Unequivocally, Premier Danielle Smith won this battle but the question is: how will it affect the war?.The usual rhetoric was spoken. The pounding of chests took place. The posturing happened. But the verdict was deferred..Don’t worry, it was a technical knockout. Back before the last federal budget was released in late March, there was a flurry of negotiations between the parties affected by Canada’s and Alberta’s climate policies. Remember Danielle Smith’s letters to Justin Trudeau seeking a more cooperative approach?.But the budget came and went and no substantive announcements were made. The reasons for the federal government withdrawing from the negotiations are clear. To arrive at an agreement would have given Smith’s election chances a shot in the arm. She would have proved she could face down the feds and also win major concessions for Alberta’s oil and gas industry. Plus, the federal Liberals were hoping she would lose the election and then the Alberta negotiating landscape would be considerably easier. It was no mistake that in her acceptance speech on election night Smith reminded the feds there was some unfinished business..Let’s review what this war is about..In the climate alarmist’s world, the very existence of humanity is at stake if ‘we’ don’t eliminate our CO2 emissions. There is some vagueness about exactly when the world will end, but the evidence of this truth is all around us. Too little rain, too much rain, forest fires, hurricanes, tornadoes, hail storms (as if these never happened before) not to mention snow on the first day of summer, are all cited as evidence that the end is nigh. Now, in order to save the world, Canadians (sans Saskatchewan) say ‘we’ need to shut down Alberta’s primary industry..This industry provides energy to Canadians so they can drive their cars and heat their homes. It also provides tax revenues to not only the Alberta government, but also to the federal government. Most importantly, it provides the economic foundation that allows the federal government to transfer lots of money from Alberta to Quebec via a system called equalization..In fables, the Alberta industry would be known as ‘the goose that lays the golden eggs.’ Understandably, Albertans ask the question of Canadians 'have you lost your minds?' And they follow-up by saying 'I’m sorry you are having a mental breakdown. It is indeed regrettable that you are not seeking psychiatric help. By the way, you don’t actually have the authority or the jurisdiction to shut us down. So go away and let us mind our own business!'.So how do we interpret Smith’s most recent meeting with the feds? It was a veritable knock-down that has sent the federal Liberals back to their corner, dazed and confused, trying to figure out what to do next. Advantage Alberta. Will there be more negotiations? Absolutely, but the timing of any announcements will likely be more about the upcoming federal election than any urgency to save the planet..The federal Liberals will not back down on their emissions targets. After all, this is the ninth set of federally announced targets that will never be achieved. Why stop now? But this is not the same as a legislated emissions cap which would be clearly unconstitutional and trigger Smith to invoke the Sovereignty Act. Further, how would they even enforce an ‘industry’ emission cap on 300-400 oil and gas companies, refiners and pipeliners. Impossible..The electricity grid all across Canada is facing some severe challenges from the hasty implementation of ‘green’ solutions to electricity generation. With the future forced use of electric vehicles, the stresses on the grid are only going to amplify. Why would any sane provincial government abandon safe, cheap reliable sources for electricity? The answers is they won’t. Saskatchewan just announced the building of a new gas fired generating plant which when completed will have a 40-year life. Premier Scott Moe’s defiant “so come and get me” response to the more and more insufferable Steven Guilbeault was classic Prairies realism..On the regulatory and fiscal framework for Carbon Capture, Utilization and Storage, or CCUS, expect no clarity on what the rules will be and increased subsidies. After all, the feds just promised $32 billion to Volkswagen and Stellantis just to build batteries for electric cars. Surely they can provide just as big subsidies for Canada’s oil producers to reduce their emissions. Expect the Alberta government to step up on subsidies as well and also for First Nations to get a piece of the investment action to further reconciliation..But the real area for further negotiation was mentioned in Smith’s announcement after the meeting. She explicitly mentioned getting British Columbia to the table to talk about future LNG exports. The current situation where Alberta exports natural gas at a discount to U.S. LNG projects, which then reduces global emissions, needs to be acknowledged and addressed. Why should Alberta be penalized for producing gas which is reducing global emissions? Why would the federal regulatory regime hinder further LNG projects and pipelines to move Alberta gas to international markets? If we really want to save the world, then isn’t Alberta gas part of the solution rather than part of the problem?.On the nuclear file I wouldn’t expect much progress. This is not politically popular and the federal Liberals are in no hurry to force nuclear reactors on people, even in vote scarce Alberta..On the whole, it is not clear whether Smith was Luke Skywalker or Hans Solo, but we should be feeling great, at least until the empire strikes back..William D. Marriott is a retired economist who specialized in public policy analysis of the oil and gas industry.
