Alberta elects United Conservative Party, promising a new climate policy, and to fight for the oil and gas industry

jason kenneyCitizens of the province of Alberta woke up to a new government on April 17th, with the election of the United Conservative Party (UCP), led by Jason Kenney.  After what Macleans magazine called  The most visceral Alberta election campaign in memory and CBC called “toxic” and “divisive” , the UCP election platform , Alberta Strong and Free  will begin to unfold, based on the promise to “ fight without relent to build pipelines. We will stand up for Alberta and demand a fair deal in Canada. We will fight back against the foreign funded special interests who are trying to landlock our energy.”  Ontarians will recognize much of the same rhetoric as that of  the Doug Ford Conservative government, including  cancellation of the “job-killing carbon tax”;  an “open for business” approach  to “cut red tape”, including worker protection; and creating jobs – in Alberta’s case, oil and gas jobs.

The CBC analysis of the election outlines further implications for the rest of Canada in  ” Jason Kenney won big — and the Ottawa-Alberta relationship is about to get unruly” , which highlights Kenney’s  combative style, his antipathy to the current Liberal government of Justin Trudeau,  and his close connections with the federal Conservative party (having served in Stephen Harper’s government).  The National Observer, on the morning after, sums up what to expect: “Jason Kenney’s United Conservatives issue warning to Suzuki Foundation after winning Alberta majority” , which also touches on what progressives can expect:  ”… the premier-designate delivered a warning to environmentalists, accusing them of being funded by foreign interests who are trying to shut down the Alberta oil and gas industry. He pledged to launch a public inquiry into their activities, singling out several charitable organizations including the David Suzuki Foundation  and the Tides Foundation …”

From Alberta: Calgary Herald election coverage  is triumphant, including Columnist Chris Varcoe with “Expectations are high as Kenney gives voice to Alberta’s angst“; Lucia Corbella with  “Kenney the Ironman performs miracle on the Prairies”In“Jason Kenney’s united right wins big, dashing NDP dreams of a Rachel Notley repeat“, David Staples from the Edmonton Journal acknowledges that growing the oil industry  is “a difficult, complex, multi-dimensional battle” but  “when it comes to oil and gas policy Alberta hasn’t been this united in a generation.”  The majority of his Opinion piece discusses “the malignant force that helped to divide us, the “Tar Sands campaign” which saw tens of millions in funding coming from U.S. foundations dedicated to demonizing the oilsands and landlocking Alberta oil.” He calls on the NDP to support the UCP plan for a public inquiry into “foreign interference” and  states that the NDP, the federal Liberals, and groups such as the Pembina Institute and Greenpeace are tarnished by association with that “Tar Sands Campaign”.

Union voices were strong in the Alberta Election:  The  Alberta Federation of Labour (AFL) was extremely active in support of the NDP, with a “Next Alberta” campaign built around the AFL  12 Point Plan.  With a very pragmatic orientation, the Plan makes no mention of “Just Transition” or coal phase-out, and emissions reduction is proposed in these terms:  “Reduce carbon emissions, as much as possible, from each barrel of oil produced in Alberta so, we can continue to access markets with increasingly stringent emission standards. ..Our goal should be to make sure that Alberta is last heavy oil producer standing in an increasingly carbon constrained world.”  The AFL also commissioned a report by Hugh Mackenzie: The Employment Impact of Election Promises: Analysis of budgetary scenarios of UCP and NDP platforms , which concluded:  “Under the Notley budget plan, 5500 jobs would be lost. Under the Kenny budget plan between 58,000-85,000 jobs would be lost – more than were lost in the recession of 2015-16.” President of the AFL, Gil McGowan, discussed the report in an Opinion Piece,  “How NOT to fix Alberta’s hurting jobs economy in The Tyee.

Unifor, the union which represents thousands of workers at oil producers Suncor, Imperial, Husky and Shell, also mounted  an active Unifor Votes campaign which acknowledges that “in oil and gas, our biggest customer has become our biggest competitor”.  Unifor calls for policies for  “Next Generation Energy Jobs” to invest in new pipeline infrastructure ;  diversify and upgrade in the oil and gas sector and ” Use our resource wealth as a springboard to the future.”

