In a stunning and historic move, Alberta elected a majority New Democrat government on Tuesday.

The Progressive Conservatives, which finished in third place, consistently mismanaged the environmental and climate change file.

Ralph Klein, controversial premier from 1992 to 2006, despised the Kyoto Protocol and infamously flipped the bird at an activist who was protesting against a new Al-Pac pulp mill. Subsequent premiers often talked about improving environmental regulations, but seldom acted on it.

It’s yet to be known how different things will be under the NDP, but their win certainly marks a significant shift in sentiment.

“Together, we need to start down the road to a diversified and resilient economy,” newly crowned Alberta Premier Rachel Notley said in her victory speech. “To end the boom-and-bust roller coaster ride we’ve been on for far too long. It won’t happen overnight. But we must start, and we will.”

Notley also noted that she looks forward to working with Prime Minister Stephen Harper and other premiers on a “national approach to the environment and to Canada's energy sector that builds bridges and opens markets.”

Notley has said she won’t continue to promote the TransCanada Keystone XL and Enbridge Northern Gateway pipelines, but is in favour of Kinder Morgan’s Trans Mountain and TransCanada’s Energy East.

“It’s unclear, so far, what the NDP will do with the oil and gas sector, particularly the oilsands which is the fastest growing source of GHGs in Canada,” said Ed Whittingham, executive director of the Alberta-based Pembina Institute. “We’re eagerly awaiting their plan for dealing with it.”

The NDP’s platform was vague when it came to greenhouse gas emissions, saying the party “will take leadership on the issue” and “first steps will include an energy efficiency strategy and a renewable energy strategy.”

Those are both crucial policy points, especially when one considers the PCs have delayed the release of their renewable energy strategy since 2008. The climate change framework — originally intended for release last October — was allegedly being released in June. It’s unclear what the change in government will mean for that, or what the NDP’s plan is for augmenting the current, esoteric carbon levy.

“What we want now is for the new government is to really show the immediacy of the problem and tell the bureaucrats that those plans have to get done,” Whittingham said regarding the framework.

The NDP also committed to phasing out coal-fired power stations (the incredibly polluting fossil fuel is currently used for 43 per cent of electricity generation in the province) and expressed an intention to implement a green retrofitting loan program to help Albertans reduce energy usage via installation of solar and new furnaces, windows and doors.

The NDP also committed to diverting remaining money allocated to carbon capture and storage — a controversial technology former premier Jim Prentice once dubbed a “science experiment” — to public transit.

A more contentious component of the NDP’s platform involves a review of non-renewable resource royalties — called the “Resource Owners’ Rights Commission” — which would examine the amount of money the province makes from its oil and gas resources. While such a review wouldn’t automatically translate to increases in royalties (which sunk former premier Ed Stelmach), it does have energy sector CEOs concerned.

Any money made from “incremental royalty revenue” would be channelled into the Heritage Savings Trust Fund, the province’s sovereign wealth fund, which would then be used to invest in renewables or diversify the economy. That particular idea was critiqued by Andrew Leach, professor of energy policy at the University of Alberta, in a detailed Maclean’s feature on the NDP’s energy policies.

“If the premise is to use resource revenues to provide low-cost capital to otherwise non-viable economic activity in the province today, I’d call that spending and dispense with the need to flow the dollars through a fund,” he wrote.

The NDP’s infatuation with refining raw bitumen is something else that Leach (as well as fellow Maclean’s columnist Colby Cosh) has critiqued. In addition to being potentially uneconomical due to sheer investment costs and lack of comparative advantage (contrasted with, say, Texas or Louisiana), refineries would only increase Alberta’s reliance on petroleum products and services, writes Leach.

A surprising omission in the NDP’s platform was details about oilsands monitoring and regulation, something the PCs were often criticized for. The Alberta Environmental Monitoring, Evaluation and Reporting Agency was created in 2014 as a joint agency between the federal and provincial government, with funding from the energy sector.

But in the October 2014 auditor general’s report, it was noted that the agency’s annual report for 2012-2013 was delayed 15 months, “lacked clarity and key information and contained inaccuracies.” As a result, the auditor general suggested the governments could “fail to carry out their plan for monitoring the environmental impacts of oil sands development.”

At this stage, there are more questions than answers about what the NDP will mean for Alberta on the energy and environment file — but one thing’s for sure: those concerned about climate change have more reason to hope today than they did yesterday. 

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Think of Norway and your mind likely conjures up a Narnia-like folklore: vikings, salmon, fjords, Svalbard reindeer.

But there’s another element — albeit slightly less fabled — that’s been added to the list recently: the Government Pension Fund Global. It’s also known as the “most successful sovereign wealth fund in the world,” according to a February 2015 report from the MacDonald-Laurier Institute.

It might not be popular enough to inspire a cable television show, but it’s prominent nonetheless.

“There’s almost this myth about Norway,” acknowledges Andrew Leach, energy policy professor at University of Alberta, referring to Norway’s sovereign wealth fund.

The investment fund, created in 1990, now houses $1 trillion (it’s not a typo) in savings from non-renewable resource revenue. As oil prices have plummeted, comparisons between the Norwegian reserve and Alberta’s Heritage Savings Trust Fund have spiked. Alberta Oil editor Max Fawcett jested that a CBC News feature from late March was “probably the 429th time in last year” that a Canadian news outlet had compared the two.

And with the increase in the number of comparisons has come a surge in the number of critiques of that comparison — complete with a new term born in the Twitterverse: "Norwailing."

On March 26, Fawcett published his piece Why we're not like Norway, which looks at the country's different tax regimes (as in, in Norway citizens pay enough taxes to cover program spending), the subsidized history of extracting oil from the oilsands and the differences between Alberta as a province and Norway as a country.

