Michael Ignatieff: Rebuilding the Liberal Party of Canada Through the Oil Sands

Posted on May 29, 2009 by admin

George Hoberg and Matthew Landryiggh

            

Over the past several months, Michael Ignatieff has been surprisingly positive toward the Alberta oil sands. In a Vancouver pub this past January, the Liberal leader had this to say: “It [the oil sands] changes everything about our economic future. It changes everything about Canada’s importance in the world.” This is new talk for the Liberal party, and it parallels Prime Minister Harper’s stance on the issue – that energy is a key geopolitical tool for Canada. But Ignatieff has gone even further, framing the oil sands as fundamental to the future of Canadian federalism. “Energy policy in our country is a national unity issue,” the leader was quoted as saying at the same Vancouver meeting. Ignatieff’s explicit openness toward the oil sands stems from his desire to rebuild the Liberal Party in Western Canada and to escape the sour political legacy of Pierre Trudeau’s 1980 National Energy Program.

           

The Liberal Party of Central and Eastern Canada

           

Often called the “Party of Canada,” the Liberals have historically had difficulties west of Ontario.  The last period of Liberal dominance in the region began in 1949, under Prime Minister Louis St. Laurent. In that election, the Liberals managed to carry Manitoba, Saskatchewan and British Columbia, while finishing second behind the Social Credit party in Alberta. By 1968 however (the first election of Pierre Elliott Trudeau), the Liberal party was beginning to lose momentum in Western Canada, ceding Saskatchewan and facing a strong Progressive Conservative base in Alberta.

 

In 1980, despite Trudeau’s return to office, the Liberals found themselves swept entirely out of British Columbia, Alberta and Saskatchewan, and managing only two seats in Manitoba. It was during this period that the Liberals enacted the National Energy Program, a decision that would meet vehement resistance in Western Canada. Capitalizing on the program’s unpopularity, Brian Mulroney campaigned on the notion of a “Renewed Federalism”, with energy policy at the centre of the Progressive Conservative platform. The 1985 Western Accord, signed between Ottawa and the three oil and gas producing provinces of Western Canada, reintroduced free market principles to the sector, and emphasized federal-provincial co-operation.

 

Meanwhile, the “Party of Canada” failed to win a single seat in either Alberta or Saskatchewan for the remainder of the decade, reasserting itself only modestly in the region following the Progressive Conservative collapse of 1993. In that year the Liberals, challenged only by regional parties (the Reform Party in the west, and the Bloc Quebecois in the east) retained control of Ottawa through the new millennium. However, with the resurgence of a national conservative party, the Liberals have continued to struggled in the Western Canada throughout the 2000s. They currently hold only seven seats west of Ontario, with five of those in British Columbia.

           

The National Energy Program

 

As designed by the Trudeau government in 1980, the NEP had three major goals:

1)      Security of supply and independence from the world market.

2)      For all Canadians to benefit from the energy industry.

3)      To insure a fairer revenue-sharing regime that recognizes the rights of all Canadians.

Achieving these goals, however, proved to be difficult for then-PM Pierre Trudeau. To shield consumer provinces from dramatically increased oil prices, domestic rates were kept artificially low (never rising above 85% of the world price). This was meant to insulate Eastern Canada – the source of Liberal support – from the global recession. In effect, however, it brought Alberta’s energy boom to a halt, forcing industry to sell its oil domestically at a discounted price. Alongside strict price regulations, the federal share of petroleum income increased from 10 – 24%, while the share for the Province and industry correspondingly decreased.

 

The federal justification for this policy was simple: as Alberta’s wealth increased and the rest of the country fell deeper into recession, Ottawa would be obliged to take on ever larger equalization payments to “have-not” provinces. Increasing Ottawa’s royalty take from the booming energy sector in the West would help mitigate these costs. For Albertans, however, the NEP represented an encroachment by the federal government into the management of natural resources – a provincial jurisdiction as enshrined in the Constitution. The details of the plan also called for 50% Canadian ownership by 1990. In sum, despite Ottawa’s intentions, the NEP failed to pull the rest of Canada up out of recession and, instead, pulled Alberta down into it. Unemployment rose to 10%, with lost revenue from the period estimated at between $50 and $100 billion.

 

The reasons for the NEP’s failure are varied. For one, it was a unilateral federal effort, enacted without sufficient provincial consultation. Secondly, the program hinged on the assumption that petroleum prices would continue to increase to $100 a barrel, thereby generating enough revenue to pay down the federal budget deficit. Oil prices, however, dropped 5% in 1981 and a further 13% in 1982, signalling to both industry and government that things were changing. This softening in world oil prices, combined with a new, less friendly investment climate, led to project closures and a reduction in further development. So drastically had the policy environment changed, that the Liberals instituted a phased shut down of the NEP in 1983, only three years after its inception.

 

How Stephane Dion’s Green Shift Aggravated The Problem.

