Ottawa and Alberta's pipeline memorandum

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Prime Minister Mark Carney and Alberta Premier Danielle Smith were all smiles in Calgary yesterday as they signed a new energy deal. The memorandum of understanding is aimed at clearing a path toward a new oil pipeline from Alberta to the West Coast and from there to Asian markets. That path gets rocky in British Columbia. We'll head there shortly, but we begin in Alberta with what's known as the Grand Bargain. This is a really great day for Albertans. We have been working for some time on addressing the nine bad laws, as I like to call them, that have been impacting our investment climate care. And I'm pleased that we've reached an agreement. I think what it's going to do, especially with the removal of the emissions cap on Alberta, as well as the removal of the net zero power rigs, I think it's going to unleash an incredible amount of investment and allow us to work together. Work together. Now that is a shift in tone in that relationship. The Prime Minister, Mark Carney, called it a great day for Alberta and a great day for Canada. In effect, it creates an energy transition, all aspects of energy, but really sets the stage for an industrial transformation. At the core of the agreement, of course, is a priority to have a pipeline to Asia. That's going to make Canada stronger. More independent, more resilient, more sustainable. The Prime Minister says this deal is conditional on the development of a big carbon capture and storage project in Alberta to offset emissions and stronger industrial carbon pricing in the province. The MOU also clearly states that a pipeline must be privately financed. These are commitments that are made as well to indigenous co-ownership of the pipeline and to collaborating with British Columbia. Jason Kenney is the former Premier of Alberta. He's been watching this very carefully. Jason Kenny, good morning. Morning. The Prime Minister says, in his words, this is Canada working, is it? Yeah, I think it is. You know, this is a really positive sign for federalism and for the Canadian economy to have worked through a bunch of really difficult issues. The first job of a prime minister, I think, is to protect and secure national unity. And Albertans, like people who do broadly across the country who work in resource industries, have felt for some time that Ottawa is... trying to marginalize and constrain them. I think now Albertans can feel like at least the federal government shares the aspiration to help turn around the Canadian economy by leveraging what is our largest wealth-producing job-creating tax-generating industry, which is the Canadian energy sector. We should mention that the federal government under former Prime Minister Justin Trudeau did pay for a pipeline that Canadians own. But this is a big... deal in Alberta. Daniel Smith has called this a grand bargain. How much of a bargain is it for Alberta, do you think? Well, it's not a pipeline, but it is a commitment by the federal government to get one built. More broadly, though, a lot of the progress here is in related areas. Like, for example, the eternal government had imposed something called the Clean Electricity Regulation, which said that in a few years, promises could no longer produce electricity from hydrocarbons like natural gas.

The problem is there are several provinces, including Alberta, Saskatchewan, that don't have hydroelectricity, and it takes, as you know, like a decade or long to build large-scale nuclear. So that would literally push some of these provinces into the dark without base-low electricity power. That's been repealed. The emissions cap that was threatened before the oil sands has been repealed, which means that the oil sands can grow in the future when it makes sense to do so. There's a commitment to large-scale data processing, Alberta with virtually... like the cheapest natural gas in the world in cold weather could be a major global center for data processing to support artificial intelligence. That could be good for not just the economy, but for national security by making that solid rather than processing all of our sensitive data in the United States, for example. So these are all points of substantial progress. Do you think it buries the hatchet between Alberta and the federal government? Daniel Smith, I mean, her base in particular, the majority of the UCP party members are in favor of separation. So is the hatchet buried now? Well, I think this will be seen as a huge sign of progress by the vast majority of Alberta. There will always be a small separatist fringe in Alberta that are just perennially angry. They won't buy into this. But I think it helps to reduce that number significantly. And really what I've always thought is what Albertans simply want to see is some sign of respect and understanding from their national government. After all, Alberta has played an oversized role in the modern Canadian economy. We've been the largest source of interprovincial migration as people have moved here for good jobs. And we share about $20 billion more with the rest of the federation through federal taxes paid to get back in benefits and transfers. So, you know, we think Alberta, has played a very positive role in the Canadian economy, and this is the chance for Ottawa to say, we acknowledge that, and let's keep that momentum going. How do you understand, I mean, you've had lots of experience in politics. How do you understand Mark Carney here? He's gone from the UN climate envoy to supporting the conditions or creating the conditions for a new pipeline that would pump what? More than a million barrels of oil potentially a day. He's lost one of his cabinet ministers, the former environment minister, Stephen Gilbo, over this. How do you understand what Mark Carney has done? Well, actually, it's a shocking thing. What we have here, a politician is actually keeping his election promises. Mark Carney did not get elected in the spring on a commitment to implement his book values or to implement the agenda of the global net zero financing alliance that he helped to create, which has fallen apart. He got elected on a commitment to build a Canadian economy, get big things done. more quickly than ever in our history, to make Canada an energy superpower, to diversify our exports away from the United States, to make us more resilient and prosperous, make us the leading economy in the G7. Yesterday's announcement is a big step towards achieving all of those things. And I would say the real peculiar question is why he put Mr. Gibbon cabinet in the first.

