Is Smith’s ‘climate plan’ intended as a sop to Calgary voters? It isn’t good for much else

Danielle Smith’s climate plan is a report, not a strategy or a plan, and it’s mostly concerned with growing oil and gas production

In January, I wrote a column titled, “Danielle Smith has an oil and gas marketing plan, not a climate plan.” On Wednesday, the Alberta premier proved me right. Her formal plan looks pretty much like business as usual, the status quo only now with a ridiculous acronym, ERED (Emissions Reduction and Energy Development plan).

Columnist Max Fawcett calls it the “have your cake and eat it, too, plan.” He’s bang on. This is an energy development plan with a small side of climate policy- a sprig of parsley to pretty up the plate – tacked on because it may make Alberta oil and gas more carbon-competitive.

The plan isn’t even a commitment to net-zero by 2050. “We aspire to achieve a net zero carbon neutral economy by 2050,” it says, “and to do so without compromising affordable, reliable and secure energy for Albertans, Canadians and the world.” Aspiration might have been ok in 2000, but it won’t fly in 2023, for two reasons.

The first was explained very succinctly by Fatih Birol, executive director of the International Energy Agency, in a commentary titled, “Clean energy is moving faster than you think,” published a day before the Alberta plan was announced. “…[W]e can thank an array of clean energy developments, such as solar panels, wind turbines, electric vehicles and heat pumps, and the policies and investments that are supercharging their growth,” he wrote. “It’s well-known in energy and climate circles that these technologies are expanding quickly, but I think many people still don’t realize just how quickly.”

Dr. Birol describes Premier Danielle Smith and her UCP government. You can read columns here, here, and here in which I explain why Alberta’s approach to energy is desperately flawed.

Source: Environment and Climate Change Canada (2022) National Inventory Report 1990-2020: Greenhouse Gas Sources and Sinks in Canada.

The second reason is federal climate and energy policy. Canada is a signatory to the Paris Climate Agreement. The Liberal government says it is serious about meeting 2030 emissions targets. Finance Minister Chrystia Freeland unveiled even more clean energy funding in last month’s budget. More clean energy regulations are on the way.

Meanwhile, Alberta accounts for 38 per cent of Canada’s greenhouse gas emissions, even though it comprises only 12 per cent of the population. The culprit? Oil and gas extraction, which accounts for 26 per cent of national emissions.

Irresistible force, meet immoveable object. But if I had to bet on technology, markets, and climate vs. incumbency and backward-looking politics, my money’s on the energy transition.

That’s the high level critique. There are also a number of curious policy positions in the plan.

“Clean LNG” and the carbon credit for avoided emissions make-believe

Source: Emissions Reduction and Energy Development Plan, P. 6

The most curious, by far, is Smith’s fixation with “clean LNG” exports. She has adopted the oil and gas industry’s bogus argument that LNG made from natural gas with a less than three per cent leakage rate will qualify for carbon credits under Article 6 of the Paris Agreement. The Premier has made this case in several letters to Prime Minister Justin Trudeau. She even claims that credits for “avoided emissions,” as they are called, could offset Canada’s entire annual GHG of 690 megatonnes per year.

No surprise, then, that the idea is found in ERED. Unfortunately for Smith, there is virtually no chance her scheme will work. I interviewed several carbon management consultants familiar with Article 6 and spoke to the offices of federal ministers Jonathan Wilkinson (natural resources) and Stephen Guilbeault (environment and climate change).

The carbon experts say that Paris signatories are strongly opposed to credit for avoided emissions. Ensuring that Canadian LNG displaces coal in a Chinese power plant, for example, is almost impossible. And why would China want to transfer credits when they paid full commercial price for the LNG?

Pursuing avoided emissions credits requires either a country-to-country agreement or for Canada to approve a project-specific agreement. The federal government is very leery of both options.

“If Canadian industry wants to discuss how Canadian LNG could be used to displace coal elsewhere in the world in a way that is compatible with the Paris Agreement, the government is willing to engage in that conversation,” Guilbeault said in an emailed statement. “But engaging with industry on Article 6 will not come at the expense of our 2030 targets.”

Translation: we’ll talk, but we’re not interested.

Tepid electricity policy

Another oddity of Smith’s plan is the lack of policy support for renewable energy, now the lowest cost power generation. Alberta has the best wind and solar resources in Canada. And it leads the country in renewables deployment because of its open wholesale market, which enables any qualified developer to build a wind or solar farm, then connect to the grid and compete with other generators. Last year Alberta added one gigawatt of generation and two gigawatts are expected to be built this year.

Clean, reliable, and low-cost electricity is the foundation of the 21st century economy and table stakes if Alberta wants to play in the clean energy industry game. Oddly, however, ERED adds no new policy support for wind, solar, and energy storage, whose costs have fallen dramatically in the past few years. The UCP government seems content to rely on its industrial carbon pricing (TIER) and its open market to support development, despite widespread agreement from economists that the province must double or triple electricity output as we “electrify everything” between now and mid-century.

Alberta has provided some support for geothermal over the past few years, including a first go at regulations that was tepidly received by industry. The province is home to Eavor Technologies, which recently started its first big commercial project in Germany. Alberta support pales next to the 91 million euros Eavor received from the EU and the 251 megawatt hour feed-in tariff the company will receive from the German government. The US Inflation Reduction Act also generously subsidizes geothermal.

Market purists – the oil patch is rife with them – may protest clean energy subsidies, but the oil and gas industry has received tens of billions from Canada and Alberta while always asking for more.

Why now?

The ERED release comes a week or two before the Alberta election writ is expected to be dropped. Why release it now?

Calgary is generally recognized to be the battleground region for both the UCP and the NDP. As I’ve argued many times in the past, parties without a convincing energy narrative generally struggle in the home of Canadian oil and gas head offices. Jason Kenney mopped the floor with Rachel Notley in 2019, as I explained after the election in this column, “Why did Rachel Notley refuse to run on her energy policy record?” This self-explanatory column, Rachel Notley has no energy game, got me blackballed for a month by the NDP.

The point is that Smith and the UCP, tied with the NDP in Calgary according to pollsters, perhaps feel that energy is the issue where Notley is most vulnerable. They’re right, but this energy development plan that isn’t a climate plan isn’t likely to do the job.

But it may make an already interesting provincial election one for the ages.

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