Smith condemns Ottawa for 'taking hits' against Alberta energy

The UCP outright rejects production caps to curb oil and gas emissions, arguing it would reduce production without achieving a ‘net-zero’ electricity grid by 2035.

  • Rebel News
  • June 13, 2023
  • News Analysis
Smith condemns Ottawa for 'taking hits' against Alberta energy
THE CANADIAN PRESS/Jeff McIntosh
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Alberta Premier Danielle Smith has wasted no time condemning Ottawa for "taking hits" against her province. However, she lauded the importance of a 'new relationship' with the federal government.

"Two major pieces are coming forward — an emissions cap on oil and natural gas, and a 'net-zero' power grid by 2035. Both are unachievable," Smith told Ryan Jesperson on Real Talk.

"If we can keep a target of reaching carbon neutrality by 2050, we will be perfectly in sync with each other," she said. "Don't try to accelerate if the technology isn't there and the timeline is too fast."

In 2021, Ottawa enacted the Canadian Net-Zero Emissions Accountability Act with the lofty expectation of reaching 'net-zero' emissions by 2050. Under that, Canada passed an interim plan, the 2030 Emissions Reduction Plan (ERP), which has measures that specifically target oil and gas emissions. 

It would require "emission reductions to 31% below 2005 levels in 2030 [or to 42% below 2019 levels]," which would build a pathway to 'net-zero' emissions by 2050.

"We cannot have a 42% emissions reduction in oil and natural gas. It will lead to production shut-ins, which will devastate our economy," said Smith.

A Fraser Institute report estimates that eliminating all emissions from the oil and gas sector by 2030 would reduce Canada's projected emissions by 29%. Considering total global emissions and the production caps implemented by the current federal government (187 Mt), Canada's emission reductions would equal 0.4% of global emissions.

"A reduction [is] unlikely to have any impact on the trajectory of the climate in any detectable manner, and hence, to offer only equally undetectable environmental, health, or safety benefits," said Kenneth Green, Senior Fellow at the Fraser Institute.

He contends that nearly 30% of emissions reductions would be emitted elsewhere due to carbon leakage.

"Imposing production caps on the sector will inevitably curtail oil and gas in the coming years and thereby result in negative economic impacts due to reduced production and exports," said Green. 

Navius Research added Canada will not achieve 'net-zero' emissions under the 2030 ERP. They concur Ottawa would only reduce emissions by 29% — far less than the proposed 40% to 45% benchmark.

"Overall, the GHG cap imposed on the oil and gas industry will result in significant economic losses without generating material environmental benefits," said Green. Smith claimed this would likely result in significant caps to staple Alberta industries. 

Recent estimates suggest the cap will result in at least $45 billion in revenue losses for the industry in 2030 alone, leading to a significant drop in government resource royalty and tax revenue.

Absent phasing out oil and gas, these emissions targets could decrease Canada's GDP by $196 billion in 2050.

Navius Research predicts minuscule growth of less than 1% for Alberta's economy from 2020 to 2050. "[That] may be underestimating the severity of this impact," said Public Policy Forum CEO Edward Greenspon.

The UCP outright rejects production caps to curb oil and gas emissions, arguing it would reduce production without achieving a ‘net-zero’ electricity grid by 2035.

Smith called on Trudeau to halt those policies, warning he would "strain the patience and goodwill of Canadians in an unprecedented fashion" while increasing power bills and endangering the power grid's reliability.

Alberta's premier told Jesperson the federal government needs to know that Alberta and Saskatchewan have a different energy mix. 

"In Alberta, 90% of our electricity grid comes from natural gas, so you can't use the same lens here…like in Quebec, where they get the lion's share from hydro or nuclear," she said. 

Alberta is in a different position than Saskatchewan because of a 'very aggressive' transition to natural gas. "We are based principally on natural gas, and Saskatchewan is based on a combination of coal and natural gas," said Smith, lauding reliability and affordability as her top priorities, not emissions reduction.

Environment Minister Steven Guilbeault recently threatened provinces not adopting the Clean Electricity Standard by 2030. Saskatchewan and Alberta refuted those standards, citing concerns about the affordability of residential utility bills.

Smith said compliance would increase residential electricity bills for Albertans by 40%, accusing the Alberta NDP of phasing out coal early to natural gas.

It left billions in stranded costs that were worked into ratepayers' bills, according to the UCP leader. 

"I would tell you that that's not going to be affordable for people on fixed incomes and everyday families." 

On Thursday, Smith acknowledged the province's electricity grid of tomorrow will use a mix of energy, but to expect them to replace its reliance on natural gas within 12 years is "not achievable."

"These projects take a long time to conceive [and] get the money [to fund]," she said, adding that constantly changing rules fuel uncertainty. 

"Even the Saskatchewan NDP has said a net-zero power grid by 2035 is unachievable," claimed Smith.

On May 17, the Saskatchewan Party and NDP Opposition voted unanimously to support the province's plan for affordable, reliable power generation to 2035 and beyond. That includes not phasing out conventional coal by 2030 or transitioning their electricity grid to net zero by 2035.

"We're going to continue to chart Saskatchewan's path," Premier Scott Moe told reporters. "It may not necessarily be Canada's path, and we'll have more details in the coming weeks."

On May 26, Smith told Rebel News a re-elected UCP government intends to "stand with Premier Scott Moe."

Canada Ottawa Danielle Smith News Analysis
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