OPINION: Alberta Premier Smith Needs to Set Six Conditions for Alberta to Prosper Within Canada

Alberta’s separation referendum will be profoundly impacted by the outcome of the negotiation between Danielle Smith and Mark Carney on climate policy constraints regarding Alberta oilsands development. Failure to reach a resolution that sets a competitive foundation for the development of the oilsands, inclusive of market access, is untenable for Alberta. Yet, the direction of ongoing negotiations risks that result.

A resolution that works for Alberta is one in which legitimate private sector entities, oilsands producers, major pipeline infrastructure companies and global refiners commit to the required investments. This would enable an additional one million barrels per day of production and related incremental pipeline infrastructure to be developed expeditiously.

The risks of open-ended carbon taxes, decarbonization mandates and a dysfunctional regulatory and governance system within Canada are antithetical to that occurring. They are antithetical to the fundamental economic interests of Alberta.

How much longer will Smith stay engaged with Carney seeking accommodation for such risks? Smith needs to fundamentally alter the dynamic with Carney as soon as possible. She needs to set the following conditions for Alberta to prosper within Canada:

• A recognition that the concept of net-zero as a fundamental aspiration, governing climate and energy development for Canada, and certainly Alberta, is no longer relevant. It has been rejected by Alberta, as it has no economic present value for the province or the country.
• Rejection of excessive and open-ended carbon tax liability and decarbonization mandates impacting the competitiveness of incremental oilsands production. Competitiveness must be the paramount consideration regarding project evaluation.
• A public recognition by the Carney government that fulsome development of Alberta’s oilsands is the pre-eminent economic priority for Canada, being self-evidently in the public interest. A priority that can no longer be subordinate to federal climate policy.
• The federal government must ensure, legislatively, if necessary, expeditious regulatory approvals of any financially viable pipeline infrastructure required for Alberta’s incremental oilsands production. Expeditious here is defined as no more than 12 months of related regulatory process.
• The Carney government must commit to being resolute in dealing with any civil disruptions related to the construction and operation of such infrastructure. This includes expeditious resolution of any perverse judicial interpretations of Section 35 of the Canadian Constitution or other attempted legal obstructions from any province.
• The Carney government must affirm that no vetoes exist for any select segment of the Canadian polity on projects manifestly in the national interest. Consultation does not equate to a veto.

These are not unreasonable demands, but necessary expectations of Carney if he has any genuine interest in viable economic growth. Growing hydrocarbon production across Western Canada is manifestly in the national interest. Carney needs to commit to reducing risks to that growth.

But instead, Smith and Carney remain engaged in a desultory exercise where the expectation is that the Alberta government will take on the onerous, open-ended economic obligation of decarbonization.

All of this in the context of a world where the value of Canadian hydrocarbons has never been more recognized. A world obsessed, rightly, with affordability. A world incapable of valuing reduced carbon emissions high enough to ever economically justify decarbonization via carbon capture and storage.

No action could further validate why Alberta should remain within Canada than if Carney were to simply embrace as national policy the points set out above.

And even more mystifying is why Smith is not insisting he do so.

For Danielle Smith, better late than never. Better than taking on an untenable obligation.

Dennis McConaghy, a former executive vice-president at TransCanada Corp., now TC Energy, recently published his third book, Carbon Change: Canada on the Brink of Decarbonization.