It has been a while since I’ve written about this topic, so I was delighted to see that the Munk Centre for International Studies has released a new report on the science of the Carbon Capture Scheme. The 63-page report was written by Edmonton Journal columnist Graham Thomson while he was on a Canadian Journalism Foundation fellowship at the University of Toronto in 2008-2009.
On August 26, 2008, Finance Minister Iris Evans announced that the Government of Alberta was headed to a $8.5 Billion surplus. “It’s clear that our economic outlook continues to be bright,” Evans was then quoted.
On August 26, 2009, it is expected that the Government of Alberta will announce a $6.9 to $8 billion deficit. That is a $16 billion dollar difference in one year.
Once considered to be the land of endless money and honey, Toronto-style bragging rights included, Albertans have now found their government back in a place that our political leaders swore they would never take us. But as development of our bitumen-glazed energy beach has slowed to a more manageable pace and natural gas prices have dropped, is it fair to criticize a one or five year deficit in a province that has in many ways become a rentier state?
Personally, it is not so much the existence of a deficit that I have a problem with, as much as it is the sloppy political decisions that led us here. This won’t be a surprise to regular readers, but I sincerely believe that mediocre leadership from each end of the political spectrum is holding Alberta back. There are a lot of smart people in Alberta, so it’s not as if there was a lack of warning to the Alberta Government to save while the boom was hot.
I don’t usually like to be the person who says ‘I told you so,’ but in this case I’m going to take a bit of guilty pleasure out of it. For years, many of my PC-supporting friends would tell me again and again that because of the Fiscal Responsibility Act, Alberta was forever protected from future deficits. “Dave, you silly lefty,” they would tell me, “deficits are illegal in Alberta. Period.” I would of course respond with “it’s nothing a quick legislative amendment can’t change,” and we’d quickly go back to drinking our beer. Minister Evans introduced amendments to the Fiscal Responsibility Act in April 2009.
Aside from a significant downturn in resource revenue, our provincial leaders haven’t exactly been diligent in the area of smart planning. The lost revenue from the cancellation of approximately $1 billion dollars in Health Care Premiums and the 5-month long Alcohol Tax, as well as the continued support of the Carbon Capture Scheme (CCS), are the kind of decisions that have and will continue to contribute to the loss of billions of dollars of revenue.
As I wrote in my review of the 2009 Alberta Budget, before politicians and pundits begin talking about slashing spending and cutting services, let’s please keep some perspective on economic growth:
Alberta’s economy has depended on revenue from cyclically priced resource commodities for decades and has seen much worse economic times. After years of unsustainable growth, no one should be surprised that Alberta’s economy has slowed down and now is facing a 1.8% contraction. With +$50 barrels of oil and 2% projected economic growth next year, Alberta is in a much better position than it was during previous economic recession. Let’s please try to keep some historical perspective in mind when we’re talking about these tough economic times.
Graham Thomson has an excellent column about Alberta’s record high deficit in today’s Edmonton Journal that should be recommended reading for those wanting more insight into Alberta’s fiscal situation.
Last Friday, Jim Carter, formerly of Syncrude and more recently of the Alberta Carbon Capture and Storage Development Council, spoke to the media following the release of a report which indicated the cost of the unproven technology may be higher then had been previously believed.
Carbon capture and storage will “at least double” electricity prices in Alberta and require taxpayers to contribute up to $3 billion more a year to support industry’s efforts to use the technology, says the chairman of a provincial advisory council.
Premier Ed Stelmach has used the funding of the unproven Carbon Capture and Storage technology as an attempt to convince international leaders and investors that Alberta can ‘green’ the oil sands, but a November 2008 leaked government memo written by University of Calgary researcher Dr. David Keith suggested that carbon capture would do little to reduce carbon emissions eminating from Alberta’s Energy Beach.
“[l]ittle of the oil sands’ carbon dioxide can be captured because most emissions aren’t concentrated enough.”
But what of the two recent provincial studies suggesting that the emissions from Alberta’s oil sands aren’t as dirty as we thought? Read Graham Thomson‘s column from this past Saturday to debunk that spin.
