As Jason Kenney and a third of his cabinet attempt to smother Ottawa this week with charm and argument, it’s not just because environmentalists and Justin Trudeau have been breathing down his neck about emissions in the oilsands.
That’s just nagging.
The real driving force behind Kenney’s push is a much bigger problem for Albertans: financial markets.
Last week’s decision by Moody’s Investors Service to downgrade Alberta’s debt rating, flagging environmental risks as one of the main reasons, was only the latest signal that global investors are uncomfortable with the province’s economy.
And while the markets are not entirely within Ottawa’s control, Kenney is making a compelling case that they’re not entirely beyond it either.
Institutional investors in Canada and around the world are shifting their long-term money to take climate change into account, making investment decisions based on whether the assets in question are compatible with a world that is increasingly taking action to decarbonize.
Financial regulators are compounding this trend. Canada’s regulators are still on the fence about whether to force companies to disclose their exposure to the damages of a warmer climate or whether they may wind up holding useless assets as the world transitions.
But they are actively thinking about their next move, sending strong signals to financial institutions that they are watching with a critical eye.
And Alberta has already had to put some water in its wine in rolling out new requirements for the big polluters in its midst. Yes, Kenney’s measures to push large emitters on their environmental performance were just recognized last week by the federal government as being up to par. But those measures are more stringent than the package Kenney initially campaigned on, mainly because market players let him know they wanted to see more.
Alberta desperately needs investment to come back.
As Kenney made abundantly clear in his keynote speech to a broad range of attentive lobbyists, Conservatives and Liberals alike in Ottawa on Monday, investment in the oil-and-gas sector has plunged to such low levels over the past few years that unemployment, despair, homelessness and even suicide are on the rise.
Of course, low oil prices are part of the issue, but Kenney mainly points to federal policy around pipelines and climate as the main culprits for why Alberta can’t seem to recover even when other oil-heavy regions of the world already have.
“The difference is not price. It is policy,” he said, adding that a “misunderstanding among some” in Central Canada about the reasons for Alberta’s difficulties has led to widespread anger and disappointment.
His speech, complete with charts, graphs, quotes and rhetorical flourish, made the case that federal foot-dragging on pipelines and cumbersome regulatory approvals have compounded the effect of low commodity prices.
Kenney has been building up to the Ottawa pilgrimage for weeks, issuing a list of demands right after the election at the end of October, and fine-tuning it so that he can frame the discussion with Ottawa on how to repair the Alberta economy.
His framework is fairly reasonable, and he has softened his stance in a couple of areas. He still wants about $2 billion for “fiscal stabilization” from the federal government, but he said Monday that he would earmark at least some of it for reclamation of old oil wells – an environmental blight.
He still wants the federal government to get rid of recent legislation for approving natural resource projects – which Kenney has dubbed the no-more-pipelines bill – but on Monday, he conceded that that wasn’t going to happen.
Instead, he suggested he would settle for federal approval of the proposed Frontier oilsands mine in northern Alberta. And he said he wants an end-date for the Trans Mountain pipeline expansion, but he suggested that progress would be obvious if the federal government actively engaged with Indigenous investors on that project.
The speech and meetings with Trudeau on Tuesday will set up the terms of engagement for the next few months, as both levels of government search for common ground.
But that’s the easy part.
When it comes to making money, investors don’t really care whether Alberta taxpayers have contributed more to the federation than anyone else. The anger and the despair of the unemployed matter only at the margins of their calculations.
They’re looking for a firm recovery plan that comes with steady, effective rules on climate, a secure supply of oil and gas that is increasingly and aggressively less bad for the environment, and a reliable, efficient way to get that energy to export markets.
Kenney needs Ottawa’s co-operation to deliver that package. But the federal government also needs Alberta’s heft to keep the national economy afloat.
And there, Kenney has a point.
“There cannot be a strong Canada without a strong Alberta. Alberta has been the great engine of prosperity, social mobility and shared wealth in modern Canada. But our ability to play that role in the future is at risk,” he said in the opening salvos of his speech.
So true. But also, a problem that can only be solved with the full participation of not just governments, but the private sector and investors, too.
Heather Scoffield is a columnist with Torstar Syndication Services.