A few days later, the National Post published an argument by Stephen Gordon, an economics prof at Laval, that the proposition ignored the sheer amount of oil left in Alberta compared to Norway and oversimplified the unique fiscal responsibilities of a province (think: transfer payments to the feds).

Also hopping on the bandwagon with provocative swagger was Maclean's writer Colby Cosh, who wrote “The case for blowing Alberta’s oil riches."

What to make of all of this? Well, first off let's look at why the Alberta vs. Norway makes sense. Both are industrialized places with social-democratic values. Both rely on resource revenues for a decent chunk of revenue (22.6 per cent in 2014 for Norway, almost 18 per cent for Alberta). Comparing Alberta to Norway certainly makes mores sense than comparing Alberta to Saudi Arabia or Venezuela.

Alberta’s Heritage Savings Trust Fund was created almost 40 years ago by former premier Peter Lougheed with a one-time investment of $1.5 billion. Since then, the fund has dwindled in priority. At last count, it held $17.4 billion in oil and gas revenue. That’s less than two per cent of the amount in Norway’s savings account. (That makes 430 comparisons this year so far.)

Getting trapped in the saving vs. spending debate is a red herring, argues Mitchell Anderson for The Tyee: "What is missing from these arguments is that you can't save what you don't have. Alberta has done such a wretched job of capturing public wealth from a globally significant public resource that arguing about savings versus government spending is an exercise in red-herring hair-splitting."

He also breaks down which place is doing a better job of capturing public value from a public resource.

"Dividing resource revenues by production reveals some shocking figures. Norway realized revenues of $87.69 per barrel in 2013. Alaska managed $38.54. And Alberta? Just $4.38 — one-twentieth what our Norwegian cousins managed to rake in," Anderson writes.

Back in Alberta, that money has flowed into corporate coffers instead of into the public bank account.

“They chose, rather than putting a torch to the money, to transfer into another form of capital — from a natural resource into one that accumulates interest for them in perpetuity,” explains Greg Poelzer, professor of political studies at University of Saskatchewan and author of the MacDonald-Laurier Institute report. “Sometimes it’s seen that this is a social-democratic orientation that Norway’s taken. Quite the opposite. They’re ruthless capitalists and understand fiscal conservatism and capital finance.”

On the flip side of the coin, Leach says that the comparison to Norway just doesn’t recognize the history of the resource. Back in Lougheed’s day, Leach points out, there was an incredible amount of excess revenue due to oil embargoes. There was too much money not to invest. But then came the oil glut of 1986. Investments in the fund plummeted with the returns. But by 1999, revenues had bounced back.

“If you look at Alberta, as far back as the 2000s and such times, we’ve always had the view that our future revenues are going to be greater than our current revenues,” Leach says. “This, from an economics perspective, is not good motivation for savings: it’s the equivalent of taking someone in their first job and saying ‘you should save now so you have time to spend when you’re a well-paid executive.’ ”

As Anderson notes, the royalties game is at the heart of the issue. Remember when former premier Ed Stelmach introduced a 20 per cent hike in the royalty rate back in 2007? That didn’t even last 1,000 days. Leach emphasizes that while another royalty hike wouldn’t pressure companies out that have already enormously invested infrastructure, it certainly wouldn’t encourage future prospectors.

That said, everyone from the Fraser Institute to the Canadian Centre for Policy Alternatives can agree that Alberta shouldn't be relying on non-renewable resource revenue to fund its operating expenses, so something has got to change.

Amin Asadollahi — oilsands program director at Pembina Institute — argues that growing the savings fund would serve to protect the economy from the boom-and-bust cycles the province is currently experiencing. Eventually, those dollars could be invested in sectors that are less prone to uncertainty and high levels of emissions.

“If the capital investments are targeted appropriately, they can also support sectors that might be disadvantaged as a result of the resource boom,” he says. “There’s the focus on one sector, the governments can use these kinds of capital investments to incentivize growth in other sectors. I think you can guess which sectors I’m talking about here: renewable and low-carbon pathways.”

Poelzer defends the Norway comparison for similar reasons: namely, that the amount in the Norwegian fund extracted for general revenue serves as a buffer for supply shocks like the one Alberta is current undergoing. Added to its glory is that the principal is never touched, only the interest. Poelzer compares the outcomes — massive and predictable investments in roads, schools, welfare — as the golden eggs of a white goose, boosting competitiveness, education and well-being.

But he’s not naive about the significance of social consensus. Albertans aren’t exactly well-trained in delayed gratification. Some simply work here for a few years before moving somewhere with a better view of the ocean. Norway sports heavily regulated immigration and taxation. Most Albertans are incredibly averse to the latter, making it difficult to fill the gap that investments in the fund would require.

“The interprovincial migration in Lougheed’s day was nothing like once the expansion of the oilsands took place. Then, there were greater political values and heterogeneity and a weaker social consensus," Poelzer says. "When we ran into fiscal trouble in declining oil commodity prices during Getty and his successors, there wasn’t the political consensus to stay the course. That’s where the wheels came off. And they’re very difficult to put back on.”

In Alberta’s greatly anticipated budget, released on March 26, the provincial government committed to halving its reliance on non-renewable resource revenue for budgeting by 2020, from its current level of 100 per cent. The remainder will pay off debt and get invested in the fund.

Asadollahi says that's a good sign. But how the gap left by resource revenues will be filled is yet to be determined.

“If it’s just a question of, ‘Would you like to have a trillion dollar sovereign fund,’ the answer is, ‘Yeah, sure, I would love to,’” Leach says. “But are we prepared to reduce government expenditures and/or increase government take?”

Image Credit: Fjordtravel.no

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.