Researchers like Dr. Keith have suggested that the technology would best be used to capture carbon from coal burning facilities, which does very little to reduce the fast growing oil sands emissions and nothing to reduce the impact of tailings ponds and open pit mining. With our politicians ready to invest billions of taxpayers dollars in carbon capture, it remains unclear what impact it will have if this technology can be implemented:
Air capture appears to be technically feasible. But the economics are still unclear, and the politics murkiest of all. Will developing countries build enormous air-capture plants, powered by coal, to offset the emissions associated with industrialisation? Will the technology discourage efforts to improve energy efficiency, or might it be a valuable tool in the fight against climate change? At the moment, air capture is merely experimental.
This public relations facade is a pricey piece of unicorn science. With the sheer billions of taxpayers dollars that may be spent on carbon capture, I can’t help but imagine the world leader Alberta could become if even a fraction of those billions were dedicated towards smart innovation and R&D strategies in renewable energy and sustainable transportation.
– story time: a tale of two ($2 billion dollar) funds [ccs and public transit in alberta].
– alberta budget 2009: tough economic times.
– the carbon capture pipe dream. alberta should abandon the public relations facades and plan for the future.
– albertans could leave carbon capture in their dust.
Let us all take a magical journey down to a sunny day less than a year ago. July 28 to be exact.
The bright yellow sun filled Alberta’s big blue sky and everything was right. Construction cranes filled the skylines of our cities as our captains of free enterprise filled their Hummers and Beamers with premium gasoline before driving their merry way to Calgary’s International or Edmonton’s City Centre airport to fly their private jets to a Las Vegas vacation or to their Okanagan hideaway. While they may have lost countless nights of sleep to nightmares of Pierre Trudeau’s poltergeist, they were warmed with by the thoughts of Stephen Harper warmly embracing soon-to-be United States President John McCain. Liberals and Socialists complained, but oil was aplenty and times were good.
Even better were the expected resource revenue surpluses in Alberta, which predicted to be larger than expected. That glorious summer, Finance Minister Iris Evans predicted a surplus of $8.5 billion, based on a estimate of $119.25 per barrel of Oil. Trumpeting the wonderful news, a Government press release announced the creation of two new funds that would come from the significantly larger than expected surplus.
Our glorious leader, Premier Ed Stelmach, had decided in his growing benevolence that he would bestow upon Albertans two generous monetary funds. The large sums of money that would fill these funds would help fulfill the dreams of millions of citizens, and make Wild Rose Country a better place to live. Times were good and people were proud.
For those who held the energy industry dear, $2 billion was dedicated to the creation and development of Carbon Capture Storage technology. If developed, CCS technology would allow companies to capture C02 and pump it deep into the cavernous underground of our Earth before it could reach the atmosphere.
For Albertans who held our urban centers dear, a second $2 billion fund was created to support innovative public transportation to connect Albertans both in- and outside of our growing cities. The Ministry of Municipal Affairs boasted that this Green Trip Fund would ‘promote the use of local, regional and inter-city public transit and will support new public transit alternatives throughout the province, significantly reducing the number of vehicles on Alberta roads and reduce greenhouse gas emission.’ A noble cause indeed. Alberta was getting smart with its approach to urban growth, and was backing their approach with serious money.
Times were good.
But, less than one year later, the fate of these two sister funds could not be more different.
Times were bad.
Alberta’s bright blue skies remained, but as the winter thaw began, there were less construction cranes on the horizon, a son of Pierre Trudeau had returned to haunt us, a bleak future predicted an extra ten to twenty minute drive for our captains of industry to reach their private jets, Barack Obama was President of the United States, and Megan McCain had signed a major book deal. And despite the tough economic times, Liberals and Socialists continued to complain.
