When Jason Kenney convinced Albertans that our economy is solely dependent on fossil fuels (diversification is a luxury, remember) and government policy, not the global marketplace, drives our economy; he needed a scapegoat when our economy failed to grow. Cue Rachel Notley and Justin Trudeau, although with the passage of time, even UCP supporters must realize it’s getting harder and harder to blame Rachel for any of this.
If this strikes you as a stupid way to run a province, join the club.
Recently the Kenney government escalated the “blame someone else” rhetoric to something more dangerous. It characterized the federal government’s pending decision on Teck Resource’s application for the Frontier oilsands project as a litmus test for national unity.
If the feds reject the recommendation of a joint review panel* that the Frontier project be approved, Mr Kenney will argue this is proof the feds don’t care about Alberta (and the Wexiters will go berserk but that’s another post for another day).
Bargaining is a two-way street
Ironically, Mr Kenney has an opportunity to help the feds decide in Teck’s favour, but he won’t take it.
When asked about the feds’ pending decision, the federal Environment minister said the feds are looking for “concrete action on climate change” and hinted Alberta might want to reconsider its position on the federal carbon tax.
This did not sit well with the UCP government.
Apparently it’s okay for the UCP to “bargain” with the feds (the UCP promised to hold a referendum on removing equalization from the Constitution Act in Oct 2021 if there wasn’t substantial progress on TMX and Bill C-69 isn’t repealed—equalization isn’t remotely related to TMX or Bill C-69) but it’s not okay for the feds to “bargain” with the UCP by asking the province to do more to help Canada meet its net zero greenhouse gas emissions target by 2050 in return for the feds approving a project that will generate an additional 4 megatonnes of carbon dioxide a year.
What makes the UCP government’s position even more irrational is the industry is prepared to help Canada meet its net zero GHG target by 2050—Cenovus, CNRL, and MEG made similar commitments and Suncor promised a 30% GHG reduction by 2030.**
Heaven forbid that Mr Kenney should step off his ideological perch to forge a sensible compromise.
Federal approval is not enough
To make this standoff even sillier, consider the fact that Teck’s CEO said Frontier will need 3 Ps to go ahead if it’s approved: pipelines, partners and prices. The TMX pipeline must be finished, not just started, Teck needs partners to share the risk of this $20.6 billion investment, and it needs oil prices to rise…a lot.
A quick peek at Teck’s most recent investor presentation is instructive here.
Teck is a huge mining company. Its key priorities are expanding the Quebrada Blanca copper mine in Chile, upgrading the supply chain for its steelmaking coal business, improving its innovation program and cutting costs. The Frontier project is not a key priority, it is merely one of many “future options”.
This is not surprising given that energy is Teck’s least profitable business unit. Gross profit by business unit in 2018 was: 62% coal, 22% copper, 18% zinc and minus 2% energy.
So when the Teck CEO says if Frontier is approved that’s no guarantee it’s moving ahead, he means it.
But that’s not how Mr Kenney will paint the picture. Even if the feds approve Teck, Mr Kenney will find a way to blame them if Teck decides to forgo Frontier in favour of more profitable ventures elsewhere.
Mr Kenney has painted himself into a corner. He’s convinced Albertans that our economy will be driven by nothing but energy for a long time to come and that energy investment is driven by government policy and not global markets. Therefore, when his energy-centric government policies fail to produce the desired result because multi-national players would rather invest elsewhere, Kenney needs someone (other than himself) to blame for Alberta’s faltering economy.
Trot out Trudeau (again). And just in case Albertans are starting to understand that an economy that puts all its eggs in one basket is not sustainable in the 21st century, Mr Kenney will amp up the emotion but accusing Trudeau of sticking it to Alberta just for the fun of it.
The longer Albertans continue to believe Mr Kenney’s rhetoric, the harder it will be for us to move ahead.
*Alberta Energy Regulator (AER) and Canadian Environmental Assessment Agency (CEAA)
**ARC Podcast, Jan 24, 2020