From the Editor: Yet another Alberta v Ottawa legal skirmish looms [Global Gas Perspectives]

You know you’re on the right track when the Sierra Club, one of the most virulent anti-oil and gas environmental groups on the planet, takes aim at your plans.

That’s the position Alberta Premier Danielle Smith finds herself in following her declaration of the province’s ‘Scrap the Cap’ campaign, which seeks to garner public support against plans by Ottawa to introduce a greenhouse gas (GHG) emissions cap on the oil and gas industry.

Since most GHG emissions associated with the oil and gas industry are related to production, the premier insists the emissions cap would, in effect, be a cap on production. And since oil and gas production is an area of provincial jurisdiction under the Canadian Constitution, Smith is ready to take Ottawa to court over the proposed cap.

This isn’t Smith’s first dust-up with Ottawa. 

In October 2023, she won a favourable ruling from the Supreme Court of Canada over the federal Impact Assessment Act (IAA), which Alberta and other provinces said was a significant intrusion into matters of provincial jurisdiction. And earlier this month, she gave Ottawa a November deadline to make “meaningful” changes to the IAA, or federal officials would find themselves back before the land’s highest court.

Also in 2023, Alberta rolled out an advertising campaign against Ottawa’s “reckless” Clean Electricity Regulation (CER), designed by the federal government to bring Canada’s electricity system to net zero by 2035. The big problem with that federal aspiration, however, is that power production, like oil and gas, is also an area of provincial jurisdiction.

The CER would severely limit the use of natural gas to generate power, pushing consumer power prices sharply higher, not only in Alberta, where most power is generated by natural gas, but in other provinces as well, where gas provides meaningful baseload support to renewable energy. Smith’s campaign yielded more than 20,000 letters to Ottawa opposing the move, and the federal government has yet to advance implementation of the CER to the next stage.

Let the people know

But before Smith drags Prime Minister Justin Trudeau and his environmental guru Steven Guilbeault (in his past life an activist for Greenpeace) into court over the emissions cap, she wants the Canadian public to be aware of just what the cap means to Albertans, Canadians and the Canadian economy – hence the ‘Scrap the Cap’ campaign.

According to investigations by consultancy Deloitte, S&P Global Commodity Insights and the Conference Board of Canada, imposition of the cap – which seeks to cut emissions from the oil and gas sector by 35-38% by 2030 – would reduce oil and gas production by up to 2.4mn boe/day by 2035, cost 150,000 Canadians their jobs, remove $14bn from the Canadian economy, shrink Alberta’s GDP by 4.5% and Canada’s by 1% and leave the average Canadian family with $491/month less to spend on food and fuel.

‘Scrap the Cap’, she says, is a $7mn advertising campaign now active in Alberta and in Trudeau’s power bases of Ontario, New Brunswick, Nova Scotia and British Columbia.

“We’re telling the federal government to forget this reckless and extreme idea and get behind Alberta’s leadership by investing in real solutions that cut emissions, not Canada’s prosperity,” she says.

Most in the industry support Smith’s campaign against the emissions cap, including an economist at the University of Calgary, who said it wasn’t sound public policy and would harm the economy and reduce productivity.

Tristan Goodman, CEO of the Explorers and Producers Association of Canada, said the sector is already achieving “significant” emissions reductions, and a cap is both “unnecessary and unacceptable.”

Deborah Yedlin, CEO of the Calgary Chamber of Commerce, ensuring energy security and affordability for Canadians must be prioritised “as we move forward with decarbonisation policies.”

Those on the outside? Not so much.

Environment minister Guilbeault and Jonathan Wilkinson, his federal energy minister cohort, said the emissions cap is merely a measure their government is taking to “drive down pollution from the oil and gas sector” and is not designed to cut production.

The aforementioned Sierra Club said the ‘Scrap the Cap’ campaign is “nonsense” and suggested the $7mn would be better spent “for things like wildfire preparedness”.

The Tyee, a radically left-wing “news” platform, says the campaign is nothing more than a thinly-disguised attempt by Alberta to shore up support for the federal conservatives in an upcoming federal election.

The National Observer, another Trudeau cheerleader, claims the campaign is just an attempt by Smith to shore up her own leadership, which could come under review by her own United Conservative Party in early November.

So with environmental groups of nearly every stripe lined up against her, it’s clear that Smith is itching for another court battle with Ottawa.

We can’t wait.