(Illustration by Gerry Rasmussen)

The Coal Phase-Out

Why it’s right and Jason Kenney is wrong

By Chris Turner

“Jason digs coal.”

That’s Jason as in Kenney, the long-serving Conservative MP for Calgary Midnapore, former federal minister and current leader of Alberta’s Progressive Conservatives. Also, depending on whose prognostications you believe, the unstoppable uniter of Alberta’s right and inevitable next premier of Alberta.

Last fall Jason’s campaign team took to Facebook to explain his passion for coal in this manner—presuming here they meant he dug it in a dated-beatnik-slang way and not that he actually worked in a coal mine and they were describing that work in the style of an early-childhood reader—because Rachel Notley’s NDP government has launched a plan to phase out all of Alberta’s coal-fired power by 2030. Coal currently produces about half of the province’s electricity (51 per cent in 2015), some 6,267 megawatts (MW). And because coal is Alberta’s second-largest source of greenhouse gas emissions (after oilsands production) and the most readily replaced, Notley’s government intends to supplant it with a mix of renewables and natural gas, which emits substantially less greenhouse gas per unit of energy generated—up to 50 per cent less, depending on the efficiency of the natural gas plant.

He’s hep to none of that jazz. The phase-out’s a big drag (on the economy). I mean, he’s against it, daddy-o.

Jason, who digs coal, does not dig this phase-out. He presumably also does not find it groovy, nor a gas. (Which is ironic considering, as noted, Notley’s plan relies on lots of natural gas, gas, gas.) Anyway, the Facebook post contains a video, and in it Jason stands in front of a coal plant near Edmonton on a gloomy winter day. He calls the phase-out a “reckless attack on Alberta’s economy” that unfairly targets “inexpensive, reliable and environmentally efficient modern clean coal technology” and “will do nothing in terms of global greenhouse gas emissions.”

Kenney’s coal-digging soliloquy echoes the sentiments of the opposition Wildrose. Alberta’s right, then, is already united on this front. They do not want coal phased out. They do not want the carbon tax that similarly aims to reduce greenhouse gas emissions. They are hep to none of that jazz. They think it’s all a big drag (on the economy). I mean they’re against it, daddy-o. Which, in a free and democratic society, is certainly their prerogative.

But a question arises: If not a coal phase-out, then what? Does Jason, who digs coal, have other ideas about how to reduce emissions and combat climate change? If so, he hasn’t told anyone. So I decided to ask him. He is a campaigning politician and I ask people questions for a living, so surely it would be a straightforward journalistic thing. Mr. Kenney, you dig coal. You oppose phasing it out. What would you propose to do about climate change instead? Simple enough. Or so I thought.

Before we get into Jason’s elusive plan, though, let’s look at why the Notley government does not dig coal—or at least wants to stop burning it to produce electricity—and how it intends to replace the coal power it phases out.

The short answer is simple. Burning coal is the most climate-damaging way to generate power. By a wide margin. It is also enormously harmful to human health. And there is a wide range of cleaner electricity options, at about the same or even a lower price—hydroelectricity, natural gas, wind, solar. “Our province is without question the biggest coal pollution emitter in Canada,” Notley explained in her state of the province speech last October. “That is going to end.”

Phasing out coal is widely considered the lowest-hanging fruit in the global fight against climate change. Ontario completed its phase-out in less than a decade, eliminating more than 7,000 MW of coal-fired power and becoming Canada’s leader in emissions reductions in the process. The UK and France are eliminating coal entirely in the next 10 years. So is New Zealand. Coal’s share of US electricity production declined from more than 50 per cent in 2005 to less than 40 per cent today. This is a trend even the unhinged and deliriously coal-friendly Donald Trump is unlikely to reverse, because coal’s decline in the US has been driven primarily by the plunging price of natural gas, not by a government phase-out.

Alberta currently has 18 coal-fired power plants, which generate 43 megatonnes of greenhouse gases per year—about 18 per cent of the provincial carbon footprint—and cause an estimated $300-million in healthcare costs and 100 premature deaths each year. Eliminating all that power might sound like a tall order. But consider that the phase-out will occur over more than a decade, and that 12 of the 18 plants were already scheduled for decommissioning by 2030 under new regulations brought in by—dig this—the federal government of Stephen Harper, which enacted them with the full support of a caucus that included a non-dissenting minister named Jason, who digs coal. Alberta is proposing to shut down its remaining six coal plants by 2030 as well, which is between six and 31 years ahead of schedule, depending on the plant. Those six power plants are the cause of all the commotion.

