Climate battle looms as Smith wins Alberta election and targets Trudeau

By Steve Scherer and Nia Williams

(Reuters) -Alberta's election of conservative leader Danielle Smith puts her on a collision course with Canada's Liberal Prime Minister Justin Trudeau over climate policies that she claims will undermine the province's massive fossil fuel industry.

Smith, leader of the United Conservative Party (UCP), defeated left-leaning New Democratic Rachel Notley on Monday, and immediately targeted Trudeau, threatening the country's ambitious climate goals.

In her victory speech in front of cheering supporters in Canada's oil capital Calgary, Smith called on Albertans to stand up against policies including the federal government's proposed oil and gas emissions cap and clean electricity regulations, expected to be unveiled within weeks.

"Hopefully the prime minister and his caucus are watching tonight," Smith said. "As premier I cannot under any circumstances allow these contemplated federal policies to be inflicted upon Albertans."

Smith said Trudeau's Liberal climate policies will destroy tens of thousands of jobs in the oil and gas sector, which contributes more than 20% to Alberta's annual Gross Domestic Product.

Trudeau's government is aiming to cut climate-warming carbon emissions 40-45% by 2030, but will struggle to meet that target without significant reductions from Alberta, Canada's highest-polluting province.

The federal government says Canada needs to cut emissions from oil and gas production to stay competitive as the world transitions to net-zero by 2050.

The Pathways Alliance, consisting of six companies representing 95% of Canada's oil sands production, congratulated Smith and said a "realistic and achievable plan" to cut emissions by 2030 and reach net-zero by 2050 "requires close coordination with provincial and federal governments."

Canada has the world's third-largest oil reserves, most of which are held in northern Alberta's vast oil sands. The province produces around 80% of Canada's 4.9 million barrels per day of crude oil.

"Let's create more good jobs, grow our economy, and continue to position Alberta as a leader in clean energy," Trudeau said in a tweet on Tuesday congratulating Smith on her victory.

Smith released the province's first-ever climate plan last month, which targets net-zero emissions by 2050 but does not have interim emissions-reduction targets.

Alberta think-tank Pembina Institute on Tuesday encouraged Smith to adopt short-term emissions goals, but some analysts have said deep reductions are not possible without cutting oil production, which Smith fiercely opposes.

'BELLICOSE RHETORIC'

Since winning party leadership and becoming premier in October, Smith passed legislation allowing the province to refuse to enforce federal laws it deems unconstitutional, and she has threatened to use it on legislation seen as a potential threat to the province's energy industry.

Smith and Trudeau have also sparred over who should pay for potential increases to tax credits for carbon capture and storage (CCS) projects that the oil and gas wants to use to decarbonize its production process.

"One of the challenges is there is a political class in Alberta that has decided that anything to do with climate change is going to be bad for them or for Alberta," Trudeau told Reuters in a January interview.

For Trudeau, Smith may be a better political counterpoint than her less controversial rival Notley would have been, as the Liberals can cast her climate views as akin to federal Conservative Party leader Pierre Poilievre.

On Tuesday, Poilievre welcomed Smith's "resounding victory" and said Albertans had voted to "stand up for our energy sector and unleash the full potential of Alberta's economy."

That said, provincial leaders of all political stripes tend to work with the federal government when it is beneficial to their electorate, as has been the case recently with federal funding for healthcare and childcare.

"Danielle Smith is canny enough to know that she has to be able to work with Ottawa," said Shachi Kurl, president of pollster Angus Reid Institute.

"There is a lot of bellicose rhetoric that comes from the Western premiers sometimes. ... But at the end of the day, politically, it does none of them any good."

(Reporting by Steve Scherer and Nia Williams; Additional reporting by Ismail Shakil; Editing by Denny Thomas, Michael Perry and Richard Chang)