Ideology blocks renewable energy growth in Alberta

Smiles and congratulations on a job well done. That was the scene as the UN climate conference COP28 wound up last December in Dubai. If celebration was warranted, the summit’s call to triple renewable electricity production by 2030 was one of its stronger justifications.

That is, unless you govern the petro-province of Alberta. Unbeknownst to many, Canada — not OPEC — is far and away the largest source of imported oil to the United States. Canada exports nearly 4.5 million barrels of oil per day to the U.S., the vast majority from the oilsands of Alberta. In 2022, Canada poured more than four times the oil into American markets than all the Persian Gulf states combined.

So, at COP28, the Alberta premier’s praise wasn’t for upping the global renewables game. It was reserved for the conference’s lukewarm recognition that burning fossil fuels causes global warming. Scorn accompanied this praise from Premier Danielle Smith. Federal Environment and Climate Change Minister Steven Guilbeault tried to toughen the fossil fuel language. For this, Smith portrayed him as treacherous, as a saboteur driven by “his misguided personal obsessions.” Taken together, these factors did nothing to shake Smith’s conviction that spectacular oilsands production growth must continue.

Alberta electricity generation: Climate-friendly, spectacular growth

In spite of the direction set by Smith, Alberta has enjoyed spectacular growth of a different kind: renewable electricity generation. While Smith celebrated more barrels of more GHG emissions-intensive Alberta crude pouring into American gas tanks, the province’s electricity industry continued to write a much more positive climate story. In just six years, from 2015 to 2021, the province cut GHG emissions from electricity generation by 50 per cent.

In 2022, Rystad Energy predicted this dramatic trend would continue. Alberta would overtake Ontario as Canada’s largest producer of utility-scale wind and solar power by 2025.

Smith doesn’t care about Alberta becoming a green electricity leader. Last August, she stunned the renewable electricity industry by ordering the Alberta Utilities Commission to impose a moratorium until the end of February 2024 on all new approvals for utility-scale renewable energy power plants. Thirteen projects, promising to add 2.1 gigawatts of renewable electricity-generating capacity to the grid, were caught in the moratorium’s net. This generating capacity approximates what a refurbished Pickering nuclear plant will produce in Ontario.

Second, Smith ordered the independent regulator to study whether the renewables boom was taking up too much prime agricultural land and whether it was damaging the grid’s reliability. This report, possibly with recommendations for regulatory changes, will not be delivered before March 29.

The renewables industry was deservedly shocked at these moves. Prior to that astonishing announcement, a generation’s worth of Conservative government electricity policies served today’s renewables industry quite well. Conservatives deregulated Alberta’s electricity market in 2001 and in 2019, endorsed the previous NDP government’s decision to boost the renewable percentage of electricity production to 30 per cent by 2030. In 2022, the United Conservative Party passed legislation promising to foster “a low-carbon future through investment from industry rather than costly subsidies from taxpayers.” In this legislative environment, increasingly cost-competitive renewables thrived and a revolution in Alberta electricity generation began.

For her part, Smith, who became premier in October 2022, didn’t have a problem with the booming renewables industry, with its bounty of jobs and investment dollars. In fact, her party’s May 2023 election platform celebrated that Alberta was “poised to lead the country in the development of renewable energy, working alongside our traditional energy resources.”

The ideologies behind Smith’s actions

Smith’s challenge to the renewables revolution doesn’t mesh with typical “conservative” economic policy. It flies in the face of core contemporary conservative beliefs, such as deregulation and letting markets, rather than the state, decide where investments should be made. These chapters from conservative scripture don’t drive Smith’s policies towards renewables.

Her world view privileges two other ideologies. The first is what Audrea Lim called “the Ideology of Fossil Fuels.” First and foremost, Smith is passionate about promoting the continued unrestrained growth of oilsands production. And she’s happy to subsidize this with billions of taxpayer dollars as oilsands companies ostensibly chase the carbon capture and storage dream.

This fossil fuel ideology animates her preference for natural gas-fired electricity over renewables. It also drives her staunch opposition to Ottawa’s recently proposed clean electricity regulations. Ottawa aspires to establish a national net-zero electricity grid by 2035. Smith’s crystal ball tells her that’s simply impossible for Alberta. Furthermore, she’s made it clear her government will do whatever it can to fight realizing this ambition in Alberta.

In this fight, the premier invoked her signature legislation: the “Alberta Sovereignty Within a United Canada Act.” The law is an extraordinary departure from Canada’s constitutional order. It asserts an Alberta right to pass constitutional judgment on federal laws and regulations and act on that assessment — the judiciary’s role as Canada’s constitutional interpreter be damned.

Smith’s decision to invoke this act confirms more than ideological enthusiasm for fossil fuels. It reinforces a second ideological thread of her belief system: an intense dislike for Canada’s national government. Smith is an ardent decentralist who believes Alberta should have more power in the Canadian federation.

Will ideology or economics triumph?

Come early spring, we should know if Smith’s ideological opposition to renewables will best the compelling economics that have animated the renewables boom in Alberta. Some renewable energy developers appear to believe that whatever policy changes the provincial government may make will not cripple the economic case for renewable investments in Canada’s oil and gas heartland.

Seven new applications for solar facilities have landed on the regulator’s desk since the moratorium came into effect. Together, these projects would add one gigawatt of renewables generating capacity to the electricity grid.

One renewables industry executive I contacted believes their company’s approach already respects the values the government claimed required the moratorium and inquiry. Given this view, the executive believes it’s in the company’s interests to be near the head of the applications line.

Finally, there’s the bottom line for renewables developers. Here, a federal tax credit for investing in renewable technologies makes renewables electricity investment in Alberta more lucrative. According to Rystad Energy, this credit means a 250-megawatt renewable project built in Alberta will be nearly twice as valuable over its life. Thanks to the federal credit, an estimated after-tax project value of $131 million jumps to just over $200 million. Rystad notes the only place where returns on renewable projects would be higher is the U. S. Thanks to Ottawa, the economics of renewables investments in Alberta are even better now than when the solar boom began.

Alberta and Canada obviously are only small players when it comes to the renewable energy ambitions that prompted some of the celebrations at the conclusion of COP28. But Alberta’s current efforts to stall greening the grid may offer lessons for other jurisdictions about whether ideology can defeat economics when it comes to accelerating the renewables revolution.

In Alberta’s case, economics will almost certainly drive the province to a more sustainable and hopeful future.

Ian Urquhart is professor emeritus of political science at the University of Alberta and author of Costly Fix: Power, Politics, and Nature in the Tar Sands (2018).