Mark Carney's grand climate bargain comes into view

National Observer

a day ago

In a political fight that seems destined to go many rounds, the first one went to the Prime Minister. He emerged from the high-stakes first ministers' meeting with many of Canada's premiers — including Conservative ones like Doug Ford — singing his praises. Even Smith had to concede that Carney's performance had won over the room, describing him as a 'dramatic improvement' over his predecessor.
That's because Carney didn't take the bait that Smith so obviously laid out around pipelines. Instead, he smartly called the bluff she's been getting away with for years now. Smith has talked up and down about her government's commitment to decarbonizing oil production in Alberta, one that involves reaching net-zero province-wide by 2050. As you read the official communiqué from the meeting it becomes clear that this is where Carney is going to dig in for the real fight — and where Smith is least prepared to defend herself.
'First Ministers agreed that Canada must work urgently to get Canadian natural resources and commodities to domestic and international markets,' it reads, 'such as critical minerals and decarbonized Canadian oil and gas by pipelines, supported by the private sector, that provide access to diversified global markets, including Asia and Europe. First Ministers also agreed to build cleaner and more affordable electricity systems to reduce emissions and increase reliability toward achieving net zero by 2050.'
No new pipelines without decarbonization, in other words. This immediately shifts the onus to the oil industry, which has been slow-playing its promised investment in carbon capture and storage technology for years now. If it doesn't finally move ahead there, the conversation around new pipelines is effectively over — and the blame will fall squarely on them. This also makes it more difficult for Smith and Conservative Party of Canada leader Pierre Poilievre to continue their recent campaign against industrial carbon pricing, given its obvious role in decarbonizing upstream oil and gas production.
Not everyone is buying what Carney is selling here, mind you. Catherine Abreu, the director of the International Climate Politics Hub, described the idea of decarbonized oil and gas as 'a complete contradiction in terms, and a dangerous lie that Canadian government after Canadian government has tried to spin under the spell of industry lobbying.' This tracks with the broader environmental movement's longstanding skepticism of carbon capture and storage, which is informed by the underwhelming performance of early stage projects. It's worth noting, I think, that the performance of early-stage wind and solar were equally dispiriting. Technologies can and often do improve with time and scale.
More to the point, if Canada is willing to sink billions in tax credits into EV factories in Ontario and Quebec, the same sort of opportunity should probably be afforded to Alberta's largest industry — especially if we're trying to prevent the Alberta separatist movement from escaping political containment. Yes, these large carbon capture and storage projects might fail, just as some of the battery plants in central Canada already seem to have. But carbon capture technology also might succeed — and if it does, that's an unalloyed boon to both our economy and environment.
Either way, Carney isn't biting on Smith's demands for new pipelines 'in every direction.' Instead, he's moving the conversation onto political ground that's far more favourable to his government, both in terms of the raw politics and its enduring (if evolving) commitment to fighting climate change. He will, as Smith demanded, create the conditions for a more rapid assessment of infrastructure projects. But it's clear that one of those conditions will be the net-zero targets that Smith and Alberta's oil and gas industry have repeatedly committed themselves to. If they can't or won't reach them, they'll finally have to come out and say as much.
Mark Carney's first meeting with Canada's premiers resulted in an agreement to pursue projects that export "decarbonized oil and gas". How that helped avoid a confrontation with Danielle Smith — and why it puts the pressure squarely on her.
If I had to guess, the only new oil export project we'll end up seeing is another expansion of TMX, one that can be accomplished with upgrades to the existing line and some dredging of Vancouver's Burrard Inlet, an idea that has been mooted by Carney and supported by BC's Minister of Energy and Climate Solutions Adrian Dix. That's in part because the combination of the increasingly imminent arrival of peak demand for oil will make new infrastructure projects like a revived Northern Gateway (which have to operate for decades to deliver an adequate economic return) a non-starter for the private sector. It's also because OPEC's declining interest in artificially supporting prices raises the prospect of another price war like the one in 2014 that devastated the Canadian oil patch.
Carney knows all of this, and understands it better than any elected official in the country. His real interest, I suspect, is building the sorts of projects that will best position Canada in the low-carbon economy that so clearly lies ahead. But he also understands that getting into a pitched battle with Alberta by explicitly crushing its pipeline dreams gets in the way of that objective — and helps advance Smith's political agenda in the process. Sometimes, the best way to win a fight is by not fighting it at all.