Alberta pitching plan to boost energy R&D as an alternative to ratifying Kyoto
October 7, 2002
National research strategy proposed
The Alberta government has unveiled an ambitious proposal for a new approach to energy research in Canada, one that includes new multi-year funding commitments from government and industry and the creation of a new network linking provincial, national and global researchers. Released Sept. 26 by the Alberta Energy Research Institute (AERI), the idea is being pitched to energy companies, provincial research organizations, universities, granting councils and the federal government, including Natural Resources Canada and Environment Canada.
Alberta Energy minister Murray Smith has embraced the concept. He told the Globe and Mail Sept. 27 that the idea could lead to the creation of a new $100-million energy research institute. A spokesperson with the Ministry says both the institute idea and its funding level are conceptual at this point. As a starting point, however, she says the minister is looking to redirect $10 million annually from his department’s current budget into a clean energy research program. The federal government, other provinces and industry would also be expected to contribute, with the overall program overseen by an independent steering committee, linked to the AERI board.
The AERI plan is outlined in a new strategy document titled A Clean Energy Future, which looks at how new technologies can reduce greenhouse gas emissions without hurting Alberta’s energy-dependent economy. Both the Alberta government and the Alberta Science Research Authority (ASRA) have approved the strategy and incorporated it into the Alberta Climate Change Plan, the province’s preferred alternative to the Kyoto accord.
PRESSING NEED FOR NEW APPROACH TO ENERGY R&D
Alberta has many reasons for wanting a new approach to energy research. Greenhouse gas emissions are on the rise, investments in new energy technologies are declining, oil and gas production is down, and its cheapest and most plentiful resource — coal — is one of the worst polluters, accounting for 25% of Alberta’s GHG emissions. Overcoming these problems will not be easy. Canada’s research funders and performers are fragmented and the country lacks critical capacity for conducting clean energy research.
Dr. Eddy Isaacs, AERI’s managing director, says the idea is to develop new energy technologies that reduce emissions and improve access to Alberta’s oil, gas and coal resources. The report outlines five R&D goals for accomplishing that:
- Develop clean coal technologies
- Increase recovery of conventional oil and gas reserves by using CO2
- Reduce energy required to produce a better quality of synthetic crude from Alberta’s oil sands
- Improve oil and gas production while using less energy
- Develop new sources of energy, with a focus on infrastructure and fuel cell development
Transforming coal into a clean energy resource is a top priority for Alberta. Coal-fired plants generate more than 70% of Alberta’s electricity, and the province has enough coal to last another 800 years. Most research into clean coal is done outside of Canada. AERI recommends that Canada pay to participate in these international projects, and to adapt the resulting technologies for domestic needs. Depending on Canada’s level of participation, the price to participate in such projects could be as high as $50 million annually.
- ASRA spends about $12 million/year (5% of its total research investment)
- Federal investment in energy R&D has declined steadily; $175 million in 1999
- Private sector R&D in fossil fuels energy has fallen to just $100 million annually. Total energy R&D of about $200 million annually gives the energy sector the distinction of having one of the lowest rates of investment in R&D
Source: Dr. Robert Mansell, AERI Board Member;
June 2002 presentation to ASRA
The cost to boost energy R&D within Canada could be even higher. Issacs says the first step is to get the various public and private sector players to agree in principle that a national strategy is needed.
“Right now the hard work begins, to get the parties to make a commitment at least in principle,” he says. “And it’s not enough just to throw more money at this. The funding should be harmonized in some way, and it has to be sustainable … A prudent approach is to take a portion of the rents that you get from resources and reinvest them into research and development so that you can continue to receive rents in the future.” Diverting 1% of resource royalties to clean energy research, for example, would generate about $55 million annually.
John McDougall, CEO of the Alberta Research Council, has recommended a one-third funding split between the federal government, the provinces and industry, to pay for clean energy research. At a meeting of ASRA’s board in June, he suggested that the research could be funded from a new tax on gasoline or production, or from the portion of GST collected on energy consumption.
Canada is not a huge R&D spender when it comes to clean energy technologies. Even AERI is not immune. Earlier this year, the Alberta government cut its annual budget from $8.9 million to $6.9 million (R$ April 3/02).
Even last week’s announcement by the Alberta government of a new $30-million heavy oil research project is not new funding. The commitments were made over 18 months ago and include $7.5 million from Technology Partnerships Canada, and $7.5 million from the Alberta government. A consortium of nine Canadian oil and gas producers is contributing the balance.
Isaacs concedes that convincing the various players to significantly increase spending on clean energy research will not be easy. “We need a build-up. This isn’t going to happen overnight. We’re talking about a 20-year strategy, not a three-year business plan… The parties have to see that there are benefits to move forward together rather than separately. We hope to convince them that this is worthwhile doing for the future of the country.”
He adds that negotiations have already begun between Alberta, British Columbia and Saskatchewan, as well as Environment Canada and Natural Resources Canada on a suite of technologies that could be pushed forward.