The Decibel - Building renewables in Alberta just got a lot harder

Episode Date: March 11, 2024

Alberta Premier Danielle Smith announced new regulations for renewable power developments that started on March 1st. This comes after the province paused all renewable developments in August. And the rules have some people concerned that it will limit this booming industry in a traditional oil-and-gas powered province.The Globe and Mail’s energy reporter, Emma Graney, explains what exactly the rules cover and how it could create a chill for new wind and solar investments in Alberta.Questions? Comments? Ideas? Email us at [e-mail]

About 200 kilometers southeast of Calgary, there's a town called Traverse. It looks like a lot of rural Alberta. Large swaths of grassy fields, some farmland. But in Traverse, there's also a different kind of farm. So the Traverse Solar Project, it's big. Like, it's big. It's in fact the largest in North America. Emma Graney is the Globe's energy reporter. And I drove past this site when I was in the area a couple of years ago, and it took me a while,

I'm not going to lie. How big is this solar farm? Over 3,300 acres. So if you need to compare that to something and you understand Canadian football, that's about 1,600 CFL fields. And it's covered in 1.3 million solar panels. It can produce 465 megawatts of power or enough to power about 150,000 homes. This solar project is one of many in Alberta. In fact, the province accounted for 92% of Canadian wind and solar growth last year. That meant a lot of investment money and jobs in the province. But now, Premier Daniel Smith has announced new rules for renewable projects, including where they can be built. Today, Emma Graney is going to explain the new

rules and what it means for this booming renewable sector in Canada's oil and gas province. I'm Mainika Raman-Wilms, and this is The Decibel from The Globe and Mail. Emma, it's great to have you here. Thank you for doing this. An absolute pleasure. Emma, let's just begin with the new rules here. So what are the new rules that Alberta Premier Daniel Smith announced around future renewable energy projects in the province? Yeah, so there are a few different rules. And I do want to start off by saying these are not finalized or regulated yet. And the utilities minister, Nathan Noidov,

says that could actually take up to three years to get all of this stuff in place. So there are a lot of unanswered questions. But off the bat, what we're looking at is an agriculture first approach. That's what it's called by the government. So there will be no builds on really good or excellent irrigable land unless the developer can prove that crops and cows and stuff can coexist with that infrastructure, right? There'll also be some rules around reclamation security. So basically, that means that developers are going to have to post a bond or a security that's going to cover the eventual cost of cleaning up a project at the eventual end of its life. Another big rule here is the so-called viewscapes rule. Now, this one's a bit of a head scratcher,

but basically it's a 35 kilometre buffer zone around protected areas and so-called, quote unquote, pristine viewscapes. And other renewable projects are going to be subject to a visual assessment before they're built. And we're going to dive into the details here, but I guess I just want to ask, like, why did the government say they wanted to do this? Like, what was the rationale the premier said for putting these new rules in place? Yeah, so it's worth going back to August 2023 here, and that's when the provincial government first announced a pause on approvals for all renewable projects in Alberta until the end of February 2024. So that's February, end of February, just gone. And they said,

we've had concerns in rural Alberta that renewable development is just going too hard, too fast. We have to take that seriously as a government. When our regulators are telling us that we are adding in an unsustainable way and that we have to take a pause, we have to take a pause. There's no two ways about it. So that's one part of it. So they put this pause in place, which it hasn't done on any other industry as far as we can tell. It just decided, you know what, let's put a stop to it. We'll revisit all the rules. We'll come out with some new rules and then off you go to the races once again, basically. So that's what the government says is the reasoning behind all of this. Okay. And these new rules were announced, Emma, at the end of February. When did they come into effect? Yeah, that's a really good question. So technically March 1, but because there are so many details yet to iron out,

we're not seeing them in play just yet, or not all of them anyway. So let's actually get into some of the details around these rules, because it seems like there's a little bit to unpack here. The first thing that you mentioned, Emma, is the rule around protecting agricultural land in Alberta. I guess, has this been a problem in the past in the province? No, not really. I mean, you're not seeing these massive solar farms built on prime farming land. It's just not necessarily something that land owners are going to pursue, because is that going to be financially beneficial? Well, I mean, built on prime farming land. It's just not necessarily something that landowners are going to pursue because is that going to be financially beneficial? Well, I mean, if you have really subpar agricultural land that's really hard to irrigate, hard to grow stuff on,

