Today in the Legislature, we debated the merits of the Site C project. The motion brought forward for debate by Bill Bennett, the Minister of Energy and Mines, was as follows:
Be it resolved that this House supports the construction of the Site C Clean Energy Project; because the Site C Clean Energy Project represents the most affordable way to generate 1,100 megawatts of clean and reliable power; and the Site C Clean Energy Project will create jobs for thousands of British Columbians; and the Site C Clean Energy Project has been the subject of a thorough environmental review process.
I’ve written extensively on this topic over the years and so spoke strongly against the motion. Please consider reading my rationale for taking this position.
On April the 19th of 2010, I, along with numerous others, travelled to Hudson’s Hope to hear then Premier Gordon Campbell announce the Site C project was moving to the environmental assessment stage. A lot has changed since 2010, and the environmental assessment has now been completed.
The joint review panel’s report published on May 8th, 2014, identified major obstacles in the path for approval. While the report did not emphatically say yes or no to the project, certain sections highlighted the permanent damage to the environment, farmland and wildlife the project would have. These included effects on First Nation rights and lack of exploration of similar cost renewable energy alternatives.
I’ve been pointing out for several years now that Site C is the wrong project at the wrong time when alternative energy, including geothermal, wind, tidal and small-scale hydro sources, coupled with existing dams would provide substantially improved firm energy and capacity. This approach would be less damaging to the environment and distributed around British Columbia. It would provide future power requirements with better costs and employment opportunities. Geothermal, wind, tidal and smaller hydro projects would deal substantial economic benefit to communities, especially First Nations.
The joint review panel specifically concluded the following.
On the environment and wildlife:
(1) “the project would cause significant adverse effects on fish and fish habitat”;
(2) “significant adverse effects on wetlands, valley bottom wetlands”;
(3) “the project would likely cause significant adverse effects to migratory birds relying on valley bottom habitat during their life cycle, and these losses would be permanent and cannot be mitigated”.
On the topic of renewables:
They said this:
“The scale of the project means that if built on B.C. Hydro’s timetable, substantial financial losses would accrue for several years, accentuating the intergenerational pay-now, benefit-later effect. Energy conservation and end-user efficiencies have not been pressed as hard as possible in B.C. Hydro’s analyses. There are alternative sources of power available at similar or somewhat higher costs, notably geothermal power. These sources, being individually smaller than Site C, would allow supply to better follow demand, obviating most of the early year losses of Site C. Beyond that, the policy constraints that the B.C. government has imposed on B.C. Hydro have made some other alternatives unavailable.”
Regarding First Nations:
The panel said this.
(1) The panel “concludes that the project would likely cause a significant adverse effect on fishing opportunities and practices for the First Nations represented by Treaty 8 Tribal Association, Saulteau First Nations and Blueberry First Nations and that these effects cannot be mitigated”;
(2) the panel “concludes that the project would likely cause a significant adverse effect on hunting and non-tenured trapping represented by the Treaty 8 Tribal Association and Saulteau First Nations and that these effects cannot be mitigated”;
(3) “the project would likely cause a significant adverse effect on other traditional uses of the land for the First Nations represented by Treaty 8 Tribal Association and that some of the effects cannot be mitigated”;
(4) “the project would likely cause significant adverse cumulative effects on current use of lands and resources for traditional purposes”.
In 2010, the projected construction costs for the dam was $6.6 billion. But by May of 2011, that cost had increased to $7 9 billion — a 20 percent increase. By 2014, it rose a further 11 percent to $8.8 billion.
Now, there’s considerable upside uncertainty regarding these costs that could easily reach $10 billion, $12 billion, $15 billion or even more frankly. Just yesterday, we found out that more delays and cost overruns are occurring in Nalcor Energy’s Muskrat Falls hydro project in Labrador.
Nalcor Energy’s CEO, Ed Martin, cited three reasons for the cost overruns.
Now, I have little confidence in the cost forecasts for the construction of Site C, as it won’t be completed for many, many years. I share the desire of the government to see British Columbia’s economy managed in a way that ensures a sustainable approach that is not burdening future generations with the cost of decisions we make today.
