Alberta Court Challenge of Federal Emissions Cap Looms as Ministers Meet in Ottawa

Alberta Court Challenge of Federal Emissions Cap Looms as Ministers Meet in Ottawa
Alberta Premier Danielle Smith and Minister of Environment and Protected Areas Rebecca Schulz stand together during the cabinet swearing in, in Edmonton, on June 9, 2023. (The Canadian Press/Jason Franson)
Jennifer Cowan

Alberta Environment Minister Rebecca Schulz will meet with her federal counterpart, Environment Minister Steven Guilbeault, in Ottawa today as the province readies itself to oppose Ottawa’s proposed oil and gas emissions cap in court.

The meeting comes the same day the province will submit its formal, written feedback on the proposed cap, a program Ms. Schulz has said would effectively put limits on production.

Ms. Schulz described those limits as “unconstitutional and devastating,” in a weekend interview with the Edmonton Journal, saying the cap is encroaching on provincial jurisdiction.

She said she believes the oil and gas emissions cap will negatively affect the economy, resulting in lost jobs and promised the province would fight the federal cap-and-trade system in court.

“We will stand up for our province,” she said during the interview. “We will make sure that not only Albertans but Canadians understand the impact that this terrible policy would have.”

The federal government has said its cap on greenhouse gas emissions from the oil and gas industry is a bid to cut emissions in the sector by at least one-third by 2030 as part of its overall goal to reach net-zero status by 2050.

Mr. Guilbeault, who announced the draft regulatory framework Dec. 7, said the system will require emissions from the oil and gas sector be capped at 35–38 percent below 2019 levels within the next six years.

The proposed regulation will take the form of a cap-and-trade system, allowing companies to buy offset credits or contribute to a “decarbonization fund,” which would lower the requirement to 20 to 23 percent.

Today is the final day to provide feedback on the proposed cap system.

Draft regulations regarding the cap are expected to be published sometime this spring, with final regulations to follow next year.

“A promise we took to the Canadian people in the 2021 election was to put a cap on the amount of pollution from Canada’s oil and gas sector, and reduce it at a pace and scale needed to reach carbon neutrality in Canada by 2050,” Mr. Guilbeault said during a December press conference. “And unlike almost every other sector of our economy, pollution from the oil and gas sector is still going up.”

Mr. Guilbeault has said the emissions cap on oil and gas would not only “establish a pathway to carbon neutrality by 2050” but would help “unlock the kinds of job-creating projects that will guarantee the industry’s record profits are used to secure a bright future for our communities and workers.”

The cap-and-trade system announced by Ottawa in December comes after it recently lost two court cases involving its proposed ban on plastics and environmental impact assessment legislation, both of which were deemed to be unconstitutional.

The Supreme Court said last October that Ottawa’s Impact Assessment Act—dubbed by former Alberta Premier Jason Kenney as the “no more pipelines act” because of the regulatory burden it placed on energy projects—was largely unconstitutional because it infringed on areas of provincial jurisdiction.

When asked about the potential for another court ruling against the new oil and gas cap framework, Mr. Guilbeault said the courts had ruled against them going after production. The new measures, however, are against pollution.

“We can’t impede on provincial jurisdiction, and that’s not what we’re doing,” he said. “We’re staying in our lane.”

Provinces Push Back

Alberta Premier Danielle Smith and Saskatchewan Premier Scott Moe have both been vocal in their opposition of the cap-and-trade system, saying it exceeds federal authority.

Ms. Smith said last December that she believed the oil and gas cap would end up before the Supreme Court, and that Alberta would have a good chance of winning.

“I think that that’s where this is headed,” she said. “But in the meantime, we’re going to make sure that they do not damage the investment climate that we have in Alberta.”

Ms. Smith has described the emissions cap as “an intentional attack by the federal government on the economy of Alberta and the financial well-being of millions of Albertans and Canadians.”

Mr. Moe condemned Ottawa’s regulatory framework, saying it and other regulations will have “serious economic impacts on Canadians and limit our sustainable Canadian energy products from producing heat and electricity to the world.”

Both Alberta and Saskatchewan have dug in their heels on various federal mandates over the past year, maintaining that Ottawa is overstepping with the rules it is putting in place to reach net-zero status by 2050.

Alberta invoked its sovereignty act last November in opposition of Ottawa’s Clean Electricity Regulations, proposed requirements for achieving a net-zero electricity grid by 2035. The province said the rules infringe on provincial jurisdiction and would impact the reliable supply of electrical power as well as increase costs for its residents.

Under the act tabled before the provincial legislature, Ms. Smith’s government is requiring provincial officials and agencies to ignore the requirement, saying it puts the reliability of electrical supply in the province in jeopardy.

Saskatchewan also invoked its Saskatchewan First Act last November, creating a tribunal that will study the economic impact of the Clean Electricity Regulations. The provincial act was designed to give Saskatchewan autonomy and jurisdiction over its natural resources.

Alberta and Saskatchewan have also joined other provinces in calling for equality when it comes to carbon pricing on home heating in response to Prime Minister Justin Trudeau announcing a pause on the tax for home heating oil last October.The move largely benefits Atlantic Canada, where 30 percent of homeowners still use furnace oil to heat their homes.

The premiers have since been demanding “fair treatment,” saying the exemption helps very few of their residents who, predominantly, heat with natural gas.

Mr. Trudeau’s decision not to expand the exemption to other types of home heating led Saskatchewan to take the matter into its own hands. The provincial government announced both provincial Crown corporations SaskEnergy and SaskPower would not collect the federal carbon tax on home heating bills as of Jan. 1, 2024.
Alberta is also battling Ottawa in court over its efforts to implement a nationwide plastics ban.