hard to, you know, graze livestock on, maybe it does make financial sense. But a lot of this stuff was not being built on that really good quality land. I mean, I've been covering this issue for about three or four years now. And when I go down to rural Alberta, particularly in southern Alberta, and speak with rural municipalities and landowners, it was something that they brought up. And it's certainly something that rural municipalities of Alberta, which represents all of them as an organisation, had certainly brought up in terms of discussions with the government. Okay. So how will the government now decide which lands are supposed to be kept aside for agriculture? If your land's really, really good, your dirt's really good, and you can grow stuff super easily

and water it, we don't want to have renewable infrastructure on there. Specifically, I think this is more down to solar panels, which again, take up a lot more land. So basically they're saying class one and two, you cannot build on that classification of land unless you can prove as a developer that you can either have crops and or graze livestock on the land. So, you know, you might have a massive field, you put some solar panels in and you've got some sheep or some cows that can also graze alongside that infrastructure, then that could potentially be okay. Not goats. Goats are bad. Goats jump on things. Goats chew everything. No goats. So no goats, okay.

No goats. Keep that out. But you could potentially have wind turbines where you can grow crops underneath, right? But it's another level of red tape for renewable developers that have to prove that these things can happen alongside each other on the best farmland in Alberta. Okay. All right. So that's the first point. The second rule you mentioned, Emma, is around cleanup costs. So when these energy projects like, you know, reach the end of their lives, right? So I guess this would be so that a bunch of industrial infrastructure essentially isn't just kind of left to rot in the future. So has this been a problem in the past? I mean, this hasn't been a problem for renewable development, let me be clear, because that's kind of a new industry in Alberta.

But what has been an issue and is still a massive problem in Alberta is abandoned oil and gas wells. So there are more than 170,000 wells to clean up scattered around the province. And the costs of doing that, they go anywhere from $33 billion by the Alberta Energy Regulator all the way up to about $300 billion. So no one really knows how much this stuff is going to cost to clean up. Now, there is actually no security have to be paid for wells, transmission lines or pipelines in Alberta. Industry does pay fees into this orphaned well association, which cleans up if a company goes bankrupt or whatever down the line. But the problem is big enough that the

government has pointed to it and said, you know what, we do not want this to happen with renewable infrastructure down the road in Alberta. No one wants to be left clean that up. Taxpayers don't want to pay for it. So let's make them pay security or bonds to kind of cover that off. And so how is the government going to ensure that this is this is there? So you said it's security or bonds. So this is paid to the government then by the company? The government has said, okay, they're going to pay this bond or whatever to us at the government, or developers can negotiate with landowners, you know, and prove that they're paying this reclamation stuff. But none of the details, again, about how that system will work have been ironed out. Will it be upfront at the very

beginning of a project? Because that's going to be an awful lot of money. And that's going to be really hard for developers to work into their budgets. Or will it be over the life of a project, because that's going to be an awful lot of money. And that's going to be really hard for developers to work into their budgets. Or will it be over the life of a project, you know, over the first five years? Is it going to be done more like mining projects in Canada? There are a lot of questions about how that exactly is going to work. So we're still waiting to see those details. And just to be clear, though, here, so this is for renewable energy projects, we'll have to pay these cleanup costs in the form of a bond or security or something. But this doesn't actually apply to oil and gas like that. That's not subject to the same regulation. No, absolutely not. They can just keep on keeping on. Even though you pointed out earlier that the problems in the

past really have been with abandoned oil and gas. That's where the issue has been previously. Yeah, exactly. And, you know, that has certainly been one of the critiques when it comes to a lot of these rules, not just the security payment, but, you know, the other ones about where things can be built in Alberta. As a landowner, you do not have the legal right to say no to an oil or gas well being built on your property. You just don't. Why not? That's within the Alberta rules.