In the past, our government has, appropriately, celebrated the fact that British Columbia has maintained a triple-A credit rating. Having the taxpayer take on an almost $9 billion-and-growing debt to subsidize this government’s efforts to chase the pot of gold at the end of the LNG rainbow strikes me as profoundly irresponsible for the supposedly fiscally conservative B.C. Liberals. Risking a potential downgrade of our triple-A credit rating would risk raising the costs of servicing all of our provincial debt.
Now, I recognize that as the population grows and the economy in British Columbia also grows, so too does our need for energy. But the Site C project has grown increasingly indefensible from a social, environmental and economic standpoint. This proves especially true when weighed against more practical alternatives.
The impacts of the project are widespread. Thousands of acres of farmland and wilderness will be flooded, doing irreparable damage to ecosystems. The hunting and fishing and traditions of First Nations who live in and around these lands will be threatened. Billions of dollars will be spent on the project, raising concerns over British Columbia’s economic viability and triple-A credit rating. All of these staggering realities might be forgiven if Site C was the only realistic solution. It’s not, and I’m not the only one who realizes this.
There are many alternatives that are cheaper to build and maintain, have minimal environmental footprints and generate more permanent jobs that are spread throughout the province. Chief among these options are wind and geothermal power.
The claim that Site C dam is the most affordable way to generate power is absolutely untrue. Recently for example, the Peace Valley Landowner Association commissioned an independent report from the U.S. energy economists Robert McCullough to look at the business case for what could become the province’s most expensive public infrastructure project ever.
According to Mr. McCullough: “Using industry standard assumptions, Site C is more than three times as costly as the least expensive option. Thus, while the cost and choice of potions deserve further analysis, the simple conclusion is that Site C is more expensive than the renewable and natural gas portfolios elsewhere in the U.S. and Canada.”
Mr. McCullough’s assertion that B.C. Hydro had its thumbs on the scale, so to speak, in an effort to make the Site C project look better than private sector alternatives appears, frankly, correct. In his report, he notes the following. Provincial accounting changes adopted in 2014 “to reduce the cost of power generated” are illusory. The costs will, like all costs, have to be paid, whether by hydro ratepayers or provincial taxpayers.
Mr. McCullough also disputes the rate that B.C. Hydro used to compare the long-term borrowing costs of capital for Site C against other projects. This so-called discount rate being proposed by B.C. Hydro is critical to overall cost projections, yet despite this, the paper trail on the discount figure — I quote Mr. McCullough — “could only be described as sketchy and inadequate,” especially when other major utilities in North America use higher rates for such projects because they are considered risky investments.
Mr. McCullough outlines major economic risks for the province in his report, assertions that are further solidified by Harry Swain, the chair of the joint federal-provincial panel that reviewed the Site C dam.
In recent years, as part of the Columbia River treaty, B.C. has been selling off the Canadian entitlement of our electricity to the tune of $100 million to $300 million annually. From 2010 to 2012, that translated to $30 per megawatt hour. But in the meantime, the cost of power from the Site C dam is estimated at $83 per megawatt hour.
How does it make sense to be building new sources of power at $83 per megawatt hour while continuing to export power for $25 to $40 per megawatt hour? Swain’s report predicts that as a result of B.C. Hydro generating more power than the province actually needs, the Site C dam would lose at least $800 million in the first four years of production.
The Site C dam is not a small project. Construction will require the province to borrow nearly $9 billion, and growing, and yet the project has been exempted from an independent regulatory review by the B.C. Utilities Commission.
What kind of message does this send to the citizens of this province about the government’s commitment to accountability and transparency? Why, when two independent reviews of the project have dismantled the claim that the site project is the most affordable way to generate power, do B.C. Hydro estimates claim otherwise? Why does the province refuse to sponsor its own independent regulator’s review of the project?
The only possible answer is that B.C. Hydro figures are totally illusory, manipulated to fit the government’s political guarantee of “endless investment” in the province.
