Instead of indulging in petty partisanship, Liberals are methodically reforming much of the federal legislation that touches the oil/gas sector
On Monday, Prime Minister Justin Trudeau tied bridge financing for large oil and gas companies to reducing greenhouse gas emissions. If Albertans don’t understand what this means, let me spell it out: the Liberal government is serious about aggressive climate policies.
“There are many companies in the energy sector that are already taking seriously the need to plan for the longer term, to plan for reducing emissions and fighting climate change. But not all of them,” Trudeau told journalists, as reported by the Globe and Mail.
“And that’s why we needed to make sure that as we moved forward on support for large employers across all sectors, that they are also – in all sectors, not just in the energy sector – thinking about the challenge that climate change will pose to their company and to their future and have a response for it.”
The Large Employer Emergency Financing Facility (LEEFF) will provide bridge financing – not a bailout, as the Prime Minister stressed during his speech – to companies who require more than conventional financing to navigate the economic collapse caused by the pandemic. There are strict conditions on executive pay, dividends, and share buybacks. In 2019, the Big 5 oil companies returned over $10 billion to shareholders; Suncor alone gave back $4.9 billion.
But it is the climate strings that are generating headlines. There are two big ones.
One, companies in all sectors must have a plan that is consistent with meeting Canada’s national climate goals. To date, several Canadian oil and gas majors have made aspirational commitments to achieve net-zero emissions by 2050. None have a firm plan to do so.
Two, the big corporations must take climate risk reporting seriously. Some in the oil patch are, some are not, despite investors growing concerns over climate risk management.
The reaction to Monday’s announcement from oil patch executives was supportive. “Additional financing announced today by the federal government is welcome news,” Tim McMillan, CEO of the Canadian Association of Petroleum Producers, said in a statement, adding that the industry is still waiting to see the fine print.
How strictly Ottawa will police greenhouse gas emissions? It’s one thing to require companies to commit to reductions and quite another to hold CEOs’ feet to the fire, with real consequences for non-performance.
Then there’s the thorny issue of jurisdiction as Ottawa negotiates equivalency agreements on methane emissions and large emitters with the provinces. If regulating oil and gas activities is primarily a provincial matter, how much leverage does the federal government actually have?
Quite a lot, as it turns out.
Leading up to Trudeau’s April 17 launch of expanded liquidity support for medium-sized energy companies, the Canadian Association of Petroleum Producers had 29 lobbying meetings in the nation’s capital over a two week period. CAPP submitted a 13-page letter with pages of recommendations that boiled down to one ask: relax environmental and climate policies.
Instead, the Liberals did the opposite. Now, they’ve doubled down on that strategy.
This point cannot be made enough: CAPP and the Calgary-based oil and gas leadership have little influence in Ottawa. And don’t start with the old trope about how Trudeau hates the industry and wants to kill it.
The problem here is Alberta. Since being elected a year ago, the United Conservative Government has consistently done the bare minimum on the environment and climate file. Premier Jason Kenney’s strategy is to vehemently oppose federal regulation or oversight, then grudgingly compromise in the end. That happened with the Alberta large emitter program and the recently announced methane emissions regulations.
There is no leadership from Kenney on these files. He is dragged kicking and screaming into every negotiation.
A day after the federal election, I wrote that a “huge battle is brewing between the Trudeau minority government and Alberta… Justin Trudeau is committed to net-zero emissions by 2050 and only Alberta stands between the Liberals and their climate goals. Something has to give.”
Thus far, Ottawa hasn’t given a millimetre.
But there is unlikely to be a heated political battle between Trudeau and Kenney. When the Premier slags him on the campaign trail or disparages him in the media, the Prime Minister ignores the slight or responds diplomatically. He knows, and the Premier should know since he spent 10 years as a federal cabinet minister, that Canada wields a bigger stick than Alberta.
Instead of indulging in petty partisanship, the Liberal government is deliberately and methodically reforming much of the federal legislation that touches the oil and gas sector in some way. It has demonstrated time and again that political controversies won’t deter it. Bills C-69 (revamped environmental assessment process bitterly opposed by the pipeline industry) and C-48 (banning of oil tankers of the northern coast of BC) are just two examples.
If the Liberal minority government holds, then expect more of the same approach to the emissions reductions attached to bridge financing support under the Large Employer Emergency Financing Facility. Trudeau might not achieve 100 per cent of his goal this time, but we expect he will continue on other fronts – such as the soon to be introduced Clean Fuel Standard – until he does.
A sizeable majority of Canadians supported those objectives during last fall’s election and nothing has happened since to suggest the national mood has changed.
The deep thinkers at CAPP would do well to ponder that fact.