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Alberta Faces ‘Significant Disadvantage’ by Ignoring Energy Transition, Pembina Warns

Alberta’s ability to thrive and attract investment in a world shifting to low-carbon energy will depend on the climate and energy policy choices it makes in the weeks leading into this spring’s provincial election and beyond, the Calgary-based Pembina Institute warns in a 23-page policy roadmap released last week.

The global outlook for fossil fuels “has fundamentally shifted in the last 12 months,” with even fossil companies projecting “a sustained decline in global demand for oil, beginning this decade,” Pembina writes [pdf]. “If the world successfully achieves its goal of reaching net-zero emissions by 2050 and avoiding the worst effects of climate change, that demand decline will begin sooner and be steeper—and will have a significant impact on Alberta’s industry.”

The provincial government led by Premier Danielle Smith has most recently been seen building a political brand based on its opposition to Ottawa, while advancing a C$100-million fossil tax break that Smith originally supported as an industry lobbyist. But Pembina warns against a strategy that sidesteps the immediacy of the climate emergency and a decisive shift toward climate investment and action.

“Now more than ever before, companies are looking for opportunities to invest in climate solutions, and for jurisdictions where they can operate while meeting their own climate goals,” the roadmap says. “Choosing instead to remain out of step with the global trend towards low-emission economies would leave Alberta at a significant disadvantage in the years ahead.”

The report points to the strengths and liabilities of a province that is phasing out coal-fired electricity seven years ahead of schedule and leads the country in new renewable energy installations, but is the biggest provincial contributor to Canada’s greenhouse gas emissions, accounting for 38.2% of the total with only 11.5% of the population. The oil and gas sector produces 51.8% of Alberta’s climate pollution, and the province’s fossil and transportation emissions have grown by 26.1 and 21.4%, respectively, since 2005.

In an “early estimate” released last week, the Canadian Climate Institute reported that Canada’s emissions rose 2.8% in 2021, with fossil fuels accounting for more than half of the total.

The Pembina report traces Alberta’s biggest challenges back to policy—and on inaction from the industry it currently depends on.

“Unlike many of the jurisdictions Alberta is competing with for capital investments, the province has yet to commit to achieving net-zero emissions by 2050,” the roadmap states. Yet “the oil produced in Alberta remains amongst the most emissions intensive in the world, largely due to the nature of oil sands production. While modest reductions in emissions intensity have been achieved, there remain important measures—such as methane reduction—that companies could undertake now to further reduce emissions from their upstream operations.”

The provincial grid, meanwhile, continues to bring on new gas-fired power plants, despite analysis showing that solar and wind with battery backup are less expensive to install and operate. “This risks locking the province in to a high-emitting form of electricity generation for decades to come, and potentially burdening Albertans with the volatile commodity prices of gas and the high costs of stranded gas assets that will be incompatible with Canada’s broader commitment to a fully net-zero electricity grid by 2035,” Pembina says.

A lack of supportive policies has also impeded uptake of the electric vehicles that 54% of Albertans say they would prefer for their next auto purchase.

The roadmap lays out specific steps Alberta can take to “futureproof” its oil and gas sector, modernize and decarbonize its power grid, shift to clean, affordable transportation, encourage energy efficiency and heat pumps in buildings, and protect nature—all as a way to “get back to doing what Alberta does best”.

“More than 40 years ago, this province undertook a major investigation into how to kick-start a strong energy sector,” Pembina writes. “In the face of oil price shocks, rapidly growing global energy demand, and American determination to increase energy independence, then-premier Peter Lougheed saw what a thriving oil sands industry could do for Alberta.”

Now, “Alberta needs a new industrial policy: one that similarly focuses on accelerating the adoption and deployment of new technologies, but also acknowledges the realities of a rapidly decarbonizing world.”

Primary Author: Mitchell Beer

Credits: This article by Mitchell Beer, https://www.theenergymix.com, is published here as part of the global journalism collaboration Covering Climate Now.