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Danielle Smith goes all-in on oil and gas. Elon Musk goes all-out

Elon Musk's latest "master plan" takes dead aim at Alberta's economy — and its future. Photo by NVIDIA / Flickr (CC BY-NC-ND 2.0)

When Elon Musk announced he was buying Twitter almost a year ago, one of his biggest supporters was a then-private citizen and sometimes columnist named Danielle Smith. Like Musk, Smith — who is now premier of Alberta — was a vocal proponent of the most expansive definition of free speech, one that just happened to align with her long-standing habit of saying controversial things. And like Musk, she had an obvious disdain for Prime Minister Justin Trudeau and his handling of the occupation of Ottawa. She even reached out to him on Twitter a few months later, when she was running for the leadership of the United Conservative Party, to ask if Musk could help Alberta “bypass the new @justintrudeau internet censorship law,” as though that was even a thing.

Ironically, while she continues to pretend that Trudeau is her province’s greatest threat, the real danger might come from Musk. He made that clear in Tesla’s most recent investor presentation, where he helped lay out what the company is calling its “Master Plan 3.0” that takes direct aim at fossil fuels and their role in heating and powering our homes. “There is a clear path to a fully sustainable Earth — with abundance,” he said. “I'm just often shocked and surprised by how few people realize this.”

That path revolves around a few key areas, all of which intersect with products Tesla sells or plans to sell in the future. There’s switching to electric vehicles, a process already well underway. There’s adding huge volumes of renewable energy to the world’s existing power grid. There’s green hydrogen and other large-scale industrial processes that require clean sources of energy. And there’s installing heat pumps to meet the heating and cooling needs of homes, businesses and industry.

Drew Baglino, Tesla’s senior vice-president of powertrain and energy engineering, was even more blunt about how the company intends to travel this path. “This is the product that retires fossil fuels,” he said of the company’s Megapack, the large-scale rechargeable lithium-ion battery intended for utility-scale energy storage. “One power plant at a time.” And while making all of these changes won’t be cheap, Musk and Tesla officials believe it will cost 40 per cent less than continuing to rely on fossil fuels. All the assumptions and calculations that inform their so-called “Master Plan 3.0” will apparently be detailed in a forthcoming white paper.

It would be easy to dismiss all of this as a deliberate distraction from the lack of progress on a mass-market electric vehicle model, one some analysts expected might be announced at this event. And as Gizmodo’s Lauren Leffer noted, there are still a bunch of promises from 2017’s “Master Plan, Part Deux” that haven’t come close to being fulfilled, from electrified high passenger-density urban transport to a fully autonomous fleet of Tesla robo-taxis. Given the ongoing distraction that his Titanic-like stewardship of Twitter has become, it’s not hard to imagine Musk missing his targets here as well.

Conservatives in Alberta may have cheered when Elon Musk took over Twitter, but they can't be nearly as enthusiastic about his latest plans for Tesla — or what they mean for the oil and gas industry's future. @maxfawcett writes for @NatObserver

But with the exception of his foray into social media mogulship, betting against Musk has been a mostly losing proposition over the last two decades. That’s especially true with Tesla, which has single-handedly upended the entire global auto sector. Now, every major auto manufacturer in the world is racing to compete with Tesla and build the electric vehicles it made popular.

The oil and gas industry, on the other hand, has been a bit slower to respond. That’s especially true in Alberta, where its corporate leaders refuse to believe demand for their products will ever decline. “Most economists expect that we’re going to continue to be growing the use of oil and gas at least over the next one to two decades,” outgoing Cenovus CEO Alex Pourbaix told the CBC’s Matt Galloway in an interview on Monday. “People are not doing that because they don’t care about the environment. They’re doing that because these products are absolutely necessary.”

They’re necessary today. But if Musk and his colleagues at Tesla have their way, they won’t be nearly as necessary going forward. And while that would be good news for the planet, it would be very bad news for Alberta given its increasing reliance on oil and gas revenues to fund its budget. For all the talk about diversifying the economy and finding new sources of revenue, Alberta is actually more dependent on royalties and other non-renewable revenues than it has ever been before.

If Musk’s “Master Plan 3.0” comes to fruition and his company can successfully electrify homes and businesses in the same way it’s already electrified vehicles, global demand for oil and gas will peak far sooner than Alberta’s industry leaders expect — and decline far more quickly than they’re prepared to handle. That would leave Alberta staring at a multibillion-dollar hole in its budget that could only be filled with massive cuts or major new taxes.

That’s a future that few people in Alberta are ready to think about, much less prepare for. Ironically, one of them is Finance Minister Travis Toews, who’s widely expected to resign from office any day now. “We do have a volatile revenue structure in this province, and at some point, some day, Albertans are going to have to consider what we need to do to correct that,” he said in a recent speech. If Musk has his way, that day is going to come far sooner than Toews or anyone else in the United Conservative Party is prepared to handle.

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