I must apologize for being an alarmist. I now discover there is no reason for concern about hydraulic fracturing, commonly called “fracking”. I have been alleging that this process of “mining” natural gas is dangerous not only to the atmosphere and the people around the process, but to the water used and the potential damage thereafter to the water table.
I now understand that there are no problems whatsoever with this process and that the scaredy-cats in places like New York and Quebec that have banned “fracking” – and the United Kingdom and the European Union that have limited it – are simply wrongheaded.
How do I arrive at my volte face?
I have examined the evidence carefully.
Harper govt gives seal of approval
First of all, we have our own fatuous Finance Minister, Joe Oliver, who insists that fracking is safe – chastising Nova Scotia for its recent ban – and then all you have to do is look up “safe fracking” on the Internet and you’ll see that he is right.
The Fraser Institute, which is, they allege, a “think tank” says nothing on the subject. Neither does the Canadian Taxpayers’ Federation, which normally can’t keep their mouth shut about anything. If these two honest, independent sources of the absolute truth are silent on “fracking”, we can be certain that all is well.
Rumours of LNG’s demise greatly exaggerated
There have been three very comforting reports in the press lately. We can start with the head of the BC LNG Alliance, one David Keane, who tells us that LNG is alive and well in BC and in a speech to Calgary energy barons (obviously a tough audience) makes no mention whatsoever of “fracking” – and you could be sure that he would have if it were a problem.
In the Toronto Globe & Mail, we are informed that the consortium led by Petronas assures us that LNG is alive and well in British Columbia and that it will proceed. This is enthusiastically seconded by Rich Coleman, the premier’s pet poodle on the project, although neither of them say just when this will happen. The encouraging news, though, is that not a word is mentioned about the massive increase in “fracking” required to power the industry – so we can assume from these unimpeachable sources that there is no problem there.
Exxon CEO bullish on fracking’s future
In the Vancouver Sun of March 5, there is an article containing an interview with Rex Tillerson, the CEO of ExxonMobil. In this interview, Mr. Tillerson is extravagant in his praise of shale mining and paints a very rosy future for this source of oil and gas. Again, encouraging to all, is that Mr. Tillerson doesn’t make any mention whatsoever about “fracking” so we know from the authority of ExxonMobil, that there’s no problem. (This is the same guy who infamously protested fracking-related infrastructure planned, literally, for his own back yard)
Fracking absent from BC LNG discussion
In our own province, the said Mr. Coleman makes no mention of “fracking” in any of his many statements, so knowing how trustworthy he is, we can assume that “fracking” is no problem in British Columbia.
Neither does Mr. John Horgan, Leader of the Opposition, and we surely know that if there were a problem with “fracking”, this talented opposer of wrong, would turn the full fury of his well-known temper on the government and the industry.
This evidence of the safety of “fracking” is fortified by the fact that our premier, known for her strict adherence to the facts, her candour and honesty, also doesn’t mention “fracking” – in fact calling BC LNG “the cleanest fossil fuel on the planet” – so we can assume by that omission that her credibility is behind the safety of this harmless process.
It can be taken, then, that hydraulic fracturing or “fracking” for oil and natural gas is harmless to the people and to the environment.
It follows from this that suggestions I have made about the release of methane gas by this process are nonsense. So are suggestions that it pollutes water. It can also be assumed that statements from scientists to the effect that, taking everything into consideration, fracked natural gas is as harmful to the atmosphere and contributes as much to global warming as does oil or coal, are unprofessional rubbish.
Rest assured
The lesson I take from this is that we are fortunate indeed in this province and this country to have men and women of such integrity and honesty looking after our industries and our governments. It would be sad, indeed, to ever think that captains of industry or leaders of government would shade the truth, much last tell lies, in order to feather their own nests or advance their own political prospects.
We are, in truth, lucky people and we should think about that once in a while.
I must say that the Captains of Industry and our political masters and mistresses hope we don’t think about it too much or too often.
Stephen Harper announces federal tax support for BC’s LNG industry in Surrey, BC (PMO)
Prime Minister Stephen Harper jumped on the BC LNG ship this week with the announcement of federal support for the embattled industry during a speech in Surrey, BC.
[quote]Prime Minister Stephen Harper today announced the Government’s intent to support the creation of new and well-paying jobs in the emerging liquefied natural gas (LNG) industry.[/quote]
“In order to ensure that Canadian natural gas can reach new and growing international markets, and make it accessible for new domestic uses, the Government intends to establish a capital cost allowance rate of 30 per cent for equipment used in natural gas liquefaction and 10 per cent for buildings at a facility that liquefies natural gas,” the PMO’s statement noted. “This tax relief will be available for capital assets acquired after February 19, 2015, and before 2025.”
Harper touted the job benefits from supporting the industry, yet many of the potential local jobs have already been promised to China, India and Malaysia through government agreements to import cheaper foreign temporary workers.
Meanwhile, even the enormous tax benefits the industry has already been granted can’t make up for the fact that Asian LNG prices have plummeted a record 61.7% over the past year – to a point well below the profitability line for BC exports. No wonder companies like Petronas, Chevron, BG Group, Apache, EnCana and EOG have already stalled on their final investment decisions or altogether abandoned ship on the fledgling industry.
It is a mark of sheer government incompetence – or utter neglect for the public benefit – to give an industry everything it asks for and still get nothing in return for the citizens of BC and Canada.
