Can Carney’s climate plan keep his grand bargain alive?

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There are two things Mark Carney needs from the climate plan his government will release next week: distance from Justin Trudeau and a way to keep his grand bargain alive.

The grand bargain is the phrase used by Alberta Premier Danielle Smith to describe the possibility that the Prime Minister will back plans for a new oil pipeline if the industry backs carbon-reduction initiatives, in particular the Pathways Alliance carbon-capture project.

In a broader sense, all of Mr. Carney’s climate policy has amounted to a promise of a grand bargain: that both oil-and-gas development and climate action can be made to fit together.

Now his government is about to release its first real climate policy statement, a “climate competitiveness strategy” that will be folded into the Nov. 4 federal budget. And Mr. Carney wants to keep both sides of the bargain alive.

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What’s not clear is how much of Mr. Carney’s climate policy will actually be in it. After all, Mr. Carney wants Ms. Smith’s Alberta to offer something for the grand bargain, too.

One big goal of the new policy will be to cast off some of the baggage from Mr. Trudeau’s climate policy. Mr. Carney is obviously willing to do that: His first action on becoming prime minister in March was a showy stroke of the pen to cancel the consumer carbon tax.

Politically, the Prime Minister is searching for a new narrative – hence the “climate competitiveness” phrase, designed to suggest economic goals are paramount. Mr. Carney argues that climate action can boost the economy, and his plan can be expected to highlight measures to foster investment in low-carbon sectors and talk of electrification for the data-heavy economy.

But it’s also pretty clear that Mr. Carney is willing to ditch some of the other Trudeau-era regulations – the ones that Ms. Smith loves to hate – and replace them with a revamped, more stringent industrial carbon levy regime.

Mr. Carney’s government is likely to kill the proposed emissions cap on the oil and gas sector put forward under Mr. Trudeau’s tenure, and possibly roll back other regulations. But will it put those things in writing in the plan it will release next week?

After all, if there really is the chance of a grand bargain that includes a pipeline-for-climate-action deal, then you’d expect Mr. Carney would want a quid pro quo from Ms. Smith’s Alberta – a commitment to a new industrial carbon pricing regime.

Mr. Carney’s climate competitiveness strategy was supposed to have been released weeks ago, but it apparently wasn’t ready for the light of day. Now it will be tucked into a sprawling budget that will also be packed with big spending, large deficits, immigration targets, and sundry. That suggests the climate competitiveness strategy will be a slimmed-down statement.

It’s unlikely to be a plan that pleases climate activists. Mr. Carney’s descriptions of a plan that focuses on “results over objectives” and “investments over prohibitions” suggest a step away from committing to targets. It sounds like the emphasis will be on reducing climate intensity – a goal of lowering the emissions produced relative to economic output, rather than substantially reducing total emissions.

But that grand bargain, the idea that oil-and-gas development can be expanded, is still a complicated thing to land.

It’s one thing to agree to approve a new oil pipeline if it is accompanied by a pledge to build the Pathways Alliance carbon-capture and sequestration project to reduce oil sands emissions. The federal government still couldn’t be certain that oil producers that have for years balked at the cost of the project would actually build and operate it.

Mr. Carney would presumably want to see Alberta sign on to his plans for a stricter industrial carbon pricing scheme, which would provide an incentive to build the carbon capture project. And that wouldn’t be reliable unless Alberta takes part in backing that system with financial measures that would make the cost of industrial carbon credits predictable over decades.

But that’s a complicated deal, with the tensions of Alberta-Ottawa politics in between. Setting out his whole climate policy now might make reaching that kind of deal harder. And Mr. Carney’s goal will be to keep the promise of a grand bargain alive.