Stepping back, here are some of the  articles which appeared during the election campaign, and which summarize the environmental and economic issues:  “Eleven Ignored Issues that Albertans Should Think about Before They Vote” (April 12), by  Andrew Nikoforuk, outlining :  the risks of global oil price volatility; the need for economic diversification; the growing fiscal pressure on oil-producing states; the cost of climate change; the need to promote a leaner and more local economy as opposed to the boom-and-bust one; Alberta’s failure to collect its fair share of profits from bitumen production; and, hanging over them all, the risk of economic collapse.”  In  “Analysis: Alberta Misses Out On Grown-Up Conversation About Fossil Transition” ,  Mitchell Beer of The Energy Mix compiles the statements from Nikoforuk, as well as economists Mark Jaccard, Vaclav Smil,  and columnist Gary Mason, concluding with: “ Smart, resourceful, and tech-enabled a place as it is, “too many in Alberta want to believe that a new pipeline will fix all that ails the province,” Mason writes . “That’s a fantasy, one that even the political leaders running to govern the province understand (but won’t admit publicly).” And several blogs from the Parkland Institute examine the implications for workers, including “UCP Platform will drive down wages”  .

Canadian banks still investing in yesterday’s economy – fossil fuels

offshore oil rigBanking on Climate Change – Fossil Fuel Finance Report Card 2019 , the 10th annual report by BankTrack and a coalition of advocacy groups, has been expanded to include coal and gas investors, as well as oil, as it ranks and exposes the  investment practices of 33 of the world’s largest banks. The newly-released report for this year reveals that $1.9 trillion has been invested in these fossil fuels since the Paris Agreement, with the four biggest investors  all U.S. banks – JPMorgan Chase, Wells Fargo, Citi and Bank of America. But Canadian banks rank high: RBC ranks fifth, TD ranks 8th, Scotiabank ranks 9th, and Bank of Montreal ranks 15th.  Among those investing in tar sands oil : “five of the top six tar sands bankers between 2016 and 2018 are Canadian, with RBC and TD by far the two worst.”

In addition to the investment tallies, the report  analyzes the banks’ performance on human rights, particularly Indigenous rights, as it relates to the impacts of specific fossil fuel projects, and climate change in general.  The report also describes key themes, such as tar sands investment, Arctic oil, and fracking.

In response to the Banking on Climate Change report, SumofUs has mounted an online petition It’s time for TD, RBC and Scotiabank stop funding climate chaos.    An Opinion piece in The Tyee,  “How Citizens can stop the big five ” calls for a citizens strike on Canadian banks – particularly by young people and future mortgage investors, and points out the alternatives: credit unions, non-bank mortgage brokers, and ethical investment funds, (such as Genus Capital of Vancouver ).  But while individual Canadians can make ethical choices, that doesn’t seem to be the path of our public pension plan, the Canada Pension Plan Investment Board, which manages $356.1 billion of our savings.  On March 19, Reuters reported that the CPPIB  will invest $1.34 billion to obtain a 35% share in  a $3.8 billion joint venture with U.S. energy firm Williams to finance gas pipeline assets in the Marcellus and Utica shale basins.

Investment attitudes are shifting away from fossils:  The Norwegian Sovereign Wealth Fund continues to lead the way: In March, it announced it would divest almost $8 billion in investments in 134 companies that explore for oil and gas; in April, it  announced it will  invest in renewable energy projects that are not listed on stock markets – a huge marekt and a significant signal to the investment community, as described in   “Historic breakthrough’: Norway’s giant oil fund dives into renewables” in The Guardian (April 5) .

In Canada, with the Expert Panel on Sustainable Finance   scheduled to report shortly, the Bank of Canada announced on March 27 that it has joined the  Central Banks’ and Supervisors’ Network for Greening the Financial System (NGFS), an international body established in December 2017 to promote best practices in climate risk management for the financial sector.  (This is despite the fact that Bank of Canada Governor Stephen Poloz discussed the vulnerabilities and risks in Canada’s financial system in his year-end progress report in December  2018   – without ever mentioning climate change. )  In the U.S., on March 25, the head of the  Federal Reserve Bank of San Francisco released Climate Change and the Federal Reserve  , which states: “In this century, three key forces are transforming the economy: a demographic shift toward an older population, rapid advances in technology, and climate change.”  A discussion of both these developments appears in “Bank of Canada commits to probing climate liabilities” in The National Observer (March 27) .

