Alberta government backtracks, promising public consultations on coal mining policy

The province of Alberta cancelled its own long-standing regulations regarding coal mining exploration, leases and development in May 2020,  but the government was forced to reverse course – as stated in a press release in February 8, Alberta’s 1976 coal policy reinstated .  The policy was not only reinstated, but the government promises “we will implement further protections and consult with Albertans on a new, modern coal policy.” The Narwhal provides an overview of events and the political miscalculations in  “How a public uprising forced a province built on fossil fuels to reverse course on coal mining”   – quoting a political science professor at the University of Alberta who calls the public pressure “unprecedented” –  “The government simply did not imagine that this kind of mobilization could happen” .  The Canadian Parks and Wilderness Society website has monitored the issue in a series of news releases and hosts an online campaign against coal development, still expressing concern about the government’s intentions.  The article in The Narwhal implies that the current Kenny government is out of touch with the diversity of opinion in Alberta – a diversity reflected in a poll released by Pembina Institute in February, showing  Albertan attitudes to the oil and gas industry and to the goal of net-zero emissions.

In the interim before the consultation is launched, the National Observer published “There is no such thing as a contamination-free coal mine, top scientist warns Albertans” (Feb. 16)  –  summarizing a 2019 evaluation of the Benga Mining proposal for an open-pit coal mine at Grassy Mountain near the Crowsnest Pass in the Rockies, which concluded: “The Grassy Mountain Coal Project will create a ticking environmental time-bomb resulting from selenium pollution of high quality, high value aquatic habitats and culminate in poisoning of provincially and federally protected fish.”

President Biden’s Executive Orders and Keystone XL cancellation – what impact on Canada?

Incoming U.S. President Biden exceeded expectations with the climate change initiatives announced in week 1 of his term, and many have important repercussions for Canada.  The most obvious came on Day 1, January 20, with an Executive Order cancelling the Keystone XL pipeline and taking the U.S. back into the Paris Agreement.  Also of potential impact for the Canadian clean tech and auto industries – the Buy American policies outlined in Executive Order on Ensuring the Future Is Made in All of America by All of America’s Workers (Jan. 25). On January 27 ( “Climate Day ”), the Executive Order on Tackling the Climate Crisis at home and abroad (explained in this Fact Sheet ) announced a further series of initiatives, including a pause on oil and gas leases on federal lands, a goal to convert the federal government’s vehicle fleet to electric vehicles, and initiatives towards environmental justice and science-based policies. Essential to the “whole of government” approach, the Executive Order establishes the White House Office of Domestic Climate Policy to coordinate policies, and a National Climate Task Force composed of leaders from across 21 federal agencies and departments. It also establishes the Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization, “to be co-chaired by the National Climate Advisor and the Director of the National Economic Council, and directs federal agencies to coordinate investments and other efforts to assist coal, oil and natural gas, and power plant communities.”    

The New York Times summarized the Jan. 27 Orders as “a  sweeping series of executive actions …. while casting the moves as much about job creation as the climate crisis.” A sampling of resulting summaries and reactions: ‘We Need to Be Bold,’ Biden Says, Taking the First Steps in a Major Shift in Climate Policy” in Inside Climate News (Jan. 28); “Fossils ‘stunned’, ‘aghast’ after Biden pauses new oil and gas leases” in The Energy Mix (Feb. 1); “Biden’s “all of government” plan for climate, explained” in Vox (updated Jan. 27) ;  “Biden’s Pause of New Federal Oil and Gas Leases May Not Reduce Production, but It Signals a Reckoning With Fossil Fuels”  (Jan. 27) ; “Biden is canceling fossil fuel subsidies. But he can’t end them all” (Grist, Jan. 28);  “Activists See Biden’s Day One Focus on Environmental Justice as a Critical Campaign Promise Kept”  and  “Climate Groups Begin Vying for Power in the Biden Era as Pressure for Unity Fades” (Jan 21) in The Intercept , which outlines the key policy differences between the BlueGreen Alliance (which includes the Service Employees International Union, the American Federation of Teachers, and the United Steelworkers in the U.S.) and  the Climate Justice Alliance, a national coalition of environmental justice groups.

