Exclusive jurisdiction: Premier reacts to fed’s proposed production cap

Posted on December 5, 2024 by Ryan Dahlman

By Cal Braid
Southern Alberta Newspapers
Local Journalism Initiative Reporter

Earlier this month, Premier Danielle Smith unleashed righteous indignation at the federal government for a proposed new oil and gas production cap, saying it would violate Canada’s constitution and threaten Alberta’s economy.  

The cap is expected to cut production by 1 million barrels per day by 2030 and 2.1 million barrels by 2035, with significant economic impacts, including job losses and reduced public services funding.

 Smith said the province will actively explore the use of every legal option, including a constitutional challenge and the use of the Alberta Sovereignty Within a United Canada Act. 

“As soon as possible,” she replied when asked about how quickly her government would respond. “I’ll get my justice minister working on it immediately, and we’ll start drafting a motion under the sovereignty act immediately as well. We’re going to act very quickly.”

The premier’s Nov. 4 press conference found her unequivocally saying, “Only about an hour ago, Ottawa released details of its oil and gas production cap. It is not an emissions cap. It is a production cap. This cap violates Canada’s Constitution Section 92 that clearly gives provinces exclusive jurisdiction. May I say that again, exclusive jurisdiction over non-renewable natural resource development.”

 She said an estimated 150,000 workers nationwide will lose their jobs as a result of the cap, and warned that families across the country will be left with $419 per month less to be able to pay for groceries, mortgage payments, and utilities. Revenues from oil and gas help to pay for public services like health care, education, law, justice, services, roads, and bridges – and those services will be significantly hampered, according to Smith.

 “To give you an idea, one million barrels a day of lost production at an average rate would cost us in royalties anywhere from $3 billion to $7 billion per year. To put that into context, we spend $2.2 billion on roads and bridges. It would wipe out our entire roads and bridges budget. We spend $2.5 billion on post secondary for their operating budgets. Again, it would wipe out that entire program. The losses to GDP mean $28 billion will disappear from the Alberta economy,” she said. “Ultimately, this cap will lead Alberta and our country into economic and societal decline.”

 The premier appeared twitchy and agitated while she drove home her message She said, “Strong climate action requires a strong economy. The cap will leave us neither.”

 She was so visibly upset that a reporter asked her about her emotional state. “I’m pissed,” Smith said. “I’m absolutely angry because we’ve been working with these guys for two years, because we have a plan that would reduce emissions responsibly by 2050 and they continue to act like they’re working collaboratively with us, and then they come out with exactly the same policy that they put forward a year ago, with no changes whatsoever.”

 She said that through technology, the province has seen an increase in production and a decrease in emissions, going from 159.3 megatons of emissions from the oil and gas sector in 2018 to 158.3 megatons in 2022. Her vision of paving a path forward through technological advancements sounded sensible and realistic.

 “Technology gets adopted in the time it takes to develop the technology. You can’t just plug it into a computer model and assume it exists in the real world. You have to let the technologies develop. You have a period of time (during which) it has to be adopted,” she said.

 The production cap is proposed to begin in 2026 while the federal gov’t works its way towards the 2030 emissions reduction plan. The premier thinks 2050 is a more reasonable target. “We think it’s possible that you can develop a framework for small modular reactors. You can roll them out. You can develop and build a pipeline for carbon capture utilization and storage. You can improve the technology for capture and storage, but you have to take the time to do that.”

 “If you try to put arbitrary, punitive restrictions in place before the technology is available, all that you can do to meet the target is to shut down production. And they know that, and we know that this is nothing but smoke and mirrors. They’re trying to do something which they are not allowed to do under our Constitution. They are not allowed to cap our production, and we’re not going to let them.”