Welcome to our second issue of the Provincial Spotlight Series where we provide an overview of the latest policy updates, regulatory changes, and industry-specific developments in our members’ operating areas.
The September 25th issue kicked off the series with British Columbia. In this issue, we are covering Alberta and diving into key topics relevant to the energy services, supply, and manufacturing sectors.
Provincial Political Insights
Alberta’s political climate remains dynamic following the provincial election held in May 2023. The United Conservative Party (UCP) under Premier Danielle Smith continues to emphasize Alberta’s autonomy, particularly with respect to resource development and has been vocal about opposing federal environmental policies such as the Clean Electricity Regulations, carbon pricing, and an oil and gas emissions cap. This sets the stage for ongoing discussions on balancing economic growth and environmental protection, particularly in the energy sector.
- United Conservative Party (UCP): Premier Danielle Smith will face a leadership review at the party’s AGM on November 2 – though the Premier’s recent 85% approval rating among UCP voters would suggest she will likely receive a comfortable margin to hold on to the leadership position. The party resolutions brought forward at the AGM may provide some line of sight on its future direction. While not binding, the resolutions brought forward and passed at the AGM indicate the will of the party’s most engaged members, and some of these resolutions may find their way into government policy.
- Alberta New Democratic Party (NDP): The NDP’s newly elected leader, Naheed Nenshi, recently spoke about his vision for the Party as one that supports the concerns of Albertans regarding affordability, jobs, economy, and trade. He highlighted the need to provide support for small businesses and the value of a “predictable, dependable and rational government” to support a stable and prosperous investment environment.
Regulatory & Policy Updates
- Emissions Reduction and Energy Development (ERED) Plan: Alberta has reduced methane emissions by 45% since 2014 and is now focused on further reductions through new technologies. The provincial government has invested $15 million over five years in the Natural Gas Innovation Fund (NGIF) Accelerator’s Emissions Testing Centre (ETC) program. This funding will allow companies to test emissions-reducing technologies in both lab and live settings, helping to advance innovations and bring them to market faster. The program provides testing space at the University of Calgary and Tourmaline and Perpetual Energy’s West Wolf Lake gas plant.
- Orphan Well Reclamation: With the recent settlement in the Sequoia Resources case, an additional 1,800 to 2,000 wells are expected to be handed over to the Orphan Well Association (OWA) for reclamation. Through Alberta Energy’s ongoing consultations with industry to develop a refreshed mature asset strategy, the province seeks to manage its oil and gas liabilities through a more responsible and cost-effective system that can also act as an economic driver.
- Geothermal Regulations: Alberta is moving forward with developing geothermal energy. In Q2 2024, the Alberta government announced the creation of the Alberta Drilling Accelerator, Canada’s first geothermal test site, aimed at advancing drilling innovation, reducing emissions, and creating jobs. The government kickstarted the project by investing $750,000 for a feasibility study led by Eavor Technologies.
- Carbon Capture Utilization and Storage (CCUS): Alberta continues to lead in CCUS technology, with the provincial government making significant investments in projects aimed at reducing emissions in the energy sector. The Alberta Carbon Capture Incentive Program, launched early 2024, is designed to accelerate CCUS development by offering financial support for large-scale facilities.
- Mandatory Entry Level Training (MELT) Program: Alberta is overhauling its MELT program with a new Class 1 driver training initiative called Learning Pathways. The current system has faced issues such as training backlogs, inadequate competency requirements, and a lack of industry-specific experience for new drivers. While it is uncertain if the proposed changes will fully meet industry needs, Enserva is advocating for the energy sector’s concerns.
- Key improvements needed to the proposed changes include training on standard vehicles, greater provincial interchangeability, stronger accountability for driving schools, and a deeper understanding of the unique needs of employers in the energy sector.
- Remote Workforce Lodging (RWL): While no official changes have been announced by the provincial government, Alberta’s Energy and Mineral Minister suggested that he is looking at options to require energy companies to move away from the commuter workforce, supported by RWLs, and enforce more local hiring. Enserva released a statement in response to the Minister’s comments and will be advocating for our RWL members as the government moves forward on the issue.
Environmental, Social, and Governance (ESG) Trends
- Sustainability Reporting Requirements: While yet not mandatory by federal or provincial frameworks (outside of federally regulated financial institutions), ESG reporting is increasingly in demand by investors and stakeholders – and will eventually be required under the Canadian Sustainability Disclosure Standards. The challenge posed by ESG reporting was recently exacerbated by the amendments to Bill C-59, as publicly listed companies will have to release sustainability and climate-related disclosures while being restricted in discussing their sustainability efforts due to the new greenwashing provisions. The new element of “private right of action” creates an added threat to the energy sector from ideology groups as industry participants seek to share their success through their disclosures. These new concerns add to the complexity around ESG reporting, particularly as Alberta and Canadian companies seek to compete internationally.
Economic & Industry Developments
- LNG Expansion: Long-term LNG contracts are seeing significant growth since the start of the year, reflecting Alberta’s strategy to expand export capacity to Asian markets. Despite external challenges like the temporary suspension of new LNG permits in the U.S. (often referred to as the ‘Biden Pause’), Alberta’s commitment to increasing LNG capacity remains critical to its energy sector growth.
- Oilsands Growth: The Alberta Energy Regulator has projected a 17% increase in oilsands production by 2033, a signal of continued growth in the sector. The production growth reflects Alberta’s commitment to enhancing its resource capabilities while addressing economic and regulatory challenges in the industry.
- Bill C-59: The Competition Bureau’s consultations on Bill C-59 – which imposed significant changes to the Competition Act around greenwashing – recently closed after attracting widespread commentary from governments, industry players, and associations. The Government of Alberta was among the provincial governments that voiced concerns, particularly over the implications for market competitiveness in key sectors like energy and agriculture. Major industry groups such as the Canadian Chamber of Commerce, Canadian Manufacturers & Exporters, and several large corporations contributed feedback, emphasizing the potential impacts on business operations, investment, and market regulation.
Challenges & Risks
- Alberta’s energy sector remains vulnerable to global market volatility, as seen with oil price swings driven by geopolitical tensions and changing demand patterns. This inconsistency, coupled with climate-related risks such as wildfires and floods, highlights the need to safeguard both infrastructure and long-term sustainability.
- Alberta faces ongoing tensions with federal climate policies, including disputes over carbon pricing and the Clean Electricity Regulations. The province continues to challenge the impact of these policies on jobs, energy costs, and provincial autonomy, leading to regulatory uncertainty and potential delays in key energy projects.
- Alberta’s energy sector faces growing pressure to decarbonize in line with national and global climate goals. This is driving the province to adopt technologies like CCUS and renewables. However, the pace of decarbonization may challenge traditional energy producers, who face rising costs and operational changes to meet evolving regulations, while providing a resource that is vital to Canada’s economic stability and standard of living.
The Bottom Line
Alberta’s energy sector is navigating significant changes shaped by regulatory updates, political dynamics, and market pressures. Key developments, such as the MELT program overhaul, new emissions reduction initiatives, and heightened regulatory scrutiny, will require the industry to remain proactive and adaptable.
As Alberta focuses on asserting its energy autonomy while balancing federal regulations, the near future presents essential opportunities for companies to stay informed to navigate potential challenges.
