Varcoe: There’s ‘angst' in oilpatch despite friendly talks among Canada's energy ministers

This week’s meeting of energy and mines ministers in Calgary came with its own helping of beefs

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Stampede has arrived, with the requisite servings of beef on a bun.

But this week’s meeting of Canadian energy and mines ministers in Calgary came with its own helping of beefs: a bitter battle over the Clean Electricity Regulations (CER), controversial new federal truth-in-advertising rules and Ottawa’s plan to cap oilpatch emissions.

Federal and provincial ministers spoke Friday about finding common ground on issues such as having an efficient regulatory system designed to get projects built, yet there’s no papering over the deep divisions on significant matters.

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Federal Natural Resources Minister Jonathan Wilkinson, who attended the meeting, and Environment Minister Steven Guilbeault are moving ahead with the government’s plan to limit emissions in the oilpatch.

Add to this mix the feud over Bill C-59. New federal rules have prompted petroleum producers to pull down climate information from their websites, and Alberta calls the bill “energy censorship” while proponents say it will help prevent greenwashing.

Then there’s a clash over the CER.

Alberta and Saskatchewan staunchly oppose Ottawa’s efforts requiring power grids to reach (or almost hit) net-zero emissions by 2035, instead of 2050.

“Not all of our conversations were places of broad agreement,” Alberta Energy Minister Brian Jean told reporters after the meetings ended on Friday.

“The truth is that we’re family. We’re always going to have disagreements.”

Well, this is one dysfunctional family when it comes to energy.

Just look at the federal-provincial squabbling and the lawsuits — and threats of litigation — that have cropped up in recent years, with more expected to come.

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In an interview earlier this week, Wilkinson said the federal government plans to release its draft regulations on the oil and gas emissions cap later this year. The Alberta government and business community adamantly oppose it.

“There’s still work to do. And we’ve got a lot of feedback over the course of the last little while, and we’re trying to digest all of it,” Wilkinson said before the meetings began.

“It’s unfortunate that more members of the sector did not engage the question of how could you structure it in a way that would be workable for them, rather than simply being ideologically opposed.”

The oil and gas industry is the largest emitting sector in Canada, responsible for 31 per cent of total emissions in 2022.

The cap is designed to reduce oilpatch emissions by up to 38 per cent by 2030, although that figure could fall to 20 per cent through various flexibility measures.

Canada is the only major oil-exporting country set to adopt such a policy.

“If you look at sector by sector, the sector that is growing by far most rapidly, in terms of emissions, is the oil and gas sector,” Wilkinson added.

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“At the end of the day, you have to start to see progress.”

Speaking to reporters Friday, the federal minister reiterated the cap is intended to be a tool to reduce emissions, not lower oil and gas output.

However, the province and industry insist the cap will shut in production and is unconstitutional.

A recently released study by Deloitte for the Alberta government estimates the federal cap could see a 10 per cent reduction in oil production and 12 per cent in gas output across Canada by 2030 from its base case, compared with no cap being implemented.

“If you want to make an emissions cap, you’ve got to shut in production,” said Brian Schmidt, CEO of Tamarack Valley Energy, a mid-sized Canadian petroleum producer.

“I know that’s scaring investment away . . . the uncertainty is causing a lot of angst.”

Business groups are also concerned, insisting the policy can’t be fixed.

“It’s really frustrating,” said Lisa Baiton, CEO of the Canadian Association of Petroleum Producers.

“Curtailing Canadian production will do absolutely nothing to lower global demand growth, and it will have very little impact on global emissions.”

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On the CER, Alberta officials said the issue was discussed and there may be some flexibility coming from Ottawa in response to various concerns from the provinces.

Yet, Saskatchewan Energy Minister Jim Reiter said the federal 2035 timeline isn’t realistic.

“We made it very clear. We won’t be hitting that target,” Reiter said in an interview.

“There were some productive discussions in a lot of different areas, but the relationship between the province and the feds, I would say . . . we didn’t rectify any of the major contentious” issues.

Alberta renewable
Wind turbines are seen near Pincher Creek. Postmedia file photo

Clean-energy groups say Alberta needs to make progress on its target of reaching net-zero emissions by 2050.

“Alberta hasn’t done work to identify their plans to decarbonize electricity, even on their timelines,” said Simon Dyer, deputy executive director of the Pembina Institute.

“Our preference would be that Alberta spend more time working on its own climate plan and less time challenging the federal government.”

Scott Crockatt of the Business Council of Alberta says the group wants to see collaboration from all levels of government to speed up the approval time for major projects, such as critical mineral developments or new LNG facilities.

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Yet, on the emissions limit, it will artificially restrict oil and gas production, and it duplicates other federal climate policies in place, including the national price on carbon, Crockatt said.

“But I don’t think that invalidates working together in other areas,” he added.

Earlier this year, Premier Danielle Smith reportedly said the province has or is considering about 14 active court matters and challenges in its ongoing fights with Ottawa.

However, the two sides can still look at ways to speed up regulatory approval processes for new projects, or reach agreements on issues surrounding small modular reactors, biofuels and hydrogen.

Just don’t expect an accord on the three big skirmishes.

“All of these darts are still being thrown. It’s a very negative situation and yet, on some files, they still are making some progress,” said Heather Exner-Pirot, director of natural resources, energy and environment at the Macdonald-Laurier Institute.

“I would say that the areas of disagreement are very big, important, significant areas.”

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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