Thursday, 7 November 2019

Alberta after Fossil Fuels

Alberta and oil are almost synonymous. But if the province is to do its share to avoid the apocalypse that global warming threatens, it must kick the oil habit, or at least the fossil fuel habit. The transition to greener energy is much harder for this prairie province, of course, because of its particular dependence on oil and gas or, if you prefer, bitumen. Nonetheless, we Albertans must face up to the challenge.

Fortunately, Alberta has alternatives to fossil fuel dependence. Oil and gas in themselves have multiple uses other than as fuels. Petrochemicals are used to manufacture thousands of products essential to the modern world: plastics, medicines, fabrics, detergents and other cleaning products, fertilizers, cosmetics, furniture, appliances, electronics, synthetic rubbers, asphalt, pipes, home siding, and yes, solar power panels and wind turbines. Almost all pharmaceutical feedstocks and reagents are derived in some way from petrochemicals—they provide both the medicines and the bottles they come in. 

In the 1970s, the Lougheed government encouraged the growth of an ethane-based petrochemical industry and it is now one of the largest manufacturing industries in the province. Rachel Notley’s government instituted a petrochemical diversification program establishing a new propane-to-plastics industry. Inter Pipeline Ltd. and Pembina Pipeline Corp. are now building propane-to-polypropylene facilities north of Edmonton. This is one NDP initiative Jason Kenney has had the good sense to maintain. Alberta provides royalty credits to companies in exchange for building facilities that turn feedstocks into plastics and other products. Not all subsidies to the oil and gas industry go toward fossil fuels.

Another intriguing initiative is producing hydrogen from hydrocarbon reservoirs in situ. Most hydrogen is currently produced from natural gas with carbon dioxide and carbon monoxide released as waste products. If the hydrogen is produced in situ, these gasses would be left in the reservoir. A team of Alberta engineers presented such an in situ method at the Goldschmidt Geochemistry Conference in Barcelona this summer, turning heads around the globe. According to University of Calgary professor David Layzell and energy researcher Jessica Lof, "There is no region in North America that is better positioned than Alberta for cost-effective, large-scale production and distribution of zero-emission hydrogen fuel." Meanwhile, the province's drilling prowess is being applied to a geothermal pilot project that could help unlock the province's considerable geothermal assets.

Alison Cretney, managing director of the Energy Futures Lab, insists that Alberta is almost ideally positioned to capitalize on the decarbonization of the global economy, both because of the skills and education of its population and the opportunity to apply both to a host of new challenges. "We just need to get beyond that view that when we talk about oil and gas it's extract and burn," she says. "The world moves on without us. And we'd miss a huge opportunity for Alberta and Canada to lead that change, to lead the transition, rather than it ultimately catching us unaware down the road. It's disrupt or be disrupted."

Quite aside from oil and gas, Alberta has other arrows in its quiver such as tourism, forestry and, of course, agriculture. The province produces half of Canadian beef and a quarter of its wheat.

As is typical of a mature economy, most Albertans work in services, including finance. The TSX Venture Exchange is headquartered in Calgary, and the city has a robust industry serving the securities market. It also has the second highest number of corporate head offices in Canada after Toronto. Edmonton hosts the Canadian Western Bank and ATB Financial, the only major Canadian banks west of Toronto.

Clearly, Alberta can look forward to a bright future beyond oil. But embracing a future of dramatic change is always difficult. People tend to cling to the past they know rather than embrace a future they don't, especially when that past is based on one of the most lucrative industries this or any province has ever experienced. It can be frightening, and Premier Kenney aggravates this fear when instead of presenting Albertans with a vision for the future, he doubles down on bitumen and then goes on the warpath against Justin Trudeau and assorted environmentalists, even fanning the flames of separatism in order to gain leverage. The wrong leader at the wrong time, holding us back.

Albertans will have to rise above their reactionary government. The potential ls there. And this is a very entrepreneurial place—at one time making money off bitumen was a pipe dream. The feds can help. During the federal election campaign, Trudeau promised a "Just Transition Act" to ensure workers can get the training and support they need. Alberta should be a central focus of that effort.

But how smooth or rough the transition is will depend heavily on Albertans willingness to accept change that must come. As Blake Shaffer, an economist with the University of Calgary and a former energy trader, puts it, "I hope that rather than putting our head in the sand and focusing on where we were 10 or 15 years ago, we embrace the skills and strengths that we have and go forward." I hope so too, Blake.

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