Big Idea #1: Pivot our energy economy towards the future

What happens when the world starts moving away from the very things that drive our economy? That’s the central economic policy question facing Albertans, today.

If a candidate or party isn’t willing to acknowledge that we are in the midst of a global energy transition – and if they don’t have a clear strategy for maintaining our prosperity in a rapidly changing world – then they should be judged unfit to govern at this critical juncture in our province’s history.

Working Albertans are justifiable anxious about the change that’s unfolding around them. They understand that they’re likely to be the first to suffer the consequences of delay and denial. The prospect of Alberta turning into a northern rust belt is very real under the UCP’s leadership. But it doesn’t have to be that way. A better future is possible – and Alberta’s NDP can lead the way!

We can’t allow Alberta to be left behind

Gil believes that economic policy in Alberta in 2024 needs to be built on five foundational tenets:

  1. The global energy transition is real. Denial is not an option.
  2. We don’t get to choose the change – it’s happening whether we like it or not. But we can choose how to respond to it.
  3. Planning for an economic future that looks different than our past is better than sticking our heads in the sand.
  4. Pivoting the Alberta economy towards opportunities in a lower-carbon future isn’t just an environmental imperative, it’s an economic imperative, as well.
  5. Our economy, including our oil and gas sector, has a bright future – but only if we play our cards right. If we don’t, we run the risk of being left behind as the world moves forward.

Re-learn the lessons of Lougheed

Through their actions and policies – most notably their outrageous approach to renewable energy development – Premier Danielle Smith and the UCP have proven that they are unfit to set the economic course for our province in the midst of the unfolding global energy transition.

What Alberta needs right now is another Lougheed. In the 1970s, Premier Peter Lougheed saw that Alberta was running out of conventional oil and gas – and he used the tools of government to pivot the Alberta economy towards new opportunities.

Specifically, he used a mix of regulation, publicly-funded research, publicly-financed investment incentives and outright public ownership to create two industries that have driven our prosperity for 50 years: petrochemicals and the oil sands.

As we face another, arguable bigger, paradigm shift in the global economy, we need to re-learn the lessons of Lougheed and use government-led industrial policy to pivot the Alberta towards the many new and exciting opportunities inherent in the lower-carbon economy.

In the same way that Lougheed understood that the change Alberta needed in the 70s would not happen if he simply “let the market decide,” we have to acknowledge that the change we need today won’t happen without a big push from a progressive and visionary government acting in the public interest.

We built economic juggernauts before – we can do it again

Albertans are justifiably proud of the economy we’ve built around our collectively-owned oil and gas resources.

The oil sands, in particular, is the biggest industrial project in the history of our country – and its development by Alberta workers, scientists, engineers and businesspeople has brought us unprecedented prosperity in the form of jobs, wages, profits and government revenue.

But, in the same way that economic changes within and beyond our borders forced Lougheed and Albertans of his generation to pivot towards the oil sands and petrochemical, change at the global level requires us to pivot towards new opportunities … or run the risk of being left behind.

The good news is that Albertans have the skills and drive necessary to pivot and seize these new opportunities. We’ve built economic juggernauts before – we can do it again. 

Skate to Where the Puck is Going

As a prominent advocate for Alberta workers, Gil McGowan has spent more than a decade thinking deeply about the global energy transition and what it means for ordinary Albertans. He has concluded that diversification must become the top economic priority for the Alberta government. 

Gil’s views about diversification within and beyond our oil and gas sector were laid out in the final report of the Notley-era Energy Diversification Advisory Committee (EDAC), which he co-chaired, and in a more recent economic blueprint, entitled “Skate to Where the Puck is Going,” which he helped draft with unions representing Albertans working in oil and gas, construction and manufacturing.

As hockey great Wayne Gretzky was fond of saying: success in life, as in hockey, requires us to “skate to where the puck in going, not where it has been.” Gil firmly believes that, when it comes to economic policy, it’s time for Alberta to skate to where the puck is going.

Think like owners – Gil’s plan for diversifying and strengthening Alberta’s energy economy

Gil has a ten-point plan for diversifying the Alberta economy, creating jobs and ensuring our continued prosperity in a changing world:

1. Think like owners

Lougheed famously urged Albertans to “think like owners.” We need to heed this advice and remember that we Albertans, not oil or gas companies, own our natural resources. We also need to start thinking about things like the sun, wind and water as public assets that need to be carefully stewarded in the interests of all Albertans. As the asset owners, we need to play a more active role in determining how those resources are developed and exploited. We also need to be unafraid of participating as equity partners in investments involving our collectively-owned assets. It’s the best way to ensure that we’re maximizing job creation; getting our fair share; and that development is being done in the broad public interest, as opposed to the narrow interests of private firms and corporations. As Lougheed reminded us, it’s not “socialism” when the real owners of important assets demand a piece of the action and a seat the table – it’s just good business.

