Alberta launches ad campaign against federal oil and gas emissions cap

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The Alberta government has turned up the heat on Ottawa’s emissions cap for the oil and gas sector, unleashing a new $7-million national advertising campaign against the incoming policy.

The UCP government rolled out an initiative on Tuesday that calls on Ottawa to “Scrap the Cap,” saying the proposed federal regulation will cause job losses and damage the country’s economy.

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It claims the emissions limit will cap Canadian oil and gas production — something the federal government rejects — and “make groceries, gas and all of life’s necessities even more expensive.”

“We need to raise awareness that this is not just an emissions cap,” Alberta Environment Minister Rebecca Schulz said in an interview.

“This is, quite frankly, an energy production and Canadian prosperity cap. It’s going to increase the costs of our day-to-day lives.”

The campaign includes advertisements that will run in Alberta, Ontario, New Brunswick, Nova Scotia and British Columbia. It follows another advertising effort — called “Tell the Feds” — the UCP government began last year against the Clean Electricity Regulations.

In its new campaign, the province claims: “Ottawa’s energy production cap will make groceries more expensive.”

The ads also assert the federal proposal would lead to up to 150,000 fewer jobs by 2030, and up to $419 less per month for the average Canadian family to spend.

At a news conference in Calgary, Premier Danielle Smith characterized the cap at various times as ideological, irresponsible and dangerous, warning: “It will kill jobs and it would ruin economies.”

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On Tuesday afternoon, federal Natural Resources Minister Jonathan Wilkinson and Environment Minister Steven Guilbeault responded with their own missive, insisting the policy will not limit petroleum sector output.

“Repeating a lie does not make it true. Our government’s commitment is to drive down pollution from the oil and gas sector, not to cut production,” the federal ministers said in a joint statement.

“Instead of wasting $7 million in taxpayer dollars to spread thoroughly debunked disinformation to appease her base ahead of her leadership review, Premier Smith should focus on collaborating with us to protect Albertan energy workers.”

But the province points to several third-party reports released this year that examine the economic consequences of the federal policy, including studies for the Alberta government by Deloitte and the Conference Board of Canada.

The Deloitte report estimates the cap could lead to a 10 per cent reduction in Canadian oil production and 12 per cent drop in natural gas output by 2030 from its base case. It projects Alberta’s GDP would be 4.5 per cent lower by 2040.

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The Conference Board of Canada report says the cap would lead to significantly slower growth of the oil and gas sector, down about 11 per cent from the think-tank’s base case.

The negative economic effects include up to 151,000 jobs lost by the end of the decade, and Canada’s nominal gross domestic product (GDP) growth lowered cumulatively between $600 billion and $1 trillion from 2030 to 2040, it states.

The province’s assessment of the effect on Canadians’ spending comes from Alberta Finance’s analysis of the studies, Schulz said.

“When we take those reports into account and we look at all of those pieces, that domino effect of less money earned, again, means less money to spend, and that would be the impact in terms of a basic cost increase for Albertans and for Canadians,” she added.

Canada is the world’s fourth-largest oil producer and fifth-largest natural gas producer. Across the country, the sector employed 211,000 people last month.

It’s also the country’s largest emitting industry, responsible for 31 per cent of all emissions in 2022.

The federal government aims to reduce emissions in the country by 40 to 45 per cent by 2030 and reach net-zero status by 2050. It has already implemented a national price on carbon and clean fuel regulations.

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At last year’s COP28 climate summit, the federal government released draft regulations mandating the upstream oil and gas sector cut its methane emissions by at least 75 per cent by 2030.

The new emissions cap would make Canada the first major oil and gas exporter to adopt such a policy.

It seeks to reduce industry emissions by 35 to 38 per cent — from 2019 levels — by the end of the decade. Flexibility measures, such as allowing companies to purchase offset credits, could drop that figure to 20 per cent.

“Today’s statements from the government of Alberta underscored that there is no comprehensive provincial plan to address the sector’s emissions,” Pembina Institute executive director Chris Severson-Baker said Tuesday in a statement.

University of Calgary economist Trevor Tombe said the emissions cap isn’t sound public policy and will harm the economy and lower productivity, but he questioned the notion it will boost grocery prices.

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“There is no link between the emissions cap and world oil prices, and therefore we shouldn’t view the cap as bad because it will make groceries more expensive,” Tombe said.

“We would see it as bad because it’s a very expensive way to lower emissions.”

Alberta is also eyeing a legal challenge to the cap. The Constitution says provinces can exclusively make laws related to the exploration, management and development of non-renewable natural resources.

“We’re pleased that Alberta is stepping up and pushing back on something that we feel is provincial jurisdiction,” said Tristan Goodman, president of the Explorers and Producers Association of Canada.

As for the regulations, Smith expects the draft emissions cap rules could be unveiled by Guilbeault at next month’s COP29 conference in Azerbaijan.

The regulations will be released in the coming weeks, but federal officials indicate it’s not expected to be made public at the climate summit.

cvarcoe@postmedia.com

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