Mr. Kippo was a self-described socialist. He was once arrested for vandalizing the home of a former Alberta Premier in an environmental protest. I can't imagine somebody being appointed the cabinet who had done that to the Quebec, for example. And Mr. Kippo was clearly not committed to the platform to make Canada a global energy superpower. Is there a business case for this? The benchmark North American crude blend, known as West Texas Intermediate, is priced at below $60 a barrel. The U.S. Energy Information Administration says it's going to go down to about $55 in 2026, even lower in 27. Given that math, is there a business case for this pipeline? Yeah, actually, believe it or not, that's relatively good news for the Canadian energy sector because it means that our oil sensors have become hugely efficient. At $60 WCS, they're actually generating very good earnings. And the U.S. shale, which has been the largest source of growth in global energy supply in the last 10 years. is uneconomic at those price points. So you'll see other less efficient energy basins reducing production while Canada could actually produce more. Secondly, we produce a unique product that the world needs and will for decades to come. That is heavy bitchievous accrued. So there's a global demand for that. The only other major potential source of that is Venezuela, which because of the dysfunctional government there is virtually... See nothing right now. So the economist, Andrew Leach, says the world is a wash and cheap energy, which has positives. But when you're sitting on a trillion barrels of oil, the fact that the world is a wash and cheap energy is generally bad news. Is he wrong? No, he's not wrong. But we have ways, as I say, look. Reality is this, if we were to get a million barrels a day of increased shipments, that would represent at current prices, a value of like $20 billion to the Canadian economy, a country that has had a decades-long decline in productivity and competitiveness for several years declining for capital GDP. A huge flight of capital outside of the country. There's enormous pressure for the Trump administration. And the single biggest economic lever that we can pull to turn those things around, to create wealth, to trigger tens of billions of dollars of capital investment that will generate orders for steel and manufactured implements and so on. That is the energy sector. And it's $150 billion of Canadian exports right now. which is several times larger than Canadian auto exports. So, you know, we can choose to just carry on sliding towards less, towards becoming a less prosperous country or embrace opportunities like this to turn that around. The Prime Minister and the Premier of Alberta have said that this is in many ways a nation-building project, that it's about national unity. What sort of nation-building project excludes the province where the pipeline will end?

Well, you know, first of all, the majority of British Columbians are consistently saying they support a new West Coast energy pipeline. But BC was cut out of any conversations around this. The Premier said he found out about it after the fact. Well, actually, the memorandum includes a commitment to trilateral discussions with the government of BC. But British Columbia doesn't get to choose what gets exported from Canada. The entire confederation is predicated on Canada being an economic union. Part of that is... exclusive federal authority over interprovincial infrastructure, including pipelines, a principle upheld unanimously by both the BC Appeal Court and the Supreme Court of Canada a few years ago when David E.B. tried unsuccessfully to block the Trans Mountain expansion, and that's a project which is now generating revenue for BC, for BC First Nations, and employment. And so, you know, John Hogan. who had tried that effort to block TMX, told me that after the Supreme Court ruling, he accepted this was a federal jurisdiction, as Mr. E.B. said yesterday. But Mr. Hogan also told me that his party included a, quote, mud hut wing that would always oppose any energy development. I think that's what Mr. E.B. is playing to right now, not the broader interest with the Canadian economy. Where do the First Nations in British Columbia fit into that? The Union of BC Indian Chief's Grand Chief said, the answer is still no, and it will always be no. Well, where does the First Nations fit in essentially to this? As you can see in the agreement, Indigenous equity participation consultation is enumerated probably two dozen times in the MOU. You know, on the Trans Mountain expansion, there was a lot of focus on supposed indigenous opposition, but when that was actually tested, the Federal Court of Appeal and the Supreme Court of Canada determined that... 111 of the 119 indigenous communities with a punitive interest in the Trans Mountain expansion, either supported it or neutral for it towards it, had signed mutual benefit agreements on that project, just as with the coastal gas link, a natural gas pipeline. to the LNG Canada Terminal, every one of the 20 elected Northern BC First Nations councils supported that. So you're always going to have some who are reflexively opposed. But I believe if equity participation is on offer and there's proper consultation, the majority of Western Canadian First Nations will support this. I have to let you go. You and I are generally around the same age, and I hope we live long, long lives. But do you really believe that you will see a new pipeline out of Alberta to the BC coast in your lifetime? I think it's a bit of a long shot because of the economics. And despite yesterday, there's still... a grindingly slow regulatory process. But it is a positive sign for the Federation that at least the door has been open to that. It says to Albertans, you are included in the Federation. That itself is important. There will be other ways that we can increase the production and shipment of Alberta energy to help the Canadian economy in the future. But I hope that at least we give this a good shot. Jason Kenney, good to speak with you. Thank you very much.