And if we needed more proof that coal is a dying industry:  The Institute for Energy Economics and Financial Analysis released Over 100 Global Financial Institutions Are Exiting Coal, With More to Come  in February, drawing on the ongoing and growing  list of banks which have stopped investing in new coal development, as maintained by BankTrack.   The detailed IEEFA report states that “34 coal divestment/restriction policy announcements have been made by globally significant financial institutions since the start of 2018. In the first nine weeks of 2019, there have been five new announcements of banks and insurers divesting from coal. Global capital is fleeing the thermal coal sector.”  Proof: global mining giant Glencore announced on February 20 that it would cap its coal production at current levels in  “Furthering Our Commitment to the Transition to a Low-Carbon Economy. “

With an election coming, updates on Alberta energy policy

pembina energy alberta 2019With a provincial election looming large in Alberta, the Pembina Institute released a new publication, Energy Policy Leadership in Alberta, on March 8,  with  this introduction: “Like most Albertans, we want to see the responsible development of oil and natural gas. The province’s policy and regulatory environment must ensure that our resources are produced in a manner that is both economically and environmentally sustainable. … Alberta’s future as an energy provider is directly linked to an ability to demonstrate a demand for its products in a decarbonizing world. With the right policies, Alberta can be competitive, attract investment, spur innovation and remain a supplier of choice in the global energy market.”  The 17-page document, intended to reach across political partisan thinking, continues by outlining 23 policy recommendations “to unleash innovative technologies, deploy renewables, promote energy efficiency, continue greening our fossil fuel industries, and reduce climate pollution.”

The Alberta government itself is active in getting out its story about its energy policies.  Most recently, the Alberta Climate Leadership Progress Report  was released in March 2019, documenting the fiscal year of April 1, 2017 to March 31, 2018 –  the first year Alberta collected a carbon levy.  The report states that a total of $1.19 billion of carbon revenue was invested back into the economy that year, and a press release of March 7  catalogues the impacts, including:

  • Climate Leadership Plan (CLP) investments have supported more than 5,000 jobs in 2017-18. CLP commitments, such as the Green Line in Calgary, will support a further 20,000 jobs in the coming years.
  • Combining 2016-17, 2017-18 and 2018-19 fiscal years, a total of $978 million in rebates has made life better and more affordable for lower- and middle-income Albertans.
  • The solar industry in Alberta has grown by more than 800 per cent…. About 3,100 solar installations have been completed across the province.
  • Alberta is forecast to cut emissions by more than 50 megatonnes in 2030.

Further press releases from the government :

“Alberta solar on the rise“: (Feb. 15) announced a new contract for  solar electricity with Canadian Solar,  to run from 2021 to 2041,  at an average price of 4.8 cents per kilowatt hour, sufficient  to supply approximately 55 per cent of the government’s annual electricity needs while creating jobs in Southern Alberta.

Premier’s plan unlocks $2-billion energy investment” (Feb. 20) announced that the province will provide up to $80 million in royalty credits, funded through the Petrochemicals Diversification Program , to support phase one of the a Methanol production project by Nauticol Energy  . Construction is scheduled to begin in 2020, with a commercial operational date set for 2022; the government states that the project will create “as many as 15,500 construction jobs and an additional 1,000 permanent jobs.”

The Alberta Community Transit Fund announced a program which will provides $215 million over 4 years .  The press release lists 33  municipal projects awarded funding  on March 7, 2019.

Supreme Court rules in Redwater: bankruptcy is no escape from “polluter pays”

Supreme court of canada buildingOn January 31, the Supreme Court of Canada released a long-awaited, precedent-setting decision which holds fossil fuel companies responsible for the clean-up costs of their abandoned operations, and gives environmental clean-up costs precedence over other creditors’ claims.  The case arose from the 2015 bankruptcy  of Redwater Energy, a small, Calgary-based oil and gas company; the agent managing the  bankruptcy was proposing to  sell the company’s  profitable wells to pay off debts, and leave the clean-up costs of the other non-producing wells to the Orphan Well Association (OWA), a provincial, industry-funded agency.  The Supreme Court provides its own “Case in Brief” summary of the the case,  Orphan Well Association v. Grant Thornton Ltd.  here , with links to all the official documents.  The full decision is here ; French-language versions of the Case in Brief , and the full decision are also provided. The response by the Orphan Well Association is here  .

