Solar panels at the Michichi Solar project near Drumheller, Alta., on July 11.Jeff McIntosh/The Canadian Press
Alberta Premier Danielle Smith says she takes her cues on major economic issues from CEOs, but leaders of companies in the renewable-energy industry would contend that she’s not taking any from them.
Since Ms. Smith’s UCP government imposed a seven-month halt on application approvals for new wind and solar projects, renewable-energy developers, investors and unions have expressed their frustration, and questioned the stated reasons for the move. Those include a need to address end-of-life reclamation, as well as a study into how more renewables impact arable farmland and grid reliability.
Industry participants say these issues are important but could be studied without a moratorium in place.
The industry has warned that the freeze injects new risks into what has been a free-market system, and that could trigger a diversion of capital to other jurisdictions such as the United States, which is offering rich incentives.
Ms. Smith, her ministers and the fossil-fuel sector argue that maintaining the boom in wind and solar development could threaten the power grid and unnecessarily weaken the natural-gas industry.
The move appears to satisfy two aims. Elected on the strength of its rural base, the government is acting in response to what Calgary energy lawyer Jeremy Barretto refers to as neighbouring landowner concerns. Indeed, wind and solar projects can only be built in agreement with landowners. That differs from oil and gas, where landowners do not own the subsurface rights.
Some neighbours of renewable projects have complained about construction and noise, as well as the impact on landscapes and potential cropland.
“Some would say that’s the whole point of our regulatory processes – to address them,” said Mr. Barretto, a partner with Cassels Brock & Blackwell LLP who serves clients in the renewable as well as conventional energy industries.
“But I think that sort of message got to the Alberta government, that there’s a lot of folks that are neighbouring these wind and solar projects that had concerns that they felt were not addressed by the process,” he added
Natural gas looms large too. Since 2015, the province has moved to phase out coal-fired power. Major energy companies responded by converting power plants to natural gas or shutting them down ahead of their planned retirement dates.
Now, the last one is due to go offline later this year – seven years ahead of schedule. That has put gas-fired power in the driver’s seat with about three-quarters of the generation in the province. But wind and solar have quickly made major strides. Rising from 9 per cent of capacity six years ago to more than 22 per cent as of last year.
Landowner Duane Olson and his dog Bella drive past solar panels at the opening of the Michichi Solar project on July 11.Jeff McIntosh/The Canadian Press
Video has re-emerged showing Rob Anderson, executive director of Ms. Smith’s office and her long-time political ally, expressing numerous anti-renewable-energy views, some of which are held by the oil industry’s most ardent supporters. He said Alberta is “sitting on an ocean of clean-burning natural gas” and its development and export is being held back by “a hostile federal government.” In the video from 2021, Mr. Anderson refers to renewable energy installations as “just butt ugly” and “a scam.”
The UCP is not alone in its discomfort with renewables. In Texas, another oil and gas jurisdiction where wind and solar projects have been built at a frantic pace, Republican lawmakers have started efforts to slow the decarbonization of the grid. Some hark back to the state’s deadly grid collapse in 2021, which has often been erroneously blamed on green energy rather than fossil-fuel plants.
Ms. Smith has made no secret that she favours gas-fired power, calling Alberta a “natural-gas province” while pushing against Ottawa’s target for net-zero power grids by 2035. In recent days, she has said new renewable-energy capacity must be matched by gas-fired power and that the federal government won’t let her build such new plants in Alberta.
On Thursday, after the federal Liberals issued new draft Clean Electricity Regulations, she doubled down: “Alberta’s government will protect Albertans from these unconstitutional federal net-zero regulations. They will not be implemented in our province – period,” Ms. Smith said in a statement.
The province’s treasury is highly dependent on non-renewable resource revenues, and natural gas is seen as the hydrocarbon with the most potential for expansion as the oil sands wrestle with high development costs and companies focus on developing a $16.5-billion carbon-capture network.
In the past fiscal year, total oil and gas revenues were $25.2-billion, leading to an $11.6-billion budget surplus. Natural-gas royalties alone rang in at $3.6-billion, up $1.4-billion from the year before. Though not insignificant, renewables’ contribution to the public purse is nowhere near as large.
The power grid is not the only place where the government is pushing natural gas. As Canada’s first liquefied natural gas project nears commercial operations, Ms. Smith and the Alberta-based industry are seeking carbon credits under the Paris Agreement if gas exports can displace coal-fired power in other countries, a strategy that so far is deemed unlikely to succeed.
The Canadian Association of Petroleum Producers said it is worried about the impact of the new federal regulations on the ability of natural gas to act as “a backup for the intermittency challenges of renewable power. We are also concerned that the proposal will have investment impacts, causing further uncertainty in the Canadian energy sector,” CAPP chief executive officer Lisa Baiton said in a statement.
However, Ottawa’s draft shows the opposite. It has made exemptions for building and operating gas-fired peaker plants – stations that operate in times of high demand to ensure reliability – to be built and operated beyond 2035.
The regulations are also technology-neutral. That will allow for various generation methods to be woven into a grid to reduce emissions, thus offering provinces more options to reach net-zero by the target date, said Binnu Jeyakumar, the electricity program director at the Pembina Institute, a think tank.
That’s particularly significant for Alberta, where there are numerous options to bring gas-fired plants into regulation compliance, including carbon capture and hydrogen. Many companies are already pursuing such technologies and the draft regulations give them the impetus to continue doing so, she added.
General Electric Co. GE-N, for example, is proposing to build a 465 megawatt gas-fired power plant near the town of Whitecourt featuring technology that would capture 95 per cent of the carbon emissions.
But Alberta’s Environment Minister Rebecca Schulz insists that the province needs gas to back up its power system. She said the draft regulations around natural gas are simply a “bait-and-switch” that will reduce the lifespan of gas plants from 40 to 20 years. “Who’s going to build that plant with a lifespan of 20 years?” she said.
“Alberta’s natural-gas power plants cannot simply be recovered and brought out to turn on and off whenever they’re needed,” she added. “These are massive commercial operations. They need to be viable and available when needed most.”
Mr. Barretto, the energy lawyer, points out that the various generation types in Alberta are complementary, rather than competing. For example, solar feeds the grid the most when it is brightest and hottest outside, allowing it to fuel air-conditioning load, as an alternative to burning gas for that purpose.
“We have to kind of shift our thinking from having a power source that is on or off, and then over to other power resources that are available, to thinking they all provide power at different times. And it’s very predictable. I think that’s why companies have flocked to Alberta.”