By Gary Mar
Published in the Financial Post, Calgary Herald, Kingston Whig-Standard and Sudbury Star

October 26, 2020

Addressing the United Conservative Party’s annual general meeting on Oct. 17, Alberta Premier Jason Kenney signalled a new position on his government’s role in taking action on climate and environment issues. “We have to find a way forward for our industry where we don’t stick our head in the ground and pretend that the aspirations behind the Paris thing are not hugely influential in how capital is allocated and how market access decisions are made.” By “the Paris thing” he of course meant the Paris climate agreement of 2015.

Premier Kenney acknowledged that access to capital increasingly “requires a demonstration that companies and governments are serious about improving their environmental performance — reducing their CO2 emissions in particular — so we have to aspire to do better.”

Over the past few years a large and growing segment of the investment community has committed to funding only those energy projects that can credibly demonstrate they are globally competitive on low emissions as well as economics. In response, many companies — like BP, Shell, Cenovus, Husky, CNRL — have made “net zero” pledges and are actively planning ways to eliminate their carbon footprint. But that isn’t a goal they can reach without the full participation of the provincial government. And it isn’t a story that can be told, sold or made believable without a strong industry-government partnership.

Until now, the UCP’s response has been to focus on the story of Alberta’s regulatory stringency and industry improvements, such as the fact that the province had the first carbon pricing regime in the country, updated it in 2020 and is using the revenues it generates to fund new technology in carbon capture and sequestration, methane emission reduction, clean hydrogen production and more. But this attitude hasn’t played well either domestically or internationally, as critics have pointed to growth in absolute emissions and the sense that the government is not committed to the effort.

What is needed to change the perception? Basically, clear recognition of challenges, a commitment to resolving them and transparent reporting. The premier’s statement is a good start but his government needs to follow through with meaningful engagement with industry and the federal government to establish the measures needed to reduce GHG emissions that satisfy investor and public concerns over the environment.

What might this shift in thinking — that energy is good, but emissions are not — unlock for the province? For one thing, it could help the problem of market access by, for instance, undergirding the case for the Keystone XL pipeline. It could also boost investment in technologies to reduce emissions and expand production in the oilsands, produce hydrogen from natural gas, export LNG and so on.

Investors and industry needed to hear from the premier that the environment is a priority in his government’s management of oil and gas. His statement to the UCP was absolutely a step in the right direction. Now it’s the federal government’s turn. Investors and industry need a matching statement from the prime minister that Canada is open for business in all forms of energy, including cleaner oil and gas.

Gary Mar is president and CEO of the Canada West Foundation.