 

By embracing the oil sands, Michael Ignatieff hopes to reenergize the Liberal party in western Canada. To do this, he has begun to distance himself and the party today from certain policies of the past, namely the NEP and Stephane Dion’s Green Shift. Dion staked his party’s hopes on an ambitious, nation-wide carbon tax. It met strong resistance in western Canada, however, and Conservative rhetoric frequently linked the Green Shift directly to the NEP. “It’s (the Green Shift) like the national energy program in the sense that the national energy program was designed to screw the West and really damage the energy sector,” Stephen Harper told the CBC. “This is different in that it will actually screw everybody across the country.” Echoing that sentiment, the Premier’s Office in Alberta was quick to condemn the plan: “Mr. Dion cannot come to Alberta and tell us how to run our province,” a spokesman said, dubbing the Liberal policy “an NEP-style green shaft.”

 

While Dion dismissed comparisons between the NEP and his own program, Michael Ignatieff has made it a priority to directly address Western concerns. “The dumbest thing you can do is run against the energy sectors in Western Canada,” Ignatieff told a room of supporters in Regina. “God knows this party has made mistakes out in western Canada.” Included in his list of mistakes: the NEP and Dion’s Green Shift. Nevertheless, try as he might, the National Energy Program and Stephane Dion’s more recent Green Shift have created a political legacy that may be impossible for Michael Ignatieff to escape. A quarter century after the NEP’s end, it remains a poignant issue in Western Canada. The Green Shift only refreshed bitter memories.

             

The New Dilemma

 

There is no question that overcoming longstanding political ill will rooted in memories of the NEP will be essential for rebuilding the Liberal Party in Western Canada. However, doing so may create tensions elsewhere for Michael Ignatieff. How exactly will Michael Ignatieff reconcile the oil sands with an aggressive climate action plan, important to so many Liberal supporters? Details have been deliberately vague thus far (the official Liberal platform is expected in June) but it will likely involve some form of cap-and-trade system with absolute limits, a policy Ignatieff has expressed interest in before (although he has maintained that such a system must not hurt Alberta). Ignatieff has also said he would have Ottawa match at least part of the two billion dollars Alberta has committed to carbon capture & storage research. And, while details of the Liberals’ climate action plan have been vague, Ignatieff has been clear on what will not be on the table: “We will not be going into the next election with a carbon tax,” he stated during the May convention. Although his party adopted a resolution leaving open the option for a carbon tax, the party leader retains a veto over party platform items (Liberal Party Constitution, Section 33 (2e) ).

           

Politically, Ignatieff’s pro-development position on Alberta’s oil sands is a trade off; alienate some of the party’s younger, more progressive members to pick up formally sympathetic ridings in Edmonton and Manitoba. But if it is not successful – if the NEP proves too difficult a legacy to cast off – then Ignatieff will have given ground for nothing, electorally-speaking. Political commentator Don Newman, for one, is weary of the strategy. Newman believes Ignatieff has more growth potential in the eastern provinces and to focus resources on such an uphill battle (in Western Canada) appears “delusional.” However, Ignatieff’s support for the oil sands, beyond simple political expediency, represents a greater, symbolic gesture to the West. While Dion was quick to criticize Alberta for its “tarnished” environmental record, Ignatieff is reaching out. “The dumbest thing you can do – and no Liberal shoulder ever do it – is run against Alberta, make Alberta the enemy, isolate Alberta.” He wants to extend an olive branch to the people of the Wild Rose Country, to reassert that the Liberals, in their traditional pragmatism, are the “Party of Canada”.

           

The larger question that remains, however, is whether Michael Ignatieff’s conciliatory gesture to the West will complicate, even hinder, any significant policy aimed at reducing greenhouse gas emissions in the future.

 

Print Resources on the National Energy Program

 

G. Bruce Doern and Glen Toner, The Politics of Energy, (Toronto: Methuen, 1985)

 

Patrick James and Robert Michelin, “The Canadian National Energy Program and Its Aftermath: Perspectives on an Era of Confrontation,” American Review of Canadian Studies, 19:1 (1989): 59-81.

 

Glen Toner, “Stardust:  The Tory Energy Program,” in Michael Prince, ed., How Ottawa Spends, 1986-87 (Toronto:  Methuen, 1986), pp. 119-148.

 

Carolyn J. Tuohy, Politics and Policy in Canada: Institutionalized Ambivalence, Philadelphia: Temple University Press, 1992.

 

 

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It’s time to rally around cap and trade

Posted on May 19, 2009 by admin

Alex Etchell and George Hoberg

 pdf version here

 

The BC election is over and Gordon Campbell’s Liberals have secured a third term in office. For many climate activists, that the Liberals did not lose this election because of their carbon tax is a positive sign. As the logic goes, if Campbell had lost and the defeat could be blamed on the carbon tax, a political chill would have been cast over elected officials in other jurisdictions interested in pursuing effective climate policy.

 

Now that the election is over, however, it is time to take stock of the evolving landscape of climate action policy. Ironically, at a time when many are hailing a significant victory for BC’s carbon tax, it is becoming increasingly apparent that those committed to real climate action, in BC and elsewhere, need to deemphasize the carbon tax and rally around cap-and-trade at a federal and international scale.

 

There is broad consensus in the climate action policy community on the need to use government policies to put an effective price on carbon. But there has been considerable disagreement between those advocating the carbon tax and those advocating cap-and-trade. This debate continues to confuse politicians and the public, and frustrates progress on the urgent actions we need. Meanwhile, a combination of recent events has, in our view, dramatically strengthened the relative merits of cap and trade. We’ve now had two elections in Canada where the carbon tax has been an important issue, and the replacement of the recalcitrant Bush administration with a new President and Congress committed to emissions pricing changes the policy landscape.

