What role does the federal emissions cap play in Alberta, the 2025 election and is it a good thing?

The proposed federal emissions caps has been brought up several times throughout the federal election and has garnered criticism from Alberta Premier Danielle Smith who has been calling for the Liberals to scrap the policy.

Since the threat of U.S. President Donald Trump’s 25 per cent tariffs on Canadian goods was announced, how the elected party will handle the threat has become an integral part of the federal election.

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Federal party leaders have been shifting discussions to how the nation can become more independent of the U.S. and conversations on pipelines, the carbon tax and the proposed federal emissions cap are at the forefront.

Andrew Leach, a professor of economics and law at the University of Alberta, said the emissions cap is one part in several pieces of a narrative that paints the Liberals as being “unfriendly” when it comes to the oil and gas sector and places the Conservatives as a party that is more willing to contribute to fossil fuel development.

“The emissions cap is one of many bits and pieces that are part of the narrative of the Liberals being unfriendly to at least fossil fuel development, and the Conservatives wanting to craft out a space where there will be much faster, much more extensive fossil fuel development under a prospective Conservative government,” Leach said.

“I think the emissions caps is kind of part and parcel of that, but I don’t know that it’s the big part.”

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Will the federal emissions cap impact Albertans?

The proposed draft regulations of the federal emissions cap looks to force emissions from upstream oil and gas operations to fall to 35 per cent less than they were in 2019. Ottawa is calling it a pollution cap, but critics like Smith have been calling it a production cap.

According to a report by the Conference Board of Canada, commissioned by the Alberta government, it said the emissions cap would cause Alberta’s GDP to shrink by 11 per cent by 2050 and employment would decline by four per cent.

“They’re comparing two worlds,” Leach said regarding the Conference Board of Canada report.

“One where there are all of these projects that are economically viable, going to get built, going to produce oil. But when they’re asked collectively to reduce their emissions by a little bit, all of these incredibly valuable projects are just going to go away.”

Leach pushed back against both the Conference Board of Canada and the Parliamentary Budget Office’s (PBO) reports and said both make conservative assumptions on the ability to continue to produce oil while reducing emissions. He said the history of the industry is actually the opposite where there’s continued increases in production in various parts of the oil and gas industry while “dramatically” reducing emissions.

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Is the federal emissions cap actually productive?

Leach said he hasn’t traditionally been a fan of the emissions cap, saying it creates inefficient policy and is putting a higher price on emissions from oilsands than on emissions from other sectors of the economy.

He said he will wait until the final version comes out before deciding if he will be a supporter or not.

“I’ve spoken out against it as an inefficient policy tool, but now we’ve gotten to a world where we have no carbon pricing on a wide range of emissions and we have many governments saying the way we’re going to reduce emissions is by deploying technology in some of our big industries and we have the industry saying we’re committed to doing these sorts of things,” Leach said.

When it comes to an emissions policy, Leach said he would be more in favour of a broad-based carbon pricing policy across all sectors which he has helped develop.

One of the rationales Leach uses for carbon pricing is when oil production grows, it’s growing with a carbon price on it — and even with a carbon price on it, it’s more competitive.

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“I said in everything I think I’ve ever written about this, if you make this about let’s look around and see which sector we should impose regulations on, people are going to look at the oilsands, because it’s an easy target and that’s where we’re at unfortunately,” Leach said.

Smith said at a press conference on Tuesday that a number of federal policies implemented over the last decade have been damaging towards Alberta and pointed to the federal emissions cap as part of her list of demands which she wants to see met by whoever is elected as the next prime minister.

“I put forward the nine major policies that I think have to be repealed after the next election. Unfortunately, the current prime minister, despite what he said to me privately when he was here, has now gone public saying he supports export taxes, he supports Bill C-69, he supports emissions caps. That is moving in the wrong direction,” Smith said.

ctran@postmedia.com

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