Notley’s climate change gamble

Premier Rachel Notley may not go to Vegas for her holidays, but that doesn’t mean she is not a gambler. Her “Go big, go early” climate change strategy is best understood as making three big bets about what will happen in the coming years.

Bet No. 1 is that by going big and going early, she can pre-empt Prime Minister Justin Trudeau from imposing an even more damaging national cap and trade program. A national cap and trade would quickly become yet another transfer program for moving western dollars to eastern voters. “Dirty” oil and coal provinces like Canada and Saskatchewan would have to purchase credits from “clean” Quebec and other hydro-rich provinces.

So far, Notley seems to be winning this bet. Thanks largely to Saskatchewan Premier Brad Wall’s outspoken opposition, Trudeau failed to achieve a consensus in support of any new federal carbon plan at the first minsters’ conference in Vancouver in March.

But it’s still too early to say for sure that this won’t happen. Trudeau is under pressure from the green lobby for a federal plan. Equiterre, the Pembina Institute and Environmental Defence have warned that Canada’s new policies are good, but not good enough. They are calling on the Trudeau government to “move quickly (to) establish minimum standards on carbon pricing (and build) … a coherent and ambitious national plan.”

Like his father’s National Energy Plan, there would be plenty of votes in Eastern Canada for a second Trudeau NEP — a national emissions program.

Notley’s second bet is that by imposing a $5-billion-a-year carbon tax, replacing coal with wind and mandating a hard cap on oilsands’ emissions, her new “Green Canada” will win social license in the rest of Canada for the desperately needed new oil export pipelines. So far, there is little evidence that this is working.

Post the Paris COP 21 international agreement to cap carbon emissions, Greenpeace Canada, the Council of Canadians and 60 other environmental groups called on the National Energy Board to suspend the Energy East pipeline application process, calling it a “complete fiasco.”

Two months later, 70 environmental non-governmental organizations announced their opposition to any new pipelines. That same week, Montreal Mayor Denis Coderre and 30 other municipal officials declared their opposition to the proposed Energy East pipeline.

On the other coast, B.C. Premier Christy Clark has declared her continued opposition to the expansion of the Kinder Morgan pipeline. This is not surprising. British Columbians’ opposition to new export pipelines is driven by fears of disastrous maritime oil spill. As Simon Fraser University professor Mark Jaccard has observed, “The battle is not a rational battle. It’s a symbolic battle. It’s ‘I love my pristine B.C. coast, and I love my beaches in Vancouver.’ How can you do anything for me that gets Canada rich and I take the risk?”

At the end of the day, approval of new export pipelines is clearly a federal responsibility. What will count is Trudeau’s position. To date, that has been decisively ambiguous. He has declared that he will be a “neutral umpire” but not a “cheerleader” for new pipelines.

The only action he has taken has been to make the moratorium on oil tankers off the northern B.C. coast “permanent” and to add new conditions to the NEB process for pipeline approval. The tanker moratorium appears to be the final nail in the coffin for the Northern Gateway pipeline. The new NEB directives — enhanced aboriginal consultation and assessing the impact of new pipelines on upstream emissions — both further complicate and slow the approval process.

Trudeau’s ambivalence and indecision are not surprising given his circle of advisers. Foreign Affairs Minister Stephane Dionne, a longtime advocate of a national carbon tax, chairs the Liberal cabinet committee on climate change and environment. Gerald Butts, Trudeau’s principal secretary and close personal friend, was formerly CEO of World Wildlife Fund Canada and an anti-pipeline activist.

So will Notley win her bet on social license? Will Trudeau have the stomach to go toe-to-toe against David Suzuki, Greenpeace, provincial politicians in B.C., Ontario and Quebec, and maybe even his own advisers?

Notley’s third and final bet is that in the near future, other oil and gas producing states and provinces will adopt similar carbon reduction policies. This is critical to prevent carbon leakage, which occurs when one jurisdiction raises the cost of carbon emissions, thereby giving a neighbouring jurisdiction with lower carbon costs a competitive advantage in attracting investment. When this happens, there is no net decrease in emissions, as the reductions in the first jurisdiction are offset by increases in the second.

Notley’s Climate Change Panel Report explicitly warns that, “Canada cannot act alone. Without comparable actions from peer competitor jurisdictions, Canada will be significantly disadvantaged … with production and the prosperity and employment it brings simply shifting to other jurisdictions without stringent GHG policy.”

So who are Canada’s peer competitor jurisdictions? At home, it is Saskatchewan, where Premier Wall has been Canada’s most vocal opponent of any unilateral new carbon tax. Across the border, it’s the top-10 oil and gas producing states, of which only one, California, has anything resembling a carbon tax.

Indeed, most of the others have joined a lawsuit to block President Barack Obama’s executive order to expedite the closing of America’s coal-fired electricity plants. Suffice it to say that such states as Texas and Wyoming will not be imposing carbon taxes any time soon.

To conclude, Rachel Notley may not be a gambler, but she is definitely gambling with Canada’s future. At this point, the odds don’t look good.

Ted Morton is a senior fellow at both the University of Calgary’s School of Public Policy and the Manning Foundation for Building Democracy.

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