However, on the flip side, because of these rules, there is a very good chance that you don't have the right to say yes to a solar farm on your property or a wind farm on your property. So it's really creating this two- tier system where oil and gas can go wherever it wants. You don't get to say no. Renewables are being subject to all these new rules and you potentially do not have a right to say yes. All right, Emma, let me ask you about the third point that you raised then. This is the creating a buffer zone around the quote unquote pristine viewscapes. This is a term that's used. So who gets to decide what is pristine? And I guess what is a pristine viewscape anyways?

You know, that's a really great question. It's the real pretty places, right? Like, you know, go look at those mountains. Are they lovely? Yeah, they're gorgeous. We love them. And you know what? The utilities minister, Nathan Noidoff,

during a press conference that kind of announced all these rules, he went, yeah, look, hey, there's no accepted definition of a pristine viewscape. Sure, there is no universal definition for that. Our government will continue to work on policy with other ministries, particularly environment protected areas and forestry. Forestry and parks, obviously, and tourism may have some contribution to that as well. He did say that that conversation is going to start around the foothills of the Rocky Mountains and the Rocky Mountains themselves.

That does include protected areas as well. So there's a very good chance that that will include like provincial parks, national parks, and other protected lands in the province. Okay. And I believe the buffer zone is supposed to be 35 kilometers around this pristine viewscape or protected area. I'm just curious, why 35? Where's that number from? Some places in the US have a 20 to 35 kilometer buffer zone. So I guess Alberta just went with the highest 35 kilometre zone. But it's interesting because I did talk to the Canadian Parks and Wilderness Society. CPORS produced this map. It basically takes all of the protected areas, according to the government, as we are right now. And there are these massive bubbles of red where you cannot build a wind

turbine and other renewables will be subject to some kind of, you know, viewscape assessment. And in fact, that covers about 76% of southern Alberta. And that's where most development happens. Again, we're going to have to wait to see the details of what a pristine viewscape is and what this buffer zone includes. We'll be back in a minute. Emma, let's just back up a little bit here. What is it that made Alberta such a hotbed for renewable projects to begin with? Yeah, there are two major reasons, and they really work hand in hand. So in Alberta, unlike anywhere else in Canada, and in fact, most places in the world,

we have a deregulated electricity market. So we don't have crown corporations looking after building all of the infrastructure that will supply us with power. Like you look at Sask Power in Saskatchewan, for example, BC Hydro, etc. The other point is, of course, we're real sunny and we're real windy. So we have all of the natural resources that you need if you want to build a solar farm or you want to build a wind farm. This is kind of an interesting point, right? So if there's less regulation there in Alberta, I guess this is good for companies to potentially invest there. This

is something they kind of like. It's really easy to build stuff here in Alberta, right? It's easy to build solar. It's easy to build wind. We have an open market. And that means it's really easy to get corporate power purchase agreements. And basically what that is, is you have a corporation, and I'm going to use the example of Amazon, okay? Everyone knows Amazon. And this is very real because North America's largest solar project, which is in Traverse, outside of Vulcan in Southern Alberta, that massive one that we talked about off the top there, this is actually signed into a power purchase agreement with Amazon, which wants to take power off of that solar farm and feed it into the grid. Now it's paying to do that. And the reason these companies do that is because

they have these net zero goals. They're trying to decrease their footprint, right? But they're not doing it by necessarily changing their operations. I mean, the Travis Solar Project is not going to be powering Amazon operations throughout North America. That's simply not what's happening. What they're doing is using the power that's produced there, that they're paying to offtake. And when it goes into the grid, they're like, hey, look what we did. That reduces our environmental footprint. Go us, go Amazon. And it's really easy for companies to do that. And that's why we have seen such a huge multi-billion dollar market here in Alberta for solar development. So this brings us to now, right, with these new rules. I guess what could the effect on future renewable investments be in the province with these new rules?

Yeah, I mean, and I want to take you back to August 2023 again, when the government announced that pause on all renewable license approvals. It really spooked companies. And, you know, I spoke with one developer who was actually at a baseball game or something in Toronto when he heard about it, and he immediately started calling contacts in Africa and Iceland. And he explained to me later that it's because every dollar you spend in a jurisdiction is a sunk cost. Is it worth, at this point, sinking that money when you don't know what the outcome is going to be? Because there was just so many unknowns.

