Alberta’s Coal Phase-Out

Alberta is in the middle of a rapid phase-out of coal-fired electricity. More than half of Alberta’s electricity came from burning coal in 2015, the most of any Canadian province. Now, coal supplies about a third of Alberta’s power, and by the end of 2023 the province will have little coal power left, six years ahead of the federally mandated coal phase-out of December 31, 2029.

This is significant because coal is a very greenhouse-gas-intensive fossil fuel and the burning of coal to produce electricity is a major contributor to global climate change. The prevalence of coal power in the province has resulted in Alberta cities having among the worst air quality in Canada.

Last month, Parkland Institute and the Corporate Mapping Project published a report that I co-wrote with Emma Jackson that analyzes Alberta’s coal phase-out to date. This blog highlights the community case study on the municipal district of Parkland County included in the report. A municipal case study is one way to examine how large political and economic changes are affecting a local coal-power community. We chose to develop a case study on Parkland County because it is likely the community most affected by the coal phase-out in Alberta.

Parkland County is a municipal district of over 30,000 residents west of Edmonton that includes Stony Plain and Spruce Grove (which are themselves bedroom communities of Edmonton). Parkland County is an interesting case study because it is part rural and part urban, and in 2015 nine of the 18 coal-fired electricity units in Alberta were located in the rural part of the county.

Parkland County and the Coal Community Transition Fund

Acting on a recommendation of its advisory panel, in September 2017 the Alberta New Democratic Party (NDP) government announced a $5-million Coal Community Transition Fund. Twenty Alberta municipalities and First Nations impacted by the coal phase-out were eligible to apply to the CCTF.

The provincial government announced in March 2018 that 12 projects in 17 coal communities had been funded, exhausting the $5 million allocated to the fund. The projects include strategic planning, feasibility studies, and work to expand tourism, transportation, agribusiness, and high-tech industries.

The announcement of the Coal Community Transition Fund was made in Parkland County; however, the county did not end up applying to the fund. The municipalities of Stony Plain and of Spruce Grove, which are located in Parkland County, did apply and receive funds for economic diversification planning from the CCTF.

Parkland County Mayor Rod Shaigec said that the county anticipated the transition away from coal-fired electricity “long before the introduction of the Climate Leadership Plan” in November 2015. The county commissioned 30 studies on various topics—for example, an inventory of the county’s wetlands, and a study on the economic potential of agriculture in the county—prior to the announcement of the CCTF in September 2017. The county’s elected officials decided that the county did not need to apply to the CCTF for funds to do more economic diversification planning.

Parkland County’s budget

In 2017, Parkland County was home to nine coal-fired generating units (Sundance 1-6 and Keephills 1-3), and the co-located Highvale coal mine. TransAlta is the sole owner of these assets, except Keephills 3, which is co-owned with Capital Power. In 2017, TransAlta accounted for about a quarter of Parkland County’s annual tax revenue, or almost 10% of the county’s total annual revenue. TransAlta was also the largest employer in Parkland County in recent years. The service industry and residential property values in Parkland County and other coal communities have also historically been dependent on the coal power industry.

In August 2017, Parkland County Mayor Shaigec asserted that the coal phase-out could result in $2 million per year in lost property tax revenue for the municipal district. By April 2018, TransAlta had retired Sundance 1 and 2, and temporarily mothballed Sundance 3 and 5 in preparation for conversion to gas. TransAlta is converting the seven remaining generating units—Sundance 3–6 and Keephills 1–3—to gas by the end of 2023, and constructing Sundance 7 (a 856 MW gas-fired unit) from 2020 to 2022 (more on this below). The converted Sundance units are expected to operate until 2031 and the converted Keephills units are expected to operate until 2039.

With the change in status of four power-generating units in 2018, Parkland County collected less property tax revenue. The county has also seen less tax revenue from the oil and gas industry since the mid-2014 oil price crash. In December 2018, Parkland County wrote off about $90,000 in unrecoverable taxes from oil and gas companies.

Parkland County’s budget in both 2017 and 2018 was about $158 million. In 2019, the county’s budget is about $150 million, a 5.5% overall reduction from the previous two years. About $4 million of the revenue shortfall was cut from the operating budget, for a 3.75% cut to municipal operations.

Private sector jobs and investment in Parkland County

In March 2019, Mayor Shaigec stated that “upwards of a thousand people stand to lose their jobs” in the coal power industry in Parkland County. “We need immediate support and long-term support to help us transition away from coal,” Shaigec added.

Indeed, several hundred coal plant and mine jobs have already been lost in Parkland County. Highvale Mine, one of the largest employers in the county, employed 650 workers in 2018. By March 2019, employment at the mine was done to little more than 300.

TransAlta, the owner of the mine and power plant, plans to build Sundance 7, a new gas-fired generating unit, from 2020 to 2022. The company estimates the project will generate 400–600 construction jobs and will require 1.8 million construction hours to complete (TransAlta 2014, page 6).

Besides this significant new investment by TransAlta, Parkland County has successfully attracted other private capital investments. In 2018, Pinnacle Renewable Energy opened an energy-pellet plant in Entwistle (west of Wabamun Lake), and Champion Petfood announced a plant in the Acheson industrial area. The Petfood factory created 340 construction jobs and 200 full-time jobs to operate the plant.

In May 2019, Groupe Nordik announced plans to spend $50 million building a Nordic spa in Parkland County—the exact location has not been made public yet. Construction will start in 2021 and last 18 months.

Parkland County is also working to expand opportunities in agriculture and related value-added industries. In 2018, an agricultural program and service review recommended that Parkland County increase agricultural land in the county by 40% and improve irrigation to increase the productivity of the land. The review found that farmland in the county decreased 22.2% from 1996 to 2016 (most of this arable land was lost to coal mining and urban expansion), and the number of farms dropped from 1,196 to 679 in those two decades (-43.3%), but farm income increased by 37%, with technological innovations aiding in the intensification of the local agriculture economy.