2. Embrace industrial policy

South of the border, the Biden Administration is in the process of successfully pivoting the American economy toward opportunities in the lower carbon future. The results, in terms of jobs, investment and economic growth, are truly impressive and unprecedented. Three pieces of legislation have been particularly important in this transformation: the “CHIPS and Science Act”; the Bi-Partisan Infrastructure Act; and the Inflation Reduction Act. Alberta needs its own legislative framework for industrial policy in the context of the unfolding global energy transition – and Gil will make sure we get it. Getting the Alberta Diversification Act developed, debated and passed will be a first-year priority for a McGowan government. Gil will also ensure that we have a labour force development strategy to compliment the industrial strategy.

3. Create a public diversification corporation

If we’re serious about “thinking like owners” and “embracing industrial policy,” then we need mechanisms to make these things happen. Gil would spearhead the creation of a publicly-owned Diversification Alberta Corporation to make deals and partner with industry on projects necessary to pivot the Alberta economy towards new opportunities, both within the oil and gas sector and beyond it. In the same way that Lougheed created the publicly-owned Alberta Energy Corporation (AEC) to build the infrastructure necessary for our petrochemical industry and took a majority ownership stake in Syncrude to help get the oil sands get off the ground, a McGowan NDP government would use public ownership to help build the future we want. 

4. Pivot towards materials

As an oil and gas producing jurisdiction, we need to find ways to continue prospering in a world that’s buying less of what we’re selling. One of the best ways to accomplish this is to change what we’re selling. As Gil and the unions who collaborated on the AFL’s Skate to Where the Puck is Going blueprint have suggested, we can do this by pivoting from producing oil and gas as feedstock for fuels to producing oil and gas as feedstock for manufacturing materials, like carbon fibre. By taking this approach, we’d be killing three birds with one stone: first, we’d create new demand in one area (materials manufacturing) to at least partially offset the loss of demand in another area (fuels manufacturing); second, we’d be helping maintain the value of assets that we, ourselves, own by adding domestic demand to export demand; and, third, we’d be helping to create jobs by keeping people working in oil and gas extraction AND by creating jobs in new manufacturing enterprises. Using Lougheed and IRA-style industrial policy to pivot towards materials.

5. Make a deal on emissions

In order to do our part to address climate change and remain competitive in a de-carbonizing world, our oil and gas industry has to reduce its emissions, fast. In fact, given that the industry produces 145 megatonnes of our province’s total of 256 megatonnes of CO2 we can’t make any real progress on emissions unless we make progress in the oil and gas industry. The good news is that technologies exist to reduce emissions – and the industry is making progress in reducing per barrel emissions. The bad news is that the technology to reduce emission is costly and the progress in per-barrel reductions is being swamped by an overall increase in production. That’s why the industrial price on pollution through the TIER program is so important. It provides an incentive for companies to make the necessary investments in emission reductions. The problem is that the TIER price on carbon pollution is increasing too slowly — 1-2 percent per year — to incentivize the necessary emissions reductions. As Premier, Gil would negotiate with the federal government to abandon their proposed emissions cap (which would be a cumbersome and duplicative cap and trade system on top of a more effective carbon tax system) in exchange for Alberta increasing the TIER price on pollution more quickly. Unlike Danielle Smith, as AFL president Gil has already demonstrated his ability to negotiate successfully with the federal government (he was instrumental in winning billions in diversification tax incentives for Alberta in the 2023 federal budget, even when the Smith government wouldn’t come to the table). By negotiating an amendment to the equivalency agreement that Alberta has with the federal government on industrial pollution pricing, Gil would get the feds off our back and more effectively incentivize necessary decarbonization in our oil and gas sector — a true win-win scenario. It almost goes without saying, but Gil would also use all the money raised by TIER to fund innovation and emissions reductions, unlike the UCP who divert large portions of it back into general revenue.

