Opinion: Canada, and especially Alberta, face pivotal decisions after COP28

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COP28 wrapped up in December with the developed world trying to grasp the material distinction between “phasing out” and “transitioning from” fossil fuels in the conference’s non-binding closing counsel; its specific language calling for a transition “away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade.”

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Just how far will certain countries — especially Canada — take this admonition as an open-ended rationalization for further economic self-destruction?

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Regardless of COP28, certain realities still persist for the energy industry, such as:

• Wind and solar power are fundamentally intermittent, and the storage of electricity is physically problematic and extremely costly at scale. Expecting renewables to bear the electricity demands of modern economies beyond 20 per cent, 24/7, 365 days a year, is unrealistic and economically destructive.

• Certain demands for hydrocarbons (from petrochemicals to transportation and load balancing electric grids) have no real substitutes. There is no doubt that world oil demand will grow by the end of this decade, likely close to 10 per cent.

• ‘Free riders’ abound. Certain countries with significant hydrocarbon consumption, notably India and China, have no intention of reducing their consumption or even taxing themselves to reasonably reflect the cost of their emissions. However, the COP28 expectation is that developed economies, such as Canada and the United States, will reduce consumption and implement tax systems regardless of the cost.

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• Net zero, de facto decarbonization, does not likely even represent the optimal objective to deal with climate risk at any acceptable cost. The capacity of developed economies, in terms of affordability and security, to deal with the transition away from hydrocarbons is far from infinite.

Net-benefit and optimal risk mitigation have never been concepts that the federal Liberal government can seemingly grasp. Nevertheless, Environment Minister Steven Guilbeault will proclaim that the COP28 agreement represents a “beginning of the end” of hydrocarbons, with a de facto sanction to impose whatever coercions and oppressions necessary for Canada to outperform other developed economies in reducing emissions, regardless of net costs in the transition. All of this will happen regardless of the economic deconstruction, coercion and oppression it will leave in its wake.

If Canadians and citizens in other developed countries are left to choose freely, how much are they prepared to sacrifice to achieve decarbonization? We already know that answer — not much, if anything. Current examples abound where consumers are unwilling to pay up — whether that is failing renewable projects, falling EV sales, continued use of natural gas to maintain electricity supply or abiding by carbon tax increases in Canada.

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What Albertans must consider is whether we will be able to resist this looming assault on our economy via the political process. And not just within Canada but across the developed world, with special emphasis on the outcome of the 2024 U.S. presidential election.

The reality for Albertans is that the onus will fall on our conservative politicians and public commentators to make a case to resist decarbonization and not re-elect the Canadian left to federal office. Make no mistake that Canada’s next federal election will be dominated by this issue. If the left is re-elected to hold political power in Canada, it will have a democratic sanction for climate extremism.

The conservative position regarding climate change policy in Canada must be more than simple denial and reliance on provincial jurisdiction to resist federal climate policies; it will require logic and coherence to be successful.

Canada, along with the United States, should be advocates to reinvent the UN climate process to one based on cost/benefit analysis of continued hydrocarbon consumption, establishing a uniform carbon pricing system across the developed economies of the world. The resulting price signal should be the only policy instrument in play; no other regulations, mandates or subsidies should be implemented. China and India will have to accept this formulation on their own economies as a fundamental condition, otherwise no binding obligation should be imposed on any other country.

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Further, based on this pricing signal, the resulting carbon price should be applied consistently across Canada on all emissions, with no regional exemptions. And how should this revenue be used? Ideally to ensure no net increase in the national level of taxation.

If the developed economies of the world cannot accept such a policy formulation, then why would Canada impose decarbonization on itself?

Alberta and Canada are at a true inflection point — climate extremism or rational policy grounded in a legitimate cost/benefit analysis of the climate risk, along with defence of Canada’s legitimate economic self-interest and a respect for the basic tenets of Canadian federalism.

It’s time for Albertans to close ranks.

Dennis McConaghy, a former executive vice-president at TransCanada Corp., now TC Energy, has recently published his third book, Carbon Change: Canada on the Brink of Decarbonization.

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