'Billions of dollars': Schulz says federal strings on electricity climate funding is a 'threat'

Alberta's minister of environment and protected areas says Ottawa is threatening her province by suggesting it will withhold federal funding from electricity projects that don't reduce greenhouse gas emissions to meet 2035 net-zero goals. 

"I think that that is not going into negotiations in good faith," said Rebecca Schulz.

"Quite frankly, it comes across as a threat to provinces who've already said, 'Look, this isn't doable for us based on our grids and based on the sheer costs that have been cited, of what this would take to get there by 2035.'"

Schulz made the comments following the release of a paper from Canadian Natural Resource Minister Jonathan Wilkinson which re-announced a host of new investment tax credits and programs for renewable electricity projects and technology upgrades. 

Wilkinson notes that billions of dollars in tax credits and grants will be tied to progress towards a net-zero grid, but says accessing the tax credit "will require that we are moving in a direction of a non-emitting grid."

"Alberta wants to ensure that it is affordable for their citizens and that it is reliable and we agree with that," Wilkinson said in a statement to CTV News. 

"At the end of the day, rather than having an argument over the fence, what we have both said is that it is important for us to sit down and to work through where concerns may exist and how we can actually address those concerns."

The financial concerns, however, from a non-emitting grid comes as an "ultimatum," according to Schulz, who points to high increases in electricity costs.

"The federal government continues to put ideology before common sense when we look at estimates and they're not government's estimates, they are independent estimates that will say this will cost tens of billions to up to $1.7 trillion," Schulz said.

"At a time where affordability is a top-of-mind issue for everyday Albertans, we need to make sure that we know what we're getting into, and the federal government has no data they have shared on how they see us getting to these arbitrary goals."

Neither Alberta nor Saskatchewan say they can meet the 2035 goal, preferring to offset it until 2050, but Wilkinson says provinces will be afforded flexibility in how they achieve the earlier target.

"We will be bringing forward the Clean Electricity Regulation in the near term," added Wilkinson.

"Regulations will provide flexibility for provinces like Alberta and Saskatchewan. We are very open to conversations as we move through the consultations on that regulation as to how we actually address some of the concerns that provinces and territories have."

Kent Fellows, an assistant professor of economics at the University of Calgary's School of Public Policy, says reaching net-zero targets depends much on exemptions granted within regulations.

"We do have some technologies on the grid right now which may get exceptions, such as potentially cogeneration in the oilsands, because the cogeneration exists for the heat demand and then dispatches electricity to the grid, or maybe some acceptance for some legacy generators," Fellows said.

"We've seen these kinds of regulations go into place in the U.S. in the past, so is that a realistic goal? Yes, as long as the exceptions kind of pans out the way that we might expect them to."

Other industry experts, however, say that the costs to reach net-zero sooner than planned will have significant financial impacts. 

Jay Manoharan is a power engineer and managing partner of North America Energy Associates International. He says unlike other provinces in Canada, Alberta is faced with dual forces of increased electrification and supply decarbonisation.

"To achieve net-zero by 2035 will have significant implications to our electric system reliability and transmission costs," he said.

"It may also require an additional $44 to $52 billion in generational capital investments depending on the cost of money, and up to a 36 per cent increase in supply costs."

Manoharan adds that Alberta's current market structure is capable of delivering sufficient supply to meet demand.

"We can do this if legacy unabated natural gas units that exist in the market are replaced by supply with similar operating characteristics supported with a robust demand response program and sufficient energy storage for renewables." 

'RISK TO INVESTMENT:' NOTLEY CRITICIZES UCP MORATORIUM ON RENEWABLE ENERGY 

The Alberta government announced last week that it has placed a moratorium on approving new wind and solar power projects, arguing that the federal government is preventing the development of backup generation for renewable energy like natural gas.

Premier Danielle Smith surprised the province's renewable energy industry by announcing a six-month freeze on new projects greater than one megawatt.

She told Ottawa that it isn't feasible to bring on additional wind or solar if her province is not able to secure the reliability of its power grid to be able to bring on natural gas plants.

Alberta's NDP Opposition leader Rachel Notley disagrees with her counterpart's approach, calling it a risk to the province's economy.

"Every day this moratorium drags on is another risking investment in renewable energy and the resulting creation of good paying jobs," Notley said.

"Danielle Smith, reverse this horrible decision. Our economic future is at stake."

Binnu Jeyakumar, electricity program director at the Pembina Institute, calls the move ‘unprecedented.'

"This puts at risk over 100 projects that could represent about $25 billion in investment and it's kind of ironic because renewable energy is the cheapest source of electricity for Alberta," Jeyakumar said.

"It does actually help reduce prices in Alberta and a recent report by our market surveillance administrators showed that renewable energy has actually depressed the cost of electricity in Alberta."