 

In comparing the merits of policy instruments, we need to consider both a variety of criteria, and also how BC fits within the nascent larger climate policy regime. Many policy analysts apply four criteria when evaluating alternative policies:  effectiveness, economic efficiency, administrative feasibility, and political feasibility. Because of the legal limit placed on carbon emissions, a cap and trade system gives the greatest assurance of effectiveness. By pricing every unit of carbon the same, carbon taxes are widely acknowledged to be the most economically efficient instrument. In addition, while cap and trade policies allow for fluctuations in carbon prices in response to market conditions, carbon taxes have the advantage of providing price certainty, facilitating efficient responses from polluters. Carbon taxes are simpler administratively because they can use existing revenue collection mechanisms, and don’t require the elaborate system of regulated auctions and permit trading markets that a cap-and-trade system needs. If we consider only these three criteria, the carbon tax comes out ahead in the evaluation:  its efficiency and administrative advantages outweigh a modest disadvantage in effectiveness.

 

When the criterion of political feasibility is factored in, however, the balance of the scales shifts strongly towards cap and trade. We’ve seen what happened with Stephane Dion’s proposed “green shift” in the federal election. And, although Gordon Campbell won this week’s election, the carbon tax proved to be at least a moderate political liability. According to an Ipsos Reid exit poll, 26% of voters surveyed said the carbon tax was very important in influencing how they cast their vote. Of these, 57% voted for the NDP who had vowed to axe the carbon tax, while 25% of carbon tax voters voted liberal, and 13% voted green. These results are consistent with previous public polling on carbon taxation. While few polls appear to have carefully compared public views of carbon tax vs. cap-and-trade, what polling has been done on the carbon tax has been quite negative (see the appendix below).

 

Part of the apparent public preference for cap-and-trade over a carbon tax may be based on misinformation because many wrongly assume that consumers won’t pay as much, when economic analysis shows that to achieve the same level or reduction, a cap-and-trade system will be at least as costly to consumers as a carbon tax. But the public also seems to prefer cap and trade because they believe it is more effective – the assurance of a specific limit on emissions appeals to them in a way that a tax scheme does not. Whatever the basis for the public opinion, it is time for the climate action policy community to acknowledge the political liabilities of the carbon tax and rally around the next most efficient policy instrument, cap and trade.

 

In addition to acknowledging the centrality of political feasibility to policy instrument choice, we also need to appreciate the need to coordinate policies across jurisdictions. As the recent Achieving 2050 report of the National Roundtable on the Environment and the Economy argues, there are significant costs to the fragmented initiatives emerging across Canada and the United States. Competition for businesses among jurisdictions makes it harder for politicians to enact policies that increase the costs of doing business. Coordination across a number of jurisdictions increases trading opportunities, allowing more cost-effective greenhouse gas reductions.

 

The election of Barack Obama makes it highly probable that the US will finally adopt greenhouse gas reduction policies. Outside a small circle of think tank economists, carbon taxes are not even on the table in the US due to the American cultural antipathy to taxation. Cap and trade is the approach Obama has proposed, and the US Congress is currently developing. There will be substantial economic and administrative advantages to coordinating Canadian federal and provincial policies with the emerging US system. Indeed, the Harper government has stated an intention to develop a compatible system.

 

Continuing to push the carbon tax is limiting the expansion of the political coalition supporting the urgent climate action we need, and will keep us out of step with emerging policies in jurisdictions with which we need to cooperate. We need to coalesce around a coordinated cap-and-trade framework, and dedicate our energy to designing and implementing an effective, efficient, and equitable policy.

 

 

 

Recommended Reading:

Internet:

 

Canadian Chamber of Commerce. “A Carbon Tax vs. Cap-and-Trade Policy Brief.” December, 2008.

 

Green, Kenneth et al. “Climate Change: Caps vs. Taxes.” American Enterprise Institute for Public Policy Research. June, 2007.

 

Jaccard, Mark & Nic Rivers. “Canadian Policies for Deep Greenhouse Gas Reductions” in Jeremy Leonard, Chistopher Ragan, and France St-Hilaire, editors, Canadian Priorities Agenda: Policy Choices to Improve Economic and Social Well-Being, Montreal: Institute for Research on Public Policy, 2007.

 

Roundtable on the Environment and the Economy, Achieving 2050:  A Carbon Pricing Policy for Canada. Ottawa, April 2009.

 

Stavins, Robert. “A U.S. Cap-and-Trade System to Address Global Climate Change.” Regulatory Policy Program, John F. Kennedy School of Government. 2007.

 

In print only:

 

Jaccard, Mark, Sustainable Fossil Fuels, Cambridge:  Cambridge University Press, 2007, Chapter 8.

 

Simpson, J., Mark Jaccard & Nic Rivers. Hot Air: Meeting Canada’s Climate Change Challenge.  Toronto:  McClelland & Stewart Ltd., 2007.

 

Simpson, J. “Broken Hearts, Broken Policies: The Politics of Climate Change.” In Carbon Shift. Ed. Thomas Homer-Dixon. Carbon Shift: How the Twin Crises of Oil Depletion and Climate Change Will Define the Future. Toronto:  Random House Canada, 2009.

