The future of Canada’s oil and gas industry - a major employer in the country and especially in the oil-rich Alberta province - is at stake in Monday’s federal election, in which climate change is a key theme alongside the impacts of the pandemic on the Canadian economy. The snap election, which Prime Minister Justin Trudeau of the Liberals called in hopes of capitalizing on his handling of the COVID emergency, is too close to call, polls showed a day before the vote.
As climate change is increasingly taking center stage in every election in major Western oil and gas producers, as it did in Norway earlier this month, the stakes for Canada’s energy industry are high.
If voters choose more of the same, giving Trudeau a win, another government led by the Liberals would demand stricter federal rules from the oil and gas sector to cut emissions, while new oil pipeline projects are unlikely to be supported. But if the Conservatives were to win, Canada’s oil industry could get a boost from a pro-oil federal government. Stocks in major energy companies would also benefit from a Conservative win and could be primed for a relief rally, Michael Bellusci of Bloomberg News notes.
As Canadians go to the polls on September 20, the race is too close to call. An Ipsos poll on September 19 forecast “a photo finish”, with Conservatives projected to win 32 percent and Liberals 31 percent. The election could be a repeat of “the razor-thin victory in the popular vote in 2019,” according to Ipsos.
“However, this time around, the Conservatives are winning by less in the Prairies and are being helped by the NDP who are pulling votes from the Liberals in Ontario. This, combined with a base that seems enthusiastic to vote for O’Toole and his party, could make for a very long night on Monday as the nation waits for results from close races in British Columbia,” wrote Darrell Bricker, Global CEO, Public Affairs, at Ipsos.
Trudeau’s Liberals pledge in their platform to cut emissions from the oil and gas sector, requiring oil and gas companies to set five-year targets starting in 2025 and reduce methane emissions by at least 75 percent below 2012 levels by 2030.
“If this is done right, it could be big - but we’ve heard big talk from this party before,” Caroline Brouillette, domestic policy manager at Climate Action Network Canada, told Reuters last week, commenting on the Liberals’ program concerning emissions from oil and gas.
Conservative leader Erin O’Toole said last month that if elected, Conservatives would roll back Trudeau’s latest national target of emission reduction to the previous target of a 30-percent cut below 2005 levels by 2030. In April this year, Trudeau’s government raised the 2030 emission reduction target to 40-45 percent, reiterating a 2050 net-zero goal.
O’Toole promised climate action, although not as ambitious as Trudeau’s, but he also said that if elected, Conservatives would back oil pipeline projects that would boost Canada’s exports and its oil and gas industry.
“We should make sure that democratic countries use Canadian resources, not resources from Saudi Arabia or Venezuela or Russia,” O’Toole said in an interview with Radio-Canada in August.
“That will be our approach in getting access to tidewater,” he added.
“Unlike Justin Trudeau, who wants to phase out the sector and its jobs, we will support the energy sector as a critical part of our economy,” the Conservatives say in their platform.
Their plan for the energy sector includes ensuring adequate pipeline capacity by getting Trans Mountain built and ensuring Line 3 and Line 5 continue to operate, implement a federal LNG export strategy, and pass a Critical Infrastructure Protection Act to prevent protestors from blocking key infrastructure. The Conservatives will also support the offshore oil industry in Newfoundland and Labrador and introduce a tax credit to accelerate the deployment of carbon capture, utilization, and storage (CCUS) technology in the energy sector and in important industries that have few alternatives to burning fossil fuels, like fertilizer and chemical production.
Investors are watching Canada’s elections because the oil and gas sector potentially has much to gain in case the Conservatives win, while another Liberal government could mean that the industry will have to continue fighting for pipeline takeaway capacity.
By Tsvetana Paraskova for Oilprice.com
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