Associated with the announcement on December 16 of last year that the B.C. government was going to proceed with the construction of Site C was some very creative accounting, designed to make Site C look more competitive than it really was. The government claimed that they found savings, while the overall project costs actually rose. I’m not making this stuff up. All the government had actually done was move the financial costs of this megaproject into a different category. The fact is that the costs had gone up and so had the burden on taxpayers.
The updated cost of Site C on ratepayers was reduced from $83 per megawatt hour to $58 to $61 per megawatt hour, with the majority of the change coming from a commitment from government to take fewer dividends from B.C. Hydro. However, this merely shifted the capital cost of building the dam from B.C. Hydro ratepayers to British Columbia taxpayers.
Just three weeks earlier, on November 25, I attended a Canadian Geothermal Energy Association — known as CanGEA — press conference, where they released a report entitled the following: Geothermal Energy: The Renewable and Cost Effective Alternative to Site C.
Some of the key findings in that report included the following:
We are the only jurisdiction in the Pacific Rim that does not have any geothermal capacity in our province, state or territory. British Columbia has a significant potential to develop geothermal and other renewable energy projects throughout the province. Such projects would distribute energy production where it is required and allow power to be brought on line as demand increases.
The available evidence at that time made it clear that the government should not proceed with the Site C project. There were simply too many cheaper alternatives available to protect the ratepayer or the taxpayer. The clean energy sector was eagerly awaiting a more fiscally responsible investment decision that would provide employment and development opportunities across the province.
Site C was then, and still remains, the wrong project at the wrong time. Alternative energy, including geothermal, wind, solar, small-scale hydro sources and biomass, coupled with existing dams, would provide firm energy and capacity at a better cost to British Columbians. They would also provide better economic opportunities to local communities and First Nations, with lower impacts on traditional territory.
In March of this year, Harry Swain, co-chair of the joint review panel appointed for the Site C dam and former deputy minister of Industry Canada and of Indian and Northern Affairs, raised some very serious concerns about the government’s approach to approving Site C. Mr. Swain was very clear that the government was rushed in approving Site C and that British Columbians will pay for their haste.
As Mr. Swain said: “Wisdom would have been waiting for two, three, four years to see whether the projections they” — that’s B.C. Hydro — “were making had any basis in fact.” That’s not exactly a glowing endorsement for the fiscal underpinning of Site C. The review panel predicted that by building it now, Site C will actually produce more electricity than we’ll need for the first four years, costing taxpayers $800 million.
Mr. Swain isn’t the only person to suggest waiting a few years to see if electricity demand for the project materializes. We could still build Site C down the road if necessary, but we could use the additional time to properly explore cheaper alternatives, like our vast geothermal potential in B.C. We have the time, and as I mentioned earlier, that pot of gold at the end of the LNG rainbow won’t be found any time soon, if ever at all.
Mr. Swain went even further. He argued that pushing Site C through without adequate consideration of cost-effective alternatives was a “dereliction of duty.” Those are strong words — “dereliction of duty” — from a very highly regarded senior official from the Canadian government, a very distinguished scholar, a very distinguished senior official, and the chair of the joint review panel. I repeat: “dereliction of duty.”
To be even more blunt, it’s recklessness on the part of the government. We have a sense of the cost: an $800 million loss in the first four years of operation, because of the construction timing. We know there are affordable alternatives to Site C. These alternatives would allow us to meet present and future energy needs without running the risk of incurring increased public debt and potentially damaging our Triple-A credit rating.
The fact is that circumstances have changed since 2010. That’s why I no longer believe it’s fiscally prudent to move forward with this project. In the last few years, the cost of wind energy and solar PV have dropped dramatically. China, for example, is building a new windmill every hour, and China’s investment in photovoltaics has led to an 80 percent drop in price in just five years.
Over the next 20 years, B.C. Hydro has forecasted that our energy needs will increase by about 40 percent as a consequence of population and economic growth. Upon completion, this dam would produce 1,100 megawatts of power capacity and up to 5,100 gigawatt hours of electricity each year. According to B.C. Hydro, this is enough electricity to power about 450,000 homes.
