Canada’s economy could sustain a body blow in both international trade and job creation if the “boy scout” federal government ratifies a controversial accord on greenhouse gases, says Alberta’s energy minister.

Murray Smith pitched his dump-Kyoto message to a receptive group of investment professionals, analysts and fund managers from across Canada at a symposium held last week in Calgary by the Petroleum Services Association of Canada (PSAC).

“While the most immediate and most devastating effects of Kyoto would be felt in Alberta, Kyoto would ultimately punish the whole Canada economy,” Smith said. “A slowdown in the energy sector will harm the investment community - and where is it largely based? Toronto.”

Business Edge photo
Murray Smith

Energy industry companies already face an array of market risks including commodity prices, interest rates and competition, and “the last thing you need is the spectre of new costs imposed from above by a federal government that’s intent on being a boy scout on the world stage,” Smith said, drawing comparisons between the proposed Kyoto Accord and the devastating National Energy Program which crippled Alberta’s energy industry in the early 1980s.

“Here we have a government scheme, imposed from the centre, done for ideological reasons, rammed through against all economic logic, without debate, and carries the threat of massive costs, particularly for one region. I’d say that’s a pretty close analogy to what happened on Oct. 28, 1980.”

Smith urged the investment experts in the crowd of about 150 to demand more public debate over the costs of the accord, which would commit Canada to making a 26-per-cent cut in industrial greenhouse gas emissions by 2012. A draft proposal on how to meet those commitments is being forwarded to the provinces for their input this fall.

Late last week, federal Natural Resources Minister Herb Dhaliwal said he would consider Alberta’s home-grown global warming solution if it appears industry, government and the public are deadlocked on a Kyoto strategy. The “made-in-Alberta” strategy would cut in half the amount of greenhouse gases generated per million dollars of the province’s economy by 2020, rather than reduce total emissions.

Dhaliwal also reassured Albertans that any environmental commitment wouldn’t disproportionately affect one region of the country.

“We’re hoping the views of people who express those comments will eventually prevail around the federal cabinet table,” added Smith.

Some officials have forecast potential job losses nationwide at 180,000, with an economic aftershock of $30 billion.

On Friday, the Canadian Council of Chief Executives, formerly known as the Business Council on National Issues, released an eight-point “framework of action” strategy to combat climate change.

CCCE president Thomas d’Aquino said that national consultations launched this month by the federal government must not degenerate into a battle between energy-producing and energy-consuming regions of Canada. The public policy advocacy association believes the federal government should negotiate greenhouse gas targets directly with individual industrial sectors.

“It is time to move beyond the straightjacket of the Kyoto Protocol towards a more innovative strategy that recognizes Canada’s needs and strengths, and that will maximize the effectiveness of our country’s contribution towards environmental enhancement nationally and globally,” he said.

Meanwhile, Smith painted a rosy picture for the oilfield services industry and the future of the sedimentary basin. Alberta’s natural gas hub of extraction, processing and long-distance shipments of large volumes of natural gas is the key to unlocking the full energy potential of the North, he said.

Smith noted the Alberta government hasn’t taken an official position on which pipeline route or supply basin should proceed first, because both of them will eventually be a necessity, a position shared by the Canadian Association of Petroleum Producers (CAPP).

Forecasts indicate North America’s natural gas consumption will grow by 20 billion cubic feet per day over the next eight years, far more than either Alaska or the MacKenzie Delta sources could supply.

At the same time, natural gas production coming out of Alberta isn’t growing like it did in the 1990s, said Smith, pointing out that gas wells drilled over the past four years in Alberta have experienced an average first-year decline rate of about 25 per cent, up from 19 per cent a decade ago.

“It’s going to be a challenge just to maintain deliverability out of Alberta,” he added.