In place of all that coal Jason digs, Notley’s government has come up with a cautious, slow-building, multi-step plan. This is in part aimed at letting the changing marketplace inform future power procurement decisions. But it’s also being done this way so as not to spook the big horses in Alberta’s power-generation barn, the TransAltas and ATCOs and Capital Powers who operate those old coal plants.

The centrepiece of the NDP plan is a mandate to derive 30 per cent of Alberta’s power from renewables. This will bring 5,000 MW of new wind, solar and other renewables onto the grid, procured in tranches to avoid getting locked into any particular long-term path. Bids for the first phase of 400 MW launched early this year, to be built and connected to the grid by 2019. By contemporary industry standards, this is neither a lot of green power nor a rapid transition. It is, for example, about 5 per cent of the amount of wind energy that Texas has installed since 2010. And for at least the first few phases of Alberta’s transition, wind will provide the bulk of the green power. Alberta is the third-biggest wind jurisdiction in Canada, with almost 1,500 MW connected. Many of our large energy companies—TransAlta, Enmax, Enbridge, Suncor—already operate wind farms.

The remainder of the new power needed by 2030 is expected to come largely if not exclusively from natural gas. On the surface this might not seem very green, even though natural gas produces much less CO2 per megawatt. But natural gas makes a lot of sense as a medium-term solution. For instance, it provides the owners of those six coal plants facing early retirement the option of converting them instead to natural gas, recouping some of the plants’ sunk costs.

In any case, the transition remains flexible and open to change with market conditions. Alberta will save at least a little space on the grid for micro-generation, allowing for community-scale renewables projects and household-scale solar power. (In February the government launched a rebate plan intended to get 10,000 roofs solar-panelled by 2020.) And should the “clean coal” that Jason digs—which is to say a coal plant that actually sequesters a substantial portion of its emissions rather than simply producing slightly less—in fact become a commercial reality rather than a costly experiment within a few years, there’s room in the NDP plan for that too.

All of this is to be paid for not through higher energy prices but through carbon tax revenues, which will also compensate companies and communities forced to close their coal plants early. Kenney has spoken of “tens of billions” in costs, but that estimate—presumably based on the grid overseer agency’s estimate of $25-billion—includes new power procurement to meet future demand and to replace the 12 coal plants closing thanks to Stephen Harper’s regulations. The Alberta government’s own estimate of its share of the phase-out is $4-billion.

Meanwhile headlines have howled about imminent power bill hikes. But the province has introduced a price cap to ensure the phase-out won’t send bills through the roof. The cap is set at 6.8 cents per kilowatt-hour—much higher than current prices, which have sunk to historic lows below 4 cents, but almost exactly equal to the average price over the last decade and nowhere near as high as prices have spiked on occasion. In spring of 2013, for example, the price was more than 10 cents per kilowatt-hour for months. Albertans did not collapse under the strain.

After some weeks I’d not heard back from the media representative for Jason (who digs coal), regarding my interview request. So I decided to attend one of Jason’s campaign-trail “town halls,” hoping to ask him what he would do about climate change instead of phasing out coal.

The event was at the Hotel Blackfoot in southeast Calgary on a dark winter weeknight. But say this for Jason, who digs coal: He can pack a house even on a cold Wednesday in January. The crowd overflowed the parking lot, and by the time I got to the registration table, the faithful had filled the main hall. I found a spot against the wall in a spillover room and watched via live feed on a big screen. It turned out to be standard stump-speechifying, not a free-flowing interactive town hall, and I despaired for my chance to ask my question. Also I got the sense it’d be a little gauche of me to intrude, because this climate change thing was a pretty petty detail to fret over when Rachel Notley was SHREDDING THE VERY FABRIC OF THE PROVINCE AND DESECRATING ALL WE HOLD DEAR. (That, to be clear, is more paraphrase than direct quote.)

Jason Kenney believes Notley’s “ideological” government amounts, basically, to a new self-inflicted Dust Bowl.

