A Captive State

How the oil industry still runs Alberta

By Kevin Taft

The scientific advisory panel to US President Lyndon Johnson delivered a detailed paper in 1965 warning that fossil fuels were emitting so much carbon dioxide that global warming was a serious risk. This warming, the paper warned, could be “deleterious from the point of view of human beings” and could melt ice caps and raise sea levels. Johnson made the paper public.

Through the 1970s and 1980s a great deal more research was conducted, some of the most important of it by the oil industry, confirming the warning. Recent investigations in the US have revealed that by 1978, Exxon scientists had informed company executives of “general scientific agreement” that the global climate was warming because of emissions from the burning of fossil fuels. In 1980 the American Petroleum Institute—the industry’s largest association—was informed by its scientists there was consensus that CO2 emissions could bring climate changes that by 2067 could have “globally catastrophic effects.”

By 1992 the science was so solid that 108 heads of state met in Brazil at the Rio Earth Summit, one of the largest such gatherings ever. They didn’t gather on a hunch. They gathered because there was a powerful scientific case that burning fossil fuels, if continued, would lead to globally catastrophic warming. The UN Framework Convention on Climate Change was signed, encouraging countries to reduce emissions to 1990 levels, and in 1997 the Kyoto Protocol was signed, committing countries to reductions. The Alberta government began developing its own plan in 1990 to curtail the province’s greenhouse gas emissions. By then the oil industry, realizing its interests were threatened, had begun to close down its research and to resist action to reduce GHGs.

Industry interests aren’t the same as the public interest, a lesson Lougheed understood and that history is going to teach us again.

Twenty-five years later the picture for emissions and global warming is grim. The 1965 US advisory committee based its warning on CO2 levels in the atmosphere rising 25 per cent from the mid-1800s to the year 2000. The actual rise was 30 per cent, and by 2015 it had passed 40 per cent. As the science predicted, the world saw global warming, melting ice caps and rising sea levels. In Alberta alone, a frenzy by oil companies spiked emissions in the province by almost 60 per cent from 1990 to 2015.

How was a vital scientific and political consensus so completely broken down? In my book Oil’s Deep State I argue that key institutions of democracy responsible for action on global warming—including political parties, the civil service, regulators and universities—have been captured by the oil industry. An institution is captured when it becomes the instrument of private rather than public interests. Albertans should remember that the oil industry’s interests are not the same as the public interest, a lesson Peter Lougheed understood and one that history is going to teach us again, harshly.

When several key democratic institutions are captured by the same private interest, a “deep state” forms. A deep state is an unofficial system of government that arises separately from but closely connected to the official system. It is a public–private hybrid that operates outside public view. A deep state typically comprises leading owners and executives of major private interests and their allies, together with a selection of politicians and bureaucrats tied to the success of those private interests. A successful deep state captures and harnesses the institutions of democracy for its own use.

Alberta’s PC government provides a good example. When the PC party was first elected in 1971 under Lougheed, only one of its cabinet ministers, Don Getty, came from the oil industry, and only two of them—Getty and Lougheed—went to work in the industry after politics. Lougheed’s government was quick to take on the industry by raising royalties, suspending export permits and asserting public ownership. It staged a cabinet walkout during tough negotiations with industry over Syncrude. Lougheed left office in 1985, and to the end of his life he exhorted Albertans to “think like owners” when it came to their oil. He had reason to be concerned.

From 1989 to 2006 at least seven people who served as Alberta ministers of energy or finance either came from the fossil fuel industry into politics or stepped out of cabinet into senior positions in the industry: Patricia Nelson (née Black), Jim Dinning, Mel Knight, Shirley McClellan, Greg Melchin, Rick Orman and Murray Smith. Three did a full circle, from the industry into cabinet and back to industry, including Nelson, who, as Ralph Klein’s energy minister, invited the oil industry to remake the oil sands royalty system to suit its preferences.

Under this leadership the Alberta government openly attacked the Kyoto Protocol. When polls in 2002 showed 72 per cent of Albertans supported Kyoto, the Alberta government spent $1.5-million on a campaign to undermine the initiative, driving public support down to 27 per cent. In 2003 it sent environment minister Lorne Taylor to global climate meetings in Moscow to subvert Ottawa’s efforts to support Kyoto, and when medical officer of health Dr. David Swann raised health concerns about global warming he was fired.

When Ed Stelmach unexpectedly succeeded Klein as PC premier in 2006, he struck a course that showed some independence from the oil industry, imposing a carbon levy on the largest emitters and trying to increase royalties. The industry responded harshly. Donations to the PCs fell from almost $2.1-million in the 2004 election to $580,000 in the 2008 election. The PC caucus and party were stoked in revolt against Stelmach, and before the next election he was replaced by Alison Redford. Redford campaigned mightily for the industry, pleading in New York and Washington for the XL Keystone pipeline and taking up the mantle of a petroleum-centred National Energy Strategy.

Alberta’s other parties have not been immune. While one stream of the oil industry propped up the PCs, another built the Wildrose party. The industry latched onto the Wildrose after the PCs, Alberta Liberals and New Democrats in the 2008 election all called for royalty increases and tougher environmental standards. The industry’s grip on the Wildrose is illustrated by a fundraising letter written for the party in April 2009 by an industry group called Protect the Patch. Directed to “members of Alberta’s oil and gas industry,” the letter perfectly presents the industry’s campaign of political capture: “The ultimate success of our industry is now political. Only when the government of Alberta supports and trusts its most important industry—oil and gas—will Alberta’s future be truly secure.” The letter sketched out a plan to help the Wildrose form government and concluded by saying, “Our oil and gas industry must continue to lead the way,” making no distinction between the interests of Albertans and the interests of the oil industry.

