Rachel Notley has crafted visionary, ambitious, and well-designed energy policies, but can she sell them to Albertans?
Energy figured prominently in the NDP government’s Throne Speech, perhaps signalling that pipelines and petrochemicals will play a key role in the election campaign when the Premier drops the writ, which was expected Tuesday but now may be delayed because of the “kamikaze candidate” scandal dogging Jason Kenney and the United Conservative Pary. Just as interesting is a list of words that aren’t in the speech: oil sands, carbon tax, Carbon Competitiveness Incentive Regulation (CCIR), methane, emissions.
Oil sands policy is arguably Rachel Notley’s greatest achievement in the energy sector. Working closely with the top oil sands companies, her government developed a carbon pricing regime (CCIR) designed to provide incentives for producers to reduce emissions and the carbon-intensity of their heavy crude oil while ploughing carbon levy revenue back into a $1.4 billion Innovation Fund that supports the commercialization of emission-reducing technologies. And if those carrots aren’t sufficient to motivate producers, the looming threat of the 100 megatonne emissions cap should serve as a big enough stick to get their attention.
Now, how to turn those policies into a narrative that appeals to voters? Notley and her energy minister, Marg McCuaig-Boyd, failed for four years to craft a coherent oil sands story and it appears they won’t bother trying during the election campaign.
Pity, because the Big 5 oil and gas producers (Suncor, Cenovus, CNRL, Husky, Imperial Oil) account for two-thirds of all Alberta oil production and now drive the “new oil patch.” Conventional oil production, the “old oil patch,” now accounts for only just over 400,000 barrels per day while the oil sands in total are over 3 million barrels a day.
Kenney, like any opposition leader, wasn’t impressed by the speech. For instance, he complained in a press release that on Friday a US appeals court ruled against TransCanada’s Keystone XL (KXL) pipeline and “Alberta’s NDP government has remained silent since.”
What could Premier Notley possibly have said? The desperately needed 800,000 barrels per day project is snarled in the American courts and the American regulatory system. It will likely be delayed a year beyond its 2021 inservice date because TransCanada missed a critical March 15 deadline to resolve its legal problems or miss the 2019 construction season. The Alberta government has zero influence over that decision.
Nor does it have any power over the State of Minnesota, which two weeks ago decided that Line 3 permits would be issued six to 12 months later than it expected, pushing Enbridge’s 370,000 barrels per day pipeline inservice date from the end of 2019 to mid or late-2020.
Market access problems for Alberta crude oil have escalated from a crisis into a disaster. Therefore, the Throne Speech emphasized the only things Notley can control: keeping up the pressure on the Canadian government to build the 525,000 barrels per day Trans Mountain Expansion, contracting for 120,000 barrels per day of rail capacity (which Kenney said he would cancel, a position he conveniently ignored in his release), and almost $11 billion of petrochemical investment and $2 billion of partial upgrading investment, which may provide more domestic consumption for Alberta crude oil.
Kenney claimed that the Throne Speech said nothing “about getting Albertans back to work,” but the downstream projects are projected to create close to 10,000 construction jobs and around 1,000 new permanent positions.
The UCP leader wasn’t the only one laying it on a bit thick. The Throne Speech cheerfully attributed the growing support for new pipelines, including “a majority of our neighbours in British Columbia,” to the Notley government, which is quite a feat for the small national advertising campaign that wasn’t launched until TMX had already become a political tire fire.
The Premier is expected to drop the election writ Tuesday. Energy issues are pocketbook issues for many Albertans, so expect pipelines, carbon taxes and regulations, and petrochemicals to figure prominently in the NDP platform. Communicated properly, her energy accomplishments can be a real strength for Notley. Similarly, the UCP’s skimpy energy policies – mostly rolling back Notley policies the way Donald Trump is busy cancelling Barack Obama initiatives – could be an Achilles Heel for Kenney.
Alberta will soon be in election mode and policy will play second fiddle to political narrative, which Kenney has owned for months. He has persuaded Albertans that Notley and the NDP broke the Alberta energy sector. And his success is not so much due to his clever and convincing story as it is Notley’s lack of her own coherent energy narrative.
The Throne Speech appears to be an attempt to take back that narrative. Now it comes down to execution. On your mark, get set…
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