Clean fuel standard, future of the oilsands: Wilkinson on the tense relationship with Alberta

The next battle in the ongoing war between Ottawa and Alberta is the clean fuel standard that the federal government wants to bring in as part of its efforts to fight climate change.

Alberta says it will see the feds in court.

It's just the latest in a series of salvos from the cash-strapped heart of the oil industry in Canada toward a government that has made reducing carbon emissions one of its central pillars. It's also just the latest headache for the minister in charge of the portfolio.

Alberta has already taken Ottawa to court over the federal carbon tax as has Saskatchewan and Ontario and is awaiting a decision in the Supreme Court.

"We remain pretty, pretty comfortable that our position will be upheld at the Supreme Court. But obviouslywe will all need to wait to see that over the coming months," said Jonathan Wilkinson, speaking on the West of Centre podcast.

"And we certainly hope that that will come forward in the not too distant future. The clean fuel standard is actually done under a completely different regulatory regime."

The Saskatchewan native who now lives in B.C. said he's confident the federal government will win any legal challenges to the clean fuel standard.

"The unfortunate thing about all of this is I don't think there's much productive work being done by, you know, defaulting to the courts," he said.

Good relationship, questions over policy

Wilkinson, however, says he has a good relationship with his provincial counterpart, Jason Nixon, even if they don't agree. He's optimistic there are shared concerns that can be worked through in order to achieve ambitious goals from Ottawa, including achieving net-zero emissions by 2050.

He didn't mention Nixon's boss, Jason Kenney, who responded to the recent federal throne speech with a barrage of condemnations and who, on Friday, called for a pause on federal environmental policies affecting the oilpatch in wake of announced layoffs at Suncor.

The clean fuel standard will mandate the amount of additives that help reduce the carbon emissions of fuel, including ethanol and hydrogen a stepped up version of something that already exists in Canada.

It's not without costs, to consumers and producers, a key source of frustration in a province that doesn't veer too far from that feeling when it comes to most things related to the government of Justin Trudeau.

"One thing I found really interesting is his comment about GHG reductions need to be economically viable as well as environmentally responsible," said University of Calgary economist Jennifer Winter.

"There is research out there that suggests that the clean fuel standard is far more expensive per ton of emissions reduced than other sources like a carbon tax."

Wilkinson, for his part, thinks the standard will spur innovation that can drastically reduce the financial impact on producers and consumers.

What of the oilsands?

It's part of the political push and pull that has come to define climate change policies in Canada, where science mingles with politics, perception and salesmanship.

Duane Bratt, a political scientist at Mount Royal University in Calgary, said conservatives across Canada seem to favour regulation over carbon taxes, even if it's clearKenney and his United Conservative Party reject the clean fuel standard.

"The difference is between the direct cost and the indirect cost, even if the indirect cost to consumers is much higher," he said. "Politically, it may be smarter to do that than the direct carbon tax."

The politics also come into play as Wilkinson carefully addresses what his mandate to drastically reduce emissions means for Alberta, and its oilsands industry in particular something that could be far more expensive for the province compared with its peers.

Wilkinson said he's focused on his target to get Canada to net-zero, but if there are reductions in emission intensity or improvements to technology like carbon capture and storage, there is no reason the oilsands could not expand at the same time.

"I'm concerned about the goal. I'm concerned about meeting our targets and I'm concerned about ensuring that we get to that net zero pathway," he said.

"And so at the end of the day, if we can do that, I mean, anything that can fit within that envelope, assuming that it doesn't have other environmental impacts, is fair game."

An emissions cap without teeth

Alberta did establishan emissions cap for the oilsands, but the cap lacks regulatory teeth, and Wilkinson said it's entirely up to the province to bring it into force.

"That's a decision that Mr. Kenney's government is going to have to make,"Wilkinson said.

It's part of a delicate dance for the minister in charge of the high stakes portfolio, imposing regulations tied to his mandate while pirouetting around Canada's never-ending jurisdictional battles.

For Winter, the coming fight over the clean fuel standard and the ongoing battle over the carbon tax is much more about that than policy positions too far apart to bridge.

"To me, this just signals that the politics is all about: Alberta wants to regulate emissions in its own way and make its own choices," she said. "And the federal government should stay out of Alberta's business."

West of Centre41:52Jonathan Wilkinson and the price of greening the economy

The Liberal government has doubled down on its promise to meet Canadas Paris agreement commitments. Jonathan Wilkinson, minister of Environment and Climate Change is vowing to exceed those 2030 climate goals. But at what cost to places like Alberta and the oil and gas industry? The minister joins Kathleen Petty to talk about what role oil and gas and the West will play in the greening of the Canadian economy. Afterwards, economist Jennifer Winter of the University of Calgary and political scientist Duane Bratt of Mount Royal University weigh in. This episode was recorded on Thursday, October 1, 2020, before the news of Suncor Energy layoffs.