With an election (presumably) now less than 100 days away and the UCP showing signs of life in recent polls, it’s a particularly odd time to throw a political lifeline to their chief opponents.
Maybe the premier just feels spoiled by the generous political gift from the prime minister and wants to spread the love around. Otherwise, it’s difficult to make sense of her insistence to move forward on a controversial and costly cleanup plan for inactive oil and gas wells.
Politics aside, Albertans have good reason to be concerned about this plan. There’s definitely a need to address this problem, but that doesn’t have to come at the cost of abandoning the polluter-pay principle. The idea that we need to reward companies for doing what they’re already legally obligated to do makes no sense at all. That Premier Smith would choose to pursue such a plan at all, never mind doing so on the eve of an election campaign, raises serious questions about her judgment.
For now, the idea is that this would be a pilot project, but it’s very similar to an idea she had pitched to the Alberta government before re-entering politics. At the time, she envisioned a program that would dangle as much as $20 billion in royalty credits.
Despite the growing criticism and pushback against this idea, the premier is standing firm. Earlier this month she claimed that this was about cleaning up “the worst of the worst sites” and that “what has happened is the polluter who created the problem is no longer around anymore.” The executive director of the premier’s office has claimed the same, arguing that this is about cleaning up “the worst orphan wells in Alberta.”
This is all rather disingenuous, unfortunately. “Orphan wells” are already the purview of the Orphan Wells Association, to which the oil and gas industry pays into. This is about the cleanup liabilities of existing companies. The Alberta Surface Rights Association says they were told explicitly that in a recent meeting with Energy Minister Peter Guthrie.
In fact, as University of Alberta energy economist Andrew Leach has noted, it’s actually the companies with the strongest balance sheets that stand to benefit the most while penalizing and disincentivizing the companies that have done the right thing.
What’s interesting is that Guthrie’s predecessor, who is now environment minister, had dismissed this idea as a violation of the polluter-pay principle. While such sentiment might be verboten within cabinet these days, it is a sentiment that is spreading. Former UCP and now independent MLA Drew Barnes has called it “corporate welfare.” The head of the Rural Municipalities of Alberta says this “is exactly how a fox would design a henhouse,” and that his members are pushing back against the plan.
There was also a report from Scotiabank earlier this month that warned this plan could “perpetuate negative views against the energy industry” and that it flies in the face of “the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept.”
None of this seems to have swayed the premier, but she’d be foolish to think that Albertans will just happily go along with this scheme. There is undoubtedly widespread support for the energy industry and the jobs it creates and sustains, but there’s a limit to what that goodwill can buy. Public dollars to subsidize activity that is already mandated will be a hard sell indeed.
There is a substantial amount of cleanup to be done and this is not going to be accomplished easily or quickly. But it’s a false dichotomy to pretend that it’s either this approach or nothing. Even if she can’t see the problems with this approach, the premier would do well to consider the political trap she’s setting for herself.