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Economy

The Guilbeault – Trudeau Fallout: Canada’s Oil and Gas Emissions Cap is Under Fire from Experts and Business Leaders – Resource Works

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Steven Guilbeault, Canada’s environment and climate minister, at the COP28. Photo by AP.

By Resource Works

More News and Views From Resource Works Here

Prime Minister Justin Trudeau and his eco-extremist Minister of the Environment and Climate Change Steven Guilbeault are risking hundreds of billions of dollars of investments in Alberta’s and Canada’s economies and core social programs

The federal government’s proposed cap on emissions from oil and gas has now been outlined in a draft.

While Ottawa insists that it is not a cap on the production of oil and gas, experts fail to see how the emissions cap is not also a de facto production cap, given the details of the policy.

The industry fears that, in effect, that is just what it is — with negative impacts on western provinces that produce oil and gas for domestic use and for export.

The federal government proposes to limit emissions for oil and gas at 35% to 38% below the 2019 level. At the same time, Ottawa says the new rules would allow production to increase 12% above 2019 levels.

The producers are trying to figure out the ups and downs of the policy, and there is a lot to unpack. The federal draft “framework”  is open for discussion and consultation until February 2024.

The initial reaction from the Canadian Association of Petroleum Producers was that the emissions cap could result in “significant” production cuts, and it called the government’s emissions framework unnecessary. Alberta’s oil and gas sector has been invested in decarbonization efforts and measures to reduce methane emissions, already beating a target of a 45% reduction by 2025.

Alberta Premier Danielle Smith furiously flamed that “This announced de facto production cap on Alberta’s oil and gas sector amounts to an intentional attack by the federal government on the economy of Alberta and the financial well-being of millions of Albertans and Canadians. . . .

“With their pronouncement singling out the oil and gas sector alone for punitive federal treatment, Prime Minister Justin Trudeau and his eco-extremist Minister of the Environment and Climate Change Steven Guilbeault are risking hundreds of billions of dollars of investments in Alberta’s and Canada’s economies and core social programs, are devaluing the retirement investments of millions of Canadians, and are threatening the jobs of hundreds of thousands of Albertans.”

The Business Council of Canada hammered the cap as part of a “full-on charge against the oil and gas sector,” with no other industry so targeted by Ottawa. “It all seems punitive and short-sighted.”

The sectoral specificity is alarmingly pointed.

The Indigenous Resource Network also said it was disappointed by the emissions-cap announcement — and will seek an Indigenous exemption from the cap for Indigenous communities engaged in the oil and gas sector.

And Karen Ogen, CEO of the First Nations LNG Alliance, said from the COP28 climate conference in Dubai that the federal announcement is “disheartening” because of what resource projects mean to Indigenous people. “We’re being shoved aside again.”

The emissions cap follows the unravelling of the federal carbon tax. In the fall of 2023, the Federal Government made a number of exemptions and incentives, including removing the carbon tax from home heating in Atlantic Canada only. As Premiers in the rest of Canada voice their frustration, Saskatchewan even declared it will no longer collect the federal carbon tax at all.

Then the new national chief of the Assembly of First Nations, Cindy Woodhouse, said she ‘absolutely’ supports Ontario chiefs in a push for a review of federal carbon-pricing rules. The Ontario chiefs oppose the tax because they say it is not revenue neutral, especially for those on reserves, and because electric vehicles and heat pumps are neither available nor workable in many First Nations communities.

In the face of crumbling support for its policy agenda, Trevor Tombe of the University of Calgary saw in the new approach a softening of Ottawa’s enthusiasm for carbon taxes.

“I think it’s pretty clear that government is backing away from the carbon tax as a central pillar of their climate policy. And that means if you want to hit your target, you need to adopt other policies.”

Ergo, production (emissions) caps.

Debate continues over whether Canada is overdoing its climate measures, given that it produces only 1.5% of world emissions. And that Canada is the only top ten world oil producer that proposes such an emissions cap. None of the world’s other major oil producers have an emissions cap.

And then there’s the report from Canada’s independent parliamentary budget officer: “Canada’s own emissions are not large enough to materially impact climate change.”

He went on to say: “Consequently, Canada’s primary means of limiting the economic costs of climate change are through participation in a globally coordinated emissions reduction regime.”

LNG, anyone?

Whatever the final version of the regulatory cap looks like, we can expect to lose investment and economic activity, and the producing provinces, companies and their families can expect some pain.

That seems to be a trade-off that, to some extent, the federal government wants to make. But why is it going in this direction?

While some provinces like Quebec or Manitoba have incredible hydroelectric resources, and Ontario is Canada’s nuclear power leader, some provinces, especially in Western Canada, produce and consume oil and natural gas products.