Asian spot market prices for liquefied natural gas (LNG) have plunged by a single year record of 61.7% since February 2014, according to Platts JKM (Japan/Korea Marker) – a leading source of benchmark prices for the industry.
Average prices for March delivery peaked at a historic high of $20.20 per million British thermal units (MMBtu) on February 14 ,2014. By February of this year, prices for March delivery had tumbled to$7.44/MMBtu – representing the largest year-over-year drop since Platts began tracking the market in 2009, and the lowest benchmark price for Asian LNG since 2010.
Said Stephanie Wilson, managing editor of Asia LNG at Platts:
[quote]Moderate temperatures and high buyer inventories continued to cap demand for spot cargoes in northeast Asia, despite the lower prices in March. Exacerbating the oversupply were cheaper competing fuels, which many utility power generators opted to burn rather than LNG.[/quote]
Taking its nuclear reactors offline post-Fukushima, Japan drove up LNG prices from 2011 on, sparking a global race to supply the Asian market with LNG. But subsequent weakening demand, increased competition and lower oil prices – to which Asian LNG prices are indexed – have all exerted significant downward price pressure on the resource.
What is the Clark government thinking?
This should leave British Columbians doubting the wisdom of betting the province’s economic future on Asian LNG exports – underscored by one after another global energy player backtracking on its investment plans.
These prices match up perfectly with predictions of two years ago by business news leader Bloomberg, which foresaw precisely a 60% drop in Asian LNG prices – the only difference is the speed at which the drop has occurred. Bloomberg saw it coming by 2020. In the same story, Bloomberg calculated this would mean a $6 million loss per tanker, pegging the break-even point for shipping LNG from North America to Asia at around $9/MMBtu (in some of Northern BC’s shale gas plays, this figure can be as high as $10-13/MMBtu). With current Asian LNG prices, we are already well below that point, calling into question the entire business case for BC LNG.
The following is the sequel to an earlier story by Will Dubitsky on the growing green economy and Canada’s failure to take advantage of it.
In the first part of this story for The Common Sense Canadian, I discussed how Canadian and Quebec leaders are largely ignoring the potential of high job creation, high growth green sectors, while China, Europe and the US are showing real leadership. Here, I will dig deeper into the policies and organizations that are foolishly banking on the Canadian resource-based economy as the key to economic development. Sadly, while President Obama sits poised to veto the Keystone XL pipeline, signalling the accelerating transition into a new era, Canada is being left behind.
Up to a trillion dollars in stranded fossil fuel investments
In keeping with Einstein’s definition of insanity, nearly all the economic experts will tell you we must keep doing the same thing over and over again and expect different results. Yet the signs are that the fossil fuel era is approaching its demise.
First, long-term energy and energy-related investments already favour the green economy – largely because the costs of clean tech are coming down.
Second, in the Summer of 2014, long before the recent plunge in oil prices, it became apparent that unconventional resources such as the tar sands, shale and offshore oil cannot be supported by market prices. As a result, Big Oil has already started to withdraw from major unconventional investments around the globe, otherwise known as stranded assets. This trend is becoming more and more evident .
The growing order of magnitude of stranded fossil fuel investments are very telling. Of the$2 Trillion invested in oil development in 2014, $930 Billion may never reach the return on investment stage – the makings of an investment bubble.
Unfortunately, financial institutions are not as diversified as they claim to be, totally bypassing the high growth, high job creation green sectors while maintaining the resource economy as integral to the majority of investment products/strategies.
Doubling down on unconventional energy
Meanwhile, Goldman Sachs has warned that the oil companies’ capital expenditures for investments in unconventional resources have “gone through the roof” and that their Reserve Replacement Ratio, the measure which investors use to rate oil companies, is not encouraging. (New Internationalist, November 2014)
Similarly, a UBS study concluded that the rapid decline in the costs of clean energy, clean transportation and green economy integration technologies – such as energy storage technologies – together suggest that the writing is on the wall for fossil fuels and point to a full-scale shift to a green economy by 2020. (Ibid)
Leaving it in the ground
This is about more than economics though. Governments around the globe are adopting strong climate policies which favour the green economy, acknowledging that 80% of fossil fuels must remain in the ground to avoid catastrophic climate change. That means that of the 12,000 gigatonnes of fossil fuel reserves, only 936 gigatonnes can be used.
$26.4 Billion/yr in subsidies to Canadian fossil fuels: IMF
Another issue is the fact that fossil fuels remain one of the most heavily subsidized sectors in the global economy. According to the International Monetary Fund, in US 2011 dollars, Canada spends $26.4B/year in direct and indirect subsidies (including health, climate change costs, etc.) for its fossil fuel sectors. This means that the unraveling of short-term thinking on fossil fuels will accelerate over time as the international community increasingly engages in addressing climate change. Put another way, the idea of shifting subsidies away from fossil fuels to the green economy will become increasingly attractive for policy makers.
Oddly enough, the representatives of the fossil sectors complain about subsidies for clean energy. The response of the European Wind Energy Association is that the wind sector could compete without any subsidies if it weren’t for the subsidies fossil fuels receive.
Consequently, from an investment perspective, clean technologies are the safer bet, free of the fluctuating, speculative prices we see with fossil fuels and destined to be favoured by increasingly aggressive government policies, further driving down prices.
