July 14th, 2024

City taking proper time to act but can’t wait to make plans toward net zero, councillor says

By Collin Gallant on June 28, 2024.

Emissions from northern Medicine Hat rise above the industrial plants on June 19.--News Photo Collin Gallant

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The head of the city’s energy committee says Medicine Hat can’t afford to wait or ignore a federal mandate to plan for a net-zero power grid by 2035, or a provincial one by 2050.

That comes in the face of criticism from the Medicine Hat Utility Ratepayers Association that upgrades and investments to lower carbon emissions could be a waste of time and money in a changing political environment around environmental goals.

A Conservative government could reverse carbon pricing or emissions targets, said association head Sou Boss, or technological advancements could be less expensive.

Coun. Darren Hirsch said it is “prudent” for the city’s power division and elected officials to accept the effects of low carbon requirements and have good practice to develop contingency plans.

But, at this point, he said, minimal spending has taken place, and a major review of power business will be comprehensive and outline potential action down the road.

“We have a natural gas (powered) power plant, and have been challenged by federal government to be net zero by 2035,” Hirsch told the News.

“Regardless of the party in power, we’re obligated to abide by that expectation and plan accordingly. Have we spent towards it yet? No. But we have to make those considerations.

“That’s exactly why we are doing a full review of our energy program. There are so many things coming at us, we need to have a proper analysis.”

A 2025-26 capital budget proposal went before council members Tuesday before further debate in July. An overview of two major capital areas – a recreation facilities plan and items related to “net zero” transition – will be provided before final budget approval next fall.

At about the same time, a third-party energy business review that was ordered after a price spike last summer will be delivered and inform a “clean energy strategy.”

Budget officials said Tuesday that a 2035 net-zero date will require the city to make substantial decisions about its generation fleet in the 2030 timeframe.

That could be solved by a combination of building new green power facilities, investing in carbon capture or importing more power, but all would come at substantial cost to city reserves.

Boss told the News on Wednesday that the issue should be taken to residents for approval.

“It feels as though decisions are being made without including the community’s views,” she said. “It’s worrisome that we’re heading towards this direction, but there are so many unknowns. How much will it cost the city to get there (to net-zero)?”

Hirsch said planning and study will proceed as a matter of good practice, though major decisions could be years away when the political picture is clearer.

“We’re not oblivious to the fact there could be a political change on the horizon that could impact the energy division,” said Hirsch. “We can be prudent and patient. We have to signal spending in a two-year budget, but pulling the trigger right away probably doesn’t make a lot of common sense when we know there’s a political risk.”

The city has budgeted about $16.9 million, including $7 million in provincial and federal grants, to study building and underground storage and installing carbon capturing technology at the power plant. To date only $1.5 million has been spent.

Carbon capture is a priority for the province, led by local MLA and Premier Danielle Smith, who told the media last month that she sees the province’s own charge, known as TIER, on industrial emitters, like power generation facilities, remaining in place no matter the fate of the federal consumer carbon levy put in place by the Liberal government.

Federal Conservative leader Pierre Poillievre has made a pre-2025 campaign plank out of “axing the tax” for consumers, but hasn’t signalled a position on industry.

The City of Medicine Hat’s power plant paid $8.5 million in carbon compliance to the provincial TIER fees in 2023. That could rise above $10 million this year as rates rise.

General power prices plunged this winter and spring with a wave of new renewable projects coming online in cooler weather, leading to questions of cost competitiveness of new gas plants.

The carbon capture outlook is also unsettled as the energy sector lobbies for federal subsidies on large projects.

This spring, Capital Power announced it would suspend work on a planned $2-billion CCUS hub, but on Wednesday, Atco and Shell announced it would proceed on a joint CCUS hub venture, though no estimate was provided.

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