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Ensuring the Reclamation of Renewable Energy Projects

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Ensuring the Reclamation of Renewable Energy Projects

Energy & Environment - Provincial Policy

February 18, 2024 the Province made changes to renewable energy policy through AUC: https://www.alberta.ca/release.cfm?xID=898196983D0FA-AECA-5F92-FF655CE1369C4E28 

ORIGINAL POLICY MARKED AS COMPLETE:


Issue 

There is no current framework around funding the reclamation of orphaned renewable energy projects. Given the fact that these projects are being installed at increasing rates across rural Alberta, a mechanism needs to be put in place to ensure costs for abandoned projects do not become taxpayers’ responsibility.  

Background 

There is great potential for renewable energy projects in Alberta. Sunlight hours in Southern Alberta are the highest in the country and grazing lands are relatively flat, making it ideal for solar projects. The Rocky Mountains also provide a favorable wind climate for wind farms in Alberta since the 1990s.  

The Government of Canada and Alberta are investing in more renewable energy projects. The Government of Canada’s 2030 Emissions Reduction Plan includes measures aimed at reducing emissions to 40% below 2005 levels and reaching a net zero target by 2050. This plan includes a significant investment in solar and wind power projects across the country. This investment funding for renewable energy combined with Alberta’s renewable resource potential has more new renewable projects with a larger scope than previously seen. In both 2022 and 2023, nearly three-quarters of all new wind and solar generation capacity in Canada was sited in Alberta.  

The rapid implementation of renewable projects in Alberta creates a potential future challenge. As renewable technology changes and older installations become obsolete and require replacement, project owners may become illiquid resulting in “orphaned” facilities – installations for whom no entity is directly responsible.  

In cases where a project becomes orphaned, the responsibility for their reclamation falls on the government. As of September 14, 2018, there is a directive for the reclamation of renewable projects in Alberta which requires a reclamation plan upon approval for each project. Unfortunately, as seen in the case of orphaned oil and natural gas wells in the province, a plan alone does not account for situations where the project proponent is no longer able to implement. 

Premier Danielle Smith has herself noted publicly her concern regarding “estimates of $500,000 per [wind power] turbine for reclamation,” Assuming the responsibility of these reclamation costs, the added costs to government budgets, restricting more productive investments in high-yielding infrastructure or public services, or elevates pressures on taxpayers. These outcomes result in decreased competitiveness for all Alberta businesses. In the case of orphaned oil and gas wells, it is estimated the cost of reclamation nationwide will exceed $1 billion by 2025 - a cost which will inevitably be borne by taxpayers. 

The Orphan Well Association was established in the 1990s to tackle this problem regarding oil and gas project abandonment, however, there is currently no equivalent initiative in the renewable space. The lack of structure around reclamation for renewable projects has been identified by municipalities around the province. The Rural Municipalities Association (RMA) passed Resolution 9-22F, Renewable Energy Project Reclamation Requirements in November of 2022 to address this issue. Paul McLauchlin, president of the RMA is quoted in the Financial Post as saying, “What we’ve learned, and what Albertans have learned, is that the cheapest way to get out of reclamation is going bankrupt”. There must be a system in place to ensure the reclamation of renewable projects is completed regardless of the financial state of the proponent company. 

The Alberta Chambers of Commerce recommends the Government of Alberta: 

Establish securities to pay for project closure costs, including suspension, abandonment, decommissioning, remediation, and reclamation, if a company cannot meet its obligations to close a renewable energy project safely and responsibly. 

Date Approved: March 15, 2023
Date Updated: February 2024
Date Approved: February 21, 2024
Date Completed: March 20, 2024

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