The short trip down green public transit lane ended as unceremoniously and abruptly as a flock of duck landing in a tailing pond, when a much less jubilant Finance Minister Evans unveiled a $4.5 billion dollar deficit. Evans declared that “Just as you do in a family, you see that your revenues aren’t going to be there, then you reduce your spending, and you try to look at other ways to make the dollar stretch. That will definitely happen here in Alberta.” Accordingly, the $2 billion Green Trip Fund was cut down to a mere $10 million in 2009 and $520 million over the following three years, creating an uncertain future for public transit development in Alberta’s major cities. Alberta’s growing cities were left far behind their counterparts across the land.
Yet, the billions for Carbon Capture Storage remained largely intact as $100 million were allocated for 2009 and the remaining $1.9 billion over the following years. Even as major companies such as Suncor, Syncrude, and ConocoPhillips withdrew their plans for to bid for Carbon Capture funding and critics warned of boondogglery ahead, Premier Stelmach pushed ahead with his Carbon Capture dream, convinced that the undeveloped and unproven technology was the key to greening the sandy shores of Alberta’s vast Energy Beach.
So strong was his belief in the unproven Carbon Capture dream, that Premier Stelmach was willing to go much further than simply abandoning his promise to fund a proven public transit strategy that would actually remove vehicles (and carbon) from the roads of Alberta’s cities. He was willing to break his promise to never again to put Alberta into a deficit position.
As Premier Stelmach quietly removed the anti-deficit emblem that had adorned the lapel of his suit jacket for fifteen years, it became apparent that the anti-deficit legacy was just as dead as the legacy of the $2 billion Green Trip Fund.
As our magical journey comes to an end, it appears that the mere daydream of a warm breeze in an uncertain and unproven carbon captured future may have been all it took for the these two $2 billion funds to meet two very different ends.
These tough economic times have presented the Government of Alberta with a tougher fiscal reality from which to draw the 2009 provincial budget than what has become usual. Our new $25-million provincial slogan may be “Freedom to Create. Spirit to Achieve,” but I felt there was little evidence of the new slogan in this status-quo budget. Some funding cuts, some funding increases, no substantial tax-cuts or increases (with the exception of increases in property-tax and alcohol tax…).
Tailor made to avoid attracting sensational headlines, Alberta’s first deficit budget in 15-years included a deficit in creativity and achievement (if you exclude amending the Fiscal Responsibility Act to allow for deficits). While I don’t believe this was an awful budget, it is becoming increasingly apparent that the current government does not have a serious long-term vision to guide Alberta through these tough economic times.
Here are some of my thoughts:
Diversification. In these tough economic times, government resource revenues have dropped from $12 billion in 2008 to $6 billion in this budget. As a province that has decades worth of dependence on collecting resource revenues, it shouldn’t be a shock to anyone that we need to be smarter about how we plan and finance our government spending. Surprisingly, I actually believe that Premier Ed Stelmach and Finance Minister Iris Evans somewhat understand this (which is probably one of the reasons we aren’t seeing across the board massive spending cuts in this budget). The Alberta Ingenuity Fund was a good start, but I would like to see the government focus on and put serious funds behind the development of new Research & Development and Innovation strategies in areas like renewable energy (if you’re looking for ideas, check out the Pickens Plan).
Educate. Educate. Educate. Funding levels remain constant in post-secondary education, including the continuation of the promised 6% annual increase, which will continue to allow annual tuition increase to be indexed to CPI. One of the keys to finding our way out of tough economic times is education. As our unemployment rates rises due to slowing economic growth, one of the smartest moves our political leaders could make is to invest more in education. Since the beginning of the year, there are many un-skilled workers who have been laid off, and by giving them the resources to earn an education, whether it be in a skilled trade or University degree program, the province with be better off with a more skilled and educated workforce.
Carbon Capture & Storage (aka, the Environment). During her speech to the Legislature, Minister Evans compared the Government of Alberta to a family, who, when facing tough economic times, needs to tighten the household budget. If Evans’ metaphor actually applies, I guess it includes a $2 billion fund for trips to the casino. This year, the PC government plans to gamble $100 million on Carbon Capture & Storage (CCS) research, and $800 million over the next two years (and a remaining $1 billion over the next 12 years) on the technologically and economically unproven CCS. In recent statements to the media, both Stelmach and Energy Minister Mel Knight may have admitted that CCS would be more effective in capturing carbon from coal-burning power plants than capturing carbon from the oil sands. Other than promised future funds for CCS research, this budget does very little to address many of the larger environmental issues facing us in these tough economic times.
