The oil and gas emissions cap might be Trudeau's last chance

Like most governments that are long in the tooth and low in the polls, there aren’t many issues left that look like winners for Justin Trudeau’s Liberals. But their newly-released emissions cap on oil and gas producers, and the reflexive Conservative backlash against it, might just be one. If the Liberals are smart, they’ll lean into it as hard as possible with whatever time they have left. 

First, the facts. The federal government’s emissions cap merely formalizes the promises that oil and gas companies have been making for years. But for all that talk, their emissions have continued to rise — both on an overall basis industry-wide and a per-barrel basis for the oil sands giants. As the Pembina Institute’s Eyab Al-Aini noted in a 2023 report, the industry’s per-barrel emissions are actually higher today than they were in 1990. 

The insistence on the part of industry and its government allies that the emissions cap will result in production cuts — one they’ve backstopped with a series of reports that inflate the economic cost of the cap — is really just an admission that they never intended to live up to their word. After all, as a backgrounder to the federal government’s announcement noted, “A common assumption found in the reports was that the oil and gas sector would take limited to no additional action to reduce emissions without the regulations.” The real problem, in other words, is their own refusal to act. 

There’s another common assumption at work here, too: the Conservative belief that demand for oil and gas will continue to grow indefinitely, and federal government policy should focus on meeting it. Shuv Majumdar, the CPC MP for Calgary-Heritage and a future member of any Poilievre cabinet, has suggested that expanding Canada’s oil and gas exports is “the single biggest nation-building decision that needs to be made, for every Canadian.”

At last weekend’s UCP convention, Danielle Smith went even further out on this ledge. “We will build new pipelines, oil and gas facilities, petrochemical plants, hydrogen plants and more, because Alberta is an energy superpower. And let me be clear: we are not phasing out any of our oil and gas industry. In fact, we’re going to unapologetically double our oil and gas production.” That Smith’s grand ambition for the province revolves around growing production rather than reducing emissions is a tell — and an opening for the government her party’s membership loves to hate. 

The irony here — well, one of them — is that Justin Trudeau and environment minister Steven Guilbeault are actually doing more to protect the oil and gas industry’s interests here than Smith and her fellow Conservatives. In a decarbonizing global economy that may soon be defined by so-called “carbon border adjustments” in Europe and the United States, the high emissions profile of Canada’s oil and gas production isn’t just a problem for the climate. It’s also a problem for the industry, one it seems weirdly determined not to take seriously. If demand dries up the way forecasters like the International Energy Agency — and actual oil companies like BP and Equinor — seem to think, Smith’s dream of doubling Alberta’s oil and gas production will quickly look like a fool’s errand. 

By compelling these companies to take their emissions reduction promises more seriously, the Liberal government is forcing them to face up to reality. Smith and Poilievre, in contrast, are encouraging them to keep pretending that an energy transition isn’t happening. In the process, they’re effectively inviting the oil and gas industry to continue growing its multi-billion dollar inventory of environmental liabilities, which will be impossible to cover in a lower-carbon future where its product remains stubbornly high-carbon. 

If there was ever a hill to die on for this Liberal government, it’s this one right here. Climate policy is Justin Trudeau’s defining issue as Prime Minister, even if he’s allowed Pierre Poilievre to define it for him lately. Now, he has a chance to turn the tables on the Conservative leader and his provincial allies in Alberta by giving them the carbon tax election they keep begging for — but not the one they’re expecting. 

In his next (and potentially last) budget, Trudeau should axe his own carbon tax, replacing it with a package of consumer incentives that are modeled on the Inflation Reduction Act. He should make it clear that the onus will now be placed more squarely on industry, and specifically the one industry that hasn’t decarbonized nearly as quickly as it said it would. And he should dare Pierre Poilievre to come up with his own solution — one that’s longer than three words. 

The Alberta government will howl about this, as it does with any attempt to hold the oil and gas industry accountable for its own actions (or lack thereof). Conservative pundits will rage about the supposedly corrosive impact this would have on national unity, without admitting that the Alberta government’s constant filibustering and inflammatory rhetoric here has been slowly corroding that all along. What’s needed is a national conversation about the risks and opportunities around climate policy and how Canada can and should adapt to the global energy transition. Canadians also deserve to know who actually takes that transition seriously — and who doesn’t. 

For the Liberals, this would help clarify the stakes for Canadians in the next election, and shift the focus away from affordability concerns that will have been mitigated by the ongoing decline in inflation and the elimination of the carbon tax. If Canadians still decide to throw them out of office, at least they’ll have gone down swinging on an issue they care about.