From Energy Now

By Jim Warren

Like it or not, the supporters of conventional energy production in the West, even those who bleed maple syrup, will be best served by a substantial leave vote. A poor showing on the part of the leave camp would weaken the bargaining power of the producing provinces and the conventional energy sector in their dealings with Ottawa.

The political dust-up between the leavers and the stayers is about to commence.

The petition calling for an Alberta referendum on separation will get the required signatures. And, the Moe government in Saskatchewan may yet decide to do something similar.

And, there is a good chance the federal Liberals and their allies in the environmental movement will launch an anti-separation/anti-oil campaign in response. The Liberals need merely to reinvigorate the flag waving campaign they ran during the federal election. All that needs to change for that tactic to work is the name of the boogeyman—from Donald Trump to alienated Westerners.  Government subsidized environmental organizations will help do the rest.

This will present something of a dilemma for some supporters of the conventional energy and pipeline sectors. Should they lay low, stay quiet and perhaps avoid becoming part of the controversy? Alternatively, should they face reality and admit oil and pipelines will feature prominently in the debate whether they like it or not. The federal assault on oil, gas and pipelines is after all one of the principal motivations inspiring many who wish to separate.

And, whether we like it or not, the supporters of conventional energy production in the West, even those who bleed maple syrup, will be best served by a substantial leave vote. A poor showing on the part of the leave camp would weaken the bargaining power of the producing provinces and the conventional energy sector in their dealings with Ottawa. This is one of the immutable laws of the negotiating universe. A union that gets only 20% of its members voting in favour of strike action knows it is impotent should management call its bluff.

This is not to say the leave side will need a majority vote to produce a win for the energy sector—a large minority could do nicely. The Parti Québécois’ goal of “sovereignty association” in the 1980 Quebec referendum was supported by just 40.4% of those who voted. Yet, it nevertheless added leverage to Quebec’s extortionate demands on Ottawa and the rest of Canada. Although, after the separatists garnered 49.4% of the vote in the 1995 referendum (aka Canada’s near death experience), Quebec did even better.

True, the two producing provinces on the prairies lack the electoral power of Quebec. In combination with Ontario, Quebec has been integral to Liberal success in federal elections for decades. The power of the West lies in its ability to generate a large share of Canada’s export revenues. That’s mainly why Quebec is able to count on $14 billion in annual equalization welfare. Threatening separation turns the economic importance of the West into a political weapon.

We can expect a highly divisive referendum debate–potentially far more fractious than the federal election campaign. Signals coming out of Ottawa suggest federal-provincial negotiations over conventional energy and emissions policy are about to take a nasty turn. We could be facing a perfect storm of disunity with Westerners bashing Ottawa while Ottawa denounces separatists and resumes its assault on oil, gas and pipelines.

Chances for lowering the political temperature don’t look good. The prime minister has been distancing himself from his initial pre-election pro pipeline position. Early in the election campaign Mark Carney said he would employ the emergency powers of the federal government to get new export pipelines running from the prairies to tidewater. The next week he told reporters Quebec would have the power to veto the approval of any pipeline crossing its territory. On May 14, Carney presented reporters with a word salad that seemed to be saying he would include evaluation of the potential for new pipelines along with other energy policy ideas being discussed. And, if a consensus favouring pipelines emerged, one might be built.

This is not comforting. These statements cannot all be correct at the same time. At least two, if not all three, of them, are disingenuous.

Exactly who will be included in the consensus building discussions is unclear. Will they involve meetings with the premiers of the provinces that generate huge export revenues for Canada. Will they be restricted to the emissions reduction zealots who dominate the cabinet and the Liberal caucus? Or, is it something Carney will work out at Davos when the World Economic Forum next convenes?

The Liberals and their media allies put a lot of stock in the polls once they showed the Liberals in the lead during the election campaign. They briefly acknowledged election period polling that showed 74% of Canadians support the construction of new export pipeline including 60% of Quebecers. But reporting on the growing popularity of pipelines ended after about a week when Carney’s unqualified support for a pipeline to the Atlantic coast evaporated.

Furthermore, the popular vote totals from the federal election demonstrate that Canadians’ support for the Conservatives and the Liberals was divided fairly evenly, 41.3% for the Conservatives and 43.8% for the Liberals. A slim 2.5 percentage point spread. It seems reasonable to assume many Conservative supporters outside of the prairies shared Pierre Poilievre’s strong and consistent support for conventional energy production and pipelines. The fact people in the producing provinces are not alone in seeing the wisdom of new export pipelines strengthens our position.

