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Canada's uncivil war

A big win for populist conservatives in Canada’s oil heartland threaten national energy and environmental policies

People in Canada's oil-producing province of Alberta are mad as hell—at most of the rest of the country—and they aren't going to take it anymore.

That is the message premier-elect Jason Kenney is sending to all comers after securing a convincing win in the province's general elections. Kenney, a firebrand Conservative populist, took 63 of 87 seats to secure a commanding majority in the provincial legislature.

Given that Alberta is North America's second largest oil producing region at some 3.5m/bl- making Canada the world's fourth or fifth-largest oil producer after the US, Russia and Saudi Arabia and, dependent on sanctions, Iran-the vote has national as well as international repercussions.

The result, although it was widely expected, was surprising in its size and scale. Kenney's United Conservative Party (UCP) garnered half of all ballots cast, or more than a million votes, representing a deep-seated dissatisfaction with the energy policies of the federal government in Ottawa.

Kenney's opponent in this match was not so much the well-regarded Rachel Notley, but Canada's prime minister Justin Trudeau and what Albertans increasingly see as discriminatory environmental and regulatory policies against the broader oil sands industry in general- and pipelines to both coasts in particular. Indeed, public opinion polls suggested fully 78pc of voters cited energy as the top issue in the campaign, ahead of public works projects such as schools and hospitals.

The big question was who would best address issues such market access, i.e. pipelines, greenhouse gas emissions (GHGs) and carbon taxes within the broader national framework. Notley attempted to gain so-called 'social licence' from environmentalists and Ottawa by imposing hard caps on oil sands GHGs and imposing a broad-based carbon tax on consumers, while using provincial resource revenues to diversify into areas such as renewable energy.

Granted, nobody likes taxes. But Notley argued it was the price to pay to secure approvals for the proposed TransMountain Expansion (TMX), which would ship almost 1mn bl/d to the west coast and open new markets for Alberta crude.

The problem is that it did not happen in time. In fact, it did not happen at all. Almost as if to add insult to injury, a federal cabinet decision on the new pipeline was postponed until mid-June just days after the vote. If Ottawa ever had an erstwhile ally in Notley, it does not anymore. And if Notley could not make nice with the Prime Minister, the reasoning goes, nobody could.

Dropping the gloves

In hockey-mad Canada it is called 'dropping the gloves'. Every team has one-a player whose only real skill is to pummel opposing players and rally the team, an enforcer or 'goon'. Kenney is a political goon and, already, he has come out with elbows up and stick held high.

His first order of business after he is sworn in on 1 May is to pass Bill 12, which would restrict oil and gas shipments from Alberta to British Columbia (BC) if it continues to obstruct the TMX expansion. Notley had previously threatened to use the legislation to ban imports of BC wine. But this would represent a huge escalation and could spark a regional trade war.

Most constitutional experts agree Bill 12 is probably illegal and mostly symbolic, even if it were passed. However, a proposed re-allocation of even relatively low volumes of crude supply to, and product output from, Canada's Lower Mainland's refineries could cause an uncomfortable spike in the price of petrol and force BC to import fuel supplies from Washington State via tanker-even, ironically, as it continues to push for federal legislation to ban tankers in its coastal waters. That legislation is presently before the Canadian Senate.

And this is just a start. The premier-designate has also vowed to scrap Alberta's carbon tax, remove emissions caps on oil sands production and even sue Ottawa in federal court over its climate policies. Alberta is widely expected to join the provinces of Saskatchewan and Ontario in a legal battle against the central government that will inevitably wind up in the Supreme Court. The first court filings began in February.

Furthermore, Kenney has vowed to hold a referendum on so-called 'equalisation' payments to poorer regions of Canada- notably Quebec-which he claims have amounted to more than C$600bn ($445bn) in resource revenues at a time when Alberta's public accounts are doused in red ink and forcing it to cut public services such as education and health care.

He has also pledged to shred nearly every environmental and regulatory policy enacted in the past five years, regardless of the impact. In hockey parlance, it is the legal and political equivalent of slashing or cross-checking-both match penalties, which would call for the offending player to immediately leave the game.

The rise of Great White North populism?

Kenney's win follows a similar pattern of protest populism taking root in Ontario, Canada's most populous province and the country's economic and political heartland. His rise parallels that of Ontario Premier Doug Ford, who has been compared to Canada's Donald Trump.

Opposition politicians attempted to portray Kenney as an extremist, homophobic bigot for his socially conservative religious views. But he is no Donald Trump, having been first elected to Canada's lower house in 1997 and holding senior cabinet positions in the Conservative government of former prime minister Stephen Harper- who famously vowed to transform Canada into a "global energy superpower". It became a cliched catch-all for the country's aspirations on world oil markets.

His national experience showed on 16 April when Kenney gave his acceptance speech in both official languages- English and French-which is unheard of for a provincial politician in Alberta. Speaking in near-flawless Français Canadien, he delivered some particularly direct words for both the Prime Minister and the premier of Quebec: "There is a deep frustration in this province, a sense that we have contributed massively to the rest of Canada, but that everywhere we turn we are being blocked in and pinned down… those days are over."

The negative reaction from other provinces was immediate and swift. "There is no social acceptability for a new oil pipeline in Quebec," said Quebec premier Francois Legault, in a particularly blunt assessment of Kenney's win. About half of Quebec's oil comes Alberta; the rest is imported from the US and the Atlantic basin, including countries with less than savoury environmental and social records such as Iraq, Nigeria and Saudi Arabia.

Back to the future

There is little doubt that Kenney has tapped into a lingering pool of discontent with previous Liberal governments and, specifically, the legacy of the prime minister's father, Pierre Elliot. The elder Trudeau attempted to nationalise Alberta's oil industry in the 1980s, sparking resentment which exists to this day. The son is reaping this bitter harvest as he seeks re-election later this fall.

It creates an uncertain dynamic over the summer months. Assuming Kenney follows through with his provocative promises to tear up Alberta's climate change policies-essentially gutting Canada's international commitments to reduce GHGs under the Paris Accords-it is perfectly reasonable to assume that Trudeau will have no choice but to retaliate.

What form that might take is as yet unclear. Speculation is rife that Ottawa will unilaterally move to regulate oil sands emissions, which, until now, have been a provincial responsibility. It could also scrap the TMX pipeline entirely, after it paid C$4.5bn (just under $3.35bn) to buy it from US midstreamer Kinder Morgan in May 2018. Both would be extreme responses that would essentially put a lid on future oil production growth.

Would he do it? If the words of his father are any gauge to go by: "Just watch me".

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