Jason, who digs coal, actually delivered a calm, engaging, occasionally funny stump speech. He opened with a joke about coming to the event in a pickup truck, not a fuel-efficient Toyota Prius, which went over very well. Then he spent the next 15 minutes relating anecdotes about Alberta’s economic hardship, all of which is the fault of Notley’s “ideological” government and which, in sum, represents basically a new, self-inflicted Dust Bowl. Jason, who digs coal, used “ideological” a lot in his speech—I lost count at around half a dozen—and he didn’t talk much about oil prices or what impact they might have had on Alberta’s economy. He said he wanted to unite Albertans who “want their province back” and hope to “regain Alberta” and “put Alberta first” and MAKE ALBERTA GREAT AGAIN. (Again: ALLCAPS = paraphrase.)

After the Dust Bowl reprise, Jason, who digs coal, explained all the many reasons why the “multibillion dollar carbon tax” was wrong and bad and also really wrong. Then he turned to coal, which he digs—though he did not, on this night, linger on it. Getting rid of coal, he said, would lead to astronomical energy bill increases, perhaps 40 to 50 per cent, because that’s what happened in Ontario. (It would probably also have been gauche of me to intervene to ask whether Notley’s price cap is in fact designed explicitly to avoid even the barest similarity to Ontario’s experience. Also I knew the answer was yes.)

After that, Jason talked for a long time about how to unite the right, and then there were questions, all but one of which came from the room he was in, not mine. I was way too slow on the draw to ask my question on this night. One question was about the carbon tax, though, and Jason, who digs coal, promised that if he becomes premier, he will immediately convene a special session of the legislature to pass “Bill 1: The Carbon Tax Repeal Act.”

This might be redundant even to note, but nothing in the evening’s program indicated what Jason, who digs coal, might do to reduce greenhouse gas emissions after repealing the carbon tax and cancelling the coal phase-out. There were evidently more pressing issues.

Perhaps I’m being too hard on Jason, who digs coal. Maybe he’s got a plan so brilliant and winning it can’t be spoken of yet.

The NDP government’s climate plan has certainly not been flawless in execution. The coal phase-out’s biggest snarl, by far, has been sorting out compensation for the “power purchase agreements” (PPAs) with the province’s big power companies. PPAs are long-term contracts under which companies agreed to buy power generated at set wholesale rates and sell it to consumers at market rates. The contracts were created after Alberta’s electricity market was deregulated in 1996, as a guarantee that consumers could be sure of a steady supply of power regardless of market fluctuations.

When it came time to settle the PPAs in light of the coal phase-out, the Notley government got a troubling look at Alberta’s convoluted machinery governing electricity distribution. A clause in those PPAs was known in the business as an “Enron clause” because the failed Texas energy broker was so fond of them and in fact directly intervened with the Alberta government to have this one inserted. The Enron clause stated that the companies could terminate the PPAs if a change in provincial law rendered their business “unprofitable or more unprofitable” during the contracted term.

The “or more unprofitable” part is a huge, indeed Enron-sized loophole, through which companies could legally demand—using the coal phase-out as justification—that the government pay for all kinds of ill-advised business shenanigans. Which is what happened. The power companies said the province was on the hook for all their losses. The government thought this was a bad deal and pushed back, even threatening to pass legislation to retroactively rewrite the contracts. This caused a brief spasm of panic among municipal leaders—the head of the Calgary Chamber of Commerce used the term “banana republic,” while Calgary Mayor Naheed Nenshi more delicately called it “absolutely nuts.”

In the end Alberta did not take a Central American turn over the PPAs. Instead, the government picked up the part of the unprofitability caused by the coal phase-out—an estimated $600-million—and power companies agreed to cover losses due to unexpectedly low market prices (about $300-million) which had nothing to do with the phase-out.

Meanwhile the NDP’s embryonic energy transition may be trying too hard to please big companies such as TransAlta and ATCO. Ontario eliminated 7,600 MW of coal power in barely a decade. And Alberta’s plan so far has given short shrift to small, entrepreneurial firms looking to add solar panels and farm-scale waste-to-energy plants to the grid. This might make sense today from a cost perspective—big wind farms produce cheaper energy than rooftop solar arrays do—but it’s shortsighted to make a shift this substantial without encouraging grassroots participation. One of the crucial lessons of the chaos that has engulfed Ontario’s shift to green energy is that if you wait too long to offer communities a way to share in the transition, you can lose their support for the entire endeavour. Possibly no jurisdiction on earth has more rural hostility to renewable energy than Ontario, and this is in significant measure because the initial profit for the wind farms popping up all over the Ontario countryside went entirely to companies with no roots in the communities where they were putting up turbines.

