Alberta vs Ottawa on Net-Zero Electricity

Max Fawcett
Premier Danielle Smith meets with Prime Minister Justin Trudeau in Calgary on Friday, July 7, 2023. It might be the last one for a while. Photography by Chris Schwarz/Government of Alberta

Aug. 9, 2023

Canada’s war of the energy worlds is about to go nuclear

For months now, Danielle Smith has made it abundantly clear she has no intention of complying with the federal government’s 2035 target for net-zero electricity. But with Alberta’s booming solar and wind industries consistently exceeding expectations, including the province’s own forecasts, she apparently decided not to leave anything to chance. The negative impact of her government’s six-month moratorium on major new wind and solar projects will be felt for years, with investment and jobs flowing to less ideologically rigid jurisdictions.

You know, like Texas and Oklahoma.

Smith’s half-baked explanation on her Saturday call-in show involved blaming Ottawa and its net-zero electricity target for the decision. “How can I bring on additional wind and solar if I’m not able to secure the reliability of my power grid by being able to bring on natural gas peaker plants? That’s the heart of the problem,” she said.

This is obvious nonsense, not least because the federal net-zero target makes plenty of allowances for Alberta’s relatively high proportion of non-renewable electricity and the absence of hydroelectric baseload power. "For Saskatchewan and Alberta, I would say that natural gas with carbon capture is going to continue to be part of the conversation," Natural Resources Minister Jonathan Wilkinson said last month during the unveiling of a new solar project in Drumheller. He also noted that small modular reactors and nuclear power — a popular idea among Smith and the UCP — can also play a role.

The real problem here is that Wilkinson and Smith don’t inhabit the same factual universe. In Wilkinson’s world, the energy transition is already well underway, and Canada’s choices involve getting with the proverbial program or missing out on billions of dollars in capital flows and investment opportunities. He understands that while oil and gas jobs are under the twin threat of automation (see Suncor’s recent layoffs) and imminent declines in demand for oil and gas, there are more than enough opportunities in clean energy to fill the void.

In Smith’s world, though, even accepting the underlying premise that the global energy economy is in transition is heresy. "We're just not going to do anything that is going to damage our economy or do anything that's going to indicate that our oil and gas sector is going to be phased out," the premier said at a Stampede breakfast in Calgary. During her July 29 interview with CBC’s The House, Smith reiterated her belief that demand for Alberta’s oil and gas will be higher in 2050 than it is today. This implies that she doesn’t believe Canada will come even remotely close to hitting its 2050 net-zero targets, and the rest of the world won’t do any better.

That falls somewhere between wishful thinking and wilful blindness given the various forecasts by reputable organizations like the International Energy Agency, Rystad Energy and Wood Mackenzie that all have global demand for oil dropping as much as 75 per cent by 2050. That blindness is also apparent in Smith’s inability to recognize the enormous progress on costs that’s been made by wind and solar project developers or the opportunities they clearly see in Alberta. On her most recent Saturday show, she suggested renewable electricity was a bad fit for agricultural parts of the province because it performs more poorly in the winter. But as University of Alberta economics professor Andrew Leach pointed out, crops like wheat and canola aren’t exactly thriving in January.

Ottawa, for its part, isn’t backing down. On Tuesday, it released a major new report on the need for a net-zero electricity grid by 2035 and how it sees that coming to fruition. It also floated the suggestion that provinces looking for additional federal funding for things like carbon capture and storage or hydrogen — tax credits worth tens of billions of dollars — would have to sign off on its 2035 net-zero electricity target first. “We are certainly considering that,” Wilkinson told The Canadian Press.

He should. Alberta, after all, has already signalled its intentions here. Given that its electricity grid accounts for more than half of all electricity-related emissions in Canada, and it will be governed for at least the next four years by a party that’s happy to sacrifice jobs and investment to own the libs, it’s time for Ottawa to respond accordingly. That means bringing forward its net-zero electricity target and requiring Alberta to sign on if it wants to access those billions in clean energy credits.

Danielle Smith's decision to impose a moratorium on new wind and solar projects makes it clear that it has no interest in meeting Ottawa's net-zero electricity target by 2035. Why it's time for the Liberal government to fight fire with fire. - Twitter

It also means moving forward immediately with so-called “contracts for difference”, financial instruments that will protect clean energy projects from any changes to the carbon price that a future government — hello, Pierre Poilievre — might contemplate. With one conservative government already pulling the rug out from under their feet, you can understand why they’d be increasingly nervous about another one doing the same down the road.

And it means throwing federal money and muscle at the construction of an expanded intertie between British Columbia and Alberta’s electricity grids, one that would put many of Smith’s concerns about renewable energy storage to rest — that is if they were open to things like reason and evidence. As economists Blake Shaffer and Mark Jaccard wrote back in 2020, “Rather than displacing wind and solar, large hydro facilities with the ability to increase or decrease output on short notice can actually enable more investment in these renewable sources. Expanding the transmission connection, with Site C on one side of that line, becomes even more valuable.”

Whatever Ottawa does, though, it shouldn’t expect a reasonable or rational response from Alberta’s government. Smith has decided, whether out of political necessity or pure spite, to build an intellectual firewall against the change that’s happening outside its borders. It has already set fire to an entire sector of its economy in order to facilitate its retreat from reality, and it will resist the Trudeau government’s clean energy targets as a matter of principle, not policy.

How far will Smith go in the name of protecting the oil and gas industry’s interests and preserving its control over Alberta’s future? To paraphrase a certain former prime minister: Just watch her.

[Top photo: Premier Danielle Smith meets with Prime Minister Justin Trudeau in Calgary on Friday, July 7, 2023. It might be the last one for a while. Photography by Chris Schwarz/Government of Alberta]