Quick Wins, Goldmines, and Moonshots: Reinventing Alberta’s Energy Sector

Source: Dale Beugin, Jamie Bonham, Alicia Planincic | · RIA CANADA · | May 26, 2022

Source: Pixabay

Business-as-usual has plenty of inertia in Alberta. That shouldn’t be surprising, given that historical growth, jobs, and rates of return have long been tied to the province’s natural resources sector. And it’s tempting to depend on that model of prosperity. After some lean years, the price of oil is high, oil and gas firms are profitable, and economic recovery is far surpassing expectations. The war in Ukraine has brought the issues of energy security and affordability into sharp focus and highlighted the geopolitical implications of where our energy comes from. But that doesn’t change the longer-term realities. 

Because here’s the thing: investors know that past performance doesn’t necessarily predict future returns. A savvy investor reads other cues, from increasingly mainstream net-zero government policies to increasingly cheap net-zero technologies. There’s a reason investment capital isn’t flooding into new oil and gas projects, despite the high price of energy. In the medium- to long-term, Alberta’s future prosperity will look different than its past.   

For Alberta to thrive, policymakers, investors, and businesses in the province need to work together to create the conditions to attract the attention of those forward-looking investors. That means creating an economy built for a net-zero future, not a carbon-intensive past. Fortunately, the expertise, capital, and infrastructure already in the province can build this foundation. 

Ambitious Change Requires Ambitious Policy 

If we want the Alberta energy sector to reinvent itself, we will need to be intentional about it. Governments will need to get the conditions right, not in the form of small one-off successes, but at scale. The building blocks of this new future include carbon removal and management, the hydrogen economy, lithium extraction, geothermal power, and non-combustion uses for bitumen. 

In a nutshell, Alberta needs a policy direction that creates a bridge to a lower-carbon economy and builds on the immense human capital and assets of the sector today.