Members of Protect the Patch were among the biggest fundraisers for the Wildrose, shaped many of its policies, sat on the executive—and provided 13 candidates for the party in the 2012 election, when Wildrose became the Official Opposition in the legislature. The oil industry had captured both the governing and official opposition parties. It turned out they needed more.

From 1989 to 2006 at least seven Alberta ministers of energy or finance came from oil and gas or stepped out of cabinet into senior positions in the industry.

In May 2015 the politically impossible happened when the NDP won Alberta’s general election. Immediately the NDP government entered a world made for the oil industry. From her victory night speech onward, Premier Rachel Notley assured her “partners in the oil industry” that everything would be “A-OK.” The NDP royalty review left the PC system largely unchanged, and when the premier announced her Climate Leadership Plan she stood with a clutch of the most powerful leaders in the industry offering approval. The plan allowed CO2 emissions from the oil sands to climb to 100 million tonnes per year.

The political capture was soon complete. When the federal NDP held its convention in Edmonton in 2016, a proposal was brought forward to have Canada consider phasing out fossil fuels by 2050. Premier Notley trashed the proposal as “ill-informed, naïve, and …tone deaf,” and said its ideas would “never form any part of our policy.” By then, the Alberta NDP were working hard to outperform the PCs and Wildrose in promoting pipelines to facilitate oil sands expansion.

Lougheed spoke out with alarm about rapid oil sands expansion as early as 2006, but his message was swamped. Alberta had lost its ability to hold a serious discussion on restricting oil sands expansion. Democratic institutions had been captured across the board.

One of those institutions was Alberta’s civil service, which had been gutted during the Klein years. Pat Black, Klein’s first energy minister, went through three deputy ministers in less than five years (Myron Kanik, David Manning and Rick Hyndman). All three landed in the oil industry, part of a swirl of people passing between the civil service and the industry. Gerry Protti went from a senior civil service position in the Department of Energy to PanCanadian and Encana, became founding president of the Canadian Association of Petroleum Producers—and in 2013 was named by the PCs to chair the Alberta Energy Regulator (AER).

When Grant Sprague, the civil servant who guided the NDP government through its royalty and climate change policies, left the government in 2016, he was praised by industry as “one of the most approachable, even-keeled individuals in the bureaucracy… he is collegial, wants to work with the sector… one of the best.” A lot had changed since Lougheed’s early showdowns with industry.

The AER is another institution that might be expected to raise concerns about global warming and oil sands expansion, but in 2013 the PCs removed previous references to protecting the public interest from the AER’s legislation. They also appointed Jim Ellis as AER’s CEO. Ellis had served as deputy minister of Environment and then of Energy. He was tied to an embarrassing court case that stemmed from his time at Alberta Environment, in which the judge sharply rebuked his department for blocking an intervention by two environmental groups concerning oil sands expansion, concluding that the department had breached “all four of the principles of natural justice.” When Ellis moved to AER his salary more than doubled, to $721,000. Then, 150 environmental officers were transferred out of the government into AER. If an oil company broke pollution laws, the government wouldn’t lay charges; the regulator—paid for by industry and led by its friends—would. When it came to environmental enforcement, the Alberta government had eviscerated itself.

For a few months in 2015 it looked as though Premier Notley was concerned about the AER’s being responsible for both promoting energy development and protecting the environment. But by December, Energy Minister Marg McCuaig-Boyd had kiboshed that notion, saying Notley’s comments had been misconstrued. “We are not breaking up the AER,” she announced. “It is working well. Industry likes it.”

Universities have autonomy and offer tenure so faculty can speak truth without fear. In Alberta several scientists and social scientists have spoken out about global warming and the oil industry, sometimes stirring controversy. David Keith and Joe Arvai each broke relations with the University of Calgary over frustration with the apparent influence of the oil industry, heading to Harvard and University of Michigan respectively.

But largely our universities have been quiet, for obvious reasons. Over a thousand researchers at the University of Alberta work on oil sands research. At the University of Calgary the controversies involving the oil industry could fill a book.

One example came to light through a court case in which the director of the Canada School of Energy and Environment (CSEE), Bruce Carson, was charged with illegal lobbying. Court documents exposed the deep state network that tied together senior oil executives, university officials, federal and provincial civil servants, and politicians from Ottawa, Alberta and across the country. I examine the entanglements of this case at length in Oil’s Deep State.

The six-person CSEE board included the presidents of the universities of Alberta, Calgary and Lethbridge; the chairs of the boards of governors of the universities of Lethbridge and Alberta; and a future chair of the University of Calgary. At least two of them had strong ties to Stephen Harper’s Conservatives and the Alberta PCs, both of which formed governments that were aggressively advocating oil sands, pipeline and fossil fuel development.

The CSEE, based in Alberta’s universities, had $15-million in federal funds and overlapping staff and board members with a multi-million-dollar oil industry group called EPIC. One of CSEE’s board members was paid $10,000 a month by EPIC, while Carson was paid over a quarter of a million dollars annually by the CSEE and simultaneously collected $120,000 per year from EPIC. The police investigation into Carson showed that CSEE worked closely with the Canadian Association of Petroleum Producers on drafting reports to politicians, and led working groups that included top federal and provincial civil servants. Carson was the only person charged with a crime, but the web around the case reached many of the country’s most prominent corporate, political, university and bureaucratic leaders. At the centre of it all were the interests of the oil industry.

Is a deep state running the government of Alberta’s energy and environmental policies for the interests of the oil industry? I argue yes. This is not only bad for the environment, it’s poor long-term economic policy, and most importantly it weakens democracy. It turns out the fight against global warming is also a fight to restore our democracy.

Kevin Taft is the author of Oil’s Deep State, out this month. A former leader of Alberta’s Official Opposition, he lives in Edmonton.


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