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Coal, electricity and climate change

In Alberta, coal policy and electricity policy have become one and the same thing, handcuffed to each other by climate change policy.
Frank Dabbs
Frank Dabbs

In Alberta, coal policy and electricity policy have become one and the same thing, handcuffed to each other by climate change policy.

The province is replacing coal as its primary source of electricity with a yet to be named energy source that has less impact on the climate because it generates less greenhouse gas per unit of energy used.

The provincial government says existing coal-fired generating plants, even newer ones, will be shut down, but it hasn't said how or even if it will compensate the owners.

That has created uncertainty for the very large investment in coal-fired electrical generation and the uncertainty is triggering chaos for electrical supply as coal-fired electricity producers return Power Purchasing Arrangements to the province's balancing pool.

To oversimplify a complicated story, the PPAs are a tool in electricity market deregulation that allows owner of production to recover their operating costs and to transfer their production to expert electricity buyers – companies who are merchants of power.

By returning the PPAs to the province's pool, they become a public liability because the operating costs are still assured, but the province is on the hook to sell the power.

The price of raw electricity is declining because of reduced economic activity, but power bills are growing because of increasing transmission and delivery costs.

The values and vision of the novice NDP government demote fossil fuel reserves, especially vast coal and oilsands deposits, from being the wealth of the future to being things of the past.

(The only thing Alberta has more of than oilsands is coal – surprising as that may seem.)

The fossil fuels of the Western Canadian Sedimentary Basin provided the province's spectacular wealth, but now we are being asked to leave most of it in the ground.

This is not to criticize the government for acting to reduce greenhouse gas and preparing to adapt to the changes that climate change will inevitably bring.

The 21st century will see the collision between exponential human population growth and the technologies that supply energy, food and shelter to it.

Albertans cannot claim an exemption from this collision just because the majority doesn't like the pink politics of the newly-elected government that has faced up to the dilemma.

Thirty years ago, Saudi Arabia Oil and Mineral Resoruces Minister Ahmed Zaki Yamani said that the Stone Age didn't end because the world ran out of stones, and the oil age won't end because the world runs out of oil.

The headlines of 2016 are telling the tale of the end of the age of oil and the price Alberta is being asked to pay for the transition to energy technologies that are in the early stages of development.

So what we have in Alberta this spring is a traffic jam of coal, electricity and climate change policy without the traffic lights to guide the players.

What the government might consider is to slow down a little.

The current course of action is not affordable and not politically sustainable.

The government does not need to abandon the destination.

But it needs bring the market players and the policy makers together to collaborate on integrating these three policies – coal, electricity and climate change.

Ask them to work together to make this work.

Albertans are prepared to support change if they are convinced that change is working to make the future better.

Frank Dabbs is the editor of the Didsbury Review.

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