policies: an economy-wide carbon levy, a 100 megatonne oil sands emissions caps, fugitive methane emissions reductions of 45 per cent, and a commitment to developing and implementing new technologies to gradually the carbon intensity of oil sands crude.
Big Oil – represented by the Canadian Assoc. of Petroleum Producers – is squarely onside, even if executives from some Canadian companies are privately grumbling about supporting the NDP. Climate policies confer political legitimacy, which leads in turn to federal approval and support from other provinces (think BC’s Christy Clark) for pipelines.
Little Oil and a few industry associations, like the oil well drilling contractors, is vehemently opposed and supported by the Wildrose official opposition, which somehow thinks the Energy Transition is an eco-activist hoax and Alberta can return to 2006 when the oil sands’ political legitimacy could be taken for granted.
Kenney understandably opposes the NDP climate and energy policies. That’s what opposition politicians are supposed to do.
But they are also supposed to present alternatives to the voters.
If the NDP climate policies are unacceptable, Kenney must come up with an alternative.
The political legitimacy of the oil sands is at stake.
Soon the Trans Mountain Expansion pipeline will be built to the West Coast, where oil sands crude will be shipped to Asian markets whose governments are enthusiastic supporters of the Paris Accord. China or India or Japan may be reluctant to buy Canada’s “dirty oil” without the mitigating assurances of Alberta climate policies.
And if the Trump Administration continues for four years as it has for the 60 days, there is a good chance a Democrat will be in the White House in 2020.
And the odds are also at least even that Trudeau’s Liberal government will survive the 2019 election and continue to press ahead with the national carbon tax and other climate policies.
This is Kenney’s problem. There is no going back to 2006 – despite the howls of protest from rural Alberta and Little Oil over Notley’s carbon tax.
The Alberta government has to do something to maintain – and preferably extend, so production can indeed expand by 1.5 million b/d by 2030 – the oil sands political legitimacy created by the NDP climate policies.
We look forward to learning what that something is from Mr. Kenney. Tick tock…