While Alberta kills coal, the world is building 1,600 new plants

In the anti-reality, politically driven economy that has become Alberta in recent years, there is now another new hostage to politics: Witness the forced killing of coal towns by the provincial government.

On Monday, the province announced a new “transition” fund for Alberta’s coal-dependent communities. This follows up on previous government policy that decreed no electricity generation shall be fired by coal after 2030.

It chose that course rather than allow a mere five plants  to close down over the original planned life of the facilities, starting in 2036, with the last in 2061.

The taxpayer-financed fund is meant to help coal towns think about how to help the thousands of unemployed Albertans soon to end up that way because of political policy. Thus, the usual language about “diversification” is employed. So too the predictable government-speak about identifying “strategies to support worker transition.”

Reality check: Blue collar workers in mines and others with specialties related to minerals will not easily find employment elsewhere, not when Alberta already has 202,000 workers unemployed. 

Recall that Alberta’s main industry and employer, energy, is also yet sluggish due to the triple hit from low prices; government policy in Victoria, Edmonton and Ottawa; and anti-resource activists who seek to kill off this country’s forestry, mineral and resource sectors.  

On Alberta’s coal job losses, the province claims that new investment in electricity generation will help cushion that blow.

This belief mimics the famous economic fallacy where a broken window is said to create new economic activity. A vandal breaks a window and the shopkeeper pays a thousand dollars to replace it. Observers then see the window installer at work and assume an expanded economy.

Problem: Without a broken window, the shopkeeper had one thousand dollars to spend on something else, perhaps two suits worth $500 each. Now, some tailor has less work.

Lesson: The overall economic effect of the broken window is neutral.

It’s the same with provincial policy on coal-fired electricity. The province is breaking that mainly rural and blue-collar industry, which allowed for relatively cheap electricity. In its place, the province orders up new investment.

Problem: When the province decrees costly new power generation before the old plants were due to retire, someone pays twice: consumers, taxpayers and companies, or all three.

Evidence for the extra, government-mandated costs are not difficult to spot: Subsidies for renewables, compensation for companies with coal-fired plants and the cost of new, earlier-than-planned investment.

Everyone is familiar with the arguments for the forced shutdown: Carbon emissions and global warming, and coal pollution. The latter is a bit hyped: 21st century Alberta is not beset by 19th century London-style soot. Nor are Albertans suffering from Chinese-style pollution.

For the record, Chinese companies will continue to build new coal-fired electricity plants at home and abroad, 700 of them, according to the New York Times. As the newspaper summarized it in July, “China’s energy companies will make up nearly half of the new coal generation expected to go online in the next decade.”

Worldwide, 1,600 new coal-fired plants in 62 countries are planned.

Even Germany has no plans to kill coal-fired plants by 2030. It even allowed new coal-fired plants to be built in the last decade. Also, it appears that if German coal-fired plants ever expire, it will result from economics and not policy. 

In Canada, the killing of coal communities is artificial because it is government induced. It is also expensive and will do little for global carbon emissions. 

Which begs this point: If Canada’s politicians were serious about carbon emissions, they would demand that 62 other countries — China in particular — first stop adding coal-fired power to their own grids before Canada does more on this file.

Instead, it appears Canada’s ruling politicians will sacrifice domestic blue-collar workers.

This column originally appeared in the Calgary Herald, September 16, 2017, A14.