So let’s look at wind power. Recently a study was produced by the investment banking firm Lazard, which suggested that the cost of unsubsidized utility-scale wind could be produced as low as $19 per megawatt hour. I repeat that the cost of unsubsidized utility-scale wind could be produced as low as $19 per megawatt hour, about a quarter of the proposed costs of the Site C dam initially and still substantially less than the revised proposed costs.
Currently in B.C., only 1.5 percent of electricity production is supplied by wind energy — incredibly low when compared with other jurisdictions internationally. But with British Columbia’s mountainous terrain and coastal boundary, the potential for onshore and offshore wind power production is enormous, almost unparalleled internationally.
The Canadian Wind Energy Association and the B.C. Hydro integrated resource plan 2013 indicate that 5,100 gigawatt hours of wind-generated electricity could be produced in British Columbia for about the same price as the electricity to be produced by the Site C dam.
That is before the price of wind dropped substantially further since 2013, and is despite the fact that all costs, including land acquisition costs incurred to date by B.C. Hydro with respect to the Site C project, have never been counted in their estimate for future construction costs. The potential scalability of Site C is minimal to nonexistent. The potential scalability of wind energy is boundless.
The minimal production of wind power in British Columbia compared to other jurisdictions around the world is surprising in light of the fact that B.C. is the home of a number of existing large-scale hydro projects.
What do I mean by that? These projects include but are not limited to the W.A.C. Bennett and Peace Canyon dams already on the Peace River and the Mica, Duncan, Keenleyside, Revelstoke and Seven Mile dams on the Columbia River system.
Hydro reservoirs are ideally suited for coupling with wind power generation to stabilize baseload supply. It’s really quite simple. When the wind is blowing, use the wind energy. When the wind is not blowing, use the hydro power. That is, hydro power, coupled with wind, acts like a rechargeable battery, with wind being the recharger and the dam being the battery.
British Columbia is one of the few jurisdictions in the world, if not the only, that has the potential to take advantage of such reservoirs as wind power, if wind power were to be introduced to the grid.
Denmark, the world’s largest producer, does not have that power. Britain — a jurisdiction where, just recently, renewable energy producers started to produce more than half of its power — does not have the reservoir capacity. But British Columbia has it all, and we’re wasting an opportunity.
Given that wind power can so easily be introduced into B.C. at an even lower price than equivalent power from Site C dam, we should ask if there are other reasons that would favour Site C over wind for the production of power to meet B.C.’s present and future energy needs.
Frankly, I can think of none. In fact, I can think of a number of reasons why wind power should be considered over Site C to produce the equivalent of 5,100 gigawatt hours per year of electrical power. Let me summarize these:
1) The construction of Site C dam will flood 6,427 acres of class 1 and 2 agricultural land and a total of 15,985 acres of class 1 to 7 agriculture land. Wind power sites would not affect agricultural land. In fact, the Peace River Valley contains the only class 1 agricultural land north of Quesnel.
2) Key regions in the archive of British Columbia’s history will be flooded. It’s unknown how many unmarked First Nation graves lie in the flood zone. But the Globe and Mail recently reported it could be in the thousands. B.C. Hydro’s own archaeological research in the valley turned up everything from dinosaur teeth to ancient stone tools and old fur-trading posts. In all, it identified 173 paleontological sites, 251 archaeological sites and 42 historic sites. The Peace River has been designated as a B.C. heritage river. It was, in fact, traversed by the explorers Alexander Mackenzie, John Finlay, Simon Fraser, John Stuart, A.R. McLeod and David Thompson, among others, in their early ventures during the 17th and 18th century. Rocky Mountain Fort, thought to be the first trading post established in British Columbia by John Finlay in 1794, as well as Rocky Mountain Portage House, across the river from Hudson’s Hope and established by John Finlay and Simon Fraser in 1805, are both located in the valley that will be flooded. The joint review panel determined that the loss of the cultural places, as a result of inundation, for aboriginal and non-aboriginal people to be of a high magnitude and permanent duration and to be frankly irreversible. The existing historically valued cultural sites would be permanently lost.
