Target: Alberta

Why Harper’s recent climate-change pitch was as much a shot out West as it was an offering to Washington



Within 24 hours of Barack Obama’s victory speech, the Harper government floated the idea of a North American climate-change pact, with cap-and-trade emerging as the agreement’s most likely shape. On its surface, Harper’s preemptive strategy would seek to smooth trade relations with the Americans and secure concessions on Alberta’s oil sands, which one senior Obama advisor warned last summer could be deemed “dirty” and therefore warrant sanction. But Harper’s announcement may have been directed as much at emissions-heavy, recalcitrant Alberta as it was at the U.S.

Here’s why.

Alberta argues cap and trade would unfairly target the oil sands and drain the province of its constitutionally-protected resource revenues. “We’re not interested in Alberta industries buying emissions credits to save swampland in Florida,” Alberta Environment Minister Rob Renner told Maclean’s. If he didn’t altogether dismiss the notion of a U.S.-Canada cap and trade system, Renner did insist that any agreement must recognize the reduction measures Alberta has already adopted, including a $15-a-tonne carbon levy that the province’s large emitters have paid into a technology fund since 2007. Cap and trade may be fine for others, in other words, but leave Alberta to its business. “We’re not asking anyone to give us exemptions,” says Renner. “We’re simply saying there needs to be a recognition that the dollars that are spent for CO2 abatement by Alberta companies need to be reinvested back into actual abatements in Alberta.”

Yet, some question how much leverage Alberta will have now that the U.S. is poised to regulate. According to Alexander Moens, a senior fellow at the conservative Fraser Institute whose report, Canada and Obama: Canada’s Stake in the 2008 US Election, was released just after the U.S. election, an Obama climate-change strategy might checkmate Alberta altogether. “It’s unimaginable that American industry would let Canadian manufacturers simply remain part of our integrated supply chains if they faced the cap-and-trade levy and we did not,” says Moens, who is not a proponent of cap and trade but who believes it will inevitably be adopted by Canada in response to similar measures in the U.S. “They would insist on a level playing field.” That field would be smoothed, he believes, by the U.S. slapping protectionist levies or tariffs on Canadian goods—including Alberta crude.

Still, Renner doesn’t anticipate levies and says the U.S. is so hungry for a secure oil supply that it will grant Alberta special status in whatever climate-change framework its adopts. “The fact that we are right now one of the primary economic drivers within Canada gives us I think reason to believe that we should have some influence at the Canadian government level, at the national level,” he says. “And frankly, I think, as the U.S. moves towards any kind of a strategy for energy security, they’re going to want to recognize that it is not in their best interest to create a regulatory regime that effectively shuts down their safest and most secure source of energy in the future.”

Perhaps. But Renner’s confidence may be misplaced. Observers expect Obama to use the current financial turmoil as an opportunity to push through an ambitious agenda, including green regulations. Harper’s efforts to be part of that conversation could work a whole lot better than Alberta’s seeking to have its oil sands, and eat them too. And his climate-change trial balloon seems like a clear message to Alberta to prepare for a future without icing.


Target: Alberta

  1. Perhaps Alberta should ask itself, who else can it sell its oil too? The answer is no one. All pipe lines out of Alberta go south into the US. They don’t even sell to other Canadians or even themselves. A pipeline to the Pacific does not exist and would be decades in the future even if a project started this very day. Whatever deal the US offers, Alberta must accept or lose most of its provincial revenue.

    And let us not forget, Mr. Obama will be the President of the US and not Prime Minister of Canada. He is answerable to Americans and not Canadians (more specifically Albertans). Thus if Alberta’s economy goes into the crapper in the process of protecting his own people well that’s too bad but so be it.

    On top of that, the catastrophic fall in world oil prices demonstrates that global demand was not climbing at anywhere near that rate that all the experts were claiming. This puts the overall profitability of tarsand development into question. At least for the next few years.

    As for American “energy security” there are two matters. Right now the US will buy from any oil producing supplier and those suppliers will sell. Places like Saudi Arabia have no choice but to sell because they must have the revenue and oil exports are all they have. And the US will make use of them so long as it has access and needs them. The increasingly costly tarsands therefore can stay in the ground until the day they might really be needed.

    The other point is that Obama’s goal is for energy security not necessarily oil security. I believe Obama realizes that the future lies in moving away from fossil fuels as much as possible. Revenues from a cap and trade program will help to finance the harvesting of alternate renewable and clean energy sources.

  2. The theory being that the oil industry should finance its own demise? Thats how it reads to me anyways. As for the pipelines thing I do believe there are a few that go east AKA the Trans Canada Pipeline, etc. Although I think that ends up in Chicago or there abouts. Lets build a pipeline to a seaport, good idea. The idea of sending Alberta’s resource revenue “into the crapper, well so be it” is rather silly considering Alberta is one of the few have provinces left and all the provinces that are have provinces have resource based economies. Shuffling paper in downtown TO produces, quite literally, nothing. Although it does give alot of people something to do between weekends at the cottage and such.

    Anyways, GO STAMPS!!!!!

  3. Oh, DP. Don’t worry, those faux-cowboys in Calgary will soon be packing their cubicles, too.

    If you think the banks are useless/produce nothing/etc., I think you might be rudely surprised when the gears of Alberta’s economy stop turning because a bank failed. Look at The Bow, the palace being erected in Calgary to house the faux cowboys mentioned above. I do believe they are running into financing problems and may have to put a hold on construction.

    Which I guess is to say: don’t be so smug. The stink is blowing your way, and you don’t have an NEP to blame it on this time. After all, you have one of your boys in the PMO.

  4. DP:

    Actually, my point was that if President Obama of the United States causes the Alberta economy to go into the crapper he might think it is too bad but it won’t be effecting many who would vote for him.

  5. Personally I thougt the “Bow” project by Encana was a bit ostentatious. At the time of conception it was probably a good idea due to the shortages of offices to put more paper shufflers in. But in retrospect it seems a bit short sighted now. Thier share value has slipped quite a bit from 6 months ago, as has nearly every share on the TSE. Most of the funding for these kind of projects come from the bond markets though rather than equities.

  6. Duceppe will also continue to harp on Canada’s “fiscal imbalance,” which it defines as an “intrusion in the jurisdictions of Quebec and the provinces.” (Reading much of the Bloc’s literature, one might get the impression that Quebec has already separated………………And now that the Block is supporting the coalition, you westerners can expect more money to go from your province into the coffers of Quebec-Dion owes Duceppe big time. How this will happen, I haven’t a clue, but Duceppe will be rewarded-he’s a very smart oportunistic politician.

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