Federal budget sends mixed signals to Alberta's energy sector
OTTAWA — Leaders in Alberta’s energy sector saw some things to like in Tuesday’s federal budget , but say it doesn’t quite prime Canada to become a global energy superpower.
Sprinkled in the 493-page budget, Mark Carney’s first as prime minister, are partial climbdowns on the oil and gas emissions cap and federal provisions against “greenwashing”, two of the nine bad laws critics say are throttling Alberta’s oil and gas sector.
Calgary-based energy analyst Heather Exner-Pirot said she was “pleasantly surprised” to see these concessions in the document.
“I actually feel like we got more information than what I was expecting … Carney showed his cards and weakened his hand on purpose, and I think it was out of good faith,” said Exner-Pirot.
“If you’re (Alberta Premier) Danielle Smith and you’re reading this, Carney’s trying to say, ‘yeah, we’re still playing ball’,” she added.
The two leaders have signalled that they’d like to strike a deal on resource development by mid-November.
Smith said in a statement that she was withholding comment on the budget amidst “sensitive negotiations” with the federal government.
Exner-Pirot also detected a subtle shift in language in sections of the budget relating to the industrial carbon tax and the Impact Assessment Act, conveying a focus on working with the provinces.
Adam Legge, the president of the Business Council of Alberta, says he agrees that Carney’s first budget signals a welcome break from predecessor Justin Trudeau’s focus on social spending.
“This prime minister understands the imperative of an economy, the imperative of investment (and) the imperative of productivity. So doing things that are actually in an effort or in a spirit to grow our economy is a welcome change from social transfers and redistribution of the Trudeau era,” said Legge.
But Legge added that there’s still too much “couching and caveats” in operative sections of the budget to give would-be investors the certainty they need.
“They muse. They muse about amendments to the green washing provision. They muse about, if all of this other stuff works, well, we may not need the emissions cap,” said Legge.
The budget’s update on the emissions cap, for example, says that scaling up carbon markets, oil and gas methane regulations and carbon capture would create conditions where it would “would no longer be required as it would have marginal value in reducing emissions.”
Legge also panned the budget’s focus on “climate competitiveness,” the notion that Canada will need to reduce its emissions intensity to meet the growing global demand for low-carbon goods and services.
“Frankly, I think everything we’re seeing is that Europe and other places are putting less emphasis on, sort of the green credentials, versus more … my members are telling me that they’re not seeing the stringency of environmental standards in the capital markets that they used to see,” said Legge.
Legge noted that even some of the world’s most environmentally conscious jurisdictions, like California, are rolling back environmental regulations .
He called the focus a “holdover of (the Trudeau) government’s excessive lens on clean or zero emission energy and the transition to net zero.”
Tim McMillan, a partner at Garrison Strategies and former head of the Canadian Association of Petroleum Producers, was more blunt, calling Carney’s climate competitiveness strategy “a Trudeau-era climate policy in a business suit.”
McMillan said he saw no indication that large-scale decarbonization efforts, such as the oil sands’ Pathways project would be “anything but a drag” on Alberta’s energy industry.
Alberta Environment Minister Rebecca Schulz said she was disappointed that Carney didn’t use the occasion to kill the electric vehicle mandate, with the end of the prime minister’s 60-day review of the suspended policy serendipitously falling on budget day.
“I absolutely think this is a missed opportunity for the federal government … One would expect, if they were being strategic and thoughtful, and purposeful about the direction that they are choosing to go in, that they would be clear about repealing this mandate,” said Schulz.
Carney paused the scheduled 20 per cent sales target for 2026 model year electric vehicles in early September, after lobbying from the auto sector, and said he’d take the next 60 days to evaluate the mandate’s viability.
A short excerpt in the budget said the government will “announce next steps on electric vehicles in the coming weeks.”
Schulz added that it was “encouraging” to see the walk-backs on the emissions cap and greenwashing provisions but stressed that the language used in the budget was too muddled to send a clear signal.
“The devil’s going to be in the details,” said Schulz.
National Post rmohamed@postmedia.com
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