 

Appendix on public opinion polls on carbon taxes and cap and trade:

Given the need for politicians and analysts to meaningfully compare cap-and-trade and carbon taxation on the criterion of political feasibility, it is surprising that there has been little in the way of public polling to assess relative voter preference for each system. In the United States, some polling information is available on public attitudes towards cap-and-trade. In Canada, polling has focused almost exclusively on attitudes towards carbon taxation.

           

In June 2008, an Angus Reid Global Monitor poll asked Americans about a plan to reduce global warming that “would have the government set a limit on the amount of those emissions that companies could produce each year. Companies that exceed that limit would face fines or higher taxes, but they could avoid those penalties by paying money to other companies that produced fewer emissions than allowed.” 52% of Americans polled favoured this system while 45% opposed it and 3% were unsure.

 

A May, 2009 poll commissioned by the Pew Environment Group found that 50% of those Americans surveyed would feel more favourable to their Member of Congress if s/he voted for a comprehensive cap-and-trade plan to reduce GHG emissions. 12% responded that they would feel less favourable, while 28% said it would make no difference. The poll also found that, even after hearing arguments against a proposed cap-and-trade emissions plan, 62% of respondents still supported it.

           

In Canada, no similar polling on public attitudes towards cap-and-trade has been undertaken. Nevertheless, there is a moderate body of evidence with regards to Canadian attitudes towards carbon taxation. In June 2008, Angus Reid polled Canadians on the federal Liberals’ proposed carbon tax. Only 28% of respondents agreed that “the proposed carbon tax is the best way to curb climate change.” In that same poll, only 39% of Canadians agreed with the statement, “I am willing to pay higher taxes on fossil fuels if I also get an income tax cut.” 45% disagreed and 16% were unsure. Finally, nearly half (47%) of Canadians agreed that “putting a price on greenhouse gas emissions is a good idea.” 36% disagreed with this statement while 17% were unsure.

           

In April 2008, Harris Decima conducted a large poll entitled Understanding Modern Environmentalism. It found that, in general, tax measures were the least popular of those government policies that the respondents were presented with. However, cap-and-trade systems were not mentioned, so the poll gives no meaningful information about voters’ relative preference for one system over the other.

           

Most recently, in May 2009 Harris Decima conducted a poll for the Canadian Press on Canadian attitudes towards carbon taxation. It found that, overall, 49% of Canadians supported the adoption of a carbon tax, but that only 42% supported a carbon tax like BC’s which would incrementally increase the cost of gas and home heating fuel. According to Harris Decima’s Senior Vice President Jeff Walker, this poll made clear that a carbon tax is “definitely not a winner nationally.” Interestingly, however, an additional online poll of 1000 British Columbians found that carbon taxation can be a political liability for proponents and opponents. The number individuals who were angry with Gordon Campbell for introducing the carbon tax was similar to the number of those who were angry at Carole James for opposing it.

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British Columbia Election 2009: The Role of the Carbon Tax

Posted on May 14, 2009 by admin

Alex Etchell and George Hoberg

(with research by Matthew Landry and Gordon McCullough)

 

            British Columbia’s provincial election this May was supposed to be an election about the economy. Jobs, fiscal responsibility, and economic recovery should have dominated debates, media coverage, and public discourse. ‘Good times’ issues like environmental protection and climate change policy ought to have fallen by the wayside. Instead, they remained salient. In particular, BC’s carbon tax played a central role from the first days of the campaign to Campbell’s election night victory speech and media post-mortems.

 

            The carbon tax became a highly politicized issue well in advance of this campaign. Premier Gordon Campbell of the BC Liberal Party introduced a carbon tax that took effect in July 2008 to accolades from many in the environmental community. Subsequently, as gas prices soared in the summer of 2008, Carole James and her BC New Democratic Party launched an aggressive “axe the tax” campaign. When the writ dropped on April 14, the two main parties remained diametrically opposed in their stances on the carbon tax.

 

The NDP gave the issue significant profile by leading with it in their platform, but media interest in the issue was also fueled by criticisms of the NDP by prominent BC environmentalists. On the first day of the campaign, a group of environmentalists released a media backgrounder criticizing the NDP’s axe the tax position and giving Campbell credit for climate leadership. Several high profile environmental activists denounced the NDP position in front page articles in the Vancouver Sun and the Globe and Mail. On April 17, the lead story in the Vancouver Sun was “Key supporter quits NDP over carbon tax.” The story picked up a statement by environmentalist Tzeporah Berman who accused the NDP of putting “politicking before the planet in the most hypocritical fashion.” On April 18th, the front page of the BC edition of the Globe and Mail featured environmentalist David Suzuki’s call for the NDP to rewrite its election platform to drop their plan to eliminate the carbon tax.  Suzuki argued that an NDP victory following its ‘axe the gas tax’ campaign would set back political efforts to adopt effective climate change policies in other jurisdictions.

Given the historical connections between the NDP and the environmental movement, these developments were newsworthy. The controversy was further fueled when the National Roundtable on the Environment and the Economy released a report recommending Canada pursue a cap and trade approach rather than a carbon tax, which was initially interpreted as bolstering the NDP position.

