Alberta's quitting coal, for better and worse

As nearly 200 countries start to muddle through the next steps following the Paris climate change agreement, at least one outcome is clear much of the world will be getting off coal.

Burning coal comes with so much nastiness that the reasons for a greener shift in power generation, if they're not clear enough already, will soon become evident as carbon pricing turns into an economic reality.

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Straightforward logic, however, doesn't mean the actual experience, as Ontario's recent auditor general's report shows, will go smoothly. That said, whether Canada's move away from coal will be considered a success won't ultimately be judged by what's happened in Ontario, but rather what's coming up in Alberta.

The province is responsible for 65 per cent of the country's coal-fired electricity generation, which makes it the alpha and the omega of coal in Canada.

But not for much longer.

Alberta's new climate change plan calls for the province to shutter its fleet of coal-fired power plants by 2030.

Retooling an electricity grid is a tall order for any province, let alone one with an outsized industrial base that's hooked on the cheap power offered by coal.

At this early stage, the outfit responsible for running Alberta's power grid is confident the province can avoid the same stumbles that have marked the move away from coal in other jurisdictions.

"I wouldn't want to underplay the level of work that's going to have to be undertaken over the next 15 years, but we're not concerned by it, if you want to put it in those terms," said Michael Law, vice-president of market services at the Alberta Electricity Systems Operator.

A story of tradeoffs

Regardless of what happens to Alberta's power grid over the next 15 years, the story, as ever for coal, will be one of tradeoffs.

Wherever coal is burned, the benefits of warmth, power and industry are matched by drawbacks that include pollutants which contribute to acid rain, smog, and, of course, global warming.

If the coal industry is the most obvious loser of Alberta's new climate change direction, then renewables and natural gas are the clear beneficiaries.

The province's environmental plan recommends replacing 50-75 per cent of the retiredcoal-fired powerwith electricity generated from renewable sources.

As it stands, coal accounts for 43 per cent, or around 6,300 megawatts, of Alberta's total generation capacity of about 14,500 MWs.

New Environment Canada regulations were already going to see that number cut to about 2,500 MWs by 2030.

Alberta's more aggressive plans to shift away from coal will also require not only replacing that remaining coal-fired generation, but also covering off 3,000 to 5,000 MWs of additional capacity that's expected to be needed by 2030 as the province's power requirements continue to grow.

In this new world, natural gas will take coal's place as the workhorse of Alberta's power sector. Even with more than half of Alberta's power eventually coming from natural gas, renewables such as wind, hydro and solar will be counted on to provide 30 per cent of the province's generation capacity.

In the short term, that will mean the most for wind, which will need to see its current fleet of nearly 1,000 turbines triple over time.

The planet-friendly logic of zero-emission windmills is tough to dispute against the backdrop of climate change. Still, more windmills also means more acres will be taken up by wind farms, particularly in breezy areas such as Alberta's central-east region and its southwest and southeast corners.

"The development of any large scale infrastructure is always a point of friction with the individuals that it imposes on," said Law. "It's one of the great tradeoffs associated with a renewable grid it's the classic, there's no free lunch."

A lower-emissions grid will also mean higher power prices. A worst-case scenario offered by the climate change plan sees prices rising by as much as 20 per cent by 2030 from business-as-usual projections.

How much prices may ultimately increase remains an unknown that will hinge on everything from natural gas prices to technological advances in solar and battery technology.

Critics of the climate change plan still say Alberta should be worried about losing the competitive advantage offered by cheap power.

"People in Alberta will be more prosperous the less expensive their energy is," said Kenneth Green, a senior director of natural resource studies at the Fraser Institute, a right-leaning think-tank. "The way to bet right now, with the experiences we've seen around the world [getting off coal], is this new regime will make life harder for Albertans."

Less coal = more oil?

Doing the math on the true cost of higher power prices will also require figuring out what giving up coal will mean for the province's oil and gas sector.

Despite accounting for 12 per cent of Canada's population, Alberta is responsible for 37 per cent of national greenhouse gas emissions.

Under the status quo, Alberta's emissions, due largely to the oilsands, would account for 60 per cent of Canada's total emissions growth by 2030.

It's easy to see that something has to give. Considering that the oilsands contributed $5 billion in royalties to the province last year versus the coal industry's $16 million, it's even easier to see why that something is coal.

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A keen awareness of what side its bread is buttered on means Alberta, in an emissions-constrained world, would much rather see emissions come from the oilsands rather than its power sector.

What remains to be seen is how the greening of Alberta's power grid might also play into pipeline politics.

For NDP Premier Rachel Notley's government, sacrificing coal may be the chit that provides enough political and environmental cover to help make a new pipeline, still the oil industry's top priority, a reality.

It's a swap that might just end up being coal's final tradeoff with the province as it makes its way out the door.