Myth: "The Albertan economy can't survive without Oil and Gas"
Myth: “The Albertan economy can’t survive without Oil and Gas”
No one can deny that the fossil fuel industry in Alberta is a major part of the provincial economy. For example, royalties from the oil sands accounted for over 1.2 billion dollars in revenue for the Albertan government in 2015-2016. So while this narrative is true, it is also holding back Alberta’s transition away from fossil fuels because it presents the oil and gas industry as irreplaceable. While the oil and gas industry will remain an important part of the province’s economy for years to come, renewable energy has the potential to also become a major part of Alberta’s economy. As well, diversifying Alberta’s economy will serve the province well in the future for numerous reasons.
The renewable energy industry represents a significant economic opportunity for Alberta, especially with solar and wind power. According to Calgary Economic Development, a not-for-profit organization established by the City of Calgary, “every 150 MW of installed solar energy capacity [in Alberta] represents $310 million in investment, 1,875 direct full-time equivalent construction jobs and 45 permanent direct jobs in operations. It also will provide approximately $54 million in lease payments to site-hosts and $30 million in property tax payments to municipalities over a 20-year period.” (For some context, 150 MW can power around 24,600 homes). Calgary Economic Development also reports that “every 150 MW of installed wind energy capacity [in Alberta] represents $316 million in investment, 140 direct full-time equivalent construction jobs and 10 permanent direct jobs in operations. It also will provide approximately $17 million in lease payments to rural landowners and $31 million in property tax payments to rural municipalities over a 20-year period.” While fossil fuels will continue to have a larger economic impact on the province for the coming years, this will most likely change as Alberta undergoes the energy transition and the renewable energy industry in the province grows. As renewable energy becomes more widespread, the technology behind it matures further and the price continues to drop, the economic potential of renewable energy will only continue to increase.
As well, diversifying Alberta’s economy away from relying so heavily on fossil fuels will serve the province well in the coming years, for two reasons. One, diversifying Alberta’s economy will help protect the province from economic crashes due to low oil prices. The price of oil and other fossil fuels experience volatility as they are globally traded commodities and sudden drops in price do happen, as was seen most recently in 2014. Diversifying Alberta’s economy will help to weather these sudden price-drops more effectively. Two, as the world continues to undergo a transition to renewable energy, Alberta’s fossil fuel resources will become less and less valuable. Alberta should invest in renewable energy now, especially since Albertan bitumen is becoming less and less valuable already due to the increasing production of cheaper crude in the U.S. and O.P.E.C nations.
Ultimately, while no one can deny that the oil and gas industry is an important part of the provincial economy, it is wrong to argue that Alberta shouldn’t transition away from them because they are just too valuable. Renewable energy has the potential to also become a driving force behind the provincial economy and diversifying Alberta’s economy will serve the province well in the coming years. Alberta will still need to transition away from fossil fuels in the future if it hopes to address climate change, regardless of the importance of oil and gas to the province’s economy.
[Cover image taken from Pexels, a free photo stock website]