Surprisingly, even after this initial burst, the carbon tax issue continued to play a prominent role in the campaign. From the writ drop on April 14 to the election on May 12th, the Vancouver Sun ran 16 articles or letters that focused on the carbon tax. Three of these made the front page. The Province featured 10 carbon tax articles or letters, the Times Colonist ran 15, and CBC’s online BC news site featured 5. Compared to a traditional mainstream issue like health care, this level of coverage was significant. During the same period, the Vancouver Sun ran 11 health care articles or letters, the Province ran 3, the Times Colonist ran just 2, and CBC’s online BC news section ran none.  This is particularly significant, given that an Angus Reid Poll on April 29 found ‘the environment’ in a tie with health care for the 3rd most important issue for B.C. voters, behind ‘the economy’ and ‘crime/public safety.’

This media attention is particularly noteworthy given that neither party emphasized the issue during most of the campaign. While the NDP led with the issue, they quickly downplayed after the backlash from prominent environmentalists.  A review of the news updates on the NDP website shows that the carbon or gas tax was mentioned prominently in 12 of the 40 stories posted from April 14 to the end of April, but only twice in the 30 stories posted in May through the 12th of that month (election day). The carbon tax was not a core part of the BC Liberal message. On their website, it was not mentioned by name in their news releases, and only three releases spoke about “pricing carbon emissions.”

            Even before the results came in, some commentators began to speculate on the likely electoral effects of the carbon tax. For the Globe and Mail, Dirk Meissner reported on speculations that the NDP’s stance on the carbon tax might hurt it on election day. In particular, he emphasized the views of Harris Decima’s Senior VP Jeff Walker who suggested that “traditional soft environment voters in British Columbia who usually go into every election vowing to vote Green, but end up going with the NDP are now considering staying Green to punish the NDP.”

           

Further, on election day Gary Mason noted that the NDP may have “picked the wrong fight” with the carbon tax. Specifically, he argued that, “had it not been for their position on the carbon tax, New Democrats might have been able to count on green supporters throwing their votes behind them. Not only did Axe the Tax cost the NDP those votes, but the votes of many traditional party supporters as well.” The Tyee reported on April 22nd  the carbon tax was one of a handful of environmental policies deliberately designed by the Liberals to pull a sizeable chunk of environmentally-minded Green and NDP voters to the Liberal party.

 

These opinions are particularly noteworthy because it has often been assumed that any party that introduces, or proposes to introduce a carbon tax will pay a hefty electoral price. Jeffrey Simpson has recently argued that “taxing carbon has become the third rail of Canadian politics:  touch it and you die.”* However, what hard data is available seems to suggest that, in this provincial election, the net electoral effect of the carbon tax may have been relatively neutral. In fact, a recent Harris Decima poll conducted for the Canadian Press found that carbon taxation can be an equal political liability for proponents and opponents. Specifically, it determined that the number of British Columbians who were angry with Gordon Campbell for introducing the carbon tax was similar to the number of those who were angry at Carole James for opposing it.

 

While we have no exit polls to indicate the links between voters’ views on the carbon tax and their party choice in the election, the results of the election strongly suggest that the carbon tax issue did not hurt the BC Liberals.  As Vaughn Palmer notes, the election results in 2009 were virtually the same as they were in 2005:  the popular vote in both years was 46% for the Liberals to 42% for the New Democrats. The gap in seats was 13 in 2005, and barring changes from recounts, 13 in 2009.

 

[Update - subsequently to this post an exit poll was released that revealing the BC Liberals' support for the carbon tax was a negative for them, suggesting they may have won the election by even more had the not advocated it. See the next post.]

 

The New Democrats were using the “axe the tax” campaign as a populist wedge issue to try to appeal to rural voters. An evaluation of election results in rural ridings shows this strategy had little apparent impact. In 2005, the Liberals won 16 of 28 rural ridings (57%), with an average of 51% of the vote. In 2009, the Liberals won 21 of 34 rural ridings (62%) with an average of 51% of the vote. (There were new electoral boundaries which changed both the number and boundaries of ridings.)

 

Despite its low profile in his campaign, Gordon Campbell specifically alluded to carbon taxes in his first mention of policy issues in his victory speech. “They send a message to others who may have looked at this with trepidation. It says it can be done, it should be done, it must be done for our children and grandchildren.” Of course, there were a many issues in the campaign, the dominant one being the recession, followed closely by crime. But the election results suggest that Campbell did not pay any significant political price for pursuing the carbon tax.

 

Next on GreenPolicyProf.org:  now that the BC election is over, what’s next for climate action policies?

 

* The Jeffrey Simpson quote is from “Broken Hearts, Broken Policies:  The Politics of Climate Change,” in Carbon Shift, Thomas Homer-Dixon, ed., (Toronto:  Random House of Canada, 2009).

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BC Election 2009 – Environment and Natural Resource Issues

Posted on May 5, 2009 by admin
photo from Vancouver Sun

photo from Vancouver Sun

We’ve created a special resource on environment and natural resource issues in the 2009 BC election.

Follow the topic pages on the upper right of the page.

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Deconstructing the Green Energy Controversy in British Columbia

Posted on April 7, 2009 by admin

George Hoberg

Talk delivered to PowerUp Canada Green Economy Dialogue, April 7, 2009

Controversy over renewable energy in British Columbia has been swelling over the past year, particularly over “run of the river power” projects being developed by independent power producers. This conflict has been magnified by a complex, overlapping set of issues whose character and interrelations are poorly understood. My objective here is to attempt to contribute to a more constructive dialogue by untangling the nest of issues fueling controversy, and promote a focus on the most critical issues.

