Is Alberta Innovates working?
A bureaucratic shuffle leaves some grasping for a bygone era of innovation
How and where the province spends its research dollars is one of the most debated aspects of Alberta Innovates. For a province struggling to cope with a tide of criticism from opponents working to undermine so-called “dirty oil,” one of the most important functions of Alberta Innovates is its energy arm. It is designed to provide groundbreaking new ways to clean up and improve industry.
But rather than support smaller firms for whom government cash might be the difference between success and failure, much of the spending goes to support companies that arguably don’t need a hand up. Last year, for example, Alberta Innovates funded work with a long list of billion-dollar-plus companies that includes just about every major oil corporation in the province, from Shell and Imperial Oil to Husky Energy, Statoil, Japan Oil Sands Canada Limited and ConocoPhillips.
Big industry also has major influence over the energy arm’s operations. Its chairman, Eric Newell, served 14 years as CEO of oil sands miner Syncrude Canada Ltd. The vice-chair spent seven years as a senior vice-president with Petro-Canada. Others on the board have significant experience with other major corporate players, including Agrium, Nova Chemicals, Nexen Inc., Suncor and Capital Power Corp.
Much money also flows to university researchers. But small companies feel shut out. “Study after study says that if you want to actually make progress, the innovators are little companies. But if you actually look at their research criteria, they uniformly always want big companies,” says the CEO of one small company, which has tried and failed to obtain money from Alberta Innovates, and didn’t want to be named.
The province believes spending on larger firms makes sense − because those are the firms that have research budgets. “Small and medium enterprises are the ones that can’t fund that research. They’re just not big enough, or they can’t make the leap from a great idea to a great product,” says Kenny, the government spokesman.
But that same logic might suggest it’s in small companies that provincial innovation funding is most needed. That view is shared by Sustainable Development Technology Canada, the federally bankrolled clean-tech investment fund. Fully 94 per cent of the companies it supports are small and medium enterprises (SMEs) − largely because it’s those companies that seem best suited to bring about big change.
“The intellectual property holders and value proposition growers are usually SMEs,” says SDTC’s CEO Vicki Sharpe. What Alberta Innovates does, in particular with universities, is “valuable” early stage work, she says. But she is skeptical of big industry’s innovation credentials. “Most large companies are focused on their core business. They don’t necessarily look at how they could improve matters.”
On June 6, 1974, Alberta embarked on a project that did change history. The premier then was Peter Lougheed, and he had a burning ambition: he wanted to figure out better ways to draw oil from the bitumen-rich sands around Fort McMurray. And so, nearly four decades ago, he used an act of the legislature to create the Alberta Oil Sands Technology and Research Authority, or AOSTRA, as it would come to be known.
AOSTRA was launched with $100 million − the equivalent of $445 million in today’s dollars. It would, in the 18 years that followed, spend nearly five times that much. It was Alberta’s moon project, and it was expensive, ranking as one of Canada’s costliest government research programs by the standards of the day.
And it worked. After years of examining numerous technologies, AOSTRA was instrumental in developing one called steam-assisted gravity drainage (SAGD). Using SAGD, companies were able to pull oil from those parts of the oil sands too deep to mine. There is a clear line between the effectiveness of SAGD and the global acknowledgment last decade that Alberta’s oil reserves, at over 170 billion barrels, were the second- largest on Earth.
Alberta Innovates is no AOSTRA. Its mandate is nowhere near as clear. Its success is more disparate, less dramatic and more difficult to see. This has become a source of frustration for critics − including no less a figure than the man who once led AOSTRA, Clem Bowman. He is primarily familiar with the energy arm, which he says “does not have the independence to act, and certainly doesn’t have the financial clout to make big things happen.”
Now that industry has a better sense of how to extract oil from the oil sands, Bowman thinks the next major project needs to be figuring out what to do with all that oil. Rather than ship it all out of the province, “we have to have a national mission here to extract full value out of the bitumen from the oil sands,” he says.
Others might argue that a similarly pointed effort could be made to wring substantial emissions savings out of an industry whose greenhouse gas emissions have made it a target of global criticism. Those who work with Alberta Innovates, however, say such a model no longer makes sense. “The era of AOSTRA came to an end because it was time to come to an end,” says Eddy Isaacs, chief executive of Alberta Innovates Energy and Environment Solutions. “We’ve entered into a much more complicated era, where energy and environment are one.”
As an example, he points to how innovations are transforming waste into a valuable commodity − from dirty hydrogen that could power fuel cells, to carbon dioxide that can be used to bring more oil out of conventional reservoirs. “Because of this integrated energy and environment economy, I think that a single focus is not suitable for this era.”
Yet for a province searching for answers to a vexing set of energy questions, it’s growing clear that Alberta Innovates isn’t doing enough. That, at least, is the view from the top. Before becoming premier, Alison Redford made numerous pledges to boost the innovative spirit of the province. Among them was a pledge to create an organization “aimed at designing next-generation technology for the energy industry.”
In comments she provided to the Alberta Council of Technologies, she said she knew what to base it on. But it wasn’t Alberta Innovates. It was AOSTRA. “I will … create an organization modeled on the Lougheed-era Alberta Oil Sands Technology and Research Authority,” she said.
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