Alberta NDP fights uphill battle amid slipping energy future

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The death of the Energy East project adds to the growing narrative in Western Canada that the country's oil and gas industry is under siege by Ottawa and other parts of the country – increasing pressure on Alberta Premier Rachel Notley to prove her government's climate policy will lead to shovels in the ground for the Trans Mountain pipeline expansion.

A low oil price and soft global demand might be a significant part of TransCanada Corp.'s decision this week to shut down its $15.7-billion project to ship oil across the country to the East Coast. But questions about a new National Energy Board test of the full range of climate-change-related impacts that could result from project approval didn't help. For many Albertans, there is so much uncertainty about whether any one of a number of proposed pipelines will actually go ahead, the loss of any one project is bad news – no matter if it was an expensive long-shot.

"It's a bit of a blow," Alberta Energy Minister Margaret McCuaig-Boyd said in an interview on Friday. But, she added, "You just keep with the game plan, and that's what we're going to do."

However, the NDP government's political opponents are presenting a more forceful message, laying the blame for the death of the Energy East project at the feet of the federal Liberal government. Ms. Notley's government has said it will strike a balance between concrete action on climate change and allowing the province's main industry room to grow.

This is in line with Prime Minister Justin Trudeau's stance on balancing economic growth and the environment, but that middle-ground positioning is in danger of being drowned out by these more insistent voices.

United Conservative Party leadership candidate Jason Kenney argues if Western Canada continues to be met with carbon taxes and tough climate regulations when trying to ship more oil domestically and abroad, Ms. Notley should take a more combative stance with Ottawa. This week he said her government should cancel a planned increased to her province's carbon tax next year. Both Mr. Kenney and his leadership rival, Brian Jean, say they if win power in the 2019 election they could use legal precedent to try to force the federal government to renegotiate equalization.

"If we're going to start measuring so-called downstream emissions of oil that comes out of a pipeline and is consumed, are we going to start regulating the emissions burned by Bombardier aircraft that are subsidized by Justin Trudeau's government?" Mr. Kenney said this week, seizing on another common sentiment in Alberta.

Ms. Notley has expressed disappointment with the Energy East decision, and the NEB's greenhouse gas test. But her government still insists that Alberta's climate leadership plan – which includes a carbon tax set to grow to $30 per tonne on Jan. 1, and a hard cap on oil sands emissions – is what gives Ottawa political cover in approving controversial projects such as the Kinder Morgan Inc. pipeline expansion from Alberta to the West Coast.

But it's a calculated risk with an irritable electorate. The conservative message is potent in a province that has long viewed itself as an outlier in Confederation – and a proud thorn in the side of Liberal governments in Ottawa from the days of Peter Lougheed to Ralph Klein.

A return to this familiar political position is finding fertile ground in the angst over the long-term loss of tens of thousands of jobs – whether it is positions for accountants, geologists and IT workers in downtown Calgary, or tradespeople in the field. While most of the Canadian economy is humming along, Alberta's unemployment is in the 8-per-cent range, and Calgary's unemployment rate is stuck at 8.5 per cent.

As Alberta turns its attention to advocating for the $7.4-billion Trans Mountain expansion, including an appearance at B.C.'s Federal Court of Appeal this coming week, it faces an uphill battle. The other major pipeline project to a Canadian coast still faces stanch opposition from Indigenous communities, environmental groups and the B.C. government itself.

Despite the hurdles ahead, Ms. McCuaig-Boyd says she believes construction will begin this fall. "There's still a lot of hope."