No province’s fortunes are tied to the energy economy quite like Alberta’s, but with an increasing global focus on net-zero greenhouse-gas emission targets, the province is under pressure to find a way to transition away from the resource roller coaster. How both major parties would do so is under scrutiny as Albertans head to the polls May 29.
For both the United Conservative Party and the New Democratic Party, fossil fuels continue to feature in Alberta’s fiscal future – albeit to varying degrees, and accompanied by a recognition from both parties that the energy economy must also diversify into alternative, lower-emitting fuels.
The UCP platform contains no new promises when it comes to the province’s most important sector. Instead, the party points to its actions while in government, including saving money by transferring Alberta’s crude-by-rail program to the private sector, developing a road map for a hydrogen economy, and appointing an advisory panel to come up with a long-term vision for the province’s energy future.
The NDP’s platform includes policies to expand the petrochemical sector, reduce energy project wait times and repeal the Sovereignty Act, introduced under UCP Leader Danielle Smith, who claimed it would allow the province to ignore some federal laws. The NDP argues that the act is anti-Canadian and repels investment in Alberta. The NDP, under leader Rachel Notley, also says it would not introduce a provincial retail carbon tax.
The UCP’s likely energy policy, should it form the next government, can be found in the Alberta Emissions Reduction and Energy Development Plan, released by Environment Minister Sonya Savage just days before the writs for the upcoming election were issued.
The plan charts a course for cutting emissions, attracting investment and providing reliable and secure energy, and says that oil and gas will continue to be a key part of the global energy mix in the coming decades.
It identifies numerous economic opportunities for the energy sector, such as hydrogen, bioenergy, uses for bitumen that go beyond burning it for fuel, and carbon capture, utilization and storage (CCUS).
The UCP has bet more than $1.8-billion on the CCUS sector since forming government in 2019. The technology captures emissions and buries them deep underground so they’re not released into the atmosphere. It’s key to how oil sands producers plan to reach their net-zero commitments by 2050.
The party wants to continue to build the CCUS sector to “decarbonize industries in every corner of the province,” including oil and gas, electricity and petrochemical production, Ms. Savage said at the plan’s launch last month.
The technology can also be used in hydrogen production – a sector that the UCP and NDP agree will play a important role in Alberta’s economic future.
Canada is one of the world’s top hydrogen producers, and the bulk of it is made in Alberta from natural gas. Light, storable and energy-dense, it produces no emissions of pollutants or greenhouse gases when used as a fuel. However, the current production method comes with a heavy environmental footprint. It’s mostly used in the refining and industrial sectors, but that’s expected to soon expand further into transportation, power generation and heating. The UCP and NDP both want to pivot to a cleaner version in which emissions are captured via CCUS, making the end product easier to sell on the world market.
The UCP would likely build off a hydrogen road map it released in 2021, which focuses on reducing investment risk and creating market demand. The NDP says it will study a potential hydrogen export pipeline, and develop hydrogen hubs and incentive programs.
Petrochemicals are also high on the energy agenda for both parties.
The UCP, for example, cites the Alberta Petrochemicals Incentive Program (APIP) it introduced in 2020, which has provided funding for projects by Inter Pipeline, Dow Chemical and Air Products.
APIP reconfigured a program introduced four years earlier by the NDP government, which provided royalty credits to encourage companies to build manufacturing facilities that turn Alberta’s fossil-fuel feedstocks into more valuable products such as plastics, fabrics and fertilizers. The UCP offered grants, rather than royalty credits, and broadened the program to encompass any new petrochemical facility. The NDP says it would expand the program if elected.
An exploration of UCP energy policy must also include a controversial oil and gas well cleanup plan, formerly called RStar, which would provide incentives to fossil-fuel companies to clean up their inactive wells. Critics, including the NDP, have labelled it a royalty giveaway that would compensate industry for work it is mandated to do.
The NDP’s election platform contains numerous energy-related planks, including a plan that would help expedite approval wait times for new projects. The Performance Fast Pass, modelled on a proposal by the Alberta Business Council, would allow companies with a proven track record of compliance with rules and regulations to receive faster regulatory services. The NDP also wants to revive a 30-per-cent Alberta Investor Tax Credit it introduced when it was in power from 2015 to 2019. The credit would be available for capital investments in sectors such as clean energy technology.
Another NDP pledge is an Alberta Future Tax Credit. Based on incentives for reducing carbon emissions under the U.S. Inflation Reduction Act, which various governments in Canada worry will draw investment stateside, it would target emerging sectors such as clean tech, critical minerals processing and alternative fuels.
The UCP, on the other hand, is targeting 2050 to reach net zero in the energy sector. The party says that moving faster on the grid’s transition will cost billions of dollars, and that natural gas must play a key long-term role in the province to ensure reliable power production.