The Narwhal provides an excellent overview of the important issues for Canada in “Biden has hit the ground running on climate and environmental justice. How will Canada respond?

Focus: Cancelling the Keystone XL Pipeline

The January 20 Executive Order halting the Keystone XL pipeline construction was meant to be a highly symbolic break with the previous administration’s policies, as described by Bill McKibben in the New Yorker as “Joe Biden’s cancellation of the Keystone Pipeline is a landmark in the climate fight” . Inside Climate News wrote “Biden Cancels Keystone XL, Halts Drilling in Arctic Refuge on Day One, Signaling a Larger Shift Away From Fossil Fuels” (Jan. 21).       

In Canada, the Keystone XL cancellation set off a torrent of reactions – with  Alberta’s Premier immediately calling for trade retaliation  – summarized in “‘Gut punch’: Alberta premier blasts Biden on revoked Keystone XL permit” (National Observer, Jan. 20) . The federal government held an Emergency Debate on Keystone on January 25, the first day the House of Commons re-convened after Christmas break. Environmental groups, along with social justice groups, First Nations, and the B.C. Government Employees Union, sent an Open Letter to Prime Minister Trudeau and all cabinet ministers on January 26, approving of the Keystone cancellation and stating: “Canada must follow Biden’s lead on Keystone XL and cancel TMX because it directly conflicts with the federal government recently announced climate plan and it does not have permission or consent from affected Indigenous Nations.”  An opposite viewpoint was reported in  “Keystone XL denial will hurt communities, Indigenous business coalition leader says” (National Observer, Jan. 22). Consistent with the past policies of the construction unions in the U.S. and Canada, Canada’s Building Trades Unions issued a press release expressing deep disappointment in lost jobs as a result of the decision – as did their U.S. counterpart the North American Building Trades Union (NABTU) . (The discord amongst unions over pipeline construction has been long-standing and well documented – for example, in Contested Futures: Labor after Keystone XL by Sean Sweeney ( New Labor Forum, 2016.)  

What next for Canada, now that Keystone XL has been cancelled?

CBC reports  “Trudeau government looks to continental energy strategy in wake of Keystone cancellation” (Jan. 27), which summarizes the unimpressive history of international energy initiatives but strikes an optimistic note because of the new Biden administration.  Eric Grenier summarizes the political and public opinion landscape and concludes that “For Trudeau, there’s no political reason to fight for Keystone XL” , and Aaron Wherry expands on that theme in “How political symbolism brought down Keystone XL” (Jan 23). In “Cenovus unveils capital spending plan, confirms up to 2,150 layoffs still targeted” (Jan. 29)  the CEO of Cenovus states that while the Keystone XL pipeline cancellation was a  “tragedy” for the industry, it wouldn’t affect his company’s ability to move oil and that Biden’s pause on oil and gas leasing, “is probably good for the Canadian oilpatch” . The Cenovus layoffs announced are not related to Biden’s policies but come as a result of its takeover of Husky Energy- Cenovus had already announced it would cut 20 to 25 per cent of its combined employee and contractor workforce (approx. 1,720 and 2,150 workers) in October 2020. 

Warren Mabee wrote in The Conversation Canada (Jan.21) “Biden’s Keystone XL death sentence requires Canada’s oil sector to innovate” – (republished in The Narwhal here ) arguing that Canada and Alberta “need to decide if more pipeline capacity is really needed” and “The future of Canada’s oil sector may not be in volume, but in value” – for example, high value-added products such as plastics, rubber and chemicals.   But this is Canada, so pipeline battles will continue: “With Keystone XL cancelled, all eyes turn to Trans Mountain expansion battle” (Ricochet , Jan. 27) and “The cancellation of Keystone XL raises the stakes for Trans Mountain (Globe and Mail Opinion piece, Jan. 26) . David Hughes has written, most recently in October 2020, that the Trans Mountain pipeline capacity is not needed, and on December 8 2020, the Parliamentary Budget Office released a report with the same conclusion. An excellent overview on the status of the Trans Mountain issue appears from the West Coast Environmental Law, and the Dogwood Institute maintains an online petition against TMX here.