Yet in Canada, only the NDP has committed to end fossil fuel subsidies, transfer the savings to clean technologies and introduce a cap and trade system.
NEB locking us into yesterday’s economy
As a result of the Harper administration’s changes to legislation on environmental impact analyses, the National Energy Board does not have the mandate to consider the biggest issue among all issues associated with TransCanada’s Energy East and other pipeline proposals – that is, the emissions stemming from tar sands development and downstream consumption of these fossil fuel products.
Compounding the limitations of the NEB mandate, the regulator has an “attitude problem”. This is very evident from the NEB’s rejection of oral cross-examination regarding certain types of questions, such as those submitted by distinguished energy expert Marc Eliesen on Kinder Morgan’s TransMountain pipeline expansion proposal.
Marc Eliesen is a former CEO of BC Hydro and Chair of Manitoba Hydro and served as a deputy minister in seven different federal and provincial governments. Since the NEB did not see it as necessary for TransMountain to address most of Marc Eliesen’s written questions, he withdrew as an intervenor/participant in theNEB Kinder Morgan review circus.
One can expect more of the same for the NEB hearings on Energy East.
Changing our laws to suit oil and gas
Just as it restricted the NEB’s environmental review mandate, the Harper government gutted the habitat protections in the Fisheries Act, at the request of Canada’s pipeline industry.
In other words, Canada is painting itself into a corner.
Both Justin Trudeau and Harper view Canada as a resource export economy and both revert to the denial of science to increase Canada’s dependence on resource exports.
The new energy paradigm
As alluded to my Jan 23, 2015 Common Sense Canadian article, yesterday’s economists, Harper and Trudeau and most of mainstream media, much like the climate change deniers would like us all to believe in a fairly tale that presents economic and environmental considerations as opposing forces for which there is a need for reconciliation.
This economy versus the environment spin is comparable to the debate of 100 years ago on the reconciliation of woman’s rights with the need for economic development.
Nearly all of the EU members are on track for their 2020 targets for a 20% reduction in GHGs, 20% energy from renewables and a 20% improvement in energy efficiency. Not resting on their laurels, in October 2014, the European heads of state agreed to a 40% GHG reduction target for 2030.
Then there is the incredible case of Germany, which outdid its own Kyoto Protocol objective of a 21% reduction of GHGs by 2012, having achieved a 25.5% reduction instead. But Germany is not an exception to the rule. For the same Kyoto period ending in 2012, the UK, Sweden and France reduced their emissions respectively by 23.4%, 18% and 10.5%.
[quote]We have witnessed three economic transformations in the past century. First came the Industrial Revolution, then the technology revolution, then our modern era of globalization. We stand at the threshold of another great change: the age of green economics.[/quote]
How long is it going to take for today’s economists to catch up?
Obama Keystone veto’s global ramifications
In closing, with Obama on the verge of applying his veto to Keystone, it may be helpful to read the article referred to below, which specifically deals with the matter of Keystone but could easily be recast as the case against TransCanada’s Energy East, Kinder Morgan’s TransMountain and Enbridge’s Line 9.
In a nutshell, this article in The Guardian speaks of the increased path dependencies generated by new pipelines and concludes that an Obama rejection of Keystone would be a clear signal to the US, Canada and the entire world that the time has come for putting the emphasis on developing clean energy and clean transportation alternatives – and the weaning off of our dependence on fossil fuels.
This is precisely the point President Obama made in his January 20, 2015 State of the Union speech, when he indicated that a rejection of Keystone would send a signal to the world that we must get serious about migrating to a green economy; whereas approving it would constitute a setback to the climate action agenda.
One can say “ditto” for TransCanada’s Energy East and the other major Canadian pipeline projects.
What is happening is that China, Europe, the US and other nations – not Canada – are becoming increasingly aligned for a future that functions on a green economy paradigm, the path to higher job creation, stronger economic development, avoidance of catastrophic climate change and the embracing of environmental stewardship – in other words, the path to tomorrow’s economy.
With the aforementioned science and economic considerations in mind, Mark Carney, the current Governor of the Bank of England and former Governor of the Bank of Canada, recently wrote to British Members of Parliament, advising them that the Bank’s officials are reviewing whether or not the majority of fossil reserves are burnable.
Change is clearly afoot – if only Canada’s leader could see and embrace it.
Gas workers in BC’s Horn River Basin (Photo: Damien Gillis)
By Karen Cooling, Marc Lee and Shannon Daub
The steady stream of bad news from Alberta’s oilpatch is a potent reminder of the boom-and-bust nature of being a resource-commodity exporter. It’s a story deeply understood in resource communities, as decisions made halfway around the world dictate whether you will have a job tomorrow.
The outlook for fossil fuel-exporting industries is likely to get worse if governments negotiate a new global deal to limit carbon emissions this year. On the heels of a climate deal with China, U.S. President Barack Obama stated in his State of the Union address that:
[quote]No challenge poses a greater threat to future generations than climate change.[/quote]
Leaving it in the ground
It is now recognized that anywhere from two-thirds to four-fifths of proven fossil fuel reserves worldwide must be left in the ground to avert catastrophe. Canadian politicians live in denial of these facts, pushing instead for more bitumen, coal and LNG exports.
