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Energy and Our World

In Canada, a Battle Royal Brews Over Energy

This article originally ran on Forbes.com on October 18, 2022. All rights reserved.

Daniel B. Markind is a Forbes.com energy column contributor. The views expressed in this article are not to be associated with the views of Flaster Greenberg PC.

Americans tend to think of Canadians as just like ourselves, only nicer, more polite, and more tolerant. We look at our own divisions and wish we could be as pleasant and accommodating as we believe the Canadians to be.

That may be how it looks at first glance, but if you dig a little deeper into Canada’s culture, politics, and economy, you will find a society that has an almost intractable internal English-French split, based mainly in the French speaking province of Quebec, that always seems to be threatening to rip the country apart.  However, the internal differences are not limited to language, as there are many other deep seeded agendas that can rear their head at any time.  One of those agendas concerns energy, and last week the fault lines became stronger and starker.

Canada is ruled by a coalition government headed by the leader of the Liberal Party, Justin Trudeau.  He has been outspoken about the need to combat climate change and the unease his government feels with the fossil fuel industry.  Similar to United States President Joe Biden, Trudeau has not banned the industry, but he has been no friend to it either.

This has infuriated many in Canada's western provinces where the energy industry is located.  Most outspoken are the people of Alberta, the wealthiest of the energy provinces and the location of most of the gas and oil reserves.  While Ontario, the largest province, and many of the other eastern provinces often vote Liberal, Alberta almost always votes Conservative.

This week, Alberta swore in a new Premier, the equivalent to a Governor of an American state.  Danielle Smith, age 51, ascended to that role after having won an internal vote of Alberta’s United Conservative Party.  

Smith ran on a platform of standing up to Ottawa, the federal capital.  She pledged that she would respect decisions of the Supreme Court of Canada but would litigate any with which she disagreed.  During the campaign, Smith proposed the Alberta Sovereignty Act, which she said would allow the province to nullify any federal law with which it disagreed.  While critics claimed that law would be of dubious constitutionally, if enacted, Smith made no secret that she would challenge Trudeau in any way in which she feels the left leaning federal government is harming Alberta's economic interests.

The interrelationship between federal and provincial power is looser and less well defined in Canada than it is in the United States between the federal government and the individual states.  In recent years, the provinces themselves have often been at each other's throats.  In 2019, Alberta proposed placing an energy embargo over neighboring British Columbia over the latter's opposition to a gas and oil pipeline proposed by Alberta from Edmonton to north of Vancouver on the Pacific Coast.

Into this regulatory breach Smith has inserted truly incendiary rhetoric.  In her acceptance speech after her election victory, Smith proclaimed “no longer will Alberta ask permission from Ottawa to be prosperous and free.”  Smith has also taken extreme positions on other issues, but the campaign itself was dominated by the not too subtle threat of Alberta’s potentially separating from the rest of Canada for good.

Few expect anything so radical to actually happen, but the fact that Smith now is the Premier of Canada's most important energy producing province shows the depth of the feelings against the Canadian federal government felt in the energy producing west.  Perhaps less intense, many of those feelings are shared in the neighboring province of Saskatchewan, which also has plentiful oil and gas reserves.

As in the United States, the pro fossil fuel people feel those who oppose development are wildly out of touch with reality and don't understand the practical implications of trying to sustain a world economy without fossil fuels.  On the other hand, the "antis" feel the fossil fuel supporters are purposely disregarding the potential environmental dangers that continued use of such energy would bring.  Neither side wants to listen to the other side.  Each prefers to lecture the other side on its perceived ignorance.

This intense, passionate, and polarizing debate, which has so far taken place at a low boil in the United States, will continue to occur at high heat north of the border.  We would all be wise to watch carefully how this debate enfolds in Canada and hope that the parties tread a little more lightly than they have to this point, since each side has some merit and neither side is completely without fault or error in judgment.

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