Green Hydrogen in Canada – Alberta sets a goal of 2040 for exports

Clean Energy Canada released a new report on hydrogen as a clean energy source, providing a history of policy and development in Canada and around the world, and a call to action.  A New Hope states that “.. Canada is among a small group of countries with the highest potential for exporting clean hydrogen, thanks to a clean power system (82% of Canada’s electricity grid is already non-emitting) and plenty of access to water (required for electrolysis). But the time to act is now. Already, 18 economies comprising more than 75% of global GDP are developing and rolling out hydrogen strategies. Some, like the EU and South Korea, have dedicated post-pandemic recovery funds to make it happen. …. Germany’s priming of the hydrogen market with a €9-billion ($13.7-billion) strategy could lead to a snowballing competitive market—and increasingly cheaper clean hydrogen.”  The EU Hydrogen Strategy for a climate neutral Europe was released in July 2020.

Green, Blue or Grey? Colour-coded hydrogen holds keys to Canada’s energy transition” appeared in The National Observer in August, and gives an excellent overview of the policy landscape for hydrogen in Canada – the perspective of the Canadian Hydrogen and Fuel Cell Association and the Canadian government, which has promised a Hydrogen Strategy – but no date is set. The article cites a very thorough consultant’s report circulating amongst government officials: 2019 Hydrogen Pathways : Enabling a Clean Growth Future for Canadians .

The Pembina Institute had also published Hydrogen on the path to net-zero emissions Costs and climate benefits (July), a 6-page overview of  the terminology (blue, green or grey hydrogen?),  the production process, transportation and storage, and its many possible applications across industry, transportation, power and buildings sectors.

Alberta seems to be heeding the call:  in September, the Alberta Industrial Heartland Hydrogen Task force released Towards Net-Zero Energy Systems In Canada: A Key Role For Hydrogen, and on October 6, the Alberta government released its Natural Gas Vision and Strategy, part of its Recovery Plan for petrochemicals, LNG production ,  plastics recycling, and hydrogen.   Along with the October 6 press release, the Plan states “…. Alberta is already a leader in hydrogen production and has strong carbon capture and storage infrastructure in place. Combined with a number of projects being built across the province, Alberta has the potential to be a strong global competitor through the creation of a hydrogen economy.”  The goals stated in the Plan: 1. “Large-scale hydrogen production with carbon capture, utilization and storage (CCUS) and deployment in various commercial applications across the provincial economy by 2030; and 2.  Exports of clean hydrogen and hydrogen-derived products to jurisdictions across Canada, North America, and globally are in place by 2040.”

Total, Exxon announce stranded assets but some Canadians aren’t listening

Just as the long-predicted weather disasters are coming to pass before our eyes, so too are the stranded assets of the oil and gas industry.  In July, French fossil fuel multinational Total announced  “asset impairment charges” caused by low oil prices, and “in line with its new Climate Ambition announced on May 5, 2020 , which aims at carbon neutrality, Total has reviewed its oil assets that can be qualified as “stranded”, meaning with reserves beyond 20 years and high production costs, whose overall reserves may therefore not be produced by 2050. The only projects identified in this category are the Canadian oil sands projects Fort Hills and Surmont.” Total also cancelled its membership in the Canadian Association of Petroleum Producers (CAPP) , as had Teck Resources in May 2020 as part of the cost-cutting which saw it withdraw from the Frontier mine project in February.

As reported by Bloomberg News on August 5, a regulatory filing to the SEC by Exxon announced that low energy prices render as much as 20% of its oil and natural gas reserves as stranded assets, without book value. The  massive Kearl oil-sands mine near Fort McMurray Alberta was the only operation specifically named in Exxon’s filing, and a separate filing of Exxon subsidiary Imperial Oil Ltd also singled out Kearl’s reserves as “imperiled”.

The Energy Mix summarized and commented on these developments in “Colossal fossil Total declares $9.3b in stranded assets in Alberta tar sands/oil sands” (July 31) and “Exxon rips up $30 Billion rebuilding plan, could declare stranded assets at Kearl Lake” (Aug. 19).   

A different future?