Still, the Notley government appears to recognize the broader opportunity buried in the coal phase-out. Opposition critics like to shout about the couple of hundred jobs to be lost in Hanna and Wabamun when the coal plants shut down, but they refuse to even consider the hundreds or even thousands of jobs to be gained as Alberta becomes a real player in the renewable energy business. More than half the world’s new electricity capacity installed in 2015 was renewable energy; employment in Alberta’s coal industry peaked in the 1920s, as it did across North America. Which trend line looks like the wiser one for Alberta to ride?

What’s more, part of the thinking behind the coal phase-out is that it will demonstrate measurable action on climate change at a time when the province’s oilsands industry has become the poster child for climate destruction. The oilsands could even contribute directly to the transition—some in situ facilities already use natural-gas-fired cogeneration to produce steam and electricity. A University of Calgary study suggested this could be put “on steroids” to help the coal phase-out and reduce oil patch emissions. Using more coal now—or post-election in 2019—would be a clear signal to the world that Alberta has opted out of action on climate change, at a moment when the oilsands is desperate for the social licence it needs to continue to operate.

Perhaps I’m being too hard on Jason, who digs coal. Maybe he’s got a better plan in the works, a plan so brilliant and winning it can’t even be spoken of yet. I can’t say for sure, because his campaign office never responded to my four interview requests. The closest I got was a brief Twitter exchange with his account, which may or may not be written by Jason between diggings of coal but in any case is phrased as if he’s speaking for himself.

Last November I posted a link on Twitter to a story about British and French plans to phase out coal. “Another couple data points conspicuously absent from @jkenney’s analysis of the coal industry,” I wrote.

In a reply, @jkenney posted a link to a story about the 60-odd new coal plants in the works in Japan and South Korea.

“So as premier,” I asked, “you would wait until Japan and South Korea phase out coal to take action on climate change?”

Kenney replied in two tweets:

“1/ I wouldn’t kill thousands of jobs, turn entire communities into ghost towns, & hike power prices in order to shut down our most … 2/ modern & environmentally efficient 5 coal plants, while the rest of the world is building 2,300 new coal power plants.”

This is boilerplate stump speech stuff. You can find the same arguments and the same data points in that Facebook video explaining why Jason digs coal. And it’s littered with misdirection and falsehood. Coal operations at Grande Cache, frequently cited by Kenney as a victim of the phase-out, have scaled down twice and then unveiled plans for reopening in recent months as the price of the steelmaking metallurgical coal mined there has fallen and risen. Fears of “hiked” power prices conveniently ignore the price cap. “Environmentally efficient” presumably refers to the fact that newer coal plants burn less coal than older ones and spew less pollution. They’re still by far the dirtiest and most emissions-intensive way to make electricity in Alberta or anywhere else.

And what of the 2,300 coal plants? Near as I can tell, that figure comes from a 2015 report by the legendarily impartial World Coal Association. It was a cumulative total of all coal-fired power plants then in the planning or construction phase—510 under construction, 1,874 being planned, a grand total of 2,384. (If Jason digs coal so much, he could even round his total up to 2,400.) More than 60 per cent of these are planned for China and India. Since that report, however, China has announced significant cuts to its coal ambitions, cancelling or putting on hold plans for nearly 300 coal plants and introducing an absolute cap on its coal capacity. India has similarly said it will stop building new coal plants by 2022. Jason also didn’t mention India has more than twice as much renewable power as coal power in the works today.

So why does Jason dig coal so much? He would seem to be rejecting the argument that phasing out coal is an essential step in reducing Alberta’s greenhouse gas emissions. Which might imply that Jason, who digs coal, doesn’t think emissions reductions are necessary, which might in turn imply that he doesn’t think any action is needed on climate change.

Kenney has always flirted around the acceptable edge of that question. In a CTV interview just before he returned to Alberta to launch his PC leadership campaign, for example, he said, “Virtually everybody accepts that there is such a thing as a man-made contribution to climate change and we have to be prudent in reducing greenhouse gases. I don’t disagree with that.”

So let’s give Jason, who digs coal, the benefit of the doubt. He does not state in public that climate change isn’t real. He just doesn’t give a shit about it. At all. Any Albertan who does might give some thought to what kind of person they want as their next premier.

 

Chris Turner’s latest book, The Patch, the story of Alberta’s oilsands, will be published in September.

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