But what does all this mean for people whose livelihoods rely on these industries? We talked with resource workers around B.C. who have experienced boom-and-bust cycles first-hand — especially in forestry. What we uncovered is a very unhappy legacy. One concern is that climate action could mean the loss of well-paying jobs and a repeat of this tragic pattern.
A “just transition”
As we plan for a transition to a zero-carbon economy, we will need to ensure a “just transition” for oil and gas workers, who should not have to pay the price of doing the right thing on climate change.
In past resource busts, families have faced extreme financial and emotional instability due to job losses. There are also ripple effects throughout the economy, as reduced spending forces the closure of small businesses and service providers, municipal government budgets collapse and the residential housing market becomes glutted with “stranded assets.”
Stable management of fossil-fuel industries over a two-or three-decade wind-down period with a just transition plan can get us off the resource roller-coaster and better serve workers, communities and the economy.
How to build a sustainable future
Much work will be required to build the zero-emission economy we need but we should embrace that. Building new, green infrastructure for the future includes investments in district energy systems, localized food systems, regional rapid transit, efficient buildings and “zero waste” management of materials — all of which can be a major economic benefit in rural and resource communities.
We also need to stop lumping in all resource sectors together. While fossil-fuel industries are at the heart of the climate problem, there can and should be a bright future for renewable resources like forestry. With strong stewardship and enhanced value-added, forestry in B.C. could support an additional 20,000 good permanent jobs — far more than will arise from any LNG development. This means reversing direction on forestry policies that have gutted the industry and its connection to supporting communities.
Graphic by Norm Farrell
A “Green Social Contract”
A coherent, managed approach would also allow for planned transitions for workers that include income supports, skills training and apprenticeships. This means investing in skills that are transferable from carbon-intensive to green industries. Proactive planning and collaboration across government, industry and unions is critical for ensuring a just transition.
This new “green social contract” will require a reallocation of financial resources. We recommend creating a just transition fund out of resource royalties or carbon tax revenues. The fund could enhance income security for workers, support early retirement initiatives for some and help people through retraining and job search processes.
Rather than trying to cultivate the next boom (think LNG), our aspirations should be to develop a high-quality, full-employment strategy that supports workers, families and communities to transition beyond fossil fuels.
Squamish council rejects Fortis BC application for test drilling (Instagram/ Dan Prisk)
In a surprising show of municipal political power – even in a region that has demonstrated strong misgivings regarding proposed LNG development – Squamish council has rejected Fortis BC’s controversial permit application for test drilling in a Wildlife Management Area.
The vote came at Tuesday night’s council meeting, which revisited an earlier discussion regarding Fortis’ planned pipeline expansion to feed the Woodfibre LNG plant near Squamish, proposed by Indonesian billionaire Sukanto Tanoto.
Plan gets bogged down in sensitive area
Proposed Woodfibre LNG plant
The application – which sought permits for drilling in a sensitive ecological area – stoked vocal opposition in the community when it was first debated by council 2 weeks ago. With close to 200 citizens packing the council chamber, the local government set its decision aside until this week’s meeting.
The Tuesday vote fell 4-3 against the plan, which would involve test drilling for a pipeline to be routed under the Squamish River, through an estuary and Wildlife Management Area (WMA). Council instructed representatives of gas pipeline operator Fortis to come back to it with a plan that avoids the estuary and WMA and doesn’t involve a compressor station being located in the middle of town. Such a route would likely need to involve building the pipeline around the north end of the community, which Fortis complained would be too costly, lengthy and challenging.
A strongly-worded letter from the Squamish First Nation objecting to the company’s proposal appears to have helped sway council.
Back to the drawing board
Despite the heavy attention the issue received during the recent municipal election – which saw an anti-LNG mayor defeat a sitting mayor who favoured the Woodfibre project – and strong opposition from local grassroots groups, the decision came as a surprise to many in attendance.
Retired KMPG partner and My Sea to Sky member Eoin Finn – a leading public critic of the project – predicts that Fortis will now have to withdraw its proposal from the Environmental Assessment process and start from scratch with a new version, “as Fortis had baked in the rejected routing in their application to the BCEAO.”
Local governments get involved
The move by Squamish council is just the latest example of a growing trend of municipal governments inserting themselves into the energy planning process around BC – from Burnaby and Vancouver’s strong stances on Kinder Morgan, to various councils that have stood against the proposed Enbridge pipeline, and a long list of Sunshine Coast and Howe Sound councils which have voted against the proposed Woodfibre project.
Sukanto Tanoto (right), the man behind the proposed Woodfibre LNG project
Permit me to make some observations about the LNG situation in Squamish. What the people of Howe Sound do is their affair. I can only give them the benefit, if any, of my experience over the years.
We are not dealing here with honest people – it is not hyperbolic to call them crooks. The powers behind Woodfibre LNG have been convicted of large tax evasion and substantial environmental degradation. Sukanto Tanoto, his family and associates have been consorts of the worst sort of financial manipulators in Indonesia – right up to the former President Suharto.
…one of the world’s largest palm oil companies, owned by Sukanto Tanoto, was fined US$205m after being shown to have evaded taxes by using shell companies in the [British Virgin Islands] and elsewhere. The company has agreed to pay the fines.
Documents arising from the case show that Tanoto’s company, Asian Agri, systematically produced fake invoices and fake hedging contracts to evade more than $100m of taxes.
