'Not be tolerated': Alberta files formal response to proposed oilsands emissions cap

Alberta Premier Danielle Smith addresses a news conference in Ottawa on Monday, Feb.5, 2024.THE CANADIAN PRESS/Sean Kilpatrick

Alberta and two prominent business groups have released formal responses to a proposed federal emissions cap as the province's environment minister was slated to meet with her federal counterpart.

"This cap is not realistic or effective, will not achieve its grandiose emissions targets and will not be tolerated in Alberta," says the province's official response.

Federal Environment Minister Steven Guilbeault was to meet with Alberta Environment and Protected Areas Minister Rebecca Schulz Monday.

Guilbeault has proposed to cap emissions across the energy sector at between 35 to 38 per cent below 2019 greenhouse gas emission levels and companies will be able to purchase credits to allow for flexibility.

Alberta’s concerns were echoed by the Canadian Association of Petroleum Producers and the Business Council of Alberta, a big-business lobby group.

All three say an emissions cap would achieve the opposite of its intended goals.

"There are other existing and proposed policies that will more effectively contribute to Canada's long-term emission reduction goals," wrote the association.

The council said those goals are "best accomplished through a robust and transparent price on carbon."

Alberta's formal response to Ottawa's proposal says the cap would undercut the work that the province has been successfully pursuing "for decades" to reduce emissions.

It says oilsands production has already risen above the forecasts that were used to establish the proposed 100-megatonne limit and that the technology needed to bring emissions down enough doesn't yet exist.

The document repeats arguments that Ottawa's plan violates the Constitution.

Alberta is one of the few places in North America with rising greenhouse gas emissions and is by far Canada's largest emitter. The oilsands recently set a production record and remains among the most carbon-intensive oil producers in the world.

Economists agree a production cap may not be the most economically efficient way to meet Canada's Paris climate goals.

University of Alberta energy economist Andrew Leach says targeting the oilsands could mean Canada loses out on the value of the oil produced. Cutting emissions elsewhere could achieve the same climate impact with less cost — a goal that could be achieved with a significant, broad-based carbon tax.

Leach, in an interview, said about 90 per cent of the emissions from agriculture are not priced even though that industry releases about the same amount of carbon as the oilsands.

"You're not going to solve this problem in Canada by going after one sector," he said.

Still, Leach noted Alberta’s argument is also not entirely consistent.

While it has had a carbon price on industrial emissions since 2004, Leach said the province has opposed measures such as clean-fuel standards and electricity grid regulations.

"There's a simultaneous commitment to emissions reduction and opposition to any policy that might reduce emissions,” he said.

Leach added that Alberta's constitutional argument is weaker than its anti-cap position. While the Supreme Court has recently ruled against two federal environmental initiatives, those rulings don't provide much support to Alberta's argument on the emissions cap, he said.

The Court has ruled in the past that Ottawa can regulate greenhouse gases. It's also hard for Alberta to argue the federal government has no jurisdiction over anything that affects production, said Leach — regulation of pipelines being one example.

In an emailed statement, Guilbeault said "Putting a cap on pollution is essential to the long-term competitiveness of the oil and gas sector in a global economy that is advancing towards net-zero emissions by 2050.

"We will continue to consult the sector as we develop our approach. No industry should be allowed unlimited pollution and we hope the Alberta government will see how beneficial and essential this policy is for our environment and our economy.”

This report by The Canadian Press was first published Feb. 5, 2024.