Industry not consulted on Alberta’s plan to challenge federal emissions cap

The Alberta government did not consult with the oil and gas sector before announcing a sweeping set of plans it says it could use to challenge the proposed federal greenhouse gas emissions cap, industry sources say.

Companies are still digesting Premier Danielle Smith’s move to announce a forthcoming motion under the province’s Sovereignty Act, which Smith said Tuesday will give Alberta the ability to assert ownership over its own fossil fuel resources.

Tristan Goodman, president and CEO of the Explorers and Producers Association of Canada, said while industry insiders expected the UCP government would use the Sovereignty Act to take aim at the emissions cap, the details unveiled Tuesday came as a surprise.

“We weren’t broadly consulted,” he said.

A second industry source confirmed the lack of consultation, adding that companies on Wednesday were still trying to absorb what Smith’s proposals could mean.

Goodman said companies need to see more detail, particularly around Smith’s suggestion that the provincial government could take exclusive control and ownership of emissions data collected at oil and gas company sites.

“That’s where we would like to be collaborated with. We would like to be talked to, to see how that would specifically work,” he said.

Smith also said the provincial government will consider instructing provincial authorities, such as the Alberta Energy Regulator, not to enforce the cap. And she said Alberta would consider barring federal officials from physically setting foot on oil and gas facilities.

Goodman acknowledged some of these proposals will require the fine-tuning of details.

“If the province wishes to ban certain types of other government officials from sites, we (the industry) are not going to get involved in that,” he said.

“That would be up to the province to enforce that.”

But he emphasized the oil and gas sector as a whole remains deeply opposed to the emissions cap, and is happy the Alberta government is standing up for the province’s No. 1 industry.

“We agree with Premier Smith that these are provincial resources, and that the federal government is overstepping their constitutional boundaries,” Goodman said.

“So we’re actually quite pleased to see the premier taking strong action and defending the sector.”

The proposed federal emissions cap, which is still in draft form, would require oil and gas companies to cut emissions by 35 per cent below 2019 levels by 2030.

The oil and gas industry has maintained that the proposed cap is unconstitutional and amounts to a cap on production that would severely harm Alberta and the Canadian economy.

Adam Legge, president of the Business Council of Alberta, called the cap “the epitome of bad public policy” and said Wednesday he believes it would be open to constitutional challenge.

“We support and applaud the provincial government exploring all potential tools to push back against this unfair and discriminatory policy, and have told the premier we would lend support to a legal challenge,” Legge said in an emailed statement.

But behind the scenes, not all industry leaders are likely to be thrilled with Smith’s proposals, said Richard Masson, an executive fellow at the University of Calgary’s School of Public Policy and the former CEO of the Alberta Petroleum Marketing Commission.

He said he believes Smith’s proposals will come off “poorly” around corporate board tables in Calgary and be viewed as “another layer of complication and uncertainty.”

“And I’m not even sure it’s going to have the desired effect of getting the federal government to back off,” Masson said.

“It just looks like more fighting, more risk, and to companies, will probably look like another example of governments who can’t get their act together to try to come up with some kind of attractive investment environment in our country.”

Masson said neither Smith’s proposal about restricting site access, nor her suggestion that the province could take ownership of individual companies’ proprietary emissions data, would be easy to carry out.

“It doesn’t seem to be fruitful on any level,” he said, adding he also believes the suggestion that the Alberta government could help sell more of the province’s bitumen by marketing their royalty share barrels is unworkable.

“It would be super complicated. It’s not a good idea,” he said.

The Pathways Alliance, a consortium of Canada’s six largest oilsands companies, said Wednesday it believes the federal emissions cap will actually deter companies from investing in emissions-reducing technology by saddling them with an additional layer of regulatory complexity.

“We appreciate the Alberta government is supporting and standing up for the economic interests of the province and Canada, and we will continue to work with Alberta to oppose the flawed proposed emissions cap,” said Pathways president Kendall Dilling in an emailed statement.

Under Alberta’s Sovereignty Act, the government must first put a motion forward in the legislative assembly identifying a federal matter at issue and outlining potential steps the government should take to overcome it.

Once the motion is passed in the assembly, the Act stipulates that Smith’s cabinet will then determine the legality of the chosen measures before taking action.

Smith did not say when a motion will be put forward in the legislature.

The federal government’s finalized regulations for the emissions cap are expected to be published in the spring.

The federal government has maintained its stance that the cap is meant to limit pollution, not oil and gas production.

But Alberta has said the cap would lead to a drop in production to the tune of one million barrels per day, resulting in large-scale job losses and leading to a five per cent loss in royalty revenues for the provincial government.

This report by The Canadian Press was first published Nov. 27, 2024.