3) Job creation associated with wind, solar and geothermal power, for example, is provincewide, not in one region. Job region associated with the Site C dam is only in and around the Peace River Valley. Wind, geothermal, etc. provides distributed jobs, stable jobs across our province.
4) the risks of cost overruns associated with the construction of the Site C dam is borne by the taxpayer. The risks of cost overruns associated with the construction of wind, solar and geothermal facilities is borne by industry. This is important as it limits any risk to the taxpayer.
5) the installation of wind and other renewable energy projects can be done in partnership with First Nations, who would benefit from both local jobs as well as of revenue from the installed facilities. In contrast, the affected Treaty 8 Tribal Association has already expressed a number of serious concerns regarding the Site C dam proposal.
6) it would take longer to complete the Site C dam project than it would to install wind farms, for example. In addition, wind power is scalable, whereas Site C dam is not.
7) wind farms and other sources of renewable energy are distributed and so can be located close to where the energy is actually needed, thereby reducing transmission loss, energy loss, as electricity is transported long distances through power lines.
I recognize that B.C. Hydro operating under the Clean Energy Act has no other option in their mandate to build anything other than dams. In my view, the government has one of two choices to protect the rate and taxpayers from the unnecessary costs of the Site C construction.
First, they could either change the mandate of B.C. Hydro to allow it to invest in alternate energy technologies. Or, the second, they could require B.C. Hydro to issue calls for power to see how the market will respond. Either of these choices are acceptable and would allow the generation of other sources of power in British Columbia.
I also realize that the only reason why the Site C is going ahead now is because of the fact that on November 4, 2014, B.C. Hydro signed an agreement with LNG Canada to provide long-term power that we don’t actually have at $83.02 per megawatt hour.
But at what cost? We’ve already embodied a generational sellout in the amended LNG Income Tax Act. And that was taken to an even more egregious level in this past July’s Liquefied Natural Gas Project Agreements Act.
Now again — and just a side bar and based on the evidence today of Bill 34 being brought forward to discuss — it is precisely clear to me that there was no need at all for a summer session, as this government is so void of new ideas that we’re having to name a date in March as a day to celebrate red-tape reduction.
Now yet again, the taxpayer will step up to subsidize the government’s irresponsible quest for the mythical pot of gold somewhere at the end of the LNG rainbow. But at what cost? The building of Site C will decimate the clean tech sector that is at a critical phase in its development in B.C. and at a phase that actually employs more British Columbians today than does the oil and gas sector.
But at what cost? EDP Renewables, an internationally-acclaimed clean energy company, First Nations and TimberWest have walked away from a $1 billion wind energy investment on Vancouver Island. That’s not hypothetical. That’s here today. That’s gone today because of the irresponsible decisions being made in this government with respect to Site C and its LNG pipe dream.
For what? A desperate attempt to fulfill a suite of irresponsible election promises made in the run-up to the 2013 election. A 100,000 jobs; $100 billion prosperity fund; $1 trillion increase to our debt; Debt-free B.C.; elimination of PST; thriving schools and hospitals; and everything else in nirvana that is to be B.C.
As I’ve been pointing out for three years now, these promises were never grounded in an economic reality three years ago. They are not grounded in economic reality today. Nor will they be grounded in any economic reality in the foreseeable future.
Frankly, the incompetence of our government’s bumbling attempts to land LNG final investment decisions have made the British Columbia government a laughing stock on the international energy scene. The lack of a fiscally conservative approach to energy policy in this province makes me wonder just what this government is thinking. They are chasing a falling stock and doubling down in the process.
Sadly, the province will have to wait until 2016 or early 2017 before the B.C. Green Party brings forth our integrated platform. We will offer British Columbians an innovative vision for an integrated energy policy. We’ll offer British Columbians a plan to grow our resource-based economy and communities, and we’ll always put the interest of British Columbians first, not vested interest or political ambitions. They will be first and foremost in our policy formulation.
Site C is fiscally foolish, socially irresponsible and environmentally unsound. It no longer represents a wise economic social environmental option for providing British Columbians with the power they need. There are other alternatives available at cheaper costs with lower environmental and social impacts.
This motion must fail.