According to evidence contained in more than 8,000 papers, the company, which employs 25,000 people in 14 subsidiaries and owns 165,000 hectares of plantations, was engaged in “routine and systematic fraudulent accounting and book-keeping practices” using British jurisdictions.
I am by no means the only person to notice that the permit request by Fortis BC to upgrade its pipelines in order to feed the proposed Woodfibre plant precedes permission to build the plant. That’s because the “fix is in”.
From childhood we’re taught to respect the law and the “policemen” who enforce it. It rubs against the grain to think of breaking even a minor law.
What happens, however, if the laws are stacked in favour of the powerful and against ordinary citizens? What if the laws are so unfair as to be travesties of justice?
The place we, the public, look for protection is environmental assessment laws. So let’s look at The National Energy Board, in the news much recently, and see how they look after us.
Hearings called a “farce”
Some of the most damning evidence of the National Energy Board’s Kinder Morgan hearings came from a former BC Hydro CEO and deputy minister of energy for both Manitoba and Ontario, Mark Eliesen. He says this about the proceedings of the National Energy Board in the Kinder Morgan hearings, from which he resigned as an official intervenor:
[quote]
In effect, this so-called public hearing process has become a farce, and this Board a truly industry captured regulator.
In addition to gutting the oral-cross examination feature of a public hearing process that supports proper questioning and an adequate level of due diligence, there are other Board decisions that have been made over the course of this hearing that reflect a pre-determined outcome.
The evidence on the record shows that decisions made by the Board at this hearing are dismissive of Intervenors. They reflect a lack of respect for hearing participants, a deep erosion of the standards and practices of natural justice that previous Boards have respected, and an undemocratic restriction of participation by citizens, communities, professionals and First Nations either by rejecting them outright or failing to provide adequate funding to facilitate meaningful participation. (Emphasis added)
[/quote]
He closed his letter resigning as an intervenor thusly:
[quote]The National Energy Board is not fulfilling its obligation to review the Trans Mountain Expansion Project objectively. Accordingly it is not only British Columbians, but all Canadians that cannot look to the Board’s conclusions as relevant as to whether or not this project deserves a social license. Continued involvement in the process endorses this sham and is not in the public interest. (Emphasis added)[/quote]
(Along with the presidency of BC Hydro, Eliesen sat on the board of Suncor Energy and was former CEO of the Manitoba Energy Authority and Ontario Hydro. In total, he has worked for seven governments and nine ministers of the crown.)
MP, MLAs avoid public meeting
What about expecting justice on the political front?
John Weston, the local Conservative MP, was not in attendance at Tuesday’s council meeting to discuss the controversial permit application from Fortis BC, which involves test drilling in a wildlife management area for its its planned pipeline expansion. He had no reason to be absent – the Commons is not in session and, besides, as with all government backbenchers, he doesn’t do anything anyway. Surely he should’ve at least troubled himself to be there to report back to the government on the feelings of the people present, his constituents.
I understand that neither of the Liberal MLAs were there either. Same criticism as Weston. They have nothing else to do of any use but to report back to the government what they see and hear.
Did I go to unpleasant meetings such as this when I was in cabinet?
You bet your life I did. If I hadn’t, Premier Bill Bennett would have quite rightly tossed me out on my ass. Perhaps standards were different then but I can tell you about meetings I was at that would curl your hair!
I could go on but suffice it to say that not only has the public not been consulted, there is no fair process by which it can be consulted unless it’s through local Councils. In every case in the Howe Sound area, the Councils have rejected the notion of an LNG plant in Squamish and concomitant tanker traffic. However, these Council decisions evidently don’t count with either the provincial or the federal governments.
Civil disobedience on the horizon
My own personal opinion is that nothing will be accomplished except by civil disobedience. I have held that opinion for a long time and it is certainly not because I am a violent person. My whole political life has been fighting elections not policemen.
The fact remains, however, that times come when the citizen has no other option. When all of the cards are stacked, when the hearings are fixed, when politicians are in bed with the powerful, when all the laws favour one side of a dispute, then what choice do people have?
I must be careful here – I am not physically able to do that which I preach. I’m sorry about that. I will, however, continue to say my piece and I presume that if I continue to press for civil disobedience I’ll be in contempt of something sufficient to be in trouble with the authorities.
Citizens line the Sea to Sky Highway to protest Woodfibre LNG (My Sea to Sky)
Former District of Squamish Councillor Meg Fellowes addresses current mayor and council over Fortis BC’s controversial application to conduct test drilling in a wildlife management area. The drilling is in connection to a planned pipeline expansion to feed gas to the proposed Woodfibre LNG plant near Squamish. At a Tuesday meeting, council deferred its decision on the drilling permit issue, to be revisited in 2 weeks.
Mayor and Council – District of Squamish (Dos):
Council is caught between a rock and a hard place. The rock is a possible Fortis legal suit if Council doesn’t approve drilling in the [wildlife management area]; and, the hard place is a possible legal suit by one or more taxpayer/resident if council does approve the drilling.
During the council meeting of January 6th, 2015, a disconnect was identified between the Official Community Plan (OCP) and the authorizing bylaw. Awareness of the disconnect provides grounds for a community legal challenge should Council approve the permit. The prudent solution, for a risk adverse council, is to officially amend the OCP to reflect the bylaw; or, amend the bylaw to reflect the OCP.
