Alberta’s liability management system addresses the environmental liabilities of coalmines through the Mine Financial Security Program (MFSP), which has been due for reform since an Auditor General’s report in 2015 found that the MFSP overstated asset values in a manner that could result in security amounts inconsistent with the “polluter pays” objective of the program. The MFSP currently has $1.47 billion in security compared to an estimated $31.39 billion in liabilities. Coalmine liabilities have not received much attention for the last few decades because they have been relatively small beside the gigantic liabilities of the oil sands mines that are also part of the MFSP, but coalmine liabilities have the potential to become significant again with the new wave of coalmines now seeking licenses.

The AER has hopefully been trying to design the new system for the last five years, if not longer, and Albertans should be concerned about this new liability system being designed behind closed doors. If the new liability system is developed in meetings between the AER and the energy industry to the exclusion of the public, the new system is unlikely to protect the interests of Alberta’s citizens in general and rural landowners in particular.

So what’s the hold up? My best guess is that the major players in Alberta’s energy industry are making contradictory requests of the government. Some companies are bitter-enders planning to pump Albertan oil for as long as possible, and looking for a reliable liability management system that protects them from paying for the risky behaviour of bankrupt companies. Other companies see the oilsands as an over-the-hill energy source and are looking to sell their assets, wave farewell to the province, and leave the smallest security deposits possible for their environmental liabilities. Whatever is going on, it should be going on where Albertans can see it.

Source: The 2020/2021 Orphan Fund Levy and the Missing Consultation on Environmental Liability Management Reform |