Prime Minister Mark Carney has signed a deal with Alberta Premier Danielle Smith that the two sides say will make Canada a ‘global energy superpower.’Jeff McIntosh/The Canadian Press
Boom.
Until this week, among the more reliable constants in Canadian politics were that the federal Liberals would oppose building any new pipelines to the B.C. coast (the Trans Mountain exception proving the rule); that Alberta’s United Conservatives would oppose any extension of carbon pricing (beyond what the province already had in place); and that the two governing parties, so different in outlook and support bases, would remain perpetual sparring partners.
All that has just changed. The memorandum of understanding Mark Carney and Danielle Smith have just signed goes far beyond the fate of a single pipeline. It is an intricate, many-sided puzzle, requiring buy-in not only from the governments of Canada and Alberta, but British Columbia, Indigenous groups, and regulatory authorities; involving issues ranging from trade diversification to climate change to national security; covering industries from oil and gas to electricity transmission to nuclear power to artificial intelligence; and requiring changes in a number of federal and provincial regulatory policies.
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But as any negotiator can tell you, the more pieces there are on the table, the more ways there are to get to a deal. And what a deal. This is not just a tentative or one-off agreement, full of loopholes and off-ramps. The federal and Alberta governments have just committed to a continuing partnership in the pursuit of two seemingly contradictory goals: making Canada a “global energy superpower,” and reducing greenhouse-gas emissions to net zero by 2050.
We are accustomed to seeing agreements struck on the basis of the lowest common denominator. This is not that.
Leave the pipeline issue to one side for a moment. In broad strokes, the two governments have each agreed to drop their worst, most costly climate policies. The feds will not proceed with the pending oil-and-gas emissions cap, and will exempt Alberta from the clean electricity regulations. In exchange, Alberta will agree to a much more stringent industrial carbon pricing regime, with “a financial mechanism” to ensure this remains in place for the long term.
That was supposed to have been the bargain with carbon pricing from the start: to replace existing, much costlier subsidy and regulatory policies. Instead, under Justin Trudeau, the Liberals layered carbon pricing on top of those existing policies, then added some new ones on top of that. Now we appear to be going back to square one – with the support and participation of the conservative government of Alberta.
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The pipeline part of the deal is equally ambitious. There had been speculation that Ottawa’s endorsement would be lukewarm at best: “We won’t stand in the way, but we won’t do anything to promote it, either.” That is not what this appears to be. The Carney government has agreed to formally declare that a bitumen pipeline carrying “at least one million barrels a day” is a “project of national interest” for the purposes of expedited review under the Building Canada Act. If approved, it will “enable” the export of Alberta bitumen, including, “if necessary,” by making “appropriate adjustment” to the tanker ban on the B.C. north coast.
And the two governments will work together in support of the Pathways carbon capture and storage project: an expensive and unproven concept, but one whose economics is dependent on a serious carbon pricing regime. Notably, the agreement declares each, Pathways and the pipeline, to be contingent on the other. The economics are debatable, but the politics is salutary. We’re used to thinking of climate change policy as being about saying no to building things. This is about building something.
Moreover, the two governments commit to negotiating with the government of British Columbia, which has to date pronounced itself squarely against the pipeline project. The calculation is that it can be brought onside with the right offer, whether by Alberta (“related to … projects of interest that involve the Province of Alberta”) or Ottawa (regarding “other projects of national interest in their jurisdiction.”) It’s not inconceivable a deal can be reached: Public opinion in B.C. is actually in favour of the idea.
That still leaves many questions unanswered. Ostensibly, the pipeline is to be “privately financed.” We’ll see. There is also a commitment to consult with (and “where appropriate, accommodate”) Indigenous groups, in the hope that with enough equity participation and other economic benefits enough of them can be brought on board. We’ll see, again. The Prime Minister may also have to face down a revolt from some Liberal MPs, especially with the departure from cabinet of Steven Guilbeault, the former environment minister. I do not anticipate this will trouble him much.
Because the political prize to be won is considerable. Mr. Carney has been taking dead aim at the centre ground in Canadian politics, so long deserted, from the moment he declared his candidacy for Liberal Leader. With this agreement, he can fairly claim to have captured it.