I come from the perspective of an academic political scientist and policy analyst, but one trying to make a contribution to real policy discourse. I teach a course in Sustainable Energy Policy and Governance jointly offered by the Department of Political Science and the Conservation Program in the Faculty of Forestry at UBC.

I’m pretty sure that at an abstract level, all stakeholders could agree on an overarching objective:  Acquiring the energy we need at the least economic, social, and environmental cost. But as I describe below, this grand objective obscures a number of crucial disagreements about a number of concepts embedded in this statement, in large part because of different worldviews on a complex set of issues.

To start with, who “we” is, is surprisingly complicated. What “we need “ is contested and value laden. And we have very conflicting views of economic, social, and environmental costs.

In my mind, there are eight related issues underlying this controversy.

1.       Conflicting interests.  There are competing economic and political interests at stake in the dispute. Some of these clashes of interests are economic, such as profits from private energy vs. the loss union jobs. Others involve recreational interests, such as kayakers’ access to free flowing rivers, or even non-material interests, such a strong affinity with wild, free flowing rivers.

2.       How much energy do we need? Future energy needs are uncertain because of what Yogi Berra noted years ago:  “It’s tough to make predictions, especially about the future.” Demand forecasting and the efficacy of demand side management (DSM) are both highly complex. But it’s more than just the inherent uncertainties of forecasting. This issue becomes so hotly contested because it also embodies value differences about what kinds of lives we should be living, i.e., whether we should be enabling “high impact” lifestyles or promoting greater frugality. What seems surprisingly absent from this part of the debate is a collective mobilization to reduce electricity use. If only we could find a way to channel a fraction of the cognitive and political energy spent on the IPP controversy to unleashing innovative demand side management initiatives. BC Hydro has become the province’s visionary voice on DSM. We need a stronger non-governmental champion of demand-side management

3.       Self sufficiency or clean energy exporter? One of the primary drivers behind future energy demand is what our provincial objective is. The BC Energy Plan commits us to provincial self-sufficiency with a reserve. But we also have the potential to be a clean energy export economy for either provincial income or the displacement of fossil fuels use in other jurisdictions. This issue becomes highly controversial because it opens the question of what is the appropriate jurisdictional scale to use as the unit of analysis. Is it the province, or some larger regional entity representing western North America? When this question gets opened, raw value differences enter about the relative merits of localism, nationalism, and globalism.

4.       Private vs. public. Perhaps the most divisive issue in the green energy controversy in BC has been the appropriate role of government and private firms in the various functions of delivering electricity. The Campbell government’s decision in 2002 to rely on private independent power producers for new sources of electricity has provoked a vehement backlash by a coalition of environmental  and labour groups.

5.       Community jurisdiction. The controversy over Ashlu Creek and the provincial government’s decision with Bill 30 to remove the ability of local government to block new power projects, has certainly fueled the controversy. In addition to removing a venue for place-based groups to be represented in the process, this aspect of the controversy has tapped into strong ideological differences on the appropriate scale of governance for resource decision making. This issue is certainly not distinct to BC – the conflict between local and higher level governments over the siting of new energy facilities is part of the emerging new politics of renewable energy across this country and throughout the developed world.

6.       Price. Part of the critique of independent power projects in BC is that they are too expensive and will lead to unnecessarily high electricity rate. But all new sources of power are going to be more expensive. We need to adopt an ethic that, because of the need to reflect their true environmental costs, energy prices will need to go up, and go up significantly. This fact creates a profound tension with the incentives of reelection-minded politicians to avoid imposing costs on potential supporters.

7.       Resource and size. What energy resource technology should we be using? Should we be building big facilities, small facilities, or both? It is noteworthy that despite its obvious centrality to sustainable energy decision making, this issue has not been part of the current controversy.

8.       Location and siting process. Assuming we need new sources of energy supply, where should new facilities go, and how do we decide? At present, the province lacks a coordinated, integrated process of energy facility decision making. The government’s decision to rely on IPPs for new sources of power aggravates this problem. Like the previous issue of resource and size, despite its centrality to sustainable energy decision making, this issue has not been an important part of the political controversy.

In my view, the dynamics of our green energy policy controversy have generated a tremendous amount of heat, but not enough light to allow us to focus on the most important issues.

We need to be respectful that there are a variety of interests at stake, but also mindful of how those interests might motivate different arguments. But we also need to rise above the cacophony of special interest arguments in the search of a broader public interest.

We need to project how much energy we need after aggressive, cost-effect conservation measures are adopted, and in order to do so we need a vision for the provincial electricity sector. The issue of public vs. private has dominated the dispute, yet it is arguably the least important. Private business can be compatible with societal objectives, given the right governance framework.

We need to find a governance framework that effectively represents place-based interests without having them unjustifiably veto projects that are in the provincial interest.

We need to get the price right, but in a way that acknowledge the need for energy prices to rise, and insulates progressive politicians from electoral backlash.

We’ve been paying so much attention to ideologically charged issues that we aren’t even thinking systematically about the most important ingredients to a sustainable energy policy:

·         After a concerted effort at demand side management, what are our energy needs?

