Province has let oilsands firms off the hook for far too long
Alberta has announced incoming restrictions on renewable energy projects including a ban on development in prime agricultural areas, buffers around protected areas and “pristine viewscapes,” plus a requirement for developers to post mandatory security deposits for potential cleanup costs.
This announcement not only threatens the future of renewable energy in Alberta, it also highlights Alberta's hypocritical approach to energy development, as these restrictions don't apply to the more destructive oilsands industry, which already threatens to leave Albertans on the hook for billions in unpaid cleanup costs.
According to information obtained from the Alberta Energy Regulator, from 2010 to 2023, Alberta collected just 71 cents from oilsands operators to put toward cleaning up the vast toxic tailings spread across the landscape and to remediate mine sites. That's less than one dollar collected over 13 years from some of the richest companies on the planet, which posted $38.3 billion in combined profits in 2022 alone. Less than one dollar toward cleanup liabilities that the AER pegged as high as $130 billion in internal estimates leaked to the media in 2018, and
$47 billion in official public reports. If the government wants to shield taxpayers from picking up the energy sector's tab, it should start there.
Like the security deposits now required from renewable energy developers, Alberta's Mine Financial Security Program (MFSP) was created in 2011 to collect funds from oilsands operators to cover reclamation costs. However, in a recent report from the University of Calgary, experts determined the program is “functionally equivalent to having no system at all.”
That's because companies only have to pay a small deposit initially, as long as their estimated assets (including oil reserves) are at least worth three times their estimated liabilities. They are only required to put aside more when the ratio falls under that bar, meaning when companies are not doing well financially. Instead of collecting cleanup funds when operators are profitable, Alberta waits for things to get bad.
If the theory seems questionable, the practice is outright egregious. In 2020-21, when oil prices dropped dramatically due to the COVID-19 pandemic, that decline should have triggered companies to post security deposits based on the MFSP's asset-to-liability formula. However, the government intervened to change the formula, without any public consultation, to avoid making operators give security deposits as required.
Alberta's program allows companies to enjoy their profits when times are good, by making sure they won't have to pay a cent towards cleaning up their mess. If Alberta doesn't compel oilsands operators to pay sufficient security deposits up front for the entire cost of their reclamation liabilities, taxpayers could be left with the bill. According to the government's own internal cleanup estimates, that could amount to $27,000 for every Albertan.
A majority of these costs are for the reclamation of toxic tailings “ponds” — huge open pits that store industrial wastewater produced during oilsands extraction. Tailings contain harmful levels of arsenic, benzene, mercury, and naphthenic acids. As of 2023, tailings ponds hold more than 1.4 trillion litres and cover more than 300 square kilometres.
There is currently no established or approved method in place for their reclamation. Even if there was, Alberta lacks the funds to cover costs.
Leaving tailings on the landscape would be detrimental to the entire ecosystem of the Peace-Athabasca Delta — one of the world's largest inland freshwater deltas. Indigenous communities in the region already experience health issues, loss of cultural practices and changes to traditional land uses due to industrial activities. This delta supports nearly 300 species, including millions of migratory birds and free-roaming wood bison.
During the news conference announcing renewable restrictions, Premier Danielle Smith acknowledged Alberta's past errors that have led to the issue of unfunded oil and gas cleanup. Yet while the government seems keen on addressing the environmental impacts of an emerging industry, what about those who have enjoyed over 50 years of profit at Alberta's expense and have yet to pay for cleanup?
Action is needed now. If Alberta continues to let oil companies off the hook, and those same companies eventually pack up and move on, what will be left for Albertans? A landscape covered in toxic wastewater and a massive bill.