The failure of Premier Danielle Smith and Prime Minister Mark Carney to resolve the outstanding conditions of the 2025 MOU by April 1 deadline was utterly predictable, but nevertheless still depressing.
Who seriously expected that Carney would eliminate the two conditions that impose untenable costs on future Alberta hydrocarbon development and its required infrastructure — namely, open-ended carbon taxes on industrial emissions and the imposition of carbon capture and sequestration (CCS)?
They are conditions to which Carney remains committed, if only to preserve Canada’s credibility on net-zero, regardless of the attendant self-destructive economic consequences.
This result arises in the context of the past 11 years of federal Liberal governance, during which Alberta has been perversely frustrated in realizing its full economic potential from hydrocarbon development. A value loss in the hundreds of billions.
Never forget:
2015: The rejection of the Northern Gateway pipeline project, linking Alberta oilsands to Asian crude markets.
2017: The loss of the Petronas LNG and Energy East pipeline projects due to regulatory and political treatment.
2015 and 2021: Denials of permits by U.S. Democratic administrations in respect of the KXL pipeline project.
2019: The imposition of Bill C-69, designed for obstruction and denial, not expedition, of hydrocarbon development within Alberta.
Also, in the recent context of materially higher global hydrocarbon pricing, recognize that North American natural gas pricing has remained below $3/mmBTU, whereas global LNG pricing has averaged $20 to $25/mmBTU. And crude oil prices have risen by more than $40 per barrel.
Canada could have had at least another 1.5 bcf/day of LNG production, and closer to another one million barrels per day of oilsands production, accessing premium Asian markets. All of which has materially contributed to Canada’s significant decline in GDP per capita relative to the U.S. over the same period.
Nevertheless, Canadian hydrocarbons are arguably now more valued than ever in the current geopolitical context.
The Alberta government seemingly expects the federal Liberal government to act in good faith to accede to, if not expedite, expanded hydrocarbon production and related market access, while relenting from imposing untenable costs that global hydrocarbon markets will never absorb?
I ardently hope that some epiphany strikes Carney. But I doubt it.
It was never in Canada’s self-interest to be in the vanguard of climate extremism. And make no mistake, open-ended carbon taxes and CCS requirements constitute climate extremism. Such measures should only follow if the developed world, especially the U.S., is prepared to impose similar costs on itself.
Albertans should ask themselves how they can relate to a federal government that persists in imposing conditions antithetical to their most fundamental economic interests. Does Alberta really own its natural resources if it cannot insulate itself from federal impositions that degrades their value and development? Is the status quo viable for Albertans?
It may be naive to think that, within the current political context in Alberta, some kind of fundamental bipartisanship would be possible. Such a process would allow Albertans to identify the necessary adjustments to Alberta’s relationship with the federal government — including removing federal constraints on natural resource development and related infrastructure — to maximize long-term economic value for the province.
That is especially important in the context of a fiscal status quo, in which Albertans receive less than a dollar back for every dollar sent to Ottawa.
A bipartisan process with intellectual honesty would also assess other arrangements for Alberta, such as a customs union with the U.S. Out of that process, a real provincial consensus on a path forward could emerge.
Surely, all Albertans can understand that only a growing hydrocarbon industry, unfettered from a fundamentally hostile existing federalism, can best realize a future where expectations of economic opportunity and basic social services are sustained.
But does the current political leadership within Alberta have the capacity to find that kind of bipartisanship, face the real economic costs and benefits of alternatives, and collaboratively act to at least gain more leverage, if not fundamental change.
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.