Launching Alberta's Energy Future, Provincial Energy Strategy
3.1 Clean Energy Production
How will we improve energy production practices in Alberta so varied sources can continue to grow and deliver benefits to Albertans?
Perhaps the option talked about most often is the development of more renewable energy - wind, solar, biomass, geothermal and hydro. Alberta has a rich endowment of renewable energy resources that will play an increasingly important role in our energy future. Already Alberta has almost three times the national average of electricity generation capacity from wind power. Biofuels can be produced from agricultural products such as grains and canola and cellulose from plant fibre and switch grass, and forestry waste products such as wood chips and wood waste. While the growth of renewables will be constrained by many factors, including manufacturing capacity and expertise, these energy sources are undeniably cleaner sources of energy than fossil fuels.
Along with growing demands for electricity and to support efforts to reduce greenhouse gas emissions, there has been a renewed interest in nuclear energy in many jurisdictions around the world. While CO2 is not produced in the consumption of uranium, nuclear-generated energy does carry other issues, including concerns around safety, health and the environment. It is because nuclear offers both potential challenges and opportunities that the Alberta government is currently reviewing this issue to determine whether it is an appropriate fit for our province. While the province currently does not have a position on this topic, it has committed to develop one through a process that will involve engagement with the public.
In terms of greening the overall energy supply, neither nuclear nor renewables offer complete answers.
It is true that air, land and water are all affected in the development of fossil fuels. CO2 and other gases are emitted in their recovery and processing. But fossil fuels do remain plentiful globally and their infrastructure is up and running. By 2030, the world is expected to be consuming more than 50% more energy than it consumes today. Most sources estimate that oil, gas and coal will still constitute the vast bulk of global energy supply by mid-century.
Should Alberta be looking at alternative energy sources? Yes. Should we promote renewables? Again, yes. But the key question for Alberta, in a world that is going to be counting on energy from all sources, is how we can begin to produce and consume fossil fuels in a far cleaner way.
Means already exist to tap the energy within fossil fuels with reduced impact on the environment. They include gasification processes, which reduce the carbon impact of fossil fuels prior to combustion, combined with carbon capture and storage (CCS) to gather CO2 and sequester it safely. These approaches, however, are expensive and yet to be fully validated. Alberta must apply its innovative talents to advancing and employing these means.
We will tackle the challenge of cleaning Alberta’s energy production in the following ways:
- Invest in development and implementation of gasification technology as well as carbon capture and storage to reduce CO2 emissions.
- Apply energy and environmental technology leadership to the other environmental issues confronting fossil fuel development, such as water consumption and tailings pond management.
- Incent cleaner industry behaviour by maintaining the Specified Gas Emitters Regulation (which puts in place a price on carbon for large emitters), or a version of it, and increasing this price over time.
- Not only support renewable energy development, but promote a market for its consumption.
- Give close consideration to the prospect of nuclear power and engage Albertans in a discussion of its potential for Alberta.
- Explore and capitalize on synergies available through innovative integration of energy sources, e.g., geothermal or hydropower in the oil sands.
- Continue to carefully manage our environmental footprint by respecting limits determined by a cumulative effects approach.
- Ensure monitoring, aligned regulations and enforcement aimed at achieving sustained cleaner energy production.
Clean energy production is not going to happen overnight. Some of the proposed approaches are long-term. But we recognize the urgency to act soon. We intend to take deliberate steps toward achieving this outcome.
3.2 Wise Energy Use
While much of Alberta’s energy policy has focused on supply, increasingly we need to integrate the “demand side” in our thinking. The demand side spans a complex range from the choice of energy sources to extract bitumen to household and transportation energy conservation measures. Albertans, as mentioned, are among the highest per-capita energy consumers on the globe. We’d like to set a more appropriate example. Energy resources may need to be consumed, but they should be consumed with emphasis on efficiency, conservation and overall wise use. It is possible for Albertans not only to set the standard in development of its energy sources, but in their consumption.
There are several pragmatic reasons for adopting a strategic approach to the consumption of energy:
- Energy that companies and individuals do not consume is energy that can be upgraded or sold to further benefit Alberta. So “saving” energy not only reduces heating or lighting costs, but offers the potential to create more wealth for Albertans.
- The reality is that most CO2 emissions are created in the consumption, not the development, of energy. Reducing per-capita consumption offers real possibilities to help meet emissions targets, even in Alberta where energy development dominates.
- There is real hope that a combination of wise energy use and appropriate technology development can begin to decouple emissions from energy consumption. In other words, we can begin to create a world where the carbon associated with our living patterns is captured and sequestered, or not even produced in the first place.
- We acknowledge that the energy we use in developing our resources is under increasing international scrutiny and has the potential to impact our province’s ability to market our products to other jurisdictions.
We will accomplish wiser energy use in this province in the following ways:
- Work to convey knowledge and awareness - including the costs and benefits - of energy consumption and emissions.
- Actively support the replacement of natural gas as an oil sands input fuel with a variety of potential substitutes including synthetic gas from the bottom of the bitumen barrel.
