Duane Bratt is a political science professor in the department of economics, justice and policy studies at Mount Royal University in Calgary.
On Friday, the Supreme Court of Canada ruled that the federal Impact Assessment Act (IAA), which governs approvals for major projects such as mines and oil and gas operations, is largely unconstitutional because it infringes on provincial jurisdiction. Alberta Premier Danielle Smith took a victory lap and proclaimed that her province was now “open for business.” But while it was obviously a huge win legally – and especially rhetorically – it is unlikely to have a positive impact on energy investment in Alberta.
The court’s ruling is important, not just because of the impact on the IAA, but more importantly on proposed federal regulations regarding an emissions cap by 2030 and a net-zero electricity grid by 2035. Already Ms. Smith is convinced that the courts, based on the IAA precedent, will automatically rule the emissions cap and net-zero grid unconstitutional because they would infringe upon provincial jurisdiction.
But it is always tough to predict how the Supreme Court will rule on future cases. Federal Environment Minister Steven Guilbeault is convinced the court affirmed the federal role in setting “rules that respect the environment and Indigenous rights and ensure projects get assessed in a timely way.” And that the federal government simply needs to “take this back and work quickly to improve the legislation through Parliament.”
There is merit in Mr. Guilbeault’s view. In fact, paragraph 142 of the IAA decision suggests that a revised and resubmitted federal law would be held up by a future Supreme Court. “The fact that a project involves activities primarily regulated by the provincial legislatures does not create an enclave of exclusivity. Even a ‘provincial’ project may cause effects in respect of which the federal government can properly legislate.”
Meanwhile, Ms. Smith has claimed the IAA led to tens of billions of dollars in lost investments in Alberta. However, the impact is hard to quantify. Investment decisions include many factors: regulations, price, labour costs, market access, etc. Ms. Smith did not help her case with the two examples she cited – the Energy East pipeline and Teck’s Frontier oil sands mine – as both were cases that the court, and the Alberta government, acknowledged were in federal jurisdiction and would not have been affected by the IAA ruling.
Ms. Smith also expects that the IAA decision will unlock new natural gas projects. But the building of natural gas facilities is predicated on there being a market for the fuel. It is possible that a few more gas-fired power plants may now be built because of increased provincial demand and the mortarium the Alberta government has placed on solar and wind facilities. But only if companies, which have to think decades in advance, believe the proposed federal net-zero electricity grid will either be cancelled or delayed – or ruled unconstitutional by the Supreme Court. The other big use of new natural gas facilities – the export of LNG to Europe and Asia – remains unaffected by the IAA ruling. So while the Smith government expects tens of billions of dollars of new energy investment in the province, that is overly optimistic.
A more likely scenario is that the energy transition may be delayed in Alberta and other parts of Canada. Already, on the other side of the country, Nova Scotia and New Brunswick have come out against the proposed coal phaseout in their provinces because of the expense and a belief that the federal government’s environmental policies have been hindered by the IAA ruling.
This is where Ms. Smith gets her Pyrrhic political victory. In Alberta, the UCP government under both former premier Jason Kenney and Ms. Smith has tried to publicly resist the energy transition. Ms. Smith has launched an advertising campaign, threatened legal action and mused about using the province’s Sovereignty Act to stop Ottawa’s proposed electricity regulations.
She has argued that she is not necessarily opposed to the energy transition but that 2035 is too soon. Instead, she has promised to do it by 2050, but without a plan to get to a timeline a quarter of a century away. Her actions, most notably her sustained criticism, her moratorium on solar and wind projects and regular references to Alberta as a “natural gas province,” belie any legitimate concern she may have with an energy transition.
The IAA ruling will undoubtedly embolden her to constrain and delay the energy transition in Alberta. But contrary to what she has been saying, the ruling is not good for business.