So this developer, when he was calling contacts in Iceland, he was looking at potentially other opportunities elsewhere then? Absolutely. Outside of North America altogether. And another example is a company here based here in Calgary called Blue Earth Renewables. Now, they've invested more than $600 million in Alberta over the past three years, and they've developed, I guess, 333 megawatts of wind and solar throughout the province. So when the government announced that pause in 2023, the company had been contemplating another 400 megawatts of development. But the CEO, his name's Grant Arnold, he told us that the moratorium, it really sent this signal to the company that it should pause its Alberta plans and focus on other regions. And he also still so much uncertainty surrounding all these rules, what they mean. And if at the end of the day, you're subject to something very subjective about

a quote unquote pristine viewscape. And if you want to build something in that 35 kilometre buffer zone and you have to have someone come out, look at it and go, nah, sorry, it's too pretty. You can't build here. What does that mean for your what does that mean for your projects? And when you look just south of the border into the United these new rules. But you mentioned earlier that municipalities will get more of a say on renewable projects with these new rules. And that's actually something they're happy about. So I guess I wonder, is there an upside, though, to these rules, another side of the coin here? Yeah, for sure. And as things stood in Alberta, if a developer came forward with this plan, they wanted to go to the Alberta Utilities Commission, get the thumbs up for their project. The way that that process was done and the rules that the AUC was kind of following and the guidelines and the regulations, it didn't take into account

municipal planning, what municipalities were envisaging for their counties or their areas. For example, in southern Alberta, near Pincher Creek, there was an airport that wanted to expand, but there's all these wind turbines around it. So they're really limited in the growth that they want to see for their community. And this new approach, the idea behind it is municipalities will have more say when it comes to the AUC assessment project. And because rural municipalities don't necessarily always have a ton of cash floating about, they'll also be able to apply for money that will allow them to take part in discussions and hearings and, you know, prepare responses for the AUC and that kind of thing. So rural municipalities are extremely happy about that development. On the question of cash, though, like having more

projects, though, in their jurisdiction, wouldn't that give them tax revenue? Like, couldn't that be a good thing in that sense? Oh, a thousand percent. And I mean, I do have figures on this, too. Like rural municipalities received more than $28 million from wind and solar projects in 2022. That's a lot of money. And there are more projects that came online in 2023. So that figure is only going to expand. And this is particularly true in the southeast of the province, where a lot of the oil and gas activity that rural municipalities really counted on for so many years, it's dried up because of oil prices, because of all kinds of different things.

And so rural municipalities were left in this boat where they were thinking, oh no, how are we going to provide the services that we need? And so suddenly these renewable developments popped up. And it's also worth noting here as well that Alberta's oil and gas sector, it owes rural municipalities more than $250 million in unpaid property taxes. And that figure grew by $40 million just last year alone. They're very angry about this, and they want more to be done to kind of solve that problem. Yeah. Just to end here, Emma, I mean, we've been talking a lot about the business implications of the new rules for renewable projects, right? But of course, there are climate implications too. And Canada has that goal, right, of net zero emissions by 2050. So how is Alberta planning on doing that if, you know, they may end up limiting renewable energy

with these new rules? That's a really great question. And I do not have an answer to that. And you know what? Alberta has a goal in place to be net zero by 2050. It has kicked up a stink about this idea of a net zero power grid by 2035 that the federal government has floated. And Alberta seems to be looking at natural gas. It wants natural gas. It does not want natural gas to stop. It's kind of banking on carbon capture. And it is true that some of these rules could make it harder for renewables to be built here in Alberta. And that does not make it look like a great place when you want to look at these net zero aspirations.

Emma, it's great to have you. Thank you so much for walking us through this today. Oh, anytime. Happy to chat. That's it for today. I'm Maina Karaman-Wilms. Our intern is Manjot Singh. Our producers are Madeline White, Cheryl Sutherland, and I'll talk to you tomorrow.