BC produces natural gas in the northeast and is close to exporting LNG overseas. It is already contributing to transporting, refining and exporting oil that is produced elsewhere in the country.

These industries contribute to emissions, they cannot easily be phased out without serious implications for every aspect of how we live our lives. We rely on fossil fuels. So it’s not as simple as saying, “Let’s just get rid of it.”

Policy leaders globally are trying to resolve right now the question of what sacrifices and compromises are we willing to make in order to address climate change in a meaningful way; What is the rate of change and transformation that our economies are willing to accept? And that consumers — and voters — are willing to accept? What can we do without limiting human development in areas of the world where it’s still desperately needed?

We already have Ottawa’s carbon pricing (carbon taxation) scheme. The provinces have been given the opportunity to structure carbon pricing as they see fit, provided that it meets the baseline set by the federal government. Of course, not every province has wanted to do that.

Ottawa is signalling that they don’t think the carbon tax model has been working to meet the emissions (and electoral) targets that they’ve set. So now Ottawa has come up with this emissions backstop, what the feds call a cap-and-trade model for the oil and gas sector.

It’s fair to say that this scheme is a little bit more convoluted. It is going to limit industries. It will add consumer costs. It will cause even more confusion around energy. And we can certainly expect it to be challenged in court.

We’ve recently seen a number of federal environmental policies get kiboshed in courts on constitutional grounds, and criticized by judges across the country. Provincial governments have a tremendous stake in what goes on with natural resource development in their jurisdictions.

We don’t expect this issue of a federal emissions cap will be easily resolved. Look for it to be a very large part of the discussion around the next federal election.

All in all, there’s a lot of concern that, if the scheme is overly convoluted, industries could start to pull back. That could have a large impact on our ability to not only keep our economy strong and serve the interests of Canadians but also on our ability to invest in technologies that actually reduce emissions, like carbon capture or hydrogen.

Our Resource Works CEO, Stewart Muir, recently returned from the COP28 climate conference in Dubai. Among other things, he raised awareness of Canada’s role as a solutions provider to the world, from coal-displacing LNG to BC’s opportunity to become a major hydrogen energy hub.

We’ve made considerable progress in reducing emissions, especially in oil and gas. We have some of the most stringent regulations, not only on carbon and methane, but more broadly on, social and governance dimensions, how you manage local environmental concerns like water and land conservation, and protecting wildlife.

Canada has made huge progress at every level, and the energy sector is building new partnerships with Indigenous communities to ensure that they’re meaningfully included in land and environmental management and also in economic opportunities, including joint or sole ownership of projects.

We are part of addressing climate change and we are part of meeting the world’s energy needs sustainably, responsibly and reliably.

These are conversations that need to continue, and they need to inform our policy agenda as a country.

Economy

Ottawa’s new ‘climate disclosures’ another investment killer

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From the Fraser Institute

By Matthew Lau

The Trudeau government has demonstrated consistently that its policies—including higher capital gains taxes and a hostile regulatory environment—are entirely at odds with what investors want to see. Corporate head offices are fleeing Canada and business investment has declined  significantly since the Trudeau Liberals came to power.

According to the Trudeau government’s emissions reduction plan, “putting a price on pollution is widely recognized as the most efficient means to reduce greenhouse gas emissions.” Fair enough, but a reasonable person might wonder why the same politicians who insist a price mechanism (i.e. carbon tax) is the most efficient policy recently announced relatively inefficient measures such “sustainable investment guidelines” and “mandatory climate disclosures” for large private companies.

The government claims that imposing mandatory climate disclosures will “attract more private capital into Canada’s largest corporations and ensure Canadian businesses can continue to effectively compete as the world races towards net-zero.” That is nonsense. How would politicians Ottawa know better than business owners about how their businesses should attract capital? If making climate disclosures were a good way to help businesses attract capital, the businesses that want to attract capital would make such disclosures voluntarily. There would be no need for a government mandate.

The government has not yet launched the regulatory process for the climate disclosures, so we don’t know exactly how onerous it will be, but one thing is for sure—the disclosures will be expensive and unnecessary, imposing useless costs onto businesses and investors without any measurable benefit, further discouraging investment in Canada. Again, if the disclosures were useful and worthwhile to investors, businesses seeking to attract investment would make them voluntarily.

Even the government’s own announcement casts doubt that increasing business investment is the likely outcome of mandatory climate disclosures. While the government says it’s “sending a clear signal to corporate boards and shareholders, at home and around the world, that Canada is their trusted partner for putting private capital to work in the race to net-zero,” most investors are not looking to put private capital to work to combat climate change. Most investors want to put their capital to work to earn a good financial return, after adjusting for the risk of the investment.

