Notley to save the planet... Who needs the oilsands when you have the PST?

By: Kenneth P. Green, Senior Director Natural Resources Studies, The Fraser Institute

Article originally published as a special to the Financial Post on August 18th, 2015. Can be found here: http://business.financialpost.com/fp-comment/how-the-alberta-government-is-trying-to-downgrade-the-oil-sands 

Notley plans to transition Alberta away from oil, toward a knowledge-based economy

The government of Alberta has released its Climate Leadership Discussion Document, which is supposed to inform citizens about climate change and prepare them for a public opinion survey on the subject.

Every Albertan should read the Document closely. It makes it abundantly clear that despite all the nice words that the Notley government has been throwing around in meetings with oil company executives and oil and gas investors, the oilsands have very little place in her administration’s vision of Alberta’s future. 

On page 7 of the document, we learn that "Alberta has much more to offer Canada and the world than its energy products." Alberta, we are told, can "transition to a knowledge-based, lower-carbon economy." On page 8 we're told that the vision which belongs to "all Albertans" is one of "sustained" economic growth, and "steady" job creation. Not a strong economy, not a booming economy, not Canada's strongest economy, but one that is "sustained" and "steady."

Digging into the Document, we find that in the entire section labelled “Alberta’s Vision,” the oilsands are not mentioned at all. But we should rejoice, because the Document goes on to tell us that “Reducing emissions does not mean halting all economic activity.” Rather, it envisions downshifting to something “sustainable” within a changing global market that, we’re told early in the report, doesn’t want high-carbon fuels any more. 

So how long do we get to this green Shangri-La of an Alberta composed of clerks tracking wind turbines and solar panels? The Document offers up the standard laundry list of failed (or rejected) green policies.

http://alberta.ca/climate-leadership.cfm 

For the oil and gas sector? Some combination of “much higher” carbon pricing, technology initiatives, and subsidies for green technology head up the wish list, followed by performance standards on everything from products to technology to fuel choice, and/or standards for the entire sector.

For the electricity sector? Alberta gets the dubious privilege of following Ontario’s Green Power disaster, with feed-in tariffs to subsidize wind and solar power, tax credits and subsidies to producers of “green” energy; Renewable Energy Certificates; government-backed loan guarantees and power purchase agreements; and, of course more performance standards such as Renewable Portfolio Standards. How did that approach work in Ontario? Badly. Power prices skyrocketed, and are slated to continue to rise while Ontarians subsidize Americans to use their wind power.

Lest you think you’re getting off the hook in your personal life, the goal for the transportation sector is “Increasing use of public transit, encouraging car-pooling, fuel taxes, clean vehicle technology and transportation design techniques that minimize vehicle use and promote active transportation.”

How will that happen? You guessed it — still more carbon taxes used to build transit infrastructure and perhaps more performance standards, and government mandates to transition fleet vehicles to alternative and renewable energy sources.

Finally, there’s the ever popular “energy efficiency and conservation measures” for homes and businesses. Here we’re told,“Energy efficiency improvements can be one of the most cost-effective ways to improve the affordability, and reduce the environmental impact of energy consumption.” 

Apparently, the authors of the Document missed a recent study by Fowlie et al.  that looked at the effects of America's largest residential energy efficiency program on a sample of 30,000 households, and found that the up-front costs came out twice as high as predicted, and the energy savings were 2.5 times smaller than predicted. The Fowlie study concludes: “Even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5 per cent annually.” And efficiency standards for office buildings don’t fare much better. 

Despite all the talke from the Notley government about continuing to develop Alberta's oilsands, the plans offered in the Document call for a wrenching change in Alberta's economy, away from energy development. 

Now, some Albertans may want that. But either way, the premier should be honest where she plans to take Alberta so that, at the very least, Alberta's energy sector can start checking the rents in Saskatchewan and British Columbia.

Kenneth P. Green is senior director, natural resource studies at The Fraser Institute.