Danielle Smith has an oil and gas marketing plan, not a climate plan

Premier boasting about emissions record all about greenwashing Alberta gas, LNG, oil

Danielle Smith, in a Jan. 12 letter to PM Justin Trudeau: “Alberta, both through government and industry, is leading the way on reducing greenhouse gas (GHG) emissions.” Unfortunately, the data says otherwise. Why is that important? Because the Premier is trying to turn Alberta’s dismal climate record into a selling point for hydrocarbon sales to Japan.

A jurisdiction’s climate performance is, whether Alberta likes it or not, of growing importance to investors and energy buyers. When German Chancellor Olaf Scholtz visited the East Coast last year, he rejected an LNG option and asked Canada for green hydrogen. Not blue hydrogen made from natural gas, but the variety made from water and emissions-free electricity. This is the trend for global markets. The European Union’s new Climate Border Adjustment Mechanism is just the start.

Most jurisdictions respond to the emissions challenge by adopting climate policy that reduces GHGs. Not Alberta. Smith, like her predecessor Jason Kenney, prefers to slather lipstick on the pig and pass it off as a new, improved model. Almost as if the Japanese can’t Google Canadian emissions data.

Alberta is Bad Boy of Canadian Emissions

Source: Environment and Climate Change Canada (2022) National Inventory Report 1990-2020: Greenhouse Gas Sources and Sinks in Canada.

The graph (right) puts the lie to the Premier’s words. Alberta accounts for 12 per cent of Canada’s population but 38 per cent of its greenhouse gas (GHG) emissions. And every other province, with the exception of Manitoba, saw emissions fall since 2005 while Alberta’s continued to rise. Ontario’s emissions, with more than three times Alberta’s population, fell by 27 per cent.

The reason for Alberta’s grim climate performance, not surprisingly, is the overwhelming presence of the oil and gas industry.

Source: Environment and Climate Change Canada (2022) National Inventory Report 1990-2020: Greenhouse Gas Sources and Sinks in Canada.

Hydrocarbon extraction (80% of which occurs in Alberta) is 26 per cent of national emissions. The Alberta oil sands comprise 11 per cent all on their own. That percentage is likely going up. According to economist Kevin Birn of S&P Global, oil sands emissions rose from 72 megatonnes (Mt) per year to 80 Mt in 2022 and are forecast to rise to 90 Mt in 2025. As long as production has grown, and Birn is predicting another 500,000 barrels per day of supply by 2030, emissions have never fallen.

Don’t be fooled by the 2020 decline. That was caused entirely by the COVID-19 pandemic. Emissions have since rebounded along with the economy. In fact, oil production has reached record highs, suggesting that emissions have risen to new heights as well.

Smith’s claims of future GHG reductions is especially dubious: “Alberta’s energy firms are committing to invest $24 billion on projects to help reduce annual GHG emissions from operations by 22 million tonnes by 2030 and achieve a goal of net-zero by 2050.” Her figures come from the Oil Sands Pathway Alliance, not the entire industry. And the net-zero project will cost $75 billion by mid-century while companies are asking government to pay $50 billion. I outlined serious problems with the proposal in a recent column, arguing that Canada should not put one more cent into it without major changes.

Canada’s Path to Paris TargetsL Forecasting Oil and Gas GHG Emissions in Canada for Period 2019 to 2030, Brian Livingston, CD Howe Institute, Dec. 2022

Brian Livingston’s exhaustive modelling of oil and gas emissions for CD Howe demonstrate that the sector is not even close to meeting the federal government’s 2030 targets. And his forecasts for the sub-sectors are based on some generous assumptions. A reasonable take is that the sector will miss the 2030 target by more than 33 Mt per year.

Alberta, the Climate Policy Laggard

The point of these examples is that Alberta is a not a climate leader, contrary to some claims (here, here). Nor does it have a climate plan to reach net-zero by 2050. Former UCP premier Jason Kenney’s first act in 2019 was ripping up the former government’s Climate Leadership Plan. In no time, Alberta went from being a climate leader to a climate laggard.

What Alberta does have is a smattering of climate policies. Kenney ended the NDP consumer carbon tax, which was replaced by the federal backstop plan. He kept the industrial emitter carbon tax (CCIR), calling it TIER. Pembina Institute, among other critics, called TIER “a step in the wrong direction” that significantly weakened incentives for the oil and gas sector to decarbonize. In fairness, the UCP scheme is acknowledged to be more effective for the electricity sector. Since oil and gas is by far the bigger emitter, the change was a net loss for emissions policy.

Power sector emissions are considered a big win for Alberta because of the shift from coal to natural gas, as well as the rapid growth of wind and solar generation. The graphic below forecasts the fuel mix in 2030. Granted natural gas has roughly half the GHGs of coal, but it’s not close to net-zero.

Come 2050, Alberta will have a fleet of relatively new gas power plants. Who will pay to retire them? Or to install carbon capture and storage equipment on them?

Rounding out the major sectors, Alberta has virtually no climate policies targeting building and transportation emissions. Heat pumps and electric vehicles are invisible in provincial policy. Kenney downsized the provincial energy efficiency agency, cut its budget, and amalgamated it with another agency; last year, Alberta came in ninth in Energy Efficiency Canada’s scoreboard.

Smith as Alberta Marketer-in-Chief

“Alberta would be pleased to help the federal government develop the business case and participate in the development of an MOU with Japan for the increased export of clean Albertan LNG,” Smith wrote in the letter to Trudeau.

Between her QR770 talk radio gig and becoming premier, Smith was a “free enterprise” group lobbyist. She publicly pushed the industry line, nicely summed up in her Calgary Herald op-ed headline, “Best way for Canada to get to net zero is to export LNG.” Stop worrying about Canada’s minuscule emissions, the argument goes, Alberta’s biggest contribution to global decarbonization should be supplying “clean” natural gas to China, where it would displace coal.

Greenwashing Alberta hydrocarbons is part of that sales pitch. Canada’s biggest emitter selling itself as the climate salvation of the world’s biggest emitter, the Asia Pacific region. A magician’s sleight of hand, really.

But Smith has another, less obvious objective. Her government and the industry are fundamentally opposed to Trudeau’s emission reduction plan and, specifically, his oil and gas emissions cap, due to be implemented this year. Fighting the cap on its merits is futile because the Liberals are deeply committed to it. Pushing for more exports to supply allies in Japan and Europe, though, might persuade Ottawa to back off, even if temporarily. Deputy Prime Minister Chrystia Freeland provided oxygen for this view by musing about “fast-tracking energy and mining projects in the name of economic security for our democratic partners,” as Smith noted in her letter.

Remember, this is an industry that believes every federal election that the hydrocarbon-friendly CPC, which it heavily finances, will finally win. Rope-a-doping Ottawa, pushing back, delaying tactics – all work to its advantage. Sooner or later, governing parties lose an election and the Liberals are now long in the tooth. The next time, in 2025 at the latest, could see the long-awaited victory. Then, federal pressure to decarbonize will ease and the industry can lower emissions at its leisure.

Which is why the province has an oil and gas marketing plan instead of a climate plan, Alberta is not a climate leader, and Smith is now Head-Marketer-in-Chief. Those are the facts.

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