Premier Danielle Smith says renewable energy is unreliable and that Alberta should build additional gas-fired power plants for a more predictable source of electricity.

“This is a natural gas basin,” Smith told delegates at the Rural Municipalities of Alberta (RMA) convention in Edmonton on Wednesday. “We are a natural gas province. And we will continue to build natural gas power plants, because that is what makes sense in Alberta.”

In response to questions from rural councillors, Smith also said she’s looking at ways to ensure solar and wind companies set aside money to reclaim land in the future for when a renewable installation is dismantled.

“I think that it needs to be addressed at the start, or we’re going to have the same problem that we had with the orphan wells, and why would we want to bring that to the province of Alberta?” said Red Deer County Mayor Jim Wood.

Smith said she met with power providers and learned the province’s electricity grid twice came close to needing more power than it could supply in the last few months.

She pointed to stagnant air and solar panels covered with snow and ice leading to a dearth of wind and solar generation at those times.

The emissions from natural gas plants can be captured and sequestered to meet climate targets, she said.

Smith’s promotion of more natural gas-fired power plants comes days after the United Nations’ Intergovernmental Panel on Climate Change said wealthy countries should phase out gas plants by 2035 to prevent irreversible damage to the planet.

The premier said it concerns her to see solar panels and wind farms installed on arable land.

Kara Westerlund, vice-president of RMA, says rural councils share that concern. She told reporters the installations should be going onto brownfields rather than “taking some of the best growing soils and agricultural land out of production.”

She sees renewable energy sources as complementary to oil and gas.

“We’ve never felt that one is going to replace the other,” Westerlund said.

Renewables a cheap source of energy, researcher says

RMA members previously voted for a resolution calling on the province to require renewable companies to pay for a bond that would cover the costs of removing solar panels or wind turbines past their useful lives.

The province already has a regulation from 2018 that stipulates how the sites are to be decommissioned.

Smith said she’s considering requiring renewable companies to set aside a proportion of revenue to save for site cleanup costs — and that the remediation money should transfer to any new site owners.

However, devising a solution for unreclaimed oil and gas sites is Smith’s priority.

“Once people feel comfortable that we’ve got the right model there, then the next obvious question is, what are we going to do about solar and wind?” she said.

According to the Alberta Energy Regulator, there are nearly 200,000 inactive or abandoned wells in the province.

Binnu Jeyakumar, director of electricity at the Pembina Institute, said inactive oil wells and renewable sites aren’t the same.

“We get orphan wells because we run out of viable gas production in these locations,” she said. “You don’t run out of wind or solar in a location.”

When equipment breaks down, it may be viable for an owner to install new turbines or panels, she said.

Jeyakumar also challenged the premier’s assertion that solar and wind are unreliable sources of electricity. She said hours of sunlight and weather are predictable: an electrical system operator can plan for those fluctuations by using diverse sources of energy, and by building more storage, transmission and distribution systems.

Most solar panel systems are built so snow and ice slide off or melt, she said.

She said building a new gas plant is a risky commitment in a world where energy prices fluctuate wildly and the power plant is likely to be around for another 30-to-40 years. She said there are sound reasons why investors are turning to renewables.

“I’m not saying we should only build solar,” she said. “But we should be basing our grid on solar and wind, because they are the cheapest options.”

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Alberta’s premier assured a ballroom of rural leaders Wednesday that she does not want to see the province move away from electricity generated from fossil fuels, while complaining about solar panels covering farm land.

“This is a natural gas basin. We are a natural gas province and we will continue to build natural gas power plants because that is what makes sense in Alberta,” Danielle Smith said.

“Yes, hydro makes perfect sense in Quebec and B.C. and Manitoba. And Ontario has nuclear and hydro as well. But we have to keep fueling our economy with natural gas power plants.”

Smith made the comments at the spring convention of the Rural Municipalities of Alberta (RMA) that was held in downtown Edmonton. The RMA is made up of 69 counties and municipal districts.

She added that carbon capture and usage will help Alberta meet emissions goals, but didn’t mention climate change.

The premier’s comments on power came after she was asked about a lack of municipal control in project approval and solar panels covering “prime land” without cleanup bonds in place to make sure companies pay for reclamation.

“I’m supportive of solar and wind projects where they make sense. But I can tell you from conversations with people in my own community that putting solar panels on prime agricultural land does not make sense,” Smith responded.

“Especially like the one I drive past in Brooks every day I go down there. It’s covered in ice and snow and not generating any power at all.”

Jim Wood, mayor of Red Deer County, also asked Smith what Alberta is doing to make sure renewable energy companies clean up projects that one day become defunct.

“The concern is this: Some of these solar may be only viable due to carbon-credit grants and so forth that may not be here forever. The companies may not have enough finances to in fact do the cleanup,” Wood said.