A legal challenge coming from the community happened in 2000 when [anti-woodchip transfer facility group] CHIPS took on DoS in the wood-chip transfer facility debacle where Squamish council was taken to court by concerned citizens. Despite the assurance of municipal lawyers, the District of Squamish lost the court case, the proposed wood-chip transfer facility wasn’t built, and one of the enterprising citizens was subsequently elected mayor of Squamish.
Seeming procedural technicalities cost taxpayers money, developers time, and communities their reputation when local governments try to take short-cuts on contentious issues.
On Monday, as Canadians got back to work following the holidays, the price for crude oil dipped below $50/barrel for the first time since 2009, offering a glimpse of the profound changes in store for the country in 2015. With some $60 Billion in oil/tar sands projects now in peril – harkening back to “dark days” of decades past – this federal election year promises to put the fossil fuel-dominant economic vision of Canada’s political leaders to the test.
Good news, bad news
Burnaby Mountain protests (Dan Pierce)
If 2014 was the year of the pipeline protest, 2015 may advance the cause of environmentalists and First Nations even further, without a single placard being waved or arrest made. In a country where the economy increasingly drives political policy and media commentary, something as simple as the halving of oil prices will likely do more to reshape the future than years of ardent protests. Cynical but true.
Yet these changes are complex and fraught with contradictions. Lower oil prices stall new oil/tar sands projects and pipelines while chilling investment in LNG projects. Yet they also drive consumer demand through lower prices at the pump.
And although this setback for Canada’s fossil fuel sector should be a wake-up call as to the need to diversify our economy and energy options, in some ways it hampers renewable energy development, by eroding recent gains in cost competitiveness for clean technologies. When oil costs over $100/barrel and natural gas is $8/unit, increasingly cost-effective wind and solar look pretty good these days. Cut those fossil fuel prices in half, and not so much.
Ontario Premier Kathleen Wynn tours an Airbus plant (CNW)
Another important contradiction to note is the benefit to Canada’s economy from a weakened fossil fuel sector. As a new study from RBC reminds us, lower fuel costs to consumers free up cash that can flow into our economy through other avenues. More importantly, lower oil prices mean a lower Canadian dollar and lower energy costs to manufacturers, both greatly benefitting Canadian exports.
In other words, the jobs we lose in Fort McMurray may be replaced – and then some – by a strengthened manufacturing sector in places like Ontario.
What this moment – and potentially extended period – of depressed fossil fuel prices offers Canadians is the opportunity, in a pivotal election year, to rethink our economic future. And this applies at both the federal and provincial level – from BC’s proposed LNG industry, to the Yukon’s debate over fracking, to Alberta’s oil/tar sands, to several pipelines planned to carry dilbit eastward.
To get the conversation started, here are a few big ideas we should be considering in 2015:
Estimates of government subsidies for the oil and gas industry range from a billion and a half dollars a year to as much as 6 billion, depending on how you calculate them and whom you listen to. So to those “free marketeers” who would balk at subsidizing clean tech innovation, just be sure to apply the same standards to the fossil fuel sector, which, we’re frequently threatened, would up and walk away if we didn’t maintain the lowest royalty and tax regimes in the world.
As our contributor Will Dubitsky has documented over the past year, Canada is the exception when it comes to major industrial nations investing in clean tech. While Stephen Harper cut our only federal clean tech innovation funding in 2013-14 (which stood at a paltry $82 million), China invested $68 Billion in clean tech in 2012, with the US not far behind. Both countries, along with Germany, Denmark, Spain, Brazil, and many others, have reaped the rewards with millions of new green jobs. Canada’s tax incentives and subsidies for clean tech lag far behind these other nations.
Steam rising from the Nesjavellir Geothermal Power Station in Iceland (Photo: Gretar Ívarsson / Wikipedia)
Even in Canada, despite a wildly unfair balance of public investment in fossil fuels compared with renewables, the employment balance is shifting. Trying to assess the real job benefits of the oil and gas industry is a tricky business, because so many different numbers and definitions are thrown around (“direct”, “indirect”, “related”, Canada, Alberta, etc.). The Alberta Ministry of Energy, for instance, pegs “oil sands related direct employment in Alberta” at 146,000; whereas a 2011 study by the the Petroleum Resources Council of Canada acknowledged just 20,000 jobs in the Alberta oil sands sector, with 130,000 total oil and gas jobs across Canada.
Renewable energy proponent Clean Energy Canada subscribes to the latter measurements and made headlines with a report last year suggesting we now have more jobs in clean tech than we do in the oil/tar sands. The comments on this Globe and Mail story discussing the report range from skeptical to apoplectic at the audacity of these dimwitted eco-pinkos. But the key take-away is that clean tech jobs are growing in Canada – and rapidly – with very little help; whereas the future of oil sands construction jobs is suddenly looking pretty bleak.
If you believe the derision of oil sands boosters, these green jobs pose no real threat to their sector, so what are we waiting for? What are we not seeing that China, America and Germany are? If jobs are the name of the game, then it’s high time we got behind these sustainable alternatives.
And that doesn’t just mean wind and solar. As we’ve learned from a number of recent reports, Canada – particularly these western provinces doubling down on fossil fuels and big, antiquated dams – are sitting on top of huge geothermal potential. This is a clean, renewable energy source which, unlike wind and solar, is as predictable and consistent as coal or natural gas – without the wild market fluctuations.
