Alberta to Bury Carbon, and its History

Commentary, Environment, Frontier Centre

Karl Marx famously said that history repeats itself, the first time as tragedy, the second as farce. It’s rare that one can apply the words of Marx to the Progressive Conservative government in Alberta, but the province’s Tuesday announcement that it will spend $2 billion to capture and force carbon emissions underground — the carbon capture and storage (CCS) project– provides just such an opportunity.

Forget for a moment that the Alberta government’s assumptions — humans are responsible for global warming — might be on the verge of being downgraded, revised, or even discredited. As Larry Solomon has chronicled over two years and in his new book, The Deniers, the world’s top scientists have a plethora of informed opinion on the subject: they range from the possibility that humans caused a rise in temperatures but that present government policies are ill-conceived, to agnosticism on the cause of global warming, or that solar activity may be responsible, or the possibility that the earth may have already entered a significant cooling phase similar to the last Little Ice Age.

Even if Alberta’s Tories don’t wish to engage in the battle of scientific nuance, the farce in spending $2 billion to capture and store carbon emissions underground is four-fold.

First, it was only last autumn that the new premier, Ed Stelmach, decided Albertans had not received their fair share from energy companies and their shareholders (the proper way to describe the governments attack on existing royalty agreements). The Stelmach government arbitrarily hiked royalties on oil and natural gas by $1.4 billion.

Now the same premier, party, and government will use tax dollars to pay the $2 billion cost of capturing and storing carbon emissions. Regardless of the merits of such a plan, if the Tories were serious about cutting back on Alberta’s carbon emissions, they wouldn’t provide this weird incentive. Apparently companies need not worry overmuch about carbon emissions as taxpayers will foot the bill to bury whatever carbon emissions the industry can produce.

A second folly in Alberta’s plan is that it has signalled it is in a panic, such as when, in its news release, it notes that it has issued a “request for expressions of interest to begin identifying those CCS proposals with the greatest potential of being built quickly.”

Think about this announcement from the perspective of an enterprising company which now knows the Tories are in a hurry to look good on this file.

Perhaps companies capable of burying carbon will propose cost-effective projects to the province. Or perhaps they will identify a desperate government and tailor their own carbon capture and storage proposals to extract maximum public cash from politicians who are in a hurry to make an impression.

In addition to that recklessness, Alberta’s unemployment rate is scraping around its all-time low. And now the provincial government wants to spend $2 billion on a major capital project (and another $2 billion on extra mass transit over the next several years, also announced on Tuesday).

It is not clear where the Alberta government intends to find the workers who might construct $4 billion in new public sector projects, but it’s not difficult to see that the province’s plan will put upward price pressure on all other infrastructure projects, public and private.

All of those reasons call into question the wisdom of Alberta’s plan to capture and store carbon emissions. But the true folly and why Alberta’s government is about to repeat history as farce a la Marx is that the same government once before spent over $2 billion in a misguided effort to deal with a then pressing issue: unemployment.

Back in the early 1980s, Alberta’s Tories lent money and guaranteed loans to a variety of private sector companies, this in a Sisyphean effort to roll back unemployment and to diversify Alberta’s economy. But the effort, doomed as corporate welfare always is, only produced a huge bill for Alberta’s taxpayers as companies anyway cratered and couldn’t repay their government-backed loans.

The invoices for the public policy experiment appeared in the late 1980s and early 1990s. The fiscal wrecks included an $81 million loss because of a Syncrude loan; a $199 million hit due to backstopping for a forestry company; a $410 million bath thanks to a government-backed waste treatment plant in northern Alberta; $209 million gone because of Peter Pocklington’s money-losing Gainers meat-packing plant in Edmonton; and the whopping $646 million loss incurred on behalf of a 1980s-era high-tech company, Novatel.

Those experiments and other Alberta government loans and guarantees eventually amounted to a total $2.3 billion loss to the provincial treasury by the early 1990s.

The issues faced by a government change from one decade to the next but it appears the policy response is often the same. In the case of Alberta, the politicians are about to repeat history and to the sum of at least $2 billion.