Joe Oliver: Rhetoric and MOUs don’t make us an energy superpower

Prime Minister Mark Carney, right, signs a memorandum of understanding with Alberta Premier Danielle Smith in Calgary on Nov. 27. Photo by Jeff McIntosh/The Canadian Press files

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Though superficially promising, last month’s “memorandum of understanding” between Alberta and Ottawa is in fact restrictive and self-contradictory, leaving the over-arching economic and strategic question of Canada’s future energy development mired in uncertainty.

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Questionable support for pipelines from the prime minister and his energy minister, obstructive laws and regulations, and at least implied vetoes for the provinces and Indigenous communities alternate with resource superpower cheerleading to create an incoherent policy environment.

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The fog may be understandable but it is not justifiable. Mark Carney is trying to reconcile the irreconcilable: on the one hand, harsh economic reality and his own campaign promises and, on the other, a restive Liberal caucus, alarmed environmental activists and his personal climate obsessions. Will potential pipeline sponsors be willing to pour billions of dollars into such a fraught, dilatory and costly political and regulatory environment? Gwyn Morgan, former president and CEO of Encana, certainly doesn’t think so, as he indicated in a recent Leaders on the Frontier podcast.

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In the MOU, Canada and Alberta agree to “unlock and grow natural resource production and transportation in Western Canada” but also “remain committed to achieving net-zero greenhouse gas emissions by 2050.” They will reach carbon neutrality by “in part, reducing the emissions intensity of Canadian heavy oil production to best-in-class in terms of the average for heavy oil.” And they say they will attain net-zero greenhouse gas emissions for the electricity sector by 2050.

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The MOU also commits Alberta to increasing its industrial carbon price to $130/tonne for large emitters by next April. That goes in precisely the opposite direction of the U.S. and will make Canada increasingly uncompetitive with its major trading partner and energy customer.

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The MOU seriously oversells the means to achieving clean oil and gas, to put it charitably. Carbon capture, utilization and storage is a key part of how Alberta wins Ottawa’s support for energy development. But it’s still an unproven and hugely expensive technology at large scale and only impacts upstream activities, i.e., extraction, upgrading and processing. They only account for a fifth to a quarter of Canada’s total life-cycle CO2 emissions. The rest comes from downstream combustion as fuel is burned in cars, trucks, planes and furnaces. Ottawa’s vision of “carbon-neutral” oil or gas is therefore an illusion.

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Despite her public enthusiasm for the MOU, Alberta Premier Danielle Smith must be galled by having to commit to net zero. She has to know it’s unachievable, would be prohibitively expensive to try to achieve, and, even if it were attained, would have a minuscule impact on global emissions and bring no measurable change in global temperatures. No serious person pretends Canada is able to lower global temperatures, no matter how much growth we sacrifice or cost we incur.

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Yet another reason to regret Alberta’s coerced climate commitment is growing recognition that global warming “will not lead to humanity’s demise,” as Bill Gates himself has now acknowledged. Net zero is being rejected around the world as unfit for purpose and disproportionately harmful to the poorest people in the poorest countries. In a brilliant article in The Spectator, Matt Ridley recently commemorated “The End of the Climate Cult.”

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Mark Carney apparently did not get the memo, although he almost certainly has seen that the latest Nanos tracking numbers, which rank the environment only sixth on Canadians’ list of top concerns, with just 5.1 per cent of respondents putting it first.