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Published on: 2/19/2007
Last Visited: 12/8/2007
David McColl: Why An Energy Economist Helped Oust Ralph Klein
This month marks the sixtieth anniversary of the Leduc oil strike.Back then, Alberta ranked as poorest among the western provinces, and even further behind Ontario's industrial powerhouse.Since 1947, Albertans' gains in population (more than 400%) and technology have been driven entirely by the hydrocarbon molecule."Our prosperity will continue to depend on conventional oil and gas, bitumen and coal for at least another generation," says David McColl, an energy economist in Calgary."To secure that future, we must develop public policies which maximize the benefits from our resource base.In my opinion, that's by far the most urgent task facing the Alberta government right now."
[Figure 1], McColl (shown here) suggests that resource policy-makers must address several key questions:
* How aggressively should the provincial government steer hydrocarbons into value-added processes like bitumen upgrading, crude oil refining and petrochemical manufacturing? * Can Albertans move promptly toward promising new coal upgrading processes like gasification and liquefaction (which produces gasoline and diesel fuel)? * Should Alberta encourage the construction of nuclear power stations in order to stabilize electricity prices and preserve hydrocarbon feedstock for value-added processing?
A fair amount of technical and economic analysis of these issues has already been done by the Alberta Energy Research Institute, the Institute for Sustainable Energy, Environment and Economy and other organizations.McColl himself has researched and co-authored studies on the oilsands development, nuclear options and related subjects for the Canadian Energy Research Institute (CERI) and Energy Alberta Corporation.
What's still missing, the Calgary consultant maintains, is any meaningful political response.McColl, who holds a bachelor's degree from the University of Waterloo and a master's in economics from the University of Alberta, has been president of the Alberta Progressive Conservatives' youth wing for more than two years.
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McColl asks.
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Gas supply is likely to be constrained in the future and is already far more expensive in price than coal," McColl says.
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McColl accepts estimates which peg Alberta's additional electricity consumption at a hefty 300 megawatts per year for the coming decade."That's a lot of power.Its development is a critical component of oilsands development and other economic growth," the young economist points out.Over the past eight months, he's consulted for Energy Alberta, a private corporation which plans to construct a nuclear power station in Alberta in partnership with AECL. (To read a DOB Magazine article about this Calgary-based firm, follow this link .)
As a generating fuel, McColl argues that uranium is vastly more practical than wind or solar power for supplying large electricity baseloads.He argues that "the nuclear option, which is being deployed in many other countries, can give Albertans stable, competitive power rates for decades to come.It also enables us to conserve our hydrocarbon resources - which are the basis of our economy - for more value-added purposes."
Legally, nuclear power is a federal regulatory jurisdiction.Constructing a plant, however, would draw in many Alberta government departments.Transmission lines, for example, are provincially regulated, as are health standards, labour, waste disposal and transportation."An Alberta premier can in effect kill the nuclear option just by dragging his feet on creating efficient regulatory access for the first project," McColl says.
In reality, the economist warns, Alberta would have to be highly determined if it wants the benefits offered by this form of energy."No nuclear generating project has ever been constructed anywhere without substantial support from government," he reports.For example, financing the very large capital cost of a reactor can be boosted by ensuring through utility pricing regulations that investors have a stable market for their electricity over the project's operating lifespan.In the past, this strategy enabled the province's private utilities to build large coal-fired generating plants.Other options include direct government investment, which Ontario has done, as well as financial incentives similar to those offered in the United States.
"It's been popular among many conservatives here to say 'let the market decide,'" McColl says.
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