Fighting Change

From petro-socialism to hijacked pensions, Western conservatives dance to big oil’s beat

FEATURE  by Gregory Beatty

On March 2, the Liberal federal government announced $18.7 million in funding to help Saskatchewan build a transmission line to deliver surplus hydropower from Manitoba. The electricity will replace power that’s currently generated by several coal-fired plants scheduled to close by 2030.

The cost-sharing agreement is a perfect example of the type of federal/provincial cooperation that’s needed on the prairies if Saskatchewan and Alberta are to reduce their sky-high greenhouse gas emissions and do their part to help Canada meet its international climate commitments.

Unfortunately, it’s also a rare example of cooperation. Prairie conservatives are still fighting hard to promote fossil fuels.

Sadly for them, though, that’s not where the decisive battle is being waged. Instead, it’s in the economic arena — and the news there is not good, says Peter Prebble of the Saskatchewan Environmental Society.

“Over the last few years, there’s been a significant loss of capital to invest in the oilsands,” says Prebble. “A lot of the big players in the foreign capital market have basically withdrawn their investments. What’s happening is they’re pressing for more transparency on climate risk and more investment, even by oil companies, in clean energy.”

That stark reality is evident in the Parkland Institute in Edmonton’s numbers on oilsands employment and spending in the last five years, says research manager Ian Hussey.

“In 2019, spending was estimated to be 64 per cent lower than 2014,” says Hussey. “At the same time, companies have found ways to produce more bitumen with less employment. So jobs have dropped by around 53,000.”

No matter what Alberta premier Jason Kenney and Saskatchewan premier Scott Moe do, those jobs aren’t coming back.

Well, there is one thing they could try. In fact, they’re already doing it.

The “it” being direct government investment in the oilsands.

Most of that noise has come from Alberta, but in early February Moe announced the creation of a cabinet committee to evaluate potential pipeline projects and the possibility of the government, in his words, “investing, stimulating, or generally advancing these projects.”

Kenney’s UCP government is further along the subsidy trail. In November, it passed legislation that, against the wishes of teachers, put Alberta Investment Management Corporation (AIMCO) in charge of the $30 billion Alberta Teachers’ Retirement Fund.

AIMCO, which administers over 30 public sector pension plans worth an estimated $150 billion, is supposed to be arms-length from government. But in the same bill the UCP gave the Treasury Board authority to direct spending on up to 10 per cent of AIMCO’s assets.

In December, AIMCO purchased a 65 per cent stake in the Coastal GasLink pipeline from TC Energy. And after Teck Resources withdrew its application for the Frontier oilsands mine in late February, Kenney mused about paying Teck to build the project.

While regulatory uncertainty was one factor Teck cited in its decision, low oil prices and lack of a partner to help finance the $20 billion mine were the true obstacles. Indeed, Alberta already has several oilsands projects that have been approved but are currently stalled because of poor market conditions.

With the financial cards increasingly stacked against the fossil fuel industry, Albertans have every right to be concerned about Kenney’s dangerous gamble, says Hussey.

“Claims that the government will get billions in tax and royalty revenue from a project like Teck are clearly hyperbolic,” he says. “There are all these X factors related to oil prices, investment partners and Canada’s stated goal of moving to a lower carbon, or even net zero economy by 2050 that raise serious concerns about whether you can get billions in revenue from an oilsands mine that’s being built in the 2020s.”

One positive move the UCP did make recently is a $100 million loan to the Orphan Well Association to assist with well clean-up. Ideally, oil companies would’ve been required to set aside clean-up money as a condition of operating in the province. That was done in North Dakota, apparently.

But not in Alberta, where conservative governments have long put fossil fuel interests ahead of the public good.

“Alberta has a huge problem,” says Prebble. “It has 94,000 inactive oil wells and over 3,000 orphan oil wells. If the price of oil stays low and companies go bankrupt, many inactive wells are likely to become orphan wells, and the cost of cleaning up a single well is around $60,000.”

The wells need to be capped because many are leaking methane —a potent greenhouse gas. Then there’s the future environmental nightmare posed by the oilsands. Companies have promised to “reclaim” the land once the mines close.

Will that actually happen? Prebble is sceptical.

“Even without Teck, there are a trillion litres of tailings sitting in these ponds,” he says. “And I haven’t seen any indication that the industry is moving in any serious way to address that.

“The cost is going to be incredibly high and the Alberta government is making a huge mistake in not requiring reclamation to be done in a timely way,” says Prebble. “That’s not just an exposure for Alberta taxpayers, it’s an exposure for all Canadians because it may be that the federal government will have to assist Alberta. And that will cost many billions of dollars.”

Lost Opportunities

The flip side of the UCP and Sask. Party’s single-minded focus on propping up the failing fossil fuel industry is that they’re foregoing the opportunity to invest in more sustainable industries with brighter futures, says Hussey.

“But that takes a government showing leadership,” he says. “We don’t want to throw the industry under the bus, but the reality is if you look at global demand for oil decreasing by 30 per cent in the next 20 years, you have to manage a long transition from where the industry is now to where it’s going to be. That way, you can help people who have been historically dependent on the industry.”

Alberta and Saskatchewan wouldn’t be the first provinces to face a major economic transition. In the 1980s, the cod industry went bust on the East Coast. Forestry in B.C. has been hammered by a decades-long dispute with the U.S. over softwood lumber, and in central Canada, manufacturing was gutted by NAFTA and other trade agreements.

None of the transitions were easy. But the regions all survived, and in the case of central Canada and B.C. especially, even thrived.

Instead of showing true leadership, the Kenney and Moe governments have doubled down on oil. They’ve picked a bitter fight with the rest of the country while simultaneously cutting funding for K to 12 and post-secondary education, healthcare, public transit and other services, and spitefully kneecapping potential growth industries such as green energy and film/TV production and related digital technologies.

Let’s not forget, too, that important markets for prairie exports such as Europe are now threatening to slap carbon tariffs on countries that aren’t acting fast enough to address climate change.

As climate concerns grow, the pressure is only going to increase.

“Forty per cent of Canada’s GHG emissions are in Alberta and Saskatchewan, so Ottawa urgently needs their cooperation if it’s going to meet its climate targets,” says Prebble.

Kenney and Moe have the luxury of not being accountable to the international community, says Prebble.

Maybe it’s time that changed.

“I’d love to see the prime minister take them to a global climate summit where they have to meet with small island nations that are losing their coastlines to sea level rise and are facing enormous dangers as a result of climate change.

“The premiers don’t need to have conversations with those countries, but Justin Trudeau does,” says Prebble. “The federal government is under enormous pressure to set more ambitious targets, and I hope it does.”