Alberta renewable energy projects blocked

The fast-growing Alberta renewable energy sector is at risk, after the Canadian province recently slapped a moratorium on new projects.

A wind farm in Alberta, Canada (Photo credit: Adobe Stock/laughingmangovideo)

The Canadian province of Alberta has blocked new solar and wind projects until February of next year, threatening to stall out what has been a boom in clean energy in the province.

In August, the government of Alberta announced a seven-month moratorium on approving new renewable energy projects, citing concerns about land use amid the rapid growth of renewables. The province will also review regulations around the impacts of renewable development on certain “pristine viewscapes” and agricultural land.

But Alberta’s Premier, Danielle Smith, has made no secret of her support for the growth of fossil fuels and her skepticism of renewable energy.

“This is a natural gas basin. We are a natural gas province and we will continue to build natural gas power plants because that is what makes sense in Alberta,” Smith said in March at a conference held by the Rural Municipalities of Alberta. “Yes, hydro makes perfect sense in Quebec and B.C. and Manitoba. And Ontario has nuclear and hydro as well. But we have to keep fueling our economy with natural gas power plants.”

“I’m supportive of solar and wind projects where they make sense. But I can tell you from conversations with people in my own community that putting solar panels on prime agricultural land does not make sense,” Smith said.

One of her stated justifications for a moratorium on renewable energy is concerns about how solar and wind sites would be reclaimed after the end of their operational lives, arguing that they present environmental hazards and unaddressed liabilities. But she has shown far less concern when it comes to oil and gas, whose liabilities are vastly higher.

Cleaning up the toxic tailings ponds from Alberta’s oil sands could cost as much $130 billion, and the cleanup from conventional oil and gas wells could cost another $100 billion. Smith has favoured offering breaks on royalty payments for the industry to address these massive obligations, offloading costs onto taxpayers. The move would effectively reward companies for bad behaviour, critics say.

Against that backdrop, some see her unbridled support for the oil and gas industry as a key motivation for the moratorium on renewable energy.

“It did sting with a lot of hypocrisy and twist of ideology,” Blake Shaffer, an economist at the University of Calgary, told the Globe and Mail in August.

The moratorium comes as Canada’s federal government is aiming for a net-zero emissions electricity grid by 2035. The clean electricity regulations, currently in the proposal phase, would contribute to ramp up of renewable energy and a decline in fossil fuel use. Canada’s grid is already 85 percent clean, but its size will double through mid-century as the economy expands and shifts towards electrification.

Some environmental groups criticized the federal policy, with ire focused on the significant loopholes that will allow for fossil fuel use well beyond the 2035 deadline. For example, gas-fired power plants built before 2025 will be allowed to operate for 20 years, meaning they will emit carbon pollution well into the 2040s.

Even still, Alberta’s Premier has vociferously opposed the policy, and has blasted what she sees as federal overreach.

“The draft regulations are unconstitutional, irresponsible, and unrealistic and would make life less affordable for Albertans and Canadians,” Alberta’s Minister of Environment and Protected Areas Rebecca Schulz said in August after the release of the electricity regulations. “They will not be implemented in our province. Period. They can’t. We are beginning our talks with the federal government and if we can’t get alignment, Alberta will chart its own path to ensure we have reliable and affordable electricity for the people we serve.”

Alberta is a renewables powerhouse

The irony is that solar and wind are already booming in the province. Blessed with strong winds and ample sun, new renewable energy projects have been springing up in recent years.

Despite Alberta’s reputation as a province that is heavily influenced by the oil and gas industry, it is also one of the most attractive parts of Canada for solar and wind.

“Alberta has a unique open market that, put plainly, means any developer can build a project in Alberta,” Jason Wang, a senior analyst at the Calgary-based Pembina Institute, a sustainability think tank, told Gas Outlook. That contrasts with other provinces, which have crown corporations (a quasi-governmental entity) that are responsible for procuring renewable energy, a market structure that boxes out private developers.

Already, Alberta sources one third of its electricity from renewable energy, a share that could easily grow quickly in the years ahead.

But the province is now actively standing in the way. There are an estimated 118 renewable energy projects currently in development in Alberta that are now at risk because of the provincial moratorium, according to a Pembina analysis. Those projects represent at least $33 billion in investment.

“The moratorium and inquiry have created uncertainty for projects officially under development and for ones still being conceptualized,” Wang said. “Many developers have already stated that this announcement is making them question where to focus their investments.”

Accelerating the buildout of renewable energy is a “no-regrets economy-building decision” the think tank said, noting that it cuts electricity costs, creates jobs, and attracts investment. Since 2019, provincial renewable energy projects have attracted $5 billion in investment and created more than 5,400 jobs, Pembina estimates.

In a statement to Gas Outlook, the Acting Press Secretary in Affordability and Utilities, Andrea Smith, said: “Construction on all approved power plants will continue. There are currently 3,400 MW of renewables under construction. The only thing paused are new construction approvals. This is not just about the next six months, and is about creating a more certain future for development.”

The province and the federal government are at loggerheads not just over the electricity sector, but also over broader climate policy. Alberta’s government supports an aspirational net zero emissions target by 2050, but has no interim target for 2030. Former Environment Minister Sonya Savage called the federal government’s 2030 target of a 42 percent cut in emissions “a random target attached to a random date.”

Instead, Premier Smith said she would announce tax credits for carbon capture and storage (CCS) projects at the international climate summit later this year. CCS is the preferred climate solution of the oil and gas industry, but it is expensive and has not demonstrated that it is technically viable. The provincial incentives will presumably be layered on top of federal incentives for CCS.

The generous support for the oil and gas industry contrasts with Alberta’s crackdown on renewable energy, a sector that would have bright prospects — if the provincial government allows it to grow.

“Alberta’s proven, economic, and available wind and solar resources position it to become Canada’s renewable energy capital,” Pembina Institute wrote in its report, adding that three-quarters of all renewable energy projects across the country built last year were located in Alberta.

“There is a tremendous amount of renewable electricity projects in development in Alberta, and it is growing year by year,” Wang said. “Just as investments in clean energy are surpassing those in fossil fuels worldwide, renewable energy is solidifying its place as a cornerstone of Alberta’s economy.”

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