“And if they’re not viable enough to put a bond up to cover their cleanup, then they’re not viable. And I think it needs to be addressed at the start or we’re going to have the same problem as the orphan wells. And why would we want to bring that to the province of Alberta?”

Smith said legislation requiring cleanup bonds is an “open question” for her government and one she plans to consult rural leaders on in the future.

The premier has faced widespread criticism lately over a plan to give royalty breaks to oil companies for cleaning up inactive wells, which they’re already legally required to.

The province’s energy minister last week called the Opposition “anti-oil and gas activists” after an NDP MLA demanded companies pay for the cleanup themselves.

The NDP claims the government’s proposed $100 million Liability Management Incentive Program is only the start of a $20 billion giveaway to oil and gas companies.

MLA Marlin Schmidt called the initiative “a scam” in the legislature, drawing a warning from Speaker Nathan Cooper for use of the word.

On Wednesday, Smith acknowledged Alberta first needs to figure out how to get orphan wells reclaimed before requiring renewables companies to do the same, but like wells, believes it will become an issue in the future.

“In the case of wind-turbine farms, as I understand it, when installing them typically is 1,500 truckloads to install them, that means someone has to pay 1,500 truckloads to take them away,” she said.

NDP Leader Rachel Notley agreed that there needs to be plans in place to clean up all energy projects, but said the government is going about it in the wrong way.

“Danielle Smith is campaigning on giving billions of taxpayers’ dollars to financially solvent companies that are choosing not to clean up after themselves. She can’t be trusted on this issue,” she said in a statement to CTV News Edmonton.

Political scientist Duane Bratt said he wasn’t surprised by Smith’s comments because being loud cheerleaders of the oil and gas industry is a clear strategy of the UCP government.

“When they talk about renewables, they talk about it not working when the wind isn’t blowing and the sun isn’t shining and so pivoting to waste issues on renewables, that’s totally on brand,” he said.

Last year, Alberta had an installed capacity, the maximum electrical output under specific conditions, of 67 per cent from natural gas and coal and 31 per cent from solar, wind and hydro, according to Alberta Electric System Operator (AESO).

In 2019, about 89 per cent of Alberta’s electricity came from fossil fuels and 10 per cent from renewables, according to the Canada Energy Regulator.

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The U.S. Federal Reserve extended its year-long fight against high inflation on Wednesday by raising its key interest rate by a quarter-point despite concerns that higher borrowing rates could worsen the turmoil that has gripped the banking system.

“The U.S. banking system is sound and resilient,” the Fed said in a statement after its latest policy meeting ended.

At the same time, the Fed warned that the financial upheaval stemming from the collapse of two major banks is “likely to result in tighter credit conditions” and “weigh on economic activity, hiring and inflation.”

The central bank also signalled that it’s likely nearing the end of its aggressive series of rate hikes. In a statement it issued, it removed language that had previously indicated that it would keep raising rates at upcoming meetings. The statement now says “some additional policy firming may be appropriate.”

That’s a much weaker commitment than the central bank had made previously.

But the latest rate hike suggests that chair Jerome Powell is confident that the Fed can manage a dual challenge: cool still-high inflation through higher loan rates while defusing the turmoil in the banking sector through emergency lending programs and the Biden administration’s decision to cover uninsured deposits at the two failed U.S. banks.

“We have the tools to protect depositors when there’s a threat of serious harm to the economy or to the financial system,” Powell said Wednesday.

The Fed’s move to signal that the end of its rate-hiking campaign is in sight may also soothe financial markets as they continue to digest the consequences of U.S. banking turmoil and the takeover last weekend of Swiss bank Credit Suisse by its larger rival, UBS.

While clearly signalling it is getting close to the end of a rate hiking cycle that has taken the U.S. federal funds rate to its highest level in 16 years, the Fed made it clear it is still worried about inflation. It said that hiring is “running at a robust pace” and noted that “inflation remains elevated.” It removed a phrase, “inflation has eased somewhat,” that it had included in its previous statement in February.

The troubles that suddenly erupted in the banking sector two weeks ago likely led to the Fed’s decision to raise its benchmark rate by a quarter-point rather than a half-point. Some economists have cautioned that even a modest quarter-point rise in the Fed’s key rate, on top of its previous hikes, could imperil weaker banks whose nervous customers may decide to withdraw significant deposits.

Silicon Valley Bank and Signature Bank were both brought down, indirectly, by higher rates, which pummelled the value of the Treasurys and other bonds they owned. As anxious depositors withdrew their money en masse, the banks had to sell the bonds at a loss to pay the depositors. They were unable to raise enough cash to do so.

After the fall of the two banks, Credit Suisse was taken over by UBS. Another struggling bank, First Republic, has received large deposits from its rivals in a show of support, although its share price plunged Monday before stabilizing.

Some economists worry that a slowdown in lending could be enough to tip the economy into recession. Wall Street traders are betting that a weaker economy will force the Fed to start cutting rates this summer, with as many as three rate hikes by the end of 2023.

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