Dennis McConaghy on Decarbonization - Dundurn
Feb 09, 2023

Dennis McConaghy on Decarbonization

My third book for Dundurn Press, Carbon Change: Canada on the Brink of Decarbonization, tried to make the case for Canada to fundamentally reconsider its current policy direction in respect of climate and energy. Does the cost achieving decarbonization in Canada by 2050 exceed the actual benefits that accrue to Canada? Obviously, the same question can and must be posed globally. The political process across developed economies will ultimately determine if such a reconsideration comes to pass, heavily influenced by the costs of the energy transition required. Take special note of what is unfolding in the UK and central Europe, where the costs of attempting such an energy transition at a significant scale become ever more onerous, admittedly made worse by some obvious geo-political eruptions impacting hydrocarbon supply.

Within Canada, no federal election is required prior to 2025. The existing policy position of decarbonizing Canada by 2050 of the current Liberal government, fully supported by the NDP, will not change in the interim. Decarbonization is now fundamental to their political ethos.

However, in Alberta in early May, a provincial election will occur that will represent a real political statement as to whether the one Canadian province most economically impacted by decarbonization is prepared to elect a  government committed to resistance.

Appreciate that decarbonizing Canada means not using or exporting hydrocarbons. Full stop. That is both the vision and practical reality. For all Canadians, the cost of energy for heat, mobility, petrochemicals, and cement will increase. But Canada will also lose, Alberta especially, the economic value that is gained by the export of Canadian natural gas, crude oil, refined products, and petrochemicals. It is not extreme to concede that decarbonization if ruthlessly imposed by the federal government requires the deconstruction of the Alberta economy.

Albertans face a simple binary choice – the Alberta NDP, led by Rachel Notely, or the United Conservative Party, led by Danielle Smith. Other issues are in play in this election beyond how the next Alberta government relates to the current federal government on climate and energy. Most notably whether Alberta chooses to reinvent fundamentally its health care system to facilitate more private sector choice or not. But no issue will determine the economic future of Alberta more than if its hydrocarbon production sector will be allowed to grow to meet hydrocarbon demand for a world that yet has shown no capacity to materially reduce that demand via less consumption or substitution to other energy sources or sacrificed on the altar of decarbonization.

It remains to be seen how both leaders position themselves across a spectrum from full alignment with decarbonization to implacable resistance to the point of some form of separation from the authority of the federal government within Alberta. Doubtless Notley will position herself as better capable of managing some form of “just transition.” Whereas Smith will claim to be the more realistic defender of Alberta’s fundamental economic interests and constitutional rights.

The key point is that if Smith does manage to get reelected, it will only intensify the issue of climate and energy as the preeminent national issue as the tensions between the current federal regime and Alberta grow more fractious. A national consensus more improbable.

The relevance of Carbon Change only  grows.

Dennis McConaghy is a Canadian energy executive who has nearly forty years of industry experience in infrastructure development and is the author of Dysfunction: Canada after Keystone XL. He lives in Calgary. Learn more by visiting his author page.