Alberta’s likely direction to overhaul renewable energy development is taking shape, including a new agricultural land-rating system to restrict where wind and solar farms can be built, and a rigid security deposit program to cover clean-up costs when projects reach the end of their life.
Renewable project approvals have been on ice in the province since August, when the United Conservative government abruptly ordered the Alberta Utilities Commission to halt application green-lights and to review issues around reclamation, viewscapes and what agricultural land can be used for wind, solar, geothermal and biomass plants. The AUC has until March to return to the government with recommended changes.
Dozens of recommendations are contained in a series of consultant reports about land impact issues, posted Friday to the AUC website. The AUC commissioned the analyses as part of its inquiry into rules that govern the province’s multi-billion dollar industry. They will be used to inform public feedback during the review.
While the reports have brought optimism that the commission will wrap up its inquiry in a timely manner, industry and experts worry that adopting some of the recommendations will lead to an unfair system where renewable energy projects are subject to rules that don’t apply to oil, gas and other industries.
Take reclamation security, said Jorden Dye, director at Business Renewables Centre Canada (BRC-Canada), a Calgary-based organization that matches renewable developers and buyers.
In other jurisdictions with strong renewables sectors, financial security requirements are flexible or limited to projects on crown or public land. Developing such a program in Alberta needs to be carefully and thoughtfully designed, he said, or it risks delaying or nixing projects altogether.
“Reclamation security has a significant ability to impact the viability of projects,” Mr. Dye said in an interview Sunday.
“This is an industry that is competing for capital, for people and for supplies – not just within Canada, but in the United States and Europe. And so making sure that we don’t essentially price ourselves out of the market is probably our biggest concern.”
Mr. Dye was also critical of the fact that the studies failed to assess whether there’s a growing wind and solar liabilities problem, and were instead conducted with a foregone conclusion that the renewables sector needs a reclamation system.
Alberta has long struggled with liabilities created by the oil and gas sector through orphan and inactive wells. Cleaning them up comes with a price tag of at least $60-billion – and quite possibly double that amount, according to some estimates. A recent report by the University of Calgary’s School of Public Policy found the province faces a financial and environmental catastrophe unless it overhauls its liability system.
The government has said that avoiding similar problems with the renewables sector is one of the reasons it paused the industry. But Martin Olszynski, an associate law professor at the University of Calgary, says that’s where the issues of fairness comes into play.
A co-author of the recent report on oil and gas liabilities, he thinks Albertans should endorse a securities system for renewables, “but then they should also absolutely demand the same thing for the oil and gas sector right away.”
“Every recommendation that I read, my mind immediately goes to the oil and gas context where we have done the exact opposite for the last 20 years,” Prof. Olszynski said in an interview.
Corporate renewable energy deals in Alberta have supported nearly $4.7-billion in new capital investment since 2019, the vast majority of which has been in rural parts of the province where they have provided about $28-million in revenues to municipalities.
But the surge in development has also created tensions, as rural councils walk a delicate line between welcoming a lucrative new industry and preserving valuable agricultural land.
Tannas Conservation Services Ltd. recommends addressing that issue by legislating an “agriculture first approach,” which would “mitigate energy development impacts on the agricultural sector.” In its report for the AUC, it proposes a developing a four-tiered land evaluation system with tighter restrictions for energy projects proposed for higher-value land.
A legislated agricultural land quality model is a good idea, but it’s just one piece of the puzzle, according to Paul McLauchlin, president of Rural Municipalities of Alberta. Low quality land is still important for cattle grazing, he said, and can be farmed with the addition of specific minerals and organic matter.
“So there needs to be a more sophisticated evaluation other than, ‘Everything that’s green,’ ” Mr. McLauchlin said in an interview, including a public interest test that values municipal planning goals.
Still, he said the reports have increased his confidence level in the review – as has the quality of dialogue, “which should have occurred five to eight years ago.”
Mr. Dye with BRC-Canada agrees that there is value in a new data set that makes it easier for landowners and municipalities to assess agricultural land, but he says a more holistic approach to potential land use legislation is necessary.
“Renewable energy is one of the smallest pressures on agricultural land, so this is an issue that the government really should dig into and make sure that we’re set up for the future,” he said.
“You can’t just look at one industry in isolation. It gets back to the point of fairness in this whole situation, and not singling out the renewable energy industry.”