While lower oil and gas prices may inhibit investment in clean tech and consumption of renewables, as noted above, that’s precisely what government intervention is for. This is where a government with long-term vision can step in an catalyze private sector investment and job growth for the future, laying the groundwork for an economy that is not strapped to the roller coaster of fossil fuel prices.
2. Take advantage of lower oil prices
As I noted earlier, lower fossil fuel prices can be a very good thing for Canada’s economy. There is strong evidence – from the likes of Industry Canada, no less – that higher oil and related currency prices have cost our nation more jobs than they’ve created.
[quote]…from 2000-2011, the oil and gas sector created about 16,500 jobs, while, at the same time, Canada lost 520,000 manufacturing jobs. Much of the manufacturing losses are tied to the rise of the petro-dollar which tends to rise and fall with the price of petroleum…Even Industry Canada acknowledges the problem. Their report notes that between 2002 -2007, from 33-39 per cent of Canadian manufacturing job losses were due to “resource-driven currency appreciation.”[/quote]
Sure, many Canadians will feel the pinch in their stock portfolios as our overly energy-bound TSX falters, but the opportunity for benefits to Canada’s economy from lower oil prices is significant – reinforced by a recent report from RBC, which notes:
[quote]Our current Canadian forecast assumes that both consumers and exporters will respond to these incentives that will slightly more than offset the expected weakening in oil-sector investment.[/quote]
What this all boils down to is a choice: Either export raw, unrefined bitumen and syncrude – generating few local jobs – or export finished goods, manufactured in Canada. Since the latter brings more jobs and value-add to Canadian resources, shouldn’t that be a no brainer?
3. Pull the plug on pipelines
Keystone has strained Canada-US relations (Adrian Wyld/CP)
Keystone XL, for both political and economic reasons, appears less and less likely by the day. Even an expected bill from a dual-majority Republican congress can and likely will be vetoed by Barack Obama. Clinging to this vision will only further strain diplomatic relations with our southern neighbour. It’s time for Stephen Harper to throw in the towel on Keystone.
As for Enbridge and Kinder Morgan, on top of all the law suits, the widespread public opposition – culminating in highly effective civil disobedience at the end of 2014 – and the well-justified environmental concerns, these plummeting oil prices mean the demand for increased export capacity is simply not there. Many oil/tar sands projects can’t make a buck at $50 oil (which is substantially lower when you factor in the Western Canadian Select discount on bitumen) – evidenced by the cancellation of numerous expansion projects in recent months.
[quote]Canadian oil and gas projects worth a total of $59-billion may be deferred during the next three years as the ‘collapse’ in capital investment in the global oil industry echoes the dark days of 2009 and 1999.[/quote]
The same thing is happening with risky, expensive shale oil from the Bakken in North Dakota, with production and train shipments plummeting in recent months. These unconventional fossil fuels are the first to lose their lustre in low-price periods. Upstart American shale oil producers are a victim of their own success – flooding the market with too much supply. Now, with OPEC unwilling to back off with its cheaper, light crude supply, it is forcing these more costly new sources out of the market.
Meanwhile, controversy is heating up over Enbridge and TransCanada’s eastbound pipeline proposals, which are also subject to the same economic challenges as the BC projects. A slew of mounting headaches for TransCanada’s Energy East project – from endangered belugas to the Quebec government’s long list of tough conditions – prompted Alberta Premier Jim Prentice to travel east in December for a round of palm pressing and damage control.
Added environmental hurdles and calls for increased provincial benefits and reassurances, piled on top of a weakening business case, spell trouble for these projects – once considered a cake walk compared to getting through BC.
Times change, new facts emerge. Canada needs to evolve its thinking accordingly. If Stephen Harper wants to hang onto his majority – even stay in power with a minority government – he should rethink his dogmatic devotion to pipelines unpopular with many voters and for which the economic justification is simply no longer there. The oil/tar sands isn’t the only avenue to create jobs and be strong on the economy.
4. For God sakes, abandon LNG
Christy Clark pitching LNG in 2014 (Damien Gillis)
Christy Clark’s LNG vision is the biggest loser of them all.
With most Asian LNG contracts tied to oil prices, the current climate has scared away even the most intrepid LNG proponents. That includes Malaysia’s Petronas, which cited this reason for further waylaying its final investment decision (again) last year. (Let’s remember too that even if it did go ahead with its pipeline and plant, Petronas has indicated that it would import Malaysian workers to build them – while the BC government signs deals with India and China to supply foreign temporary workers for the LNG industry…so there goes the whole “jobs” argument!)
Petronas’ stalling comes on the heels of many other big players getting cold feet, including Encana, EOG, Apache, and BG Group.
And with good reason. Even after Clark gave away the farm to these companies – slashing down to nothing the export tax at the root of the Liberals’ grand “$100 Billion Prosperity Fund” promises in the last election – this dog still won’t hunt.
Here’s why: With all the added costs to produce and ship LNG to Asian customers, the break-even point is between $10-13/unit of gas. When Asian prices momentarily spiked to $16-18 a few years ago, it seemed like BC exporters could make some real money exporting LNG. But as we and other pundits correctly predicted, this price bubble wouldn’t last. Now, with spot prices hovering at or below $10 – and expected to continue falling throughout 2015 – that Asian price premium is gone, taking BC’s LNG pipe dream with it.