- Support adoption of energy conservation measures in buildings and an energy-conscious approach to urban planning.
- Work with Canada to establish vehicle emission/efficiency guidelines.
- Invest in projects that provide cleaner options to consumers, including mass transit.
- Work to ensure vulnerable Albertans and sectors can cope with high energy costs in the future, while not confusing market signals for conservation.
- Support upgrades to the electricity system that will increase its capacity, make it more robust and enable Albertans to make better use of it.
- Support through planning, technology and education the realization of greater efficiency in the production, conversion and consumption of energy.
Wise energy use is within our reach. It is the right thing to do, and the world is watching Alberta. Champions of energy production, Albertans can also set the standard in its consumption.
3.3 Sustained Economic Prosperity
Tackling the environmental and other challenges facing energy is seen by some as a “price we have to pay” to continue to grow. We accept the concept of cost. Introducing cleaner ways to produce energy will require strategic investment, some of which has already begun. However, this is not all about emptying our pocket books. The future also represents a significant economic proposition to Alberta. There will be plenty of opportunities for revenue generation and, more broadly, sustained wealth creation for Albertans. We believe the extra opportunities will more than offset the investments that will be required.
Alberta can take a number of steps to derive greater wealth over the longer term and in a more sustainable way through its energy industry. They includes optimizing the recovery of our energy resources - tapping more of what we are currently leaving in the ground, developing our substantial unconventional gas (coalbed methane, shale gas, tight sands) and reaching our oil sands resource potential. They include broadening the markets for our energy resources. They include the development and effective export of energy “know-how” - profitably sharing our solutions with the rest of the world. They also encompass the concept of “value-added” - taking our commodities farther along the value chain than we currently do.
The Province of Alberta and its oil, gas and petrochemicals industries have excelled in value-added development of Alberta’s energy resources, particularly conventional oil and gas. Alberta has a major refining industry along “refinery row,” the world’s largest ethane-based petrochemical facility at Joffre, and other major petrochemical facilities in the Fort Saskatchewan region.
Most of the bitumen produced in Alberta is upgraded here, and some of that is further refined into higher-value products in our province. However, as the production of bitumen from the oil sands increases, there is further potential for value-added development in Alberta.
Value-added involves producing higher-value products from raw resources, rather than selling it at the first marketable point. This kind of development provides numerous benefits for the province—for example, new upgraders and refineries mean new, long-term jobs and tax revenues on top of the royalties the province already receives for the resources.
Getting the most value from Alberta resources requires striking a balance. Alberta does not have the capacity or the markets to turn all of its bitumen into diesel fuel or plastics. The province always has, and will continue, to try and obtain the best overall value for Albertans through the sale of a combination of products - everything from diluted bitumen to synthetic crude oil, to refined products and petrochemicals.
A strategy to maximize the value of Alberta’s resources will include a portfolio of sales that get the best from all markets including bitumen markets, synthetic oil markets and petroleum product markets. To some extent, it is the same strategy individuals use in developing their own personal investment portfolios. Variety can create and maintain opportunities for higher returns, while helping to decrease risk.
In addition, when other markets make plans and investments to receive heavier oil as part of their long-term supply, the demand for Alberta’s bitumen will grow, and so too will prices. Meeting that demand can, in turn, increase the royalty value the province receives from bitumen.
Alberta can add economic value through resource upgrading, reprocessing, manufacturing and adding knowledge to increase the value of products leaving Alberta. The need to curb emissions in the energy value chain is also a potential impetus to value-adding activity: if we can strategically plan and integrate the processing, upgrading and refining of our energy feedstocks, we will be able to more economically capture and store CO2 than similar developments located in other jurisdictions. This provides a comparative advantage to Alberta.
The bottom line is that Albertans can ultimately realize a much greater and sustained value from their resources. Strategic steps beginning now will ensure that the “net present value” of our energy resources is maximized over the long term.
We will address the challenge of sustaining Alberta’s economic prosperity in the following ways:
- Seek development of a world-class hydrocarbon processing cluster in Alberta in order to capitalize on advantages offered through feed stocks, footprint, synergies, transportation, logistics and market access.
- Invest in energy technology that will facilitate integrated approaches, value added solutions to our challenges, including gasification and carbon capture and storage.
- Aggressively seek optimization of our current resource base including investments to improve basin productivity and the development of unconventional gas resources.
- Seek innovative application of energy production from sources other than fossil fuels in order to complement and enhance the goal of clean fossil fuel development.
- Develop a higher capacity and more robust electricity system for the province that enables us to take better advantage of opportunities technology presents us.
- Strive to broaden our energy industry’s global customer base and balance its overall markets to ensure best value for our products and services.
- Create policy that provides the long-term certainty required to attract sustained private investment and highly qualified people.
- Promote the export of our energy and environmental technology know-how.
- Create a better understanding among stakeholders, including energy customers within and beyond our boundaries, of our efforts to manage the environmental footprint of energy development.