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Five Key Decisions for BC's New Government

Energy issues featured prominently in the recent provincial election, with strong accents on both audacious development and sustainability. The new government faces immediate decisions on a couple of key energy issues: liquefied natural gas exports and BC Hydro’s planning. What do these look like from a sustainability perspective?

Christy Clark won the last election with a clear mandate to pursue liquefied natural gas (LNG) exports. But voters also showed strong interest in climate change and sustainability issues, electing BC’s first ever Green Party member, climate change scientist Dr. Andrew Weaver.

Assuming the government accepts a sustainability mandate, how could it approach the two critical energy issues it must now address: LNG exports and BC Hydro’s energy planning?

LNG exports have huge implications for BC’s energy system and its greenhouse gas (GHG) emissions. Gas liquefaction consumes huge amounts of power, and if that power comes from fossil fuels, the emissions would challenge BC’s ability to meet its legislated GHG reduction targets.

Of the half-dozen or more LNG export projects proposed for the Prince Rupert/Kitimat areas, three are advanced enough to have received export permits: Kitimat LNG, Douglas Channel LNG and Shell’s LNG Canada.

To power the liquefaction trains of these three plants would require roughly 20,000 gigawatt-hours per year of electricity, or if natural gas is the energy source, 90 million gigajoules per year of gas. For scale, this represents a third of BC Hydro’s entire current demand for electricity, or if gas is used, six percent of the marketable gas produced in BC annually.

The GHG emissions from using gas to power the liquefaction would be some three million tonnes of carbon dioxide per year, five percent of BC’s current total emissions, and fully a quarter of the amount by which BC must reduce its emissions to meet its legislated 2016 target.

LNG Decision #1:

If BC Hydro is required to power the LNG plants, it would have to acquire, in the space of four or five years, a bigger block of power than it has ever acquired before. This power would be much more expensive than that from BC Hydro’s existing dams. Rates for all customers would face strong upward pressure, at a time when rates are already under pressure to rise by fifty percent or more, due to necessary system refurbishments.

Such large rate increases will have large political repercussions, and so I predict that the LNG plants will be required to power themselves, despite the Premier’s claim that the Site C hydro-electric dam must be developed to serve them. This decision may already have been taken between government, industry and BC Hydro, but a public announcement will likely await the announcement of the first LNG plant that makes a final decision to proceed.

LNG Decision #2:

If the LNG plants do not rely on BC Hydro for their power, should they be required to use renewable energy to meet some or all of their load?

The LNG proponents would doubtless prefer to power their plants with well-tried natural gas-fired technology, rather than relatively untried electrically powered technology. They will also prefer natural gas for its lower cost: it’s about half the cost of electricity priced at BC Hydro’s industrial rates. Renewable energy would cost even more. Wind energy, for example, could cost six times as much as natural gas per unit of energy, leaving aside issues of technology and reliability.

The problem with gas-fired liquefaction is, of course, the huge amounts of GHG emissions from what is a very energy-intensive process. The three megatonnes of emissions from the Kitimat, Douglas Channel and Shell proposals represent a quadrupling of the emissions from energy use in BC’s entire oil and gas sector.

Although BC’s Climate Action Plan does not allocate emissions reduction targets between the different sectors of BC’s society, clearly all sectors must do their fair share to meet the goals. Carbon offsets are not a credible solution, nor are promises of future carbon capture and storage technologies.

Despite the higher cost of energy, the only real solution is to power the operations with renewable energy. Government promised us the greenest possible LNG industry, and British Columbians should insist on this.

LNG Decision #3:

Of course, this only addresses the emissions from liquefying the gas, not from the combustion of the gas at its point of use, presumably in China, Japan or elsewhere in southeast Asia. In promoting LNG exports, the Clark government has claimed that the exports would displace more carbon-intense fuels abroad and so serve as a ‘climate solution.’ This is specious. It is just as likely that LNG exports would contribute to an overall increase in fossil fuel use, or that they would displace renewable energy and conservation. There is clearly no linkage between BC’s coal exports and its LNG exports. On top of this, the claims that natural gas is a more climate-friendly fuel ignore natural gas’s large GHG footprint from the leakage of methane into the atmosphere, which could make its climate impact as bad as that of coal, or worse.

Government should firmly commit to being honest with British Columbians on this topic, so that we can have a real discussion.

The second key energy issue – BC Hydro’s planning – concerns necessary choices between the energy resource types that BC Hydro should pursue, and decisions on how to handle the virtually unavoidable electricity rate increases.

BC Hydro Decision #1:

Premier Christy Clark and BC Hydro both say that the Site C dam is needed as soon as possible. But paradoxically, BC Hydro also says that it should ease off spending on its energy conservation programs, which save energy at about half the price per kilowatt-hour as it would cost to build Site C.

During the last review of BC Hydro’s energy conservation plans in 2012, BCSEA filed evidence showing not only that energy conservation is the most cost-effective resource available to BC Hydro, but that Hydro could cost-effectively double its spending to achieve double the conservation results. BCSEA’s analysis of BC Hydro’s draft 2012 Integrated Resource Plan shows that Site C is simply not needed at this time because of the under-exploited energy conservation resource. This holds even if BC Hydro is called on to power the first two LNG projects, Kitimat and Douglas Channel. And the earliest in-service date for Site C is about 2023, too late for the LNG plants, which could come on line as early as 2018.

BC Hydro will file its updated draft Integrated Resource Plan with government in August 2013, with an analysis of Hydro’s expected electricity load and the optimal mix of resources to meet it. Government should allow for extensive public input and discussion before British Columbians are asked to accept the need for such a large, expensive and disruptive project as Site C. If it ever is developed, it should be for the needs of BC as a whole, not for the benefit of a particular industry.

BC Hydro Decision #2:

Meanwhile BC Hydro is under great pressure to apply for permission to increase its rates. Last year, the government dictated a rate increase of seventeen percent over three years – a significant increase, but half of what BC Hydro initially applied for. To compensate, BC Hydro has postponed needed capital upgrades, shed needed staff and put expenses into deferral accounts, effectively paying for expenses with debt that must be collected from future ratepayers.

The new government faces an uncomfortable choice between allowing BC Hydro to increase its rates a lot, or continuing a program of political interference in BC Hydro’s affairs to maintain ‘families first’ appearances. Also, some of BC Hydro’s industrial customers – especially in the pulp and paper sector – are economically very stressed and supportive of any and all means to postpone a rate increase. This can’t last. The right choice is obvious but painful. But there are four years until the next election, and putting it off will only make it worse.

BCSEA will be watching events closely in the next few months, and giving government constructive input on issues that we and our members care deeply about.