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.
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.