Janice MacKinnon is a professor at the University of Saskatchewan and an executive fellow at the University of Calgary’s School of Public Policy. She was appointed by former premier Jason Kenney in 2019 to lead a panel examining Alberta’s finances.
A pumpjack draws out oil and gas from a well head as the sun sets near Calgary, Alta.Jeff McIntosh/The Canadian Press
The federal government’s plan to introduce “just transition” legislation to help move oil and gas workers to low-carbon jobs has raised alarm bells in Alberta, Canada’s largest energy-producing province, and reflects a pattern of federal-provincial relations that helps to explain our limited progress in addressing climate change.
An obvious question is: Why single out oil and gas as the sector for a just transition? Workers in many other sectors of the economy will face career changes, whether because of climate-change measures or technological change, such as digitization.
Singling out oil and gas workers has caused major problems in Alberta and shows two levels of government seemingly working at cross purposes over employment in oil and gas. A major concern of the Alberta government is a shortage of skilled workers. To address the problem, Alberta initiated a media campaign to attract workers from other parts of Canada, and in the third quarter of last year, more than 32,000 people moved to the province.
Of particular concern are labour shortages in oil and gas as the industry ramps up production to meet global demand. Surely it is preferable for that demand to be met by expansion of the Canadian industry rather than leaving the markets to dictatorships with lower environmental, social and governance standards.
However, expansion is being constrained by labour shortages. As of June, 2022, the unemployment rate for oil and gas was just 1.6 per cent – the lowest across any of the industries tracked. One challenge is persuading workers that there is a long-term future in oil and gas. Companies stress decarbonization of the industry, and that the transition will evolve over decades, not years.
The companies’ messages about the future of oil and gas are, however, undermined by the federal government message that it is developing legislation to transition oil and gas workers to low carbon industries.
The disconnect between the federal and provincial messages about employment in oil and gas can be partly explained by the role of the province in devising the federal strategy. Jonathan Wilkinson, federal Minister of Natural Resources, said his government had consultations with energy companies, unions and the province. Yet a provincial government is not merely another stakeholder to be consulted; rather, it is the provinces, not the federal government, that have constitutional jurisdiction over natural resources like oil and gas, and education and skills training. Alberta should have been at the table from the beginning, not later in the process after the establishment of key plan parameters, as Mr. Wilkinson suggested.
The federal-provincial problems regarding the just transition are not an isolated example. As well as having jurisdiction over natural resources, the provinces share jurisdiction with the federal government over the environment. Because of that, a form of co-operative federalism – in which both levels of government respect each other’s jurisdiction but work together on common goals – is required to make meaningful progress on issues like climate change.
Often, as in the case of emissions reductions in the oil sands, the federal government acts unilaterally in establishing its plan, then expects the provinces to implement and even finance it. Lack of co-operation between the two levels of government helps explain why Canada has had nine climate plans since 1990 and has failed to hit any of their targets.
Moreover, messages and language matter and can have adverse effects on people’s lives and livelihoods. High targets for oil and gas emissions reductions that can only be achieved by production cuts have led to a decline in investment in the sector. The resulting shortages of supply have contributed to escalating prices for gas for cars and home heating bills – hardly luxuries in a vast, cold country like Canada.
Similarly of concern, when the federal government narrative is about a just transition for oil and gas workers, prospective workers can easily conclude that the industry is being phased out, with dim prospects for a long-term career in it. The narrative makes recruiting in oil and gas more challenging in a tight labour market.