Home August 2017 Dealing with Coal

Dealing with Coal

---the environment, economy and people aspects

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Volumes of legendary wisdom are popular reminders that the only sure thing about life is change.

There is also consensus that, despite circumstances, situations and specifics, change isn’t always easy.

The Alberta government’s recent decision to fast-track the phasing out of coal is a big change on various levels. Although just announced last fall, there are already many questions about the revised provincial policy and its impact on key factors such as the environment, health care, the industry and the economy and how it will affect Alberta residents and taxpayers.

While respected groups like the Fraser Institute and the Coal Association of Canada vigilantly analyze the relevant government and industry details and numbers, their focus also highlights other aspects of the coal phase out.

More subtle but crucially important human aspects, like the effect of carbon taxes on the cost of living and consumer confidence, particularly in a slowly rebounding area such as Calgary which is still dealing with the damage of the oil price downturn and the dramatic people-impact on once-vibrant communities like Grande Cache.

The province is committed to replace coal-fired electricity with natural gas-fired power and a mix of renewables, including solar, wind and hydro. Provinces such as Ontario have already phased out coal, but Saskatchewan, New Brunswick and Nova Scotia plan to continue burning it for decades.

Alberta’s climate change plan already called for all but six of the province’s 18 coal-fired electricity power plants to shut down by 2030. The six newer facilities were allowed to operate until as late as 2061.

The phase-out plans have now been accelerated.

For the massive and vital business that is Alberta power generation, the phase out is a huge spike in the cost of doing business. It’s the key reason why, starting this year, the province is compensating TransAlta Corp., ATCO Ltd. and Capital Power Corp. a total of $97 million annually over 14 years (paid from the carbon levy on heavy emitters and the new, broad-based carbon tax on gasoline and heating bills) as they transition faster to cleaner forms of energy. The government is still negotiating with Enmax, Calgary’s city-owned utility.

The total cost of the compensation is expected to be over $1.36 billion.

“The coal phase out in Alberta was not expected to happen as quickly as the government has mandated,” explains Ken Green, senior director of natural resource studies at the Fraser Institute, the highly-respected Canadian public policy think tank. “I believe that the coal-fired generators here had at least another decade of economic viability.

“The Alberta coal phase out is purely a choice by the government to help Alberta meet its greenhouse gas emission reduction targets.”

Robin Campbell, president of the Coal Association of Canada and former government whip and minister of environment and parks, is also concerned about the accelerated timing of Alberta’s phase out. “There were indications that government was moving towards a more conscientious approach to coal energy. The federal government brought in regulations that mandated the phase out of some older plants, but it also allowed for exemptions. There was an openness to a dialogue.

“Five years ago, I don’t think anyone could have predicted Alberta would be where it is today,” he warns.

Although fiercely proud of all things western, many Alberta energy industry and other business leaders often squint about the Ontario example of phasing out coal from electricity generation. In 2005, Ontario phased out coal-fired power plants, to impact greenhouses gases and the environment and an annual saving of $3 billion in health care.

The change was complex, complicated and expensive. Just 12 years later, various studies show modest effects on Ontario air quality and only marginal improvements in health-care stats while the Ontario government manages public outrage about the skyrocketed costs of electricity.

“The economic impact of a phase out depends on what replaces coal,” explains Ross McKitrick, professor of economics at the University of Guelph, senior fellow with the Fraser Institute and the co-author of the Fraser Institute’s key coal phase-out report.

“In Ontario, they could have just added gas capacity since there is surplus baseload through hydro and nukes, and the costs would have been manageable. But they went the renewables route instead, and gave revenue guarantees which resulted in soaring power prices and the current crisis.

“Any time a cheap and reliable source is replaced with a costly and unreliable one, it has to be expected that the costs will go up,” he cautions. “These changes have a history of turning out worse than forecast.”

Campbell warns about the social impact. “Ultimately, we lose jobs and we lose talent when we wholesale cut out an industry like the current government is doing with coal. Mining is the third-largest employment sector in the province. That talent will go away and move to other provinces.”


The Grande Cache Spirit

There’s usually a bit of a wait for a table, especially on Fridays and Saturdays, at Grande Cache Pizza, the popular local hot spot. The regulars don’t seem to mind. It’s been a friendly people-place for years, and the food is great!

Lately, although it may be subtle, the wait is not as bad as it used to be.

Against all odds, Yvonne Rempel, Catie Layes and Shawn Slaney are long-term residents and gung-ho Grande Cache boosters. They begrudgingly admit that, especially with the government’s accelerated phase out, it’s getting tougher and tougher to keep the spirit.

Rempel, who is now a respected town councillor, has lived in Grande Cache since the 1997 boom years when rents were high, vacancy scarce and there were lots of jobs. “Grande Cache’s legacy is being a coal-mining town,” she smiles. “At its peak, it employed more than 700 people. Grande Cache Coal is now in receivership and many local ‘coal families’ are just hanging on, hoping it will be sold and reopen this summer.

“The town is working hard to diversify our economy but the impact on local property values is significant. Many families are commuting for work or had to forfeit their houses when they moved away for jobs. To date, Grande Cache has seen a 17.3 per cent decline in population, with 54 homes in foreclosure and about 40 homes for sale,” Rempel says.

Shawn Slaney moved to Grande Cache 39 years ago. Now, with two grown kids and six grandchildren, she’s still positive and upbeat but also realistic and resilient. “You’ll never meet nicer people than in Grande Cache,” she beams. “My husband worked in the mine for 23 years. Every shutdown affected us.

“I always worked outside of the mine, so we were able to hang on. But the government phasing out coal makes us wonder about the mine ever reopening. It sure has been a morale roller-coaster.”

Catie Layes is a married mother of three who grew up in the golden years of Grande Cache. “My dad worked in the mine, got laid off and there were lots of ups and downs,” she points out. “My husband works in oil and gas so the coal situation didn’t affect our family, directly.

“But I can’t deny that, for a while, it was depressing, nerve-racking and hopeless in our community. But we’re optimistic that, despite the phase out, the mine will eventually be sold and improve the mood and morale of the town.”

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