The Alberta Oil Sands: The Economy and the Environment

Several newspaper articles were published yesterday outlining a “constitutional clash” between federal and provincial powers with respect to the environment and the Alberta oil industry:

“Constitutional clash: environmental protection versus right to develop natural resources” – by: Kirk Makin

“Clash over environment, oil industry coming: Lougheed” – by: Janice Tibbetts

On August 14, 2007, Peter Lougheed, a former Alberta premier, discussed the “looming war” at a convention in Calgary with the Canadian Bar Association. Lougheed became concerned about the environmental pollution stemming from the oil sands activity after taking a helicopter ride in June, 2006 over the oil sands in Fort McMurray, Alberta. He explained that the conflict involves the Canadian public, whose concern with pollution and climate change has pushed the federal government to enact legislation that will protect the environment, and hence, reduce greenhouse gas emissions. The province of Alberta, on the other hand, is responsible for non-renewable resources under the Constitution and thus controls the Fort McMurray oil sands, a major source of water pollution and greenhouse gas emissions in Canada. Lougheed suggests that the battle between the federal right to environmental protection and the provincial right to develop natural resources will be “10 times greater than any federal-provincial conflicts of the past” and will likely go before the Supreme Court as a constitutional reference. He explains, “I’ve been worried about this confrontation growing and growing. It’s just been boiling with me over the last few weeks”.

Lougheed further predicts that with the current heightened concern for environmental protection, the public will become increasingly engaged in the battle over the oil sands, where production is expected to double over the next few years. He explains:

Public pressure will force the passage of strong environmental laws — and soon…My surmise is that we’re into this constitutional legal conflict soon. And my surmise is that – and this is strong stuff – national unity will be threatened if the court upholds federal environmental legislation and it causes major damage to the Alberta oil sands and our economy.

Lougheed foresees that “significant stress to Canadian unity” and conflict within the province will result from the Alberta government’s wishes to sidestep strengthened federal environmental laws.

The government of Alberta, with its acceleration of oil-sands operations, will, in my judgment, be seen as the major villain in all of this in the eyes of the public across Canada.

This situation is not unique to Alberta, however, as Lougheed predicts that Ontario may face a similar constitutional conflict on a smaller scale with its auto industry, which will feel pressure from federal environmental laws.

While Lougheed expresses his uncertainty about the outcome should this conflict reach the Supreme Court, this situation is troublesome especially when one considers the issues which are potentially at stake: environmental protection, economic development, political division and national unity.