The Most Expensive Campaign Promise Ever

Over the coming weeks, I'll be analyzing some of the big policy announcements that the major parties in the Alberta election make.

So, today, we’re going to kick things off with a look at an issue that made headlines yesterday - electricity policy.

I know, I can almost see your eyes glaze over through your webcam, but bear with me - this is important!

Last March, Justin Trudeau announced the release of the federal government’s “2030 Emissions Reduction Plan: Canada’s Next Steps for Clean Air and a Strong Economy”.

Who could be opposed to Clean Air and a Strong Economy, right?

The devil, as always, was in the details and, in this case, the details are called the “Clean Electricity Regulations”.

The federal government has been talking for some time about “transitioning” Canada’s entire electricity sector to being “net-zero” (ie: no net carbon emissions) by 2050.

The “Clean Electricity Regulations”, though, are the federal government’s plan to speed up this transition and require the provinces to have net-zero electricity grids by 2035 instead.

Now, for some provinces, that won’t actually be too challenging, as they already generate the vast majority of their electricity from Hydro.

But for Alberta (and Saskatchewan), it will be practically impossible - and insanely expensive.

That hasn’t stopped Rachel Notley and the NDP from promising to follow the federal government’s lead and do it, though.

So, let’s take a deep dive into exactly why this policy could be so harmful to Alberta.

First, in Alberta, about 85% of electricity on the commercial market comes from non-renewable resources.

That means that, in order to achieve net-zero here, we’d have to rebuild almost literally the entirety of our electricity market in the next 12 years.

If that sounds expensive to you - you’d be right!

In July 2020, when the federal government first started floating this idea, the Alberta Electric System Operator (AESO) wrote a report that calculated that transitioning Alberta to a net-zero electricity grid by 2035 would cost $52 billion in additional capital investments and generation operating costs.

Yes, you read that right - $52 billion.

And, to be clear, that $52 billion isn’t the entire price of transitioning to net-zero - that would be much more - the $52 billion is just the extra price of doing it faster, by 2035 instead of 2050!

Next, fast forward to yesterday, and a new report was been released that assesses those direct capital and infrastructure costs calculated by AESO, and works out what the additional indirect economic harm to Alberta would be of being forced to make this rapid transition.

This new report was written by a group called Navius, who are traditionally seen as a left-leaning environmental economic research group, and even they say that the indirect impacts to Alberta’s economy will be enormous - $35 billion - and that’s before they even account for inflation.

So, now, thanks to these two reports, we know exactly what the federal government’s 2035 net-zero electricity grid plan will cost Alberta.

$52 billion in direct costs to upgrade and build infrastructure, plus at least $35 billion in indirect economic costs, for a total of at least $87 billion.

And, as I mentioned before, Rachel Notley and the NDP are fully on board.

They aren’t advertising their support, of course.

Just like with the carbon tax in 2015, they aren’t campaigning on this policy, and they haven’t mentioned it on their website or included it in their campaign material.

But, at a private NDP event last year and in a few occasional tweets, Rachel Notley has confirmed that the NDP is committed to this idea.

And, just like in 2015 with the carbon tax, they’re hoping Albertans won’t notice until after the election.

Let’s be clear, though - a policy of implementing a net-zero electricity grid by 2035 makes the carbon tax look like a bargain by comparison.

The carbon tax costs Albertans about $2 billion.

Don’t get me wrong, that’s a huge amount of money.

But $87 billion (or more) over just 12 years is more than $7 billion a year.

I really worry that people don’t understand just how much money we’re talking about here.

It’s an absolutely insane amount.

Let's try to put it into scale...

$87 billion is more than the entire Alberta government budget ($63 billion).

$87 billion is 48 times the cost of the Red Deer Hospital.

$87 billion is 290 times as much as the province's “controversial” Calgary arena investment.

$87 billion would pay for the salaries of every single nurse in Alberta for 70 years.

One more… just for fun…

$87 billion would buy a Tesla Model 3 for literally every household in the province.

Yes, seriously - you get a Tesla, you get a Tesla, everyone gets a Tesla!

This is honestly such an insane amount of money that I’m genuinely not even sure that the NDP realizes exactly what they’ve committed to here.

“Never has a politician committed to a policy that would cost this much to implement. This is not only unrealistic, but it is dangerous to the long-term health and viability of our economy,” said UCP Candidate Brian Jean.

It is the single biggest election promise in Alberta history, and it’s not even close.

Thankfully, here at the Alberta Institute, our team is working hard to assess and analyze campaign promises to make sure that you have the facts at your fingertips, and that you’re fully aware of just how much our politician's promises are going to cost you.

I'd love to be able to bring you more of this type of analysis, so if you support our work, please help us continue to provide you with the level of in-depth policy research by making a donation to support our work:

Please also don’t hesitate to suggest any other policies you’d like us to analyze in the coming weeks.

Regards,

Peter McCaffrey
President
Alberta Institute