Cannabis cultivation and processing is another possibility that the county is considering.

Two new public infrastructure construction projects in Parkland County

The Alberta NDP government’s coal phase-out advisory panel and the federal Liberal’s just transition task force both recommended that the provincial and federal governments prioritize funding local infrastructure projects in coal communities. Infrastructure projects are a way to generate short-term economic activity and construction jobs in the communities. Municipalities also need new public infrastructure to support an economy in the near future that does not include the coal power industry.

In January 2019, the Alberta NDP government announced two public infrastructure construction projects in Parkland County. The first project will see the twinning of Highway 60 west of Edmonton and the construction of a new overpass at a busy intersection in Acheson with a rail crossing (located about 20km west of Edmonton, Acheson is the location of Parkland County’s industrial park). The infrastructure project is estimated to cost between $85 and $105 million, and it is the first project announced out of a $1.6 billion Government of Alberta initiative to upgrade the province’s heavy-load road network. Construction will begin in late 2019 and take up to three years. The project will support 450 direct and indirect jobs.

Parkland County Mayor Rod Shaigec expects the new public infrastructure will help the municipal district attract more private sector investment and jobs, particularly in the Acheson industrial park. After the announcement of the project, Shaigec stated that the mayors of the Tri-Region—Parkland County, Stony Plain, and Spruce Grove—“[have] been advocating for well over a decade to have this key infrastructure built, and it’s going to benefit not just Parkland County but the entire Edmonton Metropolitan Region.”

The second public infrastructure project announced by the provincial government in January 2019 will see the realignment and reconstruction of Highway 628 (a busy 15km section of road west of Edmonton that is currently unpaved). Construction will begin in 2021 and take four to six years to complete. After the announcement of the project, Mayor Shaigec stated that Parkland County had been advocating for the highway to be fixed for 15 years. Once complete, the new road will improve safety, shorten commute times for Tri-Region residents, and “improve access to industrial parks in Parkland County, Spruce Grove and Enoch First Nation.” The infrastructure project is estimated to cost $70–90 million, and it will support 350 direct and indirect jobs in the region.

Developing a new regional plan for the Tri-Region

In January 2019, the mayors of Parkland County, Stony Plain, and Spruce Grove signed a Letter of Intent to develop a regional plan to further integrate their public service delivery to maximize cost efficiencies to save tax dollars over time. The local chambers of commerce of the Tri-Region are in the process of amalgamating and, once combined, will form the third largest chamber in Alberta.

In late June 2019, the federal government announced it would spend $3.2 million in Alberta coal communities to aid in the transition away from coal power. Parkland County was granted most of the funding ($2.2 million) to develop the Tri-Region’s regional plan with Stony Plain and Spruce Grove. The funding is part of the $35 million Canada Coal Transition Initiative (CCTI) announced by the federal Liberal government in 2018.

In September 2019, the federal government announced a further $3.6 million from the CCTI is going to support the transition of Alberta coal communities.

Evaluating the transition programs for Alberta’s coal power communities

The governments of Alberta and of Canada have each made funds for local economic planning available to coal communities. Regarding the provincial fund, there was broad uptake of the Coal Community Transition Fund by 17 of the 20 affected municipalities and First Nations.

Local communities and governments in Alberta were consulted by the provincial government about the coal phase-out and given an opportunity to decide for themselves what transition looks like for them. Our municipal case study shows that Parkland County identified public infrastructure improvements that would enable the county to attract more private capital investment and job creation (indeed, elected officials in the Tri-Region had been advocating for the projects for the last decade). Parkland County’s choice of transition strategy aligns with the just transition principle that improved public infrastructure is one way that the benefits of a just energy transition can be accorded to the whole local community, not just the workers in the coal power industry.

In January 2019, the Alberta NDP government approved two highway construction projects in Parkland County that will contribute between $155 and $195 million to the regional economy, and support 800 direct and indirect jobs. Two months later, the 2019 federal budget created a $120 million infrastructure fund over four years. Each year beginning in 2020, $21 million will go to Western Economic Diversification Canada to support economic diversification in western Canadian coal power communities. Alberta coal communities can expect to receive a significant portion of this infrastructure funding in the next four years.

The just transition literature we reviewed for our report emphasizes that strong public services are needed to support diverse, low carbon, labour-intensive industries. The current fiscal year is the first time that the coal phase-out has had an impact on Parkland County’s budget (its operating budget is down 3.75%), with the county collecting less property tax revenue from TransAlta, who retired two coal units in 2018 and mothballed two more in preparation for conversion to gas. It is still early in the transition process, but Parkland County has already been successful in attracting substantial new private and public investments, related construction employment and therefore indirect support for other local jobs, as well as new permanent jobs in the Pinnacle Renewable Energy and Champion Petfood plants. The county is hoping that the agriculture industry, and related value-added industries, can continue to grow so they can help replace some of the lost local economic activity from the coal power industry.

It seems unlikely given the UCP’s election platform, the government’s legislative agenda to date, and its 2019 budget, but in future budgets the new government should consider earmarking funds for Alberta coal communities, especially since most of the coal-to-gas conversions are set to occur in the next four years. Municipalities and First Nations affected by the coal phase-out will also need continued support from the federal government as the energy transition continues in the coming years.

This post is part of the Corporate Mapping Project, a research and public engagement initiative investigating the power of the fossil fuel industry in Western Canada. The CMP is jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives, and Parkland Institute. This research was supported by the Social Science and Humanities Research Council of Canada (SSHRC).

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Photo credit: Jeff Wallace under a Creative Commons licence.