The woman who’s looking to reclaim power in Canada’s energy heartland is pushing back against Prime Minister Justin Trudeau’s targets for cleaning up the oil and gas industry.

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Rachel Notley, who was the centre-left premier of Alberta from 2015 to 2019 and is running for the job again, said Trudeau’s plan for cutting the sector’s emissions by more than 40 per cent by the end of the decade is too onerous. Her stance mirrors that of the country’s largest crude producers — and it’s also one that may be a political necessity as her New Democratic Party battles for votes in a province where oil is king and the prime minister is deeply unpopular.

“I don’t believe that the current drafted emissions caps that we’ve seen are realistic,” Notley said in an interview with Bloomberg News. “If we don’t get down to work and come up with a more practical cap, we are not going to be successful in mapping out a process that will get us there.”

Trudeau’s government has promised to limit emissions in the energy sector to ensure Canada meets its climate targets, but hasn’t yet chosen a mechanism for doing so. His government published a plan last year that modelled a 42 per cent cut in oil and gas sector emissions by 2030, which oil executives have said isn’t possible without slashing output. More draft regulations are expected to be released within weeks.

Relations between the federal government and Alberta — whose nearly four million barrels of daily oil output makes Canada the world’s fourth-largest crude producer — are a perennial flashpoint in local politics. Notley’s 2015 victory was a rare win in a traditionally conservative province. She’s looking to defeat the United Conservative Party, currently led by Danielle Smith, in an election set for May 29.

Although Notley is generally much more aligned with Trudeau’s environmental agenda than Smith, she said the federal government is trying to move too fast on cutting oil-sector emissions. The vast majority of these emissions in Canada come from Alberta’s oilsands, which is among the world’s most carbon-intensive crude sources.

Race for premier is tight

“Using aspirational numbers to drive practical policy is not a recipe for success,” Notley said. “The key is making sure that what we put in place is practical and achievable, and it doesn’t become so oppressive that we find ourselves shutting in production.”

Notley said she doesn’t oppose a cap in principle, but she declined to provide her own emissions target, saying she’d consult with experts and industry on the matter.

“We’re not going to be unambitious,” she said. “But we are going to be realistic, and we’re going to make sure that the industry is able to continue to flourish.”

Polls suggest the race between Notley and Smith is very tight. A recent Leger survey found the New Democrats had a two-point lead over the United Conservatives, while another poll by Ipsos found Smith’s party was up by four points.

Notley is expected to sweep much of Alberta’s capital city of Edmonton, while Smith is dominant in the smaller population centres and rural areas. The election will likely come down to who wins the most districts in Calgary — where many of Canada’s energy companies are headquartered.

Notley argued that in the bigger picture, Canada’s environmental policy needs input from Alberta, and that has been prevented by the hostility between Smith’s United Conservatives and Trudeau’s Liberal Party.

“Both Alberta and Canada do best when energy policy is crafted, quite frankly, by Alberta,” she said. “So we want to be at the table, we want to be driving the conversation, and we want to be coming up with solutions that ultimately drive investment and grow our markets.”

Another of Trudeau’s signature environmental policies is a carbon tax on consumer fuels, which kicks in if a province doesn’t have an equivalent carbon price of its own. Notley said she would leave that as a federal tax, instead of replacing it with a made-in-Alberta version.

‘More money’ from Ottawa

To help push the oil sector to decarbonize, Trudeau has also introduced tax credits to defray the capital costs of building carbon capture systems. The credits are worth up to $12.4 billion over the next 10 years, federal officials estimate.

Even more public money for carbon capture might be necessary to compete with the lucrative production tax credits in the U.S. Inflation Reduction Act, Notley said. She declined to say if she would commit the provincial government to providing the funds.

“It really is a matter still for negotiations,” she said. “My first goal will be to get more money out of the federal government.”

Yet another federal policy that’s been the source of controversy in Alberta is an impending requirement that electricity grids be made net-zero emissions by 2035.

Notley said Alberta can achieve the milestone at a reasonable cost if she’s elected premier and that trillions of dollars of global investment in renewable energy projects are coming over the next decade.

“It would be utterly ridiculous for Alberta to not be at the table trying to attract some of that,” she said. “So that is going to require some smart government policy, that’s going to require some incentives.”

Bloomberg.com