It has been three months since Prime Minister Mark Carney and Alberta Premier Danielle Smith signed their memorandum of understanding (MOU) for a new bitumen oil pipeline to the west coast. With an April 1 deadline for a final deal with the oil industry only a month away, how are negotiations for this “grand bargain” going?
Private sector investors are still nowhere in sight. If a pipeline and associated Pathways Alliance carbon capture and storage (CCS) project goes ahead, Canadian taxpayers will be unsurprisingly footing most of the bill. The signing deadline will almost certainly be missed, and most major stakeholders are in open conflict.
In other words, not great.
The Canadian Association of Petroleum Producers is already demanding major concessions to water down industrial carbon pricing meant to finance the Pathways project. Environmental groups fault the federal government for giving up a laundry list of important climate policies including a proposed emissions cap, clean energy regulations, and the greenwashing provisions in the Competition Act.
Ottawa committed to waiving the oil tanker ban on the north British Columbia coast, enraging local First Nations whose Traditional Territories would be decimated by an oil spill. The feds also caved on contentious tax credits for enhanced oil recovery from CCS and further delayed methane reduction targets. Despite such sweeping capitulations, no private pipeline proponent has come forward, and it is now obvious that none will.
Former Alberta Energy Minister Sonya Savage said that industry still expects taxpayers to open their wallets for this latest oil patch boondoggle. Enbridge spilled the same tea on an earnings call with investors. When asked if his company would be the mythical pipeline proponent, CEO Greg Ebel said, “that’s not the type of risk that we’re looking to take on at this time. We don’t need to with all the other opportunities.”
Oil industry grievance has become a commodity perhaps more valuable than oil itself. Cultivating a narrative of meddlesome political interference previously netted bitumen producers the $34 billion Trans Mountain pipeline paid for by Canadian taxpayers. Threats of another contentious pipeline corralled the BC government into supporting an increase in capacity of the Trans Mountain pipeline by up to 400,000 barrels per day. An industry hit list of important climate policies has finally been killed off after years of patient spin machine effort.
With that stunning record of success, why would the oil patch dial down the rhetoric now? Following the Carney- Smith MOU smiling photo op on November 27, all the main stakeholders are either genuinely or performatively pissed off and the clock is ticking.
The root of this impasse is an endemic sense of entitlement of Canada’s most coddled industry. The non-profit Pembina Institute points out that if Alberta gets a bespoke policy carve-out for methane reductions, it would be grossly unfair to other industrial emitters across the country putting in the hard work and investments required to lower climate destabilizing emissions. Despite the federal government being on the hook for up to half of the Pathways project and billions more in subsidies from Alberta, the largest bitumen producers still refuse to pony up any of their own money.
If the MOU was intended to lower the rhetorical temperature with the Alberta government, it has so far been an utter failure. The ink was barely dry on the agreement when premier Smith reneged on Alberta’s commitment to raise provincial industrial carbon pricing to meaningful levels.
The current price has been frozen at $95 per tonne and was supposed to raise to $130 when the agreement is finalized. Just one week after the much-lauded agreement, the Alberta government flooded the market with additional tradeable carbon credits crashing the actual price to below $20. “Expect Alberta to continuously test the federal government for weakness, using moves like this to inform their approach at the negotiating table,” warned Dan Woynillowicz ofPolaris Strategy.
Smith conjured up additional headaches for Ottawa by enacting sweeping changes to electoral law just before Christmas, paving the way for separatists to move forward with a referendum question previously deemed unconstitutional by the courts. MAGA-aligned interests now openly conspire to assist in the breakup of Canada, while Alberta extremists brag about multiple meetings with the hostile Trump Administration.
As this constitutional fire smoulders, Smith is busy igniting several others. The premier recently took to the airwaves to announce a new divisive referendum this fall demanding jurisdiction over immigration, the ability to appoint federal judges and opt out of federal education and health programs while still receiving funding from Ottawa.
It should now be obvious that continuing to shovel concessions at Danielle Smith or her overlords in the oil industry will only lead to additional demands. If there is one winner in the MOU debacle, it is cagey Mark Carney. Sacrificing Indigenous relations and climate policy in favour of a pipeline without a business case or proponent seems to play well in Alberta.
The Liberal Party of Canada – typically despised in the province – is now polling neck and neck with the Conservatives. A new bitumen pipeline is neither needed nor profitable, but perhaps that is not the point. In politics, popularity is the only outcome that matters.
