What did we learn from Energy minister Savage’s press conference announcing the so-called reversal of the government’s unbelievably bone-headed decision to cancel the 1976 Coal Policy?
Well, Ms Savage has some good speech writers. The “thank you for your passion” and “we made a mistake” bits were nice touches, but her speech did little to dig the government out of the hole it dug for itself.
When the government cancelled the Coal Policy it imposed a 120-day moratorium on accepting new lease applications for Category 2,3, and 4 lands to give itself time to process pending lease applications. In early 2020 there were 506 leases awaiting approval.*
Ms Savage made a big deal about issuing a directive to the Regulator not to process any new applications, what she didn’t tell us was how many applications had been processed between the end of the moratorium and Feb 8 when she reinstated the Coal Policy.
Bottom line: With the exception of the cancellation of 11 leases which account for on 0.2% of Category 2 lands, there has been no roll back as a result of the government reinstating the Coal Policy, furthermore exploration activity for 6 projects in Category 2 lands will continue.
Mountain top removal
Ms Savage announced there will be no mountain top removal in Alberta.
The operative word here is “will”.
Ms Savage is talking about the future mining activity, not ongoing mining activity. Furthermore, the directive she suggests supports the blanket prohibition on mountain top removal only applies to Category 2 lands, so is mountain top removal for projects like the Grassy Mountain Project on Category 4 lands still okay?
Ms Savage gave us “context” to explain how her government screwed up so badly.
She said the Coal Policy was “outdated” and “obsolete.” It didn’t address climate change. It was cancelled for administrative reasons so the Dept of Energy could issue coal leases the way it issues oil and gas leases. And the government failed to anticipate the “unintended effect of removing the coal categories.”
Whoa. She just went from the Coal Policy was outdated to the government didn’t understand the effect of removing the coal categories.
First, the policy could have been updated by adding language to address climate change.
Second, the removal of the land categories wasn’t an administrative change. Coal companies identified coal lease applications in Category 2 as a substantive regulatory risk. They welcomed the government’s decision to make this risk go away.
Third, the rationale that coal should be managed the same as oil and natural gas is hardly reassuring given the government’s lackadaisical oversight of the oil and gas sector including its decision to cut staff at the Alberta Energy Regulator, suspend reporting requirements due to covid, and its failure to require companies to set aside sufficient funds to reclaim orphan and abandoned wells.
Bottom line: the context of the decision to cancel the Coal Policy is the government thought they could get away with it by slipping it in over the May long weekend during covid.
Importance of coal mining
Ms Savage said coal mining has been an important part of Alberta for decades, the world is looking for steel making coal and Alberta businesses can meet the increasing demand for steel and provide good paying jobs.
Some specifics would be helpful here.
The total number of Albertans employed in the energy sector in 2019 was 138,372. At its peak, the coal sector employed a total of 2,985. Today it employs 1,542. Not exactly a ringing endorsement of the coal industry’s place in the energy sector hierarchy.
Who are the “Alberta businesses” that would meet the rising demand for steel by producing more coal? Teck, Canada’s leading metallurgical coal producer (headquartered in BC by the way, not Alberta) abandoned its Mackenzie Redcap project in 2019. Who’s left? Australian companies like Atrum and Hong Kong penny stock companies like CST Group?
The only “Alberta businesses” that will “benefit” from digging up Alberta’s coal will be sole purpose subsidiaries formed by foreign companies to shield them from liability when coal mining becomes unprofitable and the cost of reclamation is too high.
As far as meeting the increasing demand for metallurgical coal, Canada accounts for 1% of the world’s coal reserves and 1% of the world’s coal production. 35% of this 1% is produced in Alberta. You do the math, the world will not stop spinning if Alberta does not allow foreign companies to dig coal out of the Eastern Slopes.
Bottom line: expanding the coal industry by allowing more coal mining will not significantly improve Alberta’s economy, but it will make foreign companies and their shareholders richer.
Ms Savage said the government wants to hear from Albertans “as we move forward with a modern coal policy”.
Based on what she said in her press conference at a minimum Albertans should expect to provide input on a proposed policy that:
- Beefs up the land category restrictions with additional “strength and vigor”
- Eliminates the exceptions that allowed 4 current projects on Category 2 lands to be approved under the 1976 coal policy
- Includes climate change mitigation measures
- Effectively incorporates environmental and other regulations to protect our mountains, headwaters, foothills, parks and recreation areas (which means these regulations will have to be strengthened as well)
- remedies Alberta’s lack of recourse when a company becomes insolvent and defaults on its reclamation obligations (perhaps a bond similar to the $6 billion loan guarantee Mr Kenney gave to KXL would be in order).
Or we could simplify the consultation by asking a threshold question: Should Alberta expand coal development or wind it down?
Over to you Ms Savage.
*For an excellent overview of the Coal Policy and related issues see Nigel Bankes https://ablawg.ca/2021/02/09/what-are-the-implications-of-reinstating-the-1976-coal-development-policy/