In sharp contrast to the companies’ announcements: the Alberta office of Price Waterhouse has posted a rosy consultants’ view in a series titled: Energy Visions 2020: What’s ahead for Canada’s oil and gas industry . Part 1, “The Evolving Role of oil and gas in the Energy Transition” acknowledges the current low demand, but hones to that persistent industry view: “Given the cyclical nature of the industry, we anticipate that within five years we’ll have moved into a period of recovery and growth. By then the current oversupply will likely have been drained.”  PWC’s prescription for Canadian oil and gas producers: “to differentiate themselves from global competitors, they’ll have to continue to focus on important differentiators aligned with environmental, social and corporate governance (ESG) measures… Canadian oil and gas companies are already global leaders on some ESG principles. These include demonstrating high employee health-and-safety standards, a record for empowering and investing in the communities in which they operate, support for reasonable government carbon pricing and a commitment to new technologies to reduce emissions. But the challenge remains around how our industry communicates this story to investors.”

Part 2, “Finding Opportunity for Canada in the Global Energy Transition”  states: “Canadian energy companies have the opportunity to proactively address climate issues, take advantage of new opportunities where possible and find ways to create additional value for their communities, employees and shareholders.… We can and must raise our profile by highlighting all the positive achievements we’ve made in producing our energy more efficiently by using new technologies…”. Post Covid, “there may be opportunities for those companies that have the desire and balance-sheet strength to pursue new capital-intensive energy investments. Companies for which diversification isn’t an option must stay focused on their core business and continue to execute more efficiently, digitally and diversely than any global competitor……..We can expect that federal government support for all industries will come in some form of infrastructure investment, and the adoption of alternative energies will likely be part of the government’s infrastructure agenda.“

Finally, Part 3, “New World, New Skills: Preparing your workforce for the Energy Transition” discusses “The Transformation Imperative”, but focuses on automation and artificial intelligence as the disruptors. The report offers the general advice that employers need to create an “upskilling” organizational culture for their employees, while acknowledging that millennials rank the oil and gas as their least attractive career destination.   

Alberta Pension fund invests in Coastal GasLink pipeline, the latest risky fossil fuel investment

Carbon Tracker, the group which originated the term “stranded assets, published two new reports about the financial risks of fossil fuel investment in June:  It’s Closing Time: The Huge Bill to Abandon Oilfields Comes Early  and Decline and Fall: The Size & Vulnerability of the Fossil Fuel System on June 4 .  Banking giant Goldman Sachs also released a new report, Carbonomics: The Future of Energy in the age of climate change , which sees a fundamental shift from fossils to renewable energy investments.

Yet even as the drumbeat of fossil fuel decline continues, the public sector pension funds of Alberta and South Korea purchased a majority ownership stake in the Coastal GasLink pipeline from TC Energy on May 25,  using  the  retirement savings of millions of individuals.  “Alberta and South Korea’s pensions just bought the Coastal GasLink pipeline: 8 things you need to know” in The Narwhal (June 10) analyses the situation and cites a report from Progress Alberta :  Alberta’s Failed Oil and Gas Bailout , with this subtitle provided: “How AIMCO invested more than a billion dollars of pensioners and Albertans money into risky oil and gas companies with more than $3 billion in environmental liabilities and how the people running those companies got rich through huge salaries, share buybacks, dividends and conservative political connections.” Besides exposing the political shadows and environmental liabilities of many AimCo energy investments, the report makes recommendations, including for a public review of the investment performance and governance of Aimco; to divest from risky fossil fuel investments; to allow pension plans whose funds are being managed by AIMCo to appoint representatives to its board ; and to allow pension funds the freedom to leave AIMCo.

The recommended reforms are necessary because of the changes made by the Kenney government in November 2019,  described by WCR here and by Alberta unions in:  Union leaders tell UCP: ‘The money saved by Albertans for retirement belongs to them, not to you!’    Alberta’s Failed Oil and Gas Bailout   report urges: “The mismanagement of pensions and the Heritage Fund today offers opportunities for unions, political parties, civil society groups and organizers to engage and activate people who otherwise might never get involved in political collective action. People’s retirements and Alberta’s savings fund from its fossil fuel wealth are at stake.”