·         What kinds of new supply should we have?

·         What governance framework do we need to effectively site and regulate new facilities?

Posted in British Columbia Electricity | Leave a comment

Lament for the Great Bear Rainforest

Posted on April 2, 2009 by admin

George Hoberg
April 2, 2009

On Tuesday, March 31, 2009, the Government of British Columbia announced that it had “met its commitment to establish an Ecosystem-Based Management (EBM) system for coastal B.C. by March 31, 2009.” Agriculture Minister Ron Cantelon announced “The war is over. Now we can move on in a positive way). Valerie Langer of ForestEthics said “We have made tremendous ecological gains.” The Greenpeace Canada website proclaimed “Greenpeace is celebrating an enormous success—the protection of the Great Bear Rainforest. The government of British Columbia has announced the implementation of the most comprehensive rainforest conservation plan in North American history for the Great Bear Rainforest.” First Nations and forest companies also praised the deal.

A region frequently obscured by fog

My perspective

I have been following, writing, and teaching about the politics of coastal forest conflicts in British Columbia for almost two decades now. I have not been directly involved in the Great Bear Rainforest deliberations, with the minor exception of being a co-author of a report to the Coast Information Team. So I feel like I speak mostly as an outsider, but as one with some knowledge of policy in the region and a perspective detached from immediate stakeholders, and also as one deeply committed to conserving the extraordinary ecological values of the region. There, I’m breaking from the mould of the independent academic I’ve carefully cultivated over the years. But the Great Bear Rainforest is just too special a place.

From that perspective, I don’t share the celebratory mood of the environmental community. I honour the enormous amount of work done by all stakeholders in searching for common ground. I’m proud that the province has made such enormous strides in sharing governance with First Nations who have called the region home for millennia. But I’m also very disappointed in the conversation gains reflected in this announcement.

History leading up to this announcement

The media have made much of the significant amount of area protected by the government in this decision, one-third of the 6.4 million hectare region. But those decisions were previously announced in February of 2006 (to much international acclaim) and legislated shortly thereafter.

What this next round of decision-making has focused on are the rules guiding forest management activities outside of protected areas. Since 2001, the parties have agreed that the policy framework would employ “ecosystem-based management,” or EBM, in areas outside those formally protected. The general definition of EBM as it has evolved in the region is “an adaptive approach to managing human activities that seeks to ensure the coexistence of healthy, fully functioning ecosystems and human communities.”

However, the parties could not agree on what constituted EBM operationally. .A special collaborative science process was developed, called the Coast Information Team, that contained representatives from all major parties, and produced an EBM Handbook in 2004 that defined one version of EBM. However, the multistakeholder land use planning process going on at the same time did not adopt this definition. Industry, government, and First Nations representatives balked at the high levels of protection in the EBM Handbook and replaced them with a set of more modest “transitional management targets.”

The core issue:  old growth representation

One of the foundations of EBM has been the objectives for landscape level biodiversity, in particular the retention of old growth forest. The philosophy of EBM, at least before it was diluted with socio-economic objectives, is that resource management should reflect patterns of natural disturbance in the particular ecological system in question. The key guiding concept has been the “range of natural variation” that has existing historically in the ecosystem. The particular nature of this coastal rainforest ecosystem is one where the natural range of variation in the representation of old growth has been very high – above 90% for the dominant species in the region.

The EBM Handbook that resulted from the collaborative science process set a target of 70% for old growth forest representation at the landscape level. The transitional management targets resulting from the land use planning process, and embodied in the government’s 2006 land use decision, provided for only 30% of old growth forest representation. This difference was huge, and extremely divisive. Environmentalists could not agree to it as a long term target, so when Premier Campbell made his historic announcement in 2006, the government committed to “full implementation of EBM by the end of March 2009.” To environmentalists, full implementation meant the EBM Handbook target of 70%. Essentially, the 2006 decision was a constructively ambiguous compromise that postponed the resolution of the difficult conflict over old growth representation, until now.

The March 2009 decision

The core of the government’s new EBM decision is the commitment to “Low-impact logging regulations that will conserve 50 per cent of the natural range of old growth forests.”

The first point to make is that this region-wide commitment to 50% is a far cry from the landscape level commitment to 70% representation that environmentalists had been considering their bottom line. It’s exactly half way between what environmentalists wanted and what other parties wanted. A simple compromise by splitting it down the middle. Not necessarily a cause for celebration, but a gain over what government had agreed to previously.

The Fine Print March 2009 decision

But more important, my reading of the fine print suggests that this 50% goal is more of a general guideline than it is a legally binding target. For virtually all of the region, the real legally binding target remains 30% old growth representation.

The 50% target comes from the preamble to the Legally established Central and North Coast Amendment Order. It says “For the purpose of this order, the intent is to maintain old growth representation at 50% of the range of natural variation across the combined area covered by the South Central and Central and North Coast Orders.” The final sentence of the preamble states that “This preamble is provided for context and does not form part of the order.” In other words, this 50% representation target is not binding. It is uncertain what role this target will play in actual decisionmaking, for example whether a district manager could reject a management plan because it does not meet this target. I don’t think they could, but please comment if your interpretation is different.

