The one thing that politicians almost never turn down is more tax revenue. That means even the most hardened ideologues usually become pragmatic when it’s finally time to govern.

To some extent, that seems to be the case with Alberta Premier Rachel Notley, who helped lead the left-leaning New Democratic Party (NDP) to a historic electoral upset last May in what some have characterized as Canada’s most conservative province.

To recap, the NDP’s victory at the polls was a decisive end to the 44-year reign of the center-right Progressive Conservative Party. In Alberta’s 87-set Legislative Assembly, the NDP’s representation jumped to 53 seats from four, while the Conservatives saw their total plunge to 10 seats from 70.

With the NDP ascendant, the resource-rich province’s energy sector faces two major policy changes at the worst possible time: a raft of green-energy initiatives and a potential increase in the province’s royalty taxes on energy production.

Although there’s never a good time for government to impose new costs on business, doing so at the height of a downturn could prove especially treacherous for companies and politicians alike.

Draconian policymaking could effectively destroy the long-term profitability of a sector and, in turn, destroy a key source of tax revenue for all the goodies that politicians promised to the electorate.

During boom times, for example, royalties from the oil and gas sector accounted for about one-fifth of Alberta’s tax revenue, but have since plummeted following the collapse in crude oil prices.

Consequently, Alberta’s financial woes have prompted Notley to work closer with the energy sector than some of her supporters may have anticipated.

According to the Financial Post, the provincial government’s fear was that overly stringent regulations would result in the cancellation of projects already under development, resulting in heavy liabilities for taxpayers.

These concerns led Notley to broker an important compromise between industry players and activists while drafting the government’s Climate Leadership Plan: The deal caps carbon emissions from the oil sands at 100 megatonnes per year, up from 70 megatonnes at present.

That leaves some room for growth, with estimates that the cap would allow an additional 1 million barrels per day of production from the oil sands, up from current production of 2.3 million barrels per day.

The province will also levy a carbon tax of $20 per tonne in 2017, rising to $30 per tonne thereafter, which is apparently better than the $40 per tonne some firms had anticipated.

And there were some big names at the bargaining table, including the heads of Canadian Natural Resources Ltd., Shell Canada, Cenovus Energy Inc. and Dividend Champion Suncor Energy Inc. (TSX: SU, NYSE: SU).

As evidenced by their presence on stage when the government made its announcement, these firms believe they got what they wanted—or at least a deal they could live with.

Of course, these policies create winners and losers. Firms such as Imperial Oil Ltd. and MEG Energy Corp. were left out of the negotiation and are still mulling over the consequences.

Green From Green

The long list of new policies also creates potential winners in the clean-energy space.

The government has called for coal-fired power generation to be phased out by 2030, and that means cleaner gas-fired power along with renewable energy, such as wind and solar, will be needed to replace it.

Alberta hopes to increase renewable energy’s share of power generation to 30% by 2030 from 9% at present.

Although most investors think of Enbridge Inc. and Dividend Champion TransCanada Corp. (TSX: TRP, NYSE: TRP) as pipeline companies, both firms also operate utilities that accounted for 8.5% and 36.6% of fiscal 2014 revenue, respectively.

And both firms are already among Canada’s largest renewable power producers. While Enbridge owns 2,065 megawatts of wind power across the country, TransCanada owns 488 megawatts of wind power and 86 megawatts of solar power.

As Patrick Kenny, a Calgary-based analyst with National Bank Financial, told Bloomberg, “these renewable power contracts are going to go to the bidder that needs the least amount of government support, developers with most financial flexibility and overall lowest cost of capital” such as Enbridge and TransCanada.

And with natural gas as the reliable backbone of power generation until technology overcomes renewable energy’s intermittency, both firms should get a boost from their gas infrastructure assets.

Demand for gas is forecast to rise 1.5 billion cubic feet per day in the years ahead, up from 4.9 billion cubic feet per day currently, as gas-fired power plants replace coal burners.

Enbridge is Canada’s largest gas distributor, while TransCanada is one of western Canada’s largest gas storage providers.

Regime Change?

The last piece of the puzzle for energy producers is what will happen to Alberta’s royalty regime. The government expects to deliver the results of its royalty review by early next year, at the latest.

Alberta’s current royalty rates range from 1% to 9% of a producer’s gross revenue, depending on the price of oil, until a project has recouped its initial cost of investment. Once that hurdle is cleared, royalties are then derived from net revenue in a range from 25% to 40%, again depending on the price of oil.

Thankfully, the NDP appears to be taking a pragmatic approach on this front as well.

According to the Calgary Herald, the province’s energy minister, Marg McCuaig-Boyd, recently told an industry lobby that the government “has no desire to make things more difficult for producers” and “that there is no assumption rates will rise.”

The government has already agreed to keep royalties the same until the start of 2017.

As for what comes thereafter, McCuaig-Boyd noted that the government is taking other costs that the energy sector will incur into account, including those resulting from the climate plan.

In characterizing her discussions with the industry, McCuaig-Boyd said, “We’ve collaborated all along with them. We promised them from the beginning that there wouldn’t be any surprises and we’ve been in constant contact with lots of them.”

So at the very least, it looks like the NDP understands that it shouldn’t kill the goose that laid Alberta’s golden egg.