6. Re-regulate Alberta’s power system

Aside from the well-established need to reduce its emission in order to address the rapidly escalating global climate emergency, Alberta’s oil and gas sector is also facing an existential crisis because, for the first time in its history, oil now has a real competitor in terms of cost and efficiency: electricity from renewables. As many experts have concluded: the future is coming and it’s going to be electric. Gil feels strongly that we need to prepare our province for this future. The first step towards doing this is to scrap the UCP’s new restrictions on renewable energy development. The second step that Gil would take as Premier would be to scrap Alberta’s deregulated “energy only” power market and return to a regulated, “cost-of-service” model similar to the ones that have kept power cheaper and more reliable in literally every other Canadian province (and the majority of American states). Gil believes that Alberta’s privatized and deregulated power market should be seen for what it truly is: an expensive ideological failure and an embarrassing relic from the Enron era. Under a re-regulated system, the Alberta Utilities Commission (AUC) will hold rate hearings with the big utility companies to determine how much they can charge residential and commercial consumers. Smaller, renewable energy generators will be governed by Power Purchase Agreements (PPAs) that set prices, usually for 20 years. Clean, low-cost, reliable electricity is table stakes for economies in the low-carbon future. Gil will make sure that Alberta is as competitive as possible.

7. Establish a public power Crown Corporation

In addition, as Premier, Gil would create a new public power Crown Corporation so that Albertans can enjoy some of the same cost advantages that our neighbours in BC, Saskatchewan and Manitoba have enjoyed over the years from their Crowns. The new Crown Corporation would focus on the generation side of the power market by building and operating projects that private providers are not interested in or can’t build cheaply. The presence of the Crown corporation will give the government crucial information and leverage that it can use to keep prices low and reliability high.

8. Help create a more integrated western power market

The new Crown Corporation will also work with other western Canadian energy crowns, (BC Hydro, SaskPower and Manitoba Hydro) to expand inter-ties and create a western Canadian market for power that would see hydro dams in Manitoba and BC (and perhaps even the NWT) acting as counterbalancing storage for intermittent wind and solar facilities in Alberta and Saskatchewan. With NDP governments in BC and Manitoba (and perhaps even in Saskatchewan, soon) the dream of a western Canadian power market could finally be realized with the election of an Alberta NDP government. The costs of building these interties between provinces could be covered by the billions that have already been set aside by the federal government for this purpose – and perhaps by exporting clean, green Western Canadian power to large and growing markets in the US.  Cooperation of this sort between the western provinces could create a whole new export industry. As Premier, Gil’s goal will be to triple the size of Alberta’s grid, reduce its cost to consumers and improve its reliability, which will facilitate the further electrification of the economy and create new opportunities for businesses attracted by the prosect of cheap, clean power.

9. Support electricity innovation

Alberta is the hub of Canadian innovation, much of which concerns energy. Gil would support the development and commercialization of made-in-Alberta electricity technologies. A good example is advanced geothermal from Calgary-based Eavor Technologies. This company adapted drilling technology from the steam assisted gravity drainage technology used in the oil sands (which, itself, was developed thanks to Lougheed-era public funding) and used it as a creative and groundbreaking new platform to geothermal energy. The pilot project was located at Rocky Mountain House. But the first commercial project is located in Germany because Alberta’s system didn’t support that type of generation and the provincial government couldn’t be bothered to provide funding for clean energy development. Shockingly, it was the federal government, through the Canada Growth, Fund that invested $90 million in Eavor in October 2023 so the company could scale up its business while retaining IP and creating jobs in Alberta. Where was the UCP in all of this? Nowhere, is the sad answer. Like Lougheed before him and Biden in the States, Gil will support innovation and entrepreneurship, something Alberta is famous for. And he will leverage that innovation and entrepreneurship to create jobs and ensure the province has an abundance of reliable electricity. And, unlike the UCP, Gil will not leave it to the federal or German governments to support Alberta project — he will lead a government that supports its own businesses and workers.

10. Reform the Alberta Energy Regulator (AER)

Alberta’s provincial coal, oil and gas regulator is a disaster. The organization has been rocked by scandal, incompetence, and poor performance for years. The problems is has helped create are too numerous to list, but they include an accumulated $260 billion (yes, BILLION) of unsecured liabilities, hundreds of millions in unpaid municipal taxes, tens of thousands of orphan wells, and landowners who cannot sell their land unless they pay enormous sums to have those wells reclaimed. On Day one of a McGowan government, Gil will fire the UCP appointed CEO and the oil and gas “consultants” who make up the board of directors. An interim board of workers, farmers and landowners, Indigenous, communities, municipalities, and others will be appointed. Then, a McGowan government will consult with stakeholders about an energy regulator that actually works in the public interest, not the corporate interest. Once consultations are done, we will draft the legislation and regulations needed to create a new, effective regulator. Albertans can be confident that the CEO will be a non-partisan professional and the board of directors will reflect the interests of Albertans. Alberta doesn’t need a public inquiry, it needs action, and my government will begin work on Day One after the election.