Sure, oil prices may pick up and with them LNG prices, but the lesson here remains: LNG is expensive and volatile – not characteristics that make big energy companies likely to fork out the tens of billions of dollars and half decade in pipeline and plant construction required to get this industry up and running. Which is why the sooner we abandon this delusion and start focusing on real, sustainable economic alternatives for the province, the better off we’ll all be.
“It’s the economy, stupid.” That’s the refrain environmentally-minded folks are browbeaten with, their pipeline and climate change protests patronizingly brushed aside by wise economic pragmatists.
But in 2015, with $50 oil, we should all be on the same page for once.
Ben West addressing a Vancouver crowd about Kinder Morgan in 2012 (Damien Gillis)
There’s big news on the environmental front!
Ben West, the eminent young environmentalist until now with Forest Ethics and, before that, the Wilderness Committee, has joined Rex Weyler fighting tanker traffic on the BC coast through Tanker Free BC. This makes a very potent combination indeed. (Full disclosure: My colleague, Common Sense Canadian publisher Damien Gillis, is a founding board member of TFBC along with Mr. Weyler).
For those who may not know, Rex Weyler was a founder of Greenpeace International and its biographer. He has been active in environmental matters for many years and in 2009 took up the cudgels against tanker traffic on our coast. Tanker Free BC was formed some 5 years ago, specifically to take on the Kinder Morgan issue and the organization laid much of the early groundwork for the campaign to block the project.
Ben is a first class student of the environment and a very able presenter. I have had the privilege of appearing at podiums with both he and Rex.
Huge proposed increase in tanker traffic
The number of tankers required on our coast to transport the oil proposed by Kinder Morgan runs about 400 per year – minimum. This doesn’t count tankers coming from Squamish from a proposed LNG plant.
Despite what the professional mariners tell us, it’s a matter of mathematics. Sooner or later we’ll have a serious accident on our coast. In fact, there’s nothing to say there won’t be more than one.
If this were a relatively minor matter, we could and would have to live with it. But they are transporting bitumen, or dilbit, which is highly toxic and, as the spill on the Kalamazoo River by Enbridge 4 1/2 years ago demonstrated, it is virtually impossible to clean up. This means, to articulate the obvious, that the risk of running tankers on our coast cannot possibly match any advantage it would confer upon the people of British Columbia.
It’s for this reason that opposition to both the Enbridge and Kinder Morgan pipelines has been so vigorous. Of course, part of the opposition has come from those who must live with the pipeline in their communities but the issue is the same – be it train, truck or pipeline, they transport a vicious and dangerous poison.
Oil-by-rail threat used to scare pipeline opponents
MP James Moore being interviewed by CBC’s Chris Hall (Photo: James Moore/Twitter)
At the same time as the West/Weyler story we hear from Tory cabinet minister James Moore that pipelines must come, otherwise transportation will be by rail which, by common consent, is far more dangerous than by pipeline.
I must confess here that I’m not certain about the capacity of rail to deliver a comparable quantity of oil – in the case of Kinder Morgan 780,000-1.000,000 barrels a day, and this is of course an important figure to know. If pipelines were simply not to happen, would rail transport be sufficient to fill up 400 or more likely 450 tankers per year?
The answer, according to the limited research facilities available to me, is that this is highly unlikely. Moreover, the safety factors are enormous and make those of pipelines pale into insignificance. This, of course, is the argument that James Moore and the supercilious finance Minister, Joe Oliver, are making – permit pipelines or else…
Weston continues “Environment IS Economy” refrain
Just by way of an aside, a few moments ago when Wendy brought the mail, there was yet again another release by my MP, John Weston, bleating once more “the environment IS the economy”. As I’ve mentioned before, this slogan has about as much meaning as “please adjust your clothing when leaving the lavatory” and gives an idea of typical Tory bafflegab which desperately hopes that their own appalling ignorance is matched by that of the bovine masses.
Rex and Ben face the ill-disguised ultimatum laid down by James Moore that bitumen will come through British Columbia one way or another. The Tories are, of course, in thrall to Alberta voters with an election coming up where every seat is crucial and the safety of unreliable British Columbians not on the radar.
Remember the bitumen
We must remember that the enemy is not the train or the pipeline or indeed the tanker – it is the bitumen from the tar sands. We’re being asked – indeed perhaps ordered – to transport this highly noxious substance through the wilds of our province to populated areas, into tankers and shipped down our coast.
Sham “Process”
The politicians are unconcerned about the feelings of the people of our province. Mr. Moore has, from the beginning, been contemptuous of public opinion and those of us who have fought against the transport of bitumen are portrayed as American-financed neo-hippies. The so-called “process” by which energy decisions are made is as phoney as a three dollar bill as has been amply demonstrated by no less a figure than Mark Eliesen, one of the most prominent energy experts in the country.
Public attention, diverted by the pipeline issue, has not considered that the governments of Canada and British Columbia would cast aside safety issues and threaten the transport of this terrible substance by rail. What this does, of course, is clarify the issue for Ben and Rex and all those who join them in the fight, very much including me. It is the two senior governments who are the enemies – the bitter enemies.
The public of British Columbia must, by civil disobedience if need be, convince the federal and provincial governments that we have sufficient democracy left in this country that the people still count, or we’ll end up with a an oil sands catastrophe on our land and on our coasts, whether we like it or not.