Public Transit. Will these tough economic times lead more Albertans to park their Dodge 4×4 (with a Hemi) and wait at the corner for the bus? The Green Trip Fund will distribute $10 million this year, and $520 million over the next three years into public transit initiatives. Investing in Alberta’s urban centers, but this a far cry from the originally promised $2 billion fund. Paired with a decrease in the Municipal Sustainability Initiative (from $450 million in 2008 to $100 million in 2009), and it becomes increasingly apparent that serious investment in municipal development is needed to get municipal infrastructure in our cities where it needs to be.
Perspective on Economic Growth. Alberta’s economy has depended on revenue from cyclically priced resource commodities for decades and has seen much worse economic times. After years of unsustainable growth, no one should be surprised that Alberta’s economy has slowed down and now is facing a 1.8% contraction. With +$50 barrels of oil and 2% projected economic growth next year, Alberta is in a much better position than it was during previous economic recession. Let’s please try to keep some historical perspective in mind when we’re talking about these tough economic times.
I was lucky enough to get a ticket to watch tomorrow’s provincial budget announcement from the Public Members Gallery in the Alberta Legislature, and as previous years (2008, 2007, 2005), I will be reporting back with my thoughts, critiques, and analysis of the 2009 Alberta Budget soon after the announcement.
There are likely many reasons why the large majority of Albertans failed to cast their ballot on that day, but one that continually arises in conversations is cynicism. It’s hard to argue that any of our political parties gave Albertans a compelling reason to race to the polls in droves a year ago, and I don’t believe that much has changed a year later.
Entering the second year of Ed Stelmach‘s first term as Premier, our province is facing many challenges. No longer rolling in the billion dollar surpluses that we had been told were thanks to the now dead Alberta Advantage, Finance Minister Iris Evans now tells us that this year’s $1.4 billion deficit is ‘market induced‘ (and not the fault of a political party which has been happy to take credit for Alberta’s fiscal prosperity over the past decade).
Should Albertans blame the Stelmach PCs for the economic downturn? Of course not, because it’s not their fault, but nor should Albertans praise them for the (also market induced) boom.
In their March 2009 edition, National Geographic shined a powerful international spotlight on Alberta’s oilsands, dealing an unintentional blow to the yet to be launched replacement for the Alberta Advantage. The $25 million taxpayer-funded public relations campaign is set to brand Albertans with a new identity by combating international criticism of the oilsands. Do Albertans really need government-hired public relations consultants to determine our identity? Albertans are more than just a brand, and our identity will be determined by our actions, not by government-hired public relations consultants.
The death of the Alberta Advantage has led the Progressive Conservatives to once again return to the realm of budget deficits, and as the government cuts important programs like the $2 billion GreenTRIP funding for public transit in our cities, they are continuing to funnel $2 billion into a Carbon Capture and Storage project.
It wasn’t that long ago that the governing PCs would claim and shame the opposition parties for wanting to spend Alberta back into a deficit. Now faced with a billion dollar deficit, the same PCs are willing to push aside 15 years of fiscal dogma to continue spending billions of dollars on an unproven technology, that if developed would put Alberta at the forefront of collecting yesterday’s dirty pollution, while the rest of the world focuses on tomorrow’s new and renewable energy.
Maybe Albertans are right to be cynical?
Just think how much of an international powerhouse Alberta could be if we looked beyond the oil rigs and tar sands? With $2 billion being spent on harebrained short-term solutions like carbon capture and sequestration, Albertans could get a better bang for their buck if we jumped ahead of the curve on other new innovative long-term solutions and technologies…
VIJAY JOSHI, THE ASSOCIATED PRESS
SHAH ALAM, Malaysia – A Dutch-based company announced plans Tuesday to produce affordable electric cars by the end of 2009, promising they will be much more powerful than existing models and have zero emissions.