IS THE `BLAME TRUDEAU' STRATEGY OUT OF GAS?
The UCP government's failures are taking the spotlight, says Duane Bratt.
On the morning of Jan. 20, Joe Biden was inaugurated as United States president. In the afternoon, he signed an executive order rescinding the permit for the Keystone XL pipeline. This decision has massive negative economic consequences for TC Energy, the overall Alberta economy and the Alberta government. This set the stage for a remarkable news conference later that afternoon by Alberta Premier Jason Kenney. Ostensibly, it was a blistering if petulant, critique of Biden's decision. However, the real target of Kenney's message this week was not Biden; it was, of course, Prime Minister Justin Trudeau. Blaming Ottawa is usually an effective tactic in Alberta politics, but, in this case, it is not going to work.
The KXL saga has been going on for over a decade. KXL would have economically benefited Canada and the U.S. Alberta's oilsands producers would obviously have benefited, but so would the U.S. refineries along the Gulf of Mexico coast (which utilize heavy crude). The U.S. recently became oil self-sufficient, due to the shale revolution, and KXL would have further contributed to a North American oil market where Canada and the U.S. trade back and forth based on region. This would have further reduced imports from OPEC countries. However, KXL became a symbol of the fossil fuel industry out of all proportion to its actual impact on climate change. Therefore, for domestic political purposes, then-president Barack Obama denied KXL'S cross-border permit in 2015. Notably, Obama waited until after Canada's fall 2015 election to make the announcement, and Trudeau had only been sworn in as prime minister the day before.
When Donald Trump became president, he reversed Obama's decision with a 2017 executive order. However, an executive order is not the same as going through the U.S. regulatory process. Cutting corners in the U.S. (like in Canada) led to court actions and demonstrations in Montana and South Dakota that delayed construction. Trump even had to issue a second executive order in 2019. While KXL construction was largely completed on the Canadian side of the border, there was little work done on the U.S. side in the three-plus years after Trump's initial approval.
Biden was vice-president when Obama would not sign the KXL permit in 2015. Biden, reflecting the growing power of the environmental wing of the Democratic party, is also committed to addressing climate change. This is why he also rejoined the Paris Climate Agreement on Day 1 of his administration. Biden also campaigned against KXL in 2020. In addition, every one of Biden's initial 17 executive orders reversed Trump policies. Therefore, it was a surprise to no one, except perhaps to the Kenney government, that Biden would rescind Trump's authorization for KXL. It seems that Kenney was banking on a Trump victory.
The economic consequences of the KXL not being completed are immense. TC Energy immediately halted construction, laying off 1,000 construction workers. The Alberta Treasury has estimated that a KXL pipeline that flowed over 830,000 barrels a day of oil to the U.S. would have brought in several billion dollars a year into the Alberta economy. Just as significantly, last March, the Kenney government invested $1.5 billion and a further $6 billion in loan guarantees into KXL. Kenney has admitted that the Alberta government has lost at least a billion dollars because of KXL'S cancellation. For a government that campaigned in 2019 on “jobs, economy, pipelines,” this is a real calamity. It explains Kenney's anger, but it does not legitimize his response.
Kenney has called for Ottawa to impose economic sanctions on the U.S. In a dog whistle to anti-quebec sentiment in Alberta, Kenney contrasted the response of the Trudeau government to Trump's unilateral imposition of tariffs on Canadian steel and aluminum. However, there are fundamental differences between applying tariffs on existing products and cancelling a partially constructed pipeline. A better comparison would have been if Biden had hit Canadian oil with a 10 per cent tariff. In addition, Canada currently exports almost $100 billion in oil, which might be jeopardized in a trade war. Politically, Trump was extraordinarily unpopular in Canada, but Biden is popular. Trudeau and Biden — as well as a majority of Canadians — support measures against climate change. Simply put, there is no way that Trudeau will impose economic sanctions on the U.S.
Kenney knows this. What he is trying to do is set up Trudeau as a scapegoat. “Blaming Ottawa” is a long-standing, and successful, tactic in Alberta politics. But I doubt that it will work this time. Kenney blamed Trudeau for Obama's 2015 KXL decision, did not give Trudeau credit for Trump's 2017 KXL decision, and blamed Trudeau for Biden's 2021 KXL decision. All three of these decisions were made based upon an assessment of U.S. national interest and the views of Canada were irrelevant.
The hypocrisy of Kenney's news conference also hurts his efforts to blame Trudeau. Kenney demanded that
Biden consult with Alberta before making a decision on KXL, while simultaneously arguing in court that his government did not need to consult with Albertans over reversing a coal-mining moratorium in the Eastern Slopes of the Rocky Mountains. Kenney also shamelessly praised Canada's improved record on climate change, all the while ignoring that he ended the Notley government's provincial carbon tax, is suing Ottawa in court over the federal carbon tax backstop, and was enraged when Trudeau announced an increase in the backstop last December. Kenney wants it both ways.
Kenney campaigned and governed on his energy “fight back” strategy. None of it has worked. KXL has been cancelled. The “war room” has been an embarrassment. The public inquiry into the foreign funding of environmental groups has been delayed, over budget and has not adhered to due process. Its identified enemies of Alberta oil in other jurisdictions have been elected/ re-elected (Justin Trudeau, John Horgan, Joe Biden). Still on the horizon is the equalization referendum in the fall of 2021. Although no matter the result, it will be difficult for Alberta to unilaterally end/reform a federal program. Will Albertans blame Trudeau or blame the “fight back” strategy?
Kenney has also been hit by a series of scandals: COVID-19 deaths, COVID-19 restrictions, MLA holiday travel, teachers' pensions, fights with public sector employees (notably with health workers and doctors in the middle of a pandemic), the delisting of parks, and coal mining in the Eastern Slopes. It explains Kenney's dropping popularity. Will Albertans blame Trudeau for these scandals, or blame the Kenney government?
Finally, it looks like the Trans Mountain pipeline (purchased by the Trudeau government) will be completed and have oil flowing in 2023, but the KXL pipeline (invested in by the Kenney government) has failed. When considering the fate of pipelines, will Albertans blame Trudeau or blame Kenney? It is getting much harder to see how Kenney's “blame Trudeau” strategy will survive his own government's failings.