At a presentation sponsored by Sustainable Gabriola at the Roxy on Thursday, Energy and Mining Analyst Arthur Caldicott discussed the energy and mining roads-well-travelled by the BC Liberal government.

Caldicott said as of last month CO2 levels reached 393 ppm – a climb of over 100 ppm in 50 years. He said these levels began to increase when humans started using coal, oil and natural gas for transportation and electricity.

“We are responsible for that huge escalation in atmospheric carbon”, Caldicott said. “Climate change deniers can say what they will, this kind of coincidence of observable facts is irrefutable”, he said.

Fixing the wrong problem

Caldicott said that the BC Liberal government response to climate change has been to focus primarily on domestic CO2 production and on the three per cent of BC greenhouse gases (GHG) emitted by our electricity sector. He said that when it comes to the production of electricity BC has “achieved what most of the world is trying to get to” which is “relatively carbon free electricity”.

BC’s domestic carbon contribution is only one third of the global contribution of carbon for which BC is accountable, Caldicott said. “While the government is aggressively pushing its climate action strategy on you (through) independent power production and the carbon tax”, he said, “it is wilfully ignoring the carbon contribution that BC makes from its coal and actively promoting investment in coal mining in BC”. He said this is also true of oil and gas production.

Caldicott said the government argues that because exported fossil fuels are not burned in BC we have no responsibility to do anything about those carbon emissions. “Some might say that is a bit disingenuous. Some might say that is downright immoral, given the tsunami of climate change that’s roaring in on us”, he said.

Promoting the real problem

We have nine coal mines in BC, Caldicott said. He said the government gets about $260 million in taxes from those mines – “(not) a good enough incentive to keep coal mining going”.

Caldicott said the majority of natural gas projects are in the North-East corner of BC in the Western Canadian Sedimentary Basin. He said BC exports about 70 per cent of its natural gas.

Even when it was financially lucrative, Caldicott said, the government offered a number of royalty incentives to encourage companies to drill for natural gas. The government also cut or eliminated a number of taxes for drilling operations, and gave them fuel tax reductions at the same time that fuel taxes were raised for ordinary citizens, he said.

Since gas prices have dropped and investors lost interest in drilling, the government “raced to the bottom” with even larger incentives, Caldicott said, so that now the government is virtually “giving the product away, just to get the work happening up (in Northern BC)”.

Busting BC Hydro

Caldicott said that in 2002 the BC government decided that all new electricity would be produced by independent power producers (IPP). He said that in 2007 they decided that BC Hydro has to buy enough power to make BC electrically self-sufficient by 2016, and that by 2026 they have to buy 3000 “insurance” megawatt hours (MWh) above BC’s electrical needs.

The “final nail in the energy policy coffin” was the passing of the Clean Energy Act last week, Caldicott said. He said the Act puts the decision making for all major energy projects into the hands of cabinet, with no arms-length oversight.

He added that BC Hydro must now enter into Electricity Purchasing Agreements (EPA) through which IPPs are awarded long-term risk-free contracts, guaranteed by BC taxpayers. One such project will have an annual “free cash flow” of $26 million over their 35 year contract, he said, and another will make $7 billion profit over their 60 year contract. He said that if the first project was owned by BC Hydro, $40 million would accrue annually to the people of BC. Owned by an IPP, he said, only $14 million will be returned to the public purse.

BC Hydro will be forced to export the extra “insurance” electricity it is required to buy, Caldicott said. On average, he said, BC Hydro will buy electricity at about $120 per MWh, while the US markets to which it will be exporting will only pay about $38 per MWh for electricity. He said that will “load BC Hydro with so much debt that it will become … an untenable corporation … set up to be broken apart”.

Meanwhile, Caldicott said, the new Site C dam “being billed by the provincial government as clean energy” will be hooked up to the North-East transmission line through which it will be used to produce more natural gas. He said: “… some of (the natural gas) is inevitably going to end up in the tar sands cooking bitumen out of the sand, and more of it will be exported to Asia”.

He said a North-West transmission line is also planned and will deliver electricity to a number of mines and coal-bed methane projects in North-West BC.

A better way

Caldicott said that the provincial government is sending our natural resources such as wood, coal, and electricity to other countries that make “all sorts of junk that comes back to us in containers” and is sent to stores all over North America. “What we are doing with electricity”, Caldicott said, “is the equivalent of raw log exports - it’s raw electricity exports. We’re converting a natural resource into electricity and shipping it off. There’s no value added to that game, no value added to the coal game and no value added to the natural gas game”.

“Yet that’s where the Liberal government’s thinking is stuck, and we need to unstick it really fast, because all this carbon is going to end up in the atmosphere and we’ll be standing on the shore looking out at our devastated communities, knowing we could have done something more than we did”.