We need to move to other parts of the order to search for the legally binding language. The order requires that operations maintain an amount of old growth in a landscape unit greater than the “default target”. These default targets are listed in a table in Schedule 4, and vary from 30% to 100%. (Where the landscape unit has less than the default amount, old forest needs to be “recruited” over the next 250 years.) Section 14.6 of the order provides that less than the default target can be retained if five conditions can be met. One of these conditions is that it not fall below 30% of the range of natural variation. The other conditions are as follows: 

·         Information sharing and consultation with First Nations

·         A landscape unit habitat assessment for species at risk and regionally important wildlife is completed by a qualified professional

·         Old forest is retained to provide sufficient habitat to sustain species at risk and regionally important wildlife, based on the above assessment

·         An adaptive management plan is developed and implemented to the extent practicable

These conditions do not appear to be significantly more onerous that those required by normal forest operations under the Forest Range and Practices Act outside of EBM areas. The first condition is already part of established practice (in fact seems to fall a bit short of it).  The second condition requires an assessment routinely performed as part of forest planning. The third condition might provide additional protections, but forest managers are already required to establish protection of wildlife if they are identified in need of protection by the government.  The clause at the end of the fourth condition provides a great deal of leeway to avoid an adaptive management plan, not that such a plan would necessarily shape the level of protection.

Perhaps I am misunderstanding the significance of the constraints embodied in these conditions. If so, please comment.

Bottom Line

It looks to me like the order is structured to indicate an aspiration to manage for 50% of the range of natural variation, but there is no legal requirement to manage beyond 30% (except in 9 of the 95 landscape units in the region).

This level of old growth protection falls far short of the standards set by the independent science team. I find it hard to justify the use of the term ecosystem-based management when the representation of old growth forests is so far below the natural range of variation.

What is remarkable about the Great Bear Rainforest is the extraordinary extent of intact coastal old growth temperate rainforest. A spectacular ecosystem, one of the dwindling great wild places on earth. Many are celebrating that we’ve “saved the Great Bear Rainforest.” I don’t see it that way. We’ve protected a third from industrial development (well, somewhat less than that since some of the areas allow mining). In the remaining two thirds, we’ve adopted a system of forest management that requires between 30 and 50% of old growth forest be retained. That decision allows a tremendous amount of forest fragmentation in a remarkably undisturbed part of the world.

The dismal state of forest products markets means that industrial pressures for logging the region in the near future are likely to be limited. And environmentalists have apparently gotten a commitment from the government to revisit the issue of moving up to 70% within 5 years. Maybe that means there’s continued reason for optimism. Based on this decision, though, the conservationist side of me is not feeling celebratory.

Further Information

For more information about the history of collaborative processes in the region, see Merran Smith, Art Sterritt, and Patrick Armstrong, “From Conflict to Collaboration: The Story of the Great Bear Rainforest.” May 2007.

Posted in BC Forest Policy | Leave a comment

UBC Student Simulation: How should the Forecasted Electricity Supply Gap in British Columbia be Filled?

Posted on March 27, 2009 by admin

George Hoberg

As part of a course on Sustainable Energy Policy and Governance, students participate in a simulated multistakeholder consultation about topical policy issues. Half of this year’s students simulated a debate about how to fill the forecasted electricity supply gap in British Columbia.

The scenario was presented as follows. The BC government forecasts a substantial future shortfall in electricity supply. After a series of site-by-site conflicts, Premier Campbell announced a new multistakeholder planning process to establish a province-wide strategy for developing new sources of electricity.

The learning objectives of this exercise are to develop practical skills — teamwork, research, and communication — necessary for constructive participation in policy development, while simultaneously developing a deep understanding of one crucial component of energy policy. While I feel confident that these simulations perform this educational purpose, I often wonder whether they might provide insights into real-world policy dynamics.  I’m reporting on the process and results here in the event that others inside or outside the ivory tower might benefit from our experience. In this case, it felt a bit like we are acting like a focus group for the province.

NOTE:  None of the statements in this blog refer to any actual positions or statements of real people or real groups, unless explicitly referenced. The views below are only those of UBC students pretending to be actors in the BC electricity supply controversy.

Participating students were randomly divided into nine groups reflecting different stakeholders involved in the process: BC Ministry of Energy, Mines, and Petroleum Resources; BC Ministry of Environment; Department of Fisheries and Oceans; BC Hydro; Independent Power Producers Associations; Joint Industry Electricity Steering Committee; BC Sustainable Energy Association; Save our Rivers Society; and the First Nations Summit. The groups submit 2000 word briefs designed to articulate the position of the group. We then meet for a 4 hour session to try to develop a consensus. I act as facilitator of the process.

The session began with each group giving a 5 minute presentation outlining their initial position. The student groups very accurately reflected the positions of their real-world counterparts. The IPPBC spoke about the merits of green energy and the benefits of having the private sector take the lead in proposing, building, and operating new sources of electricity generation. Representing large industrial consumers, the Joint Industry Electricity Steering Committee (JIESC) focused on the financial risks of building new sources of power, the relative merits of demand-side management, and the critical need to maintain low electricity prices. The First Nations Summit spoke to the importance of having any new facilities respect the emerging New Relationship between the Crown and First Nations. The BC Ministry of Energy, Mines and Petroleum resources lauded the merits of the government Energy Plan. BC Hydro outlined its plans as articulated in the 2008 Long Term Acquisition Plan