Alberta warned about green projects
Renewable energy investments can turn ugly, city chief economist says
Alberta governments should be careful their money doesn’t go up in smoke before investing in green industries, City of Edmonton chief economist John Rose warned Wednesday.
While there are big opportunities in renewable energy, technology and programs, the province needs to look closely to determine how much potential these businesses have in this region, Rose said.
“Alberta is coming to the game very late, behind Germany and other jurisdictions that have been at this for a very long time,” he told a meeting of the Economics Society of Northern Alberta.
“It’s an area of interest, and potentially opportunity, but it’s fraught with risk.”
He cited Spain and Ontario as two places that saw renewable energy investments turn ugly.
Spain, buoyed by generous subsidies, was a leader in solar and wind production eight years ago, but the sector was hit hard when spending was cut a few years later in response to the world financial meltdown. Ontario’s auditor general reported last year that electricity consumers in that province paid $37 billion more than necessary from 2006 to 2014 due to overpriced green energy along with poor government planning and shoddy service.
Last week’s Alberta budget outlined proposals to spend $6.2 billion over five years under the climate leadership plan, mainly on implementation, large-scale renewable projects, transformative innovation and technology, and bioenergy initiatives.
The money will be raised from the new carbon levy and large industrial carbon emitters.
A report by Greenpeace and two other organizations to be released Friday argues the province could create more than 145,000 Alberta jobs by putting money into renewables, energy efficiency and public transportation.
Rose, who didn’t mention the climate leadership plan, said he hadn’t seen the Greenpeace report.
But he cautioned all levels of government to be prudent in financing green product development and initiatives in the province.
“Alberta has to be very realistic about its relative advantages,” he explained later. “(Don’t) simply say, ‘There are going to be more windmills, so let’s invest in a firm that builds windmills.’”
The province intends to introduce an economywide tax on carbon emissions of $20 a tonne starting next year, raising to $30 a tonne in 2018.
Fellow panellist Trevor Tombe, a University of Calgary economics professor, said the climate leadership plan will increase the average price of a barrel of oil by 75 cents after rebates are factored in, which will cut emissions without shutting down the energy industry.
A levy is the best way to fight climate change, he said.
“That kind of market-based approach to addressing environmental concerns has a lot of merit to it because we don’t need to pick winners.”
Rose said one way to improve Ed- monton’s financial footing when oil is unlikely to reach more than US$80 a barrel oil in the immediate future would be to provide more export assistance.
This could particularly apply to such local strengths as health-care management, waste management and post-secondary education, he said.