If the thumping the voters of Alberta and Saskatchewan gave the Liberals in the April 28 election didn’t convince the government its energy and pipelines policies have caused a national unity crisis, maybe a high vote in favour of separation will. Many people will figure this out and will vote strategically to ensure the leave side wins a respectable portion of the vote. Who would want to try to negotiate a good deal for the producing provinces and the conventional energy sector following a weak performance by the leave camp? The Liberals will claim that a big win for the stay camp shows that Albertans are happy with the status quo.

The anti-pipeline misinformation campaign is already underway. Steven Guilbeault was already at it last week. According to Guilbeault, since the Trans Mountain pipeline is not operating at full capacity we obviously don’t need any more pipelines.

Guilbeault knows full well the pipeline is running under full capacity. The reason being the residual fall-out from the $38 billion in cost overruns the government chalked up, which was in turn due to its own regulatory morass and system pains associated with issues like the poor design features built into the Burnaby terminal. The government expects oil producers to pay exorbitant shipping rates designed to rapidly recoup the embarrassing cost overruns. Producers are not prepared to lose money bailing out the government. Guilbeault also knows most producers making use of the Trans Mountain today had negotiated much lower rates with the pipeline prior to its completion.

We can expect the flow of this kind of misinformation to become a gusher in the days ahead.

One hopes there will be adults in charge of both the leave and stay camps. The cause of Western separation can be expected to attract enthusiasts from the fringes of the political spectrum. There will be crackpots and mean-spirited people cheering for both sides. Unfortunately, we need to prepare for the fact the mainstream media will focus on any loosely hinged eccentrics they can find who support separation. Radical environmentalists and climate change alarmists will be treated like selfless planet saving prophets.

From the Fraser Institute

By Julio Mejía and Elmira Aliakbari

In a recent interview with CTV, Prime Minister Mark Carney said he may eliminate Bill C-69, which imposes uncertain and onerous review requirements on major energy projects, and eliminate the cap on oil and gas emissions, so energy projects can “move forward.” Of course, actions speak louder than words and Canadians will have to wait and see what the Carney government will actually do. But one thing’s for certain—reform is needed now.

Last year, when the Trudeau government proposed to cap greenhouse gas (GHG) emissions exclusively for the oil and gas sector, it insisted this was essential for fighting climate change and building a strong thriving economy. However, a recent report by the Parliamentary Budget Officer (PBO) suggests this policy—which would require oil and gas producers to reduce their emissions by 35 per cent below 2019 levels by 2030—could lead to significant job losses, reduced production in the sector, and more broadly, less prosperity for Canadians.

The PBO’s findings add to mounting evidence indicating that the emissions cap will harm Canada’s already struggling economy while yielding virtually no measurable environmental benefits.

Oil and gas form the backbone of Canada’s economy and trade. As the country’s main export, the sector contributed nearly $8 billion in income taxes to federal and provincial governments while adding $74.3 billion to the overall economy in 2024. More importantly, the oil and gas sector provides employment for more than 140,000 Canadian families, offering well above-average salaries.

Several studies have assessed the potential impact of the proposed GHG cap. While estimates vary, they all reach the same conclusion: the cap will force the industry to cut oil and gas production and, in turn, negatively affect the entire economy.

The PBO projects that, under the proposed cap, Canadian firms will be required to cut oil and gas production by 4.9 per cent between 2030 and 2032, compared to what production levels would have been without the policy. As a result, an estimated 54,000 fulltime jobs would be lost, and by 2032 Canada’s economy (measured by inflation-adjusted GDP) will be 0.39 per cent smaller than it otherwise would have been.

There’s also a recent report by Deloitte, which found the cap will reduce oil production by 626,000 barrels per day by 2030 and lead to a decline in oil and gas production of 10 per cent and 12 per cent, respectively. Overall, the country will experience an economic loss equivalent to 1.0 per cent of the value of the entire economy (GDP), translating into the loss of nearly 113,000 jobs and a 1.3 per cent reduction in government tax revenues.

Similarly, a study by the Conference Board of Canada and presented by the Government of Alberta, suggests that the cap’s negative effect would ripple across the economy, resulting in the loss of 151,000 jobs by 2030. Between 2030 and 2040, Canada’s GDP losses could total up to $1 trillion, resulting in the loss of up to $151 billion in revenues for the federal government.

Finally, a recent study found that capping oil and gas emissions would result in significant economic loss without generating measurable environmental benefits. Specifically, even if Canada were to shut down its entire energy industry by 2030—thus removing all GHG emissions from the sector—the resulting global reduction in emissions would be a mere four-tenths of one per cent, a figure too small to impact the Earth’s climate.

The available evidence indicates that the proposed GHG cap could come at a high economic cost while delivering limited environmental benefits.

Julio Mejía

Policy Analyst

Elmira Aliakbari

Director, Natural Resource Studies, Fraser Institute