Varcoe: Alberta's business leaders want Trudeau to scrap oilpatch emissions cap — they got his answer Friday

Get the latest from Chris Varcoe, Calgary Herald straight to your inbox

Article content

Alberta’s business community has insisted for weeks that the Trudeau government scrap its contentious plan to cap emissions from the country’s oil and gas industry.

On Friday, they pretty much got their answer.

Article content

It was delivered, in person, by the country’s prime minister — both in long form, and much more succinctly.

“I asked if he was going to take the emissions cap off the table,” said Calgary Chamber of Commerce CEO Deborah Yedlin, who heard Prime Minister Justin Trudeau speak to a gathering of business leaders in downtown Calgary.

Advertisement 2

Article content

“And he said, ‘Not a chance.’”

Trudeau travelled to Calgary for a housing announcement as part of a pre-budget tour that has seen the prime minister and his cabinet crisscross the country recently.

Later in the day, he sat down for a fireside chat with Calgary Economic Development CEO Brad Parry in front of a crowd of about 90 business executives.

Many of Canada’s oilsands leaders were in the audience: Suncor Energy CEO Rich Kruger, MEG Energy CEO Derek Evans, Cenovus Energy CEO Jon McKenzie, Canadian Natural Resources president Scott Stauth, and Pathways Alliance president Kendall Dilling.

During a 45-minute discussion, Trudeau fielded questions from Parry and spoke about Canada’s dismal productivity levels, housing affordability concerns, and Ottawa’s strained relationship with Danielle Smith’s government in Alberta.

One of the most intriguing moments came when he was asked about his government’s plan to cap greenhouse gas emissions in the oil and gas industry.

In recent months, the Alberta business community has united to oppose the incoming cap, calling it unworkable.

Article content

Advertisement 3

Article content

Last week, the Calgary Chamber of Commerce sent an open letter to federal Environment Minister Steven Guilbeault, urging the Liberal government to withdraw the policy, saying it would stifle investment.

In the fireside chat, Trudeau rejected their assertion that the emissions cap is really a production cap that will force the industry to throttle back output.

The prime minister stressed global investors are looking to put money into decarbonization projects and Canada needs to be well-positioned for the future as the world demands lower-carbon barrels.

The Alberta government is also on board for reaching net-zero emissions by 2050 and to do that, “there’s no one tool that’s going to make that difference,” he said.

Yet, the oilpatch is the only sector in Canada facing such a measure.

What about other industries?

“We’re working with all sectors to reduce emissions,” Trudeau replied.

“But it remains that the oil and gas sector continues to be a significant source of emissions in this country. And that’s why we’re talking about putting a cap on emissions — one that we’ve worked closely with the industry on, a cap on emissions, not a cap on production.”

Advertisement 4

Article content

trudeau at ced
Prime Minister Justin Trudeau during the fireside Chat at Calgary Economic Development on April 5, 2024. DARREN MAKOWICHUK/Postmedia

Canada is the world’s fourth-largest oil producer. It’s also the only major oil-exporting nation looking to adopt such a policy.

The federal plan will come on top of a national carbon price, rules to lower industry methane emissions by 75 per cent, and new clean fuel regulations.

Business Council of Alberta president Adam Legge said the group stands firm in its belief the cap will limit production, create uncertainty and make it more difficult for companies to invest.

“He was very explicit today that the cap is staying,” Legge said after the meeting.

“It’s disappointing in light of the feedback from across the country and from a whole host of different voices…He’s sticking to his guns on this one.”

The cap aims to reduce emissions in the sector by up to 38 per cent by the end of the decade, but could drop to 20 per cent through various flexibility measures.

Draft regulations on the cap are expected later this year.

Oilsands operators in the Pathways Alliance group are collaborating to reach net-zero emissions by 2050. They have been advancing a massive $16.5 billion carbon capture network as a foundational part of their plan, although a final investment decision is pending.

Advertisement 5

Article content

The producers have welcomed Ottawa’s announcement of a federal investment tax credit for carbon capture, utilization and storage (CCUS) projects. But they oppose the cap, saying it adds new regulations and complexity to the landscape, and will not incent additional emissions reductions.

“We remain very concerned about the emissions cap, as proposed. But I think at a certain point, you have to take the prime minister at his word,” Dilling said in an interview after Friday’s meeting.

“He doesn’t intend it to be a production cap. And so we’ve got to figure out…how all those pieces work together so that it doesn’t unintentionally do that.”

On the other side of the debate, environmental groups have pressed Ottawa to implement the policy. The oilpatch remains the largest emitting sector in the country.

“It’s reasonable for a government to say, ‘OK, we’re going to hold you to the promises you’re making about net zero and we’re going to put it in a regulation,’” said Keith Stewart, Greenpeace Canada’s senior energy strategist.

“(The prime minister) knows he’s not going to have a lot of friends in that room, but this is the right thing to do.”

However, Ottawa doesn’t seem to understand that the necessary technologies aren’t in place yet for the industry to reach the federal government’s 2030 goal, Yedlin said.

And that means capping Canada’s oil and gas production.

“The prime minister is pretty clear that he’s not taking the emissions cap off the table, which I think is a big disappointment,” she said.

“I thought there might be some moderation, but there wasn’t any indication of that.”

Chris Varcoe is a Calgary Herald columnist.

[email protected]

Article content