This latest announcement should come as no surprise. The Trudeau government has demonstrated consistently that its policies—including higher capital gains taxes and a hostile regulatory environment—are entirely at odds with what investors want to see. Corporate head offices are fleeing Canada and business investment has declined significantly since the Trudeau Liberals came to power. Capital per worker in Canada is declining due to weak business investment since 2015, and new capital per-Canadian worker in 2024 is barely half of what it is in the United States.

It’s also fair to ask, in the face of these onerous polices—where are the environmental benefits? The government says its climate disclosures are needed for Canada to progress to net-zero emissions and “uphold the Paris climate target of limiting global warming to 1.5°C above pre-industrial levels,” but its net-zero targets are neither feasible nor realistic and the economics literature does not support the 1.5 degrees target.

Finally, when announcing the new climate disclosures, Trudeau Environment Minister Steven Guilbeault said they are an important stepping stone to a cleaner economy, which is a “major economic opportunity.” Yet even the Canada Energy Regulator (a federal agency) projects net-zero policies would reduce real GDP per capita, increase inflation of consumer prices and reduce residential space (in other words, reduce living standards).

A major economic opportunity that will increase business investment? Surely not—mandatory climate disclosures will only further reduce our standard of living and impose useless costs onto business and investors, with the sure effect of reducing investment.

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Business

Premiers fight to lower gas taxes as Trudeau hikes pump costs

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From the Canadian Taxpayers Federation

By Jay Goldberg 

Thirty-nine hundred dollars – that’s how much the typical two-car Ontario family is spending on gas taxes at the pump this year.

You read that right. That’s not the overall fuel bill. That’s just taxes.

Prime Minister Justin Trudeau keeps increasing your gas bill, while Premier Doug Ford is lowering it.

Ford’s latest gas tax cut extension is music to taxpayers’ ears. Ford’s 6.4 cent per litre gas tax cut, temporarily introduced in July 2022, is here to stay until at least next June.

Because of the cut, a two-car family has saved more than $1,000 so far. And that’s welcome news for Ontario taxpayers, because Trudeau is planning yet another carbon tax hike next April.

Trudeau has raised the overall tax burden at the pumps every April for the past five years. Next spring, he plans to raise gas taxes by another three cents per litre, bringing the overall gas tax burden for Ontarians to almost 60 cents per litre.

While Trudeau keeps hiking costs for taxpayers at the pumps, premiers of all stripes have been stepping up to the plate to blunt the impact of his punitive carbon tax.

Obviously, Ford has stepped up to the plate and has lowered gas taxes. But he’s not alone.

In Manitoba, NDP Premier Wab Kinew fully suspended the province’s 14 cent per litre gas tax for a year. And in Newfoundland, Liberal Premier Andrew Furey cut the gas tax by 8.05 cents per litre for nearly two-and-a-half years.

It’s a tale of two approaches: the Trudeau government keeps making life more expensive at the pumps, while premiers of all stripes are fighting to get costs down.

Families still have to get to work, get the kids to school and make it to hockey practice. And they can’t afford increasingly high gas taxes. Common sense premiers seem to get it, while Ottawa has its head in the clouds.

When Ford announced his gas tax cut extension, he took aim at the Liberal carbon tax mandated by the Trudeau government in Ottawa.

Ford noted the carbon tax is set to rise to 20.9 cents per litre next April, “bumping up the cost of everything once again and it’s absolutely ridiculous.”

“Our government will always fight against it,” Ford said.

But there’s some good news for taxpayers: reprieve may be on the horizon.

Federal Conservative leader Pierre Poilievre’s promises to axe the carbon tax as soon as he takes office.

With a federal election scheduled for next fall, the federal carbon tax’s days may very well be numbered.

Scrapping the carbon tax would make a huge difference in the lives of everyday Canadians.

Right now, the carbon tax costs 17.6 cents per litre. For a family filling up two cars once a week, that’s nearly $24 a week in carbon taxes at the pump.

Scrapping the carbon tax could save families more than $1,200 a year at the pumps. Plus, there would be savings on the cost of home heating, food, and virtually everything else.

While the Trudeau government likes to argue that the carbon tax rebates make up for all these additional costs, the Parliamentary Budget Officer says it’s not so.

The PBO has shown that the typical Ontario family will lose nearly $400 this year due to the carbon tax, even after the rebates.

That’s why premiers like Ford, Kinew and Furey have stepped up to the plate.

Canadians pay far too much at the pumps in taxes. While Trudeau hikes the carbon tax year after year, provincial leaders like Ford are keeping costs down and delivering meaningful relief for struggling families.

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