Alberta will not accept the federal government’s proposed emissions cap under any circumstances.
That was the message Alberta’s government relayed in a 24-page response to the federal government’s draft Regulatory Framework to Cap Oil and Gas Sector Greenhouse Gas Emissions.
“The federal government’s proposed cap is ineffective, unconstitutional, and unacceptable,” said Alberta in the lengthy response.
Instead of managing emissions consistently across all regions and sectors, Alberta claims that the federal government is targeting a single sector and proposing a cap that will overwhelmingly hurt Alberta and negatively impact the entire country.
“Albertans will not accept this cap or the attack on its constitutional jurisdiction, economy, and citizens that the cap represents,” said the province in its response.
To accompany the response, Environment Minister Rebecca Schulz wrote a letter to her federal counterpart, Steven Guilbeault.
“This cap is not realistic or effective, will not achieve its grandiose emissions targets, and will not be tolerated in Alberta,” said Schulz.
Alberta’s response outlines the severe consequences that the proposed oil and gas emissions cap would bring. The response details how the cap violates the Canadian Constitution, the global implications, the impacts on Canadians, the technical and practical flaws in the cap’s framework, and Alberta’s plan.
As re-iterated by Schulz, Alberta has exclusive jurisdiction to manage the rate of non-renewable natural resources production and operational development in its province.
“[The cap] clearly violates Section 92A of the Constitution Act, 1867,” said the Alberta government in its response.
If the cap were implemented, Schulz said that this cap would have a devastating economic impact not only on Alberta but also on all of Canada.
The Conference Board of Canada’s analysis shows that the cap would reduce Canada’s GDP by up to $1 trillion between 2030 and 2040 and cause up to 151,000 jobs to be lost by 2030.
“The economic impact would be felt from coast to coast,” said Schulz.
According to the analysis, even the federal government’s revenue would be reduced by between $84 and $151 billion between 2030 and 2040. Alberta’s revenue would be reduced by $73 and $127 billion in the same period.
Employee earnings would fall by $460 billion across the country during that decade.
Even the threat of the cap has discouraged investment in Alberta.
Premier Danielle Smith, speaking at the Economic Club of Canada on Monday, said that she recently met with somebody who wanted to build 1200MW of natural gas with carbon capture to do enhanced oil recovery. They spoke with three bankers, all of whom said that they would provide no funding due to the risk surrounding the federal government’s red tape.
“When you see our signs and our advertising about ‘No one wants to freeze in the dark’ in the middle of winter, it’s not hyperbole. That’s reality if we don’t end up solving this problem,” said Smith.
Alberta argued in its report that the federal cap could result in a negative environmental impact worldwide.
“The cap will not result in a global greenhouse gas emission reduction, but rather result in carbon leakage along with transfer of production, wealth, and jobs to other less reliable and less environmentally responsible countries,” said the Alberta government in its report.
It added that the cap would likely increase Canada’s reliance on low-cost and low-transparency foreign oil from countries such as Saudi Arabia, Iraq, and Nigeria, with overall negative global climate impacts.
The government of Alberta also claimed to find numerous flaws in the proposed framework. The basis of the federal cap is established based on 2019 production levels, which Alberta has significantly exceeded.
Data from the Alberta Energy Regulator shows that oil production increased by 2% between 2019 and 2022, while natural gas production increased by 2.4%.
“Inappropriately, the federal government used a single scenario and applied it to 2019 baseline – with unrealistic assumptions about future production growth and technological feasibility – to determine emissions levels in 2030 and set the legal upper bound of the cap,” reads the report.
Schulz added that the technologies needed to abate emissions in the oil and gas sector massively either don’t yet exist or aren’t being developed at the rate the federal cap’s model would require. The report states that the federal government is assuming impractical and unachievable timelines to deploy clean technology.
“The emission reductions from clean technology uptake assumed by the federal government are not based on published or verifiable evidence and are not achievable by 2030,” said the Alberta government in its report.
“Alberta is confident that many of the issues raised in this document are shared by other provinces and industry leaders, both within the oil and gas sector and beyond,” said Schulz.
Instead of pursuing this unconstitutional cap, Schulz calls on the federal government to immediately halt further development and begin collaborating with provinces. She said that Alberta would welcome federal investment to help advance and reduce emissions to support the province’s goal of carbon neutrality by 2050.
