“It’s a great time to study energy markets.”
I’ve taught energy economics, policy, and/or regulation in some form or another most years since I came to the University of Alberta in 2006. Every term, it seems, there is a list of topics that leads me to believe that this is, definitely, a great time to be a student in one of these classes. They’ll think back with awe, I tell myself, to all of the stuff that was happening when they took their first in-depth class in energy. And they’ll marvel at what we didn’t know then that we know now. And, laugh about the things we thought we new that were oh so wrong. I lead off my classes with some variant of “it’s a great time to study energy,” year after year after year.
Imagine the first class in the fall of 2008, with oil entrenched in its freefall from the record $147 per barrel prices to eventually see prices back to the $30s by the end of the semester. I taught classes in the Winter of 2016, excited to share my experiences from building a new climate policy for Alberta but, as the depths of the oil downturn really began to sink in, it was clear that wasn’t the most important topic for those students. For a time, it seemed that we had a new pipeline drama to focus on every year: Northern Gateway, Keystone XL, Energy East, Keystone XL (again), TransMountain, and Keystone XL (again), along with Coastal Gas Link and the Line 9 Reversal. Big policies became classroom fodder too: not just carbon pricing in Alberta in 2007 and then nationally a decade later, but also major green energy procurement policies in Ontario, BC, and Alberta which were each controversial in their own right. We had two royalty reviews in Alberta, along with major reports on nuclear power and carbon capture and sequestration. I wasn’t teaching during much of the debate over the Ontario coal phase out, but I did teach a class after I worked on the Alberta coal phase out in which a former mayor of one of Alberta’s coal towns was registered. As is often the case, I think I learned more from them than they learned from me in that class. Several oil and gas booms and busts have been part of first-day-of-class conversations with students as I convince them that they are lucky to be in this class at this time. The only time I wasn’t teaching energy was from 2019-2022 (don’t ask), so I missed discussing COVID, negative oil prices, the start of the war in Ukraine, and a few other things with new cohorts of students. I think it’s safe to say that there will always be a reason that any term is a great term to study energy markets.
The same has been true of the law. Challenges to pipelines and the collision between Treaty Rights and Canada’s pro-oil governments and its energy industry first drew me into the law and crept into my teaching in business and economics classes. Later, the courtroom fight over carbon pricing and Jason Kenney’s challenge to what he falsely called The No More Pipelines Act (the Canadian Energy Regulator Act, also part of Bill C-69, that determines the approval of new pipelines was never challenged) were the reason that it was a great time to study energy, environmental or constitutional law (and the reason I chose to study those subjects too, on sabbatical in 2019-20). Orphan wells and chorus frogs each had their days in Court as we learned that bankruptcy can’t shield a firm from its environmental obligations and that endangered species can stop development in its tracks. And, more recently, the recognition that the cumulative effects of resource and energy development can, in and of itself, infringe upon Treaty rights (at least in BC) sent shockwaves through the energy sector. This fall, it was single-use plastics and the fall of the Impact Assessment Act at the Supreme Court of Canada that dominated our classroom discussions. It was, you won’t be surprised to hear, a great term to study energy and environmental law.
This term, I think I might be more excited than I’ve been in a long time, as there’s just so much going on. Climate change, of course, continues to dominate the energy policy landscape, but that’s not all. Even absent more aggressive action on climate change, the IEA is now predicting that we’ll reach peak fossil fuel consumption this decade as cheap, renewable electricity and electric vehicles disrupt energy markets. Solar power is revolutionizing the global energy landscape and, along with batteries, electrolysers, and electric vehicles, we are witness to our energy markets becoming technology markets. I would never have imagined, especially when I was teaching about Ontario’s $800/MWh feed-in tariff for solar 15 years ago, that we’d soon be talking about 400GW of annual installed solar capacity worldwide, and policy wonks would be arguing about whether 1GW/yr installation rates were possible. And now, since the US has dramatically scaled-up their efforts as the Inflation Reduction Act has put the power of the US Treasury behind the energy transition and as China ramps up its clean energy industries, we might look back on the last few years as an era of slow progress.
Closer to home, we’ve got a renewables moratorium and a potentially major electricity market redesign coming in Alberta in the next few weeks. Our Premier is musing about an electricity Crown Corporation (can we please call it the Alberta Electricity Company, or AECO?) We are preparing for massive build-outs of hydrogen and perhaps carbon capture and sequestration projects. And, we’re fighting with Ottawa. Ottawa has introduced more policy initiatives than we could hope to cover full in one term. On top of the carbon tax and clean fuel regulations, there will also be a revised Impact Assessment Act, the final Clean Electricity Regulations, and likely the first formal draft of an oil and gas emissions cap. I won’t be wearing my Emissions Cap for the first class, although I might wear it later in the term to score some nerd points. And, Saskatchewan’s Premier is trying to get someone (but definitely not him) sent to jail for not paying the carbon tax. And, of course, there’s the Sovereignty Act. Can we just ignore that last one, please?
There’s also lots of stuff you probably haven’t heard about that will matter a lot. In December, utility tribunals in Ontario and BC made clear that ratepayers will not be covering all the costs of assets stranded in the energy transition, setting the stage for a major showdown with utility companies. The inflation and affordability crisis has led to showdowns between regulators and governments, as each tries to find a balance between serving a growing population, keeping costs down, and providing a reasonable return on investment for utilities. In Alberta, we’ve seen our regulatory tribunal’s decision to leave substantial costs due to wildfire damage with a regulated utility sent back by Alberta’s Court of Appeal for a new hearing. And, it’s been a little over a year now since we first saw utilities arguing (in Quebec, first) that climate risk means that they should be compensated with higher rates of return. In addition to energy economics, I’m also teaching utilities law and it’s a great time to study that too.
And, technology is positioned to fundamentally change how we use, buy, and sell electricity. The first of a new trend, so-called virtual power plants, have been set up in Alberta. These entities plan to aggregate consumption and generation from homeowners and commercial entities in Alberta’s cities and sell the power generation or reduced consumption as a service on Alberta’s grid. Where we used to fire up a peaking plant to meet supper-time peaks on cold, winter-days, in the near future we might call on a virtual power plant to discharge power from thousands of grid-connected electric vehicles to cover the shortfall or to turn down the dial on thousands of electric water and space heaters just enough to shave the demand peak a bit. And, that’s not the only way tech is changing our power markets: the electricity demand for data centers and cryptocurrency mining grows every day.
And there’s more. Lots more. LNG Canada, TransMountain, Alberta’s renewables boom, Muskrat Falls and the Atlantic Loop, carbon contracts for differences, and many others. I promise, dear students, that we won’t try to cover all of it.
This year, I think it’s another great term to be a student of energy markets or utilities law, but it’s going to be another tough year for your Professor as I try to keep everything current for you.
Enjoy it, and I hope you all look back on the experience positively in a decade from now.
PS: I updated my Energy Charts too. Don’t worry.
I don't know if the study of energy is require so much as a review of everything we have already done and in many cases abandoned. Nuclear has had a 50 year hiatus, the first wind turbines were in the Cochella valley about 40 years ago, and long distance power transmission using HVDC tech is half a century old. Even heat pumps have been around for 30 years +. What is missing though is the limitations on the tech that resulted in a lot of the ideas being sidelined.
That sounds very good Professor Leach. Have you considered putting a camera in the classroom and getting U of A to put one of your courses online? We (the Alberta public) could really use a more rigorous treatment of these topics than we seem to be getting from other sources!