Alberta Premier Danielle Smith doubled down on her support for the oil and gas industry, just as a report showing her government’s pause on renewable energy development could jeopardize investments worth billions.
“We don’t need a just transition because we don’t intend to transition away from oil and natural gas,” Smith said this week at the Canadian Energy Executive Association conference in Banff. The industry is working to reduce greenhouse gas emissions, but will not transition “away from production,” she noted.
On Aug. 3, Danielle Smith’s United Conservative Party government kneecapped Alberta’s clean energy industry with a surprise announcement on approvals of all new renewable energy projects over one megawatt.
A report released Thursday shows Alberta’s seven-month moratorium on renewable energy development has stalled 118 projects representing $33 billion in investments.
Pembina Institute combed through public data to figure out how many projects are affected by the seven-month moratorium and what this means for investments, revenues and jobs in Alberta.
The 118 projects identified are comprised of 5.3 GW of wind, 12.7 GW of solar and 1.5 GW of battery energy storage for solar projects.
The total investments supporting these projects are estimated at a little over $33 billion from projects proposed by 64 companies or partnerships. Pembina Institute also calculated another $263 million per year in revenue from municipal taxes and land leases spanning 27 different municipalities that won’t be realized until the projects move forward. According to the analysis, the planning, development and construction phase would create, over the span of several years, the equivalent of one year of 24,000 full-time jobs.
The province is well-positioned to become Canada’s “renewable energy capital,” the new analysis points out. Last year, Alberta led Canada for renewable energy growth, accounting for 77 per cent of the 1.8 gigawatts of solar and wind generation capacity that came online that year, according to data from the Canadian Renewable Energy Association.
When he announced the pause, Nathan Neudorf, Alberta’s Minister of Affordability and Utilities, said the move was a direct response to concerns raised by rural municipalities about land use considerations and end of life plans for renewable projects. Abandoned industrial projects are a pain point because many municipalities have been left with the mess from defunct oil and gas wells and are still owed millions in taxes by oil and gas companies: the Rural Municipalities of Alberta says its members are collectively owed $268 million in unpaid property taxes by oil and gas companies, and that number continues to grow.
During the renewables pause, the Alberta Utilities Commission will review policies and procedures for the development of renewable electricity generation, according to the province.
Rural Municipalities of Alberta president Paul McLauchlin said they did not ask the government to pause project approvals, only raised concerns, but he applauded the decision nonetheless.
Aside from end of life plans, another one of Rural Municipalities of Alberta members’ main concerns is that highly productive farmland will be sacrificed to accommodate large renewable projects. “We want to make sure that projects that are industrial at that scale are compatible with adjacent land uses, or at least those questions are being asked in the decision-making process,” McLauchlin told Canada’s National Observer the same day the moratorium was announced.
McLauchlin emphasized that municipalities are not against renewable energy development — they just want to see it done right.
The revenues being brought in by these projects are “life-changing” for municipalities, said McLauchlin, pointing in particular to Vulcan County, home to Canada’s largest solar project and one of the largest wind farms.
Several large renewable energy projects have injected the county with much-needed revenues after years of being stiffed by oil and gas companies.
About a decade ago, the decline of oil and gas decimated Vulcan County’s budget by almost 50 per cent, Jason Schneider, the elected reeve of Vulcan County, told Canada’s National Observer in an interview earlier this month
“We’re out about $13 million of unpaid oil and gas taxes,” said Schneider. That’s from companies who either just decided not to pay their taxes or companies that disappeared in the middle of the night or went bankrupt, he said.
“Unfortunately, the way the whole industry, the way it was all set up is, you know, these companies were able to walk away and we really had no recourse,” said Schneider.
“$13 million to a small municipality like ours is a big chunk … If you wanted to extrapolate that and compare it to a city … I mean, any city, if you have to cut your budget by 30 per cent, I don’t think many municipalities could do it.”
“In the last 10 years, wind and solar has surpassed oil and gas at its peak in Vulcan County,” said Schneider, adding “we’re we’re able to do things that we weren’t able to do 10 years ago, even five years ago,” namely infrastructure investments “thanks to the additional revenues the projects have brought online.”
He doesn’t want this issue to repeat with the rapidly expanding renewables industry. Renewable energy companies make deals with individual landowners, so it’s up to landowners to ensure the contract includes a plan to decommission and remediate the site when its operating life is over. Municipalities are left in the dark because the deals are typically confidential.
During the application process, the Alberta Utilities Commission requires companies to show how they will ensure there is enough money to cover the costs of decommissioning the project and restoring the land to its former state.
Pembina Institute’s analysis found that, on average, a 100 megawatt renewable energy project generates between $125 and $175 million in project development and construction investments, about 300 full-time jobs during construction and $1.5 million in long-term, annual municipal revenues.
For example, multiple projects proposed in the Medicine Hat area would generate up to $44 million in annual tax and land lease revenues, according to the analysis. There is just one project — a 160 megawatt wind project — proposed in the Municipal District of Smoky River, in northwestern Alberta. That one project would result in an estimated $1.9 million in tax and land lease revenues per year.
The authors of the analysis point to the Alberta Utilities Commission’s existing requirements for decommissioning and reclamation plans, writing that while improvements can be made to those current measures, the moratorium is unnecessary and hampers stakeholders eager to invest in projects.