For a brief reaction:  “Redwater decision reassuring, but we aren’t out of the woods” by the Pembina Institute (Jan. 31) or from the  National Observer special series Legacy of Liabilities ,  a summary of the decision  and the more detailed, “Alberta lauds court ruling but has no oil well cleanup plan”

Deeper background and analysis appears in  “Alberta’s Mega Oil and Gas Liability Crisis, Explained” in The Tyee , in which Andrew Nikoforuk asks, “Just how will an increasingly indebted industry, hobbled by low energy prices and rising costs, find the up to $260 billion needed to clean up its inactive pipelines, wells, plants and oilsands mines as it enters its sunset years?”  He concludes with words from Regan Boychuk, a founder of Reclaim Alberta, an advocacy group which began in 2016 to propose an Alberta Reclamation Trust , which would clean-up inactive wells and provide funding for job creation in the energy sector.   Boychuk’s own insider’s view appeared in the National Observer as “Putting the Supreme Court’s Redwater decision in context”  (Feb. 1) .  (Boychuk also provided a briefer Opinion piece as a guest blogger in David Climenhaga’s Albertapolitics.ca ).

Other detailed articles:  An Explainer from The Narwhal: “What the Redwater ruling means for Alberta’s thousands of inactive oil and gas wells”  or from a legal point of view, from Osler law firm, “Supreme Court of Canada decision in Redwater: Early Implications “. 

It is clear that the implications of this decision are huge and expensive, not only for Alberta, but for all extractive industries across Canada.  As the Pembina Institute points out:  “obligations have steadily grown, and now include over 80,000 inactive oil and gas wells, facilities, and pipelines as well as 1.4 trillion litres in fluid oilsands tailings. The Government of Alberta officially estimates it will cost CAD$57 billion to cleanup these sites, though there are ongoing concerns about the accuracy of this figure. Conversely, only $1.2 billion is currently held in securities to protect the public. ”  (A joint investigation by the National Observer, Global News, the Toronto Star, and StarMetro Calgary  in November 2018 estimated that the actual clean-up costs are approximately $260 billion in Alberta alone).

The latest analysis: What does Canada gain from the Trans Mountain Pipeline purchase?

pbologoInto Canada’s highly sensitive and highly political debate over pipelines comes the report on January 31 from the Parliamentary Budget Officer (PBO) :  Canada’s purchase of the Trans Mountain Pipeline – Financial and Economic Considerations . The report provides an overview and timeline of the negotiations and federal government purchase of the pipeline and its assets from Kinder Morgan, in August 2018 . The PBO financial analysis estimates that the $4.4 billion  price paid by the government  was at the high end of the value, and calculates the effects of construction delays or higher construction costs on the price that the Government could negotiate for its re-sale –for example, a one year delay would result in a loss of value $693 million. The report finds that the economic benefits relate to the pre-construction and construction periods: impact on GDP is estimated to peak at 0.11 per cent in 2020; impact on employment is estimated at  7,900 in 2020, with both declining thereafter.

“The main benefit of the TMEP would arise from the increased capacity of Canadian producers to sell oil to export markets, which could lead to a reduction in the differential between Western Canadian Select (WCS) grade of crude oil and other grades, most notably West Texas Intermediate (WTI).”  Stating “It is difficult to determine the impact of the TMEP on the price differential between WTI and WCS grades”, the report refers to estimates in its December 2018 report to Parliamentarians, and flags the other factor which might affect the economic impact, which is “increasing transportation capacity.”

Coinciding with the PBO report, the National Observer has brought an article out of its archives, which critiques the economic arguments used by supporters of the Trans Mountain purchase. “False oil price narrative used to scare Canadians into accepting Trans Mountain pipeline expansion” was written by Robyn Allen, and was originally published in November 2018.  More recently, she has also written,  “What Bill Morneau didn’t tell Canadians about the Trans Mountain Purchase” (Dec. 5 2018)  and an Opinion piece “Trudeau’s oilsands supply outlook reflects a future that doesn’t exist” (Jan. 25 2019)  , which concludes: “It is madness pretending that Trans Mountain’s expansion is financially or economically viable. A return to sanity begins with getting realistic about the supply of heavy oil in a world that knows — even if Trudeau won’t take his head out of the oilsands — that neither the economic system nor the ecosystem can, or will, support rapid oilsands growth.”

orcasagainstvancouverskylineFor coverage of both the economic and environmental aspects, follow the National Observer Special Reports on Trans Mountain.  An up-to-date review of the  environmental arguments by experts Marc Jaccard and Kirsten Zickfeld  appears there in “IPCC authors urge NEB to consider climate impacts of Trans Mountain pipeline expansion” (Jan. 21).

The National Energy Board documentation about all stages of the Trans Mountain Expansion project is here (and  here for French documentation).  Information about the current Reconsideration process is here   (and here in French); the deadline for the Reconsideration report to the government is February 22, 2019.