Thank you. Jason Kenney, the former Premier of Alberta. We did invite the current Premier, Danielle Smith, as well as the Premier of British Columbia, David Eby, to join us this morning, but neither was available. This week on two blocks from the White House. A sudden escalation in the ongoing trade dispute between the U.S. and Canada. Donald Trump is imposing 50% tariffs on many Canadian exports. We're asking, what's up with these new tariffs and what does it mean for the Canada-U.S. relationship? Join me, Willie Lowry, and my fellow Washington correspondence, Mike Crawley and Katie Simpson as we break down U.S. politics from a Canadian perspective. Find and follow two blocks from the White House wherever you get your podcasts. Maureen Nice is the elected chief of the Heisla Nation on the northwest coast of BC. That nation has long been opposed to an oil pipeline and export facility on their territory. Chief Nice, good morning to you. Good morning, Matt. How are you doing today? I'm well, and I'm glad to have you here as part of this conversation. You met with the Premier of Alberta, Danielle Smith, earlier this week before the memorandum was signed. What happened in that meeting? Well, we met with the Premier basically to go over what we are interested in our territory as far as development. We wanted to make sure that was up front and center for her as far as an awareness. So that was hyphenation and a district of Kitamette in that meeting. Did you feel heard in that meeting? She actually did listen and we did talk about some things that we are interested in that they might be interested in exporting from our shore. So that was, I thought that was good. There was really no discussion in that meeting about a pipeline except to restate our position on an export facility and a pipeline to our shore. You've been very clear that, I mean, you are not, in your words, opposed to resource development, but it's about this project in particular. Why is that distinction important? Well, we still harvest from our water. We still, what we look for in a project is. projects that align with our values, things that we can actually live with. We will be here for a very long time, unlike many governments that have a four-year or eight-year lifespan, but we'll be here, and we will get to see all of the outcomes of anything that comes to our shore. So we have a vested interest in making sure we are stewards of the land. We make sure that we sustain the environment that we live in. And so why does an LNG project that your nation has a majority ownership stake in work, and a bitumen pipe mine not work? Well, much of our sustainability is actually from the water. That's our breadbasket. We take all of our food from the ocean still, and I can list all the things that we do harvest. But I'm sure you're aware of what we can take from the Pacific. But the point is, is that the...

The ships that go through are, there's no risk to the aquatic life. And we were able to settle with that in order to get that economic prosperity. Our nation desperately required. We were at the beginning of the projects, we were in what's called third party management. We had no money, no resources to do anything to build our nation. So LNG met that balance for us where we could. have the project and have that economic prosperity while we sustained our environment. And bitumen does not meet that. It does not meet that. It has not proven to meet that. They haven't been able to ensure that spills won't happen. And when they do, they're devastating to the aquatic life. This memorandum of understanding calls for indigenous co-ownership of a new pipeline if it were to be built. What does that mean to you? Well, we, you know, we have, we understand what that means because we are proponents of one of the LNG facilities in our territory. That is Cedar LNG. We understand what being owners of a project means in that sense. So I know that that is a, that's the carrot that's being dangled along the whole pipeline route. It will be. And I think they may get some buy in along the route. How do you understand that? I mean, we just heard from Jason Kenney, the former Premier, who talked about that carrot and said that if you take a look at other projects and passed, that perhaps people's opposition could be assuaged, their concerns could be assuaged if that co-ownership part and the benefits that might flow from that were very clear. Is that a possibility that if... And you talked about the benefits of LNG to your community if the benefits from a bitumen pipeline were to flow in your community or toward your community that your opposition perhaps could change. We're willing to work with many project proponents, but this is one that we are not interested in. We've been very clear. We have taken this to membership already once with the Northern Gateway Project, and there was no room there for the project to be considered at all. So I don't believe that our nation, and we hold that body of water where the port, where the, where any export facility would be located, that, you know, that has to meet our, we basically have to have a say in that what's developed in that area. What about more broadly? There is polling that's been done suggesting that, what, 53% of British Columbians surveyed could support a pipeline. How much support do you think you have for your position from the public in BC?

That is a good question, Matt. I can't really answer that. I hear from both. I've heard. that support is increasing for a pipeline through BC. People, you know, stating that they just want to get it done. They just want the indigenous people to get out of the way and build a project. But I also hear from people who are, you know, opposed and are cheering that our nation is opposed to such a project. So I don't know where the numbers sit right now. That would be something that I'd have to have a look at. I have to let you go. But you have said that... The way that this has unfolded, in your words, is a major step back in relations with First Nations. What are you most concerned about? Well, I think that we, you know, when you're dealing with First Nations, one of the most important factors is building trust and building relationships and making sure that you, you know, you say what you're going to, you do what you're going to, what you say, and you move forward that way. And I think this is a major step back in what we've communicated. We've been a part of projects that have contributed to the Canadian economy and the British economy economy. I think this is a major step back. in that this means that that means really not very much, that trust-building process that we have just gone through. And I do think it's essential to have that trust in a relationship. I'm glad to speak with you. Thank you very much. Thanks, Matt. Maureen Nice is the elected chief of the Heislett First Nation in British Columbia. You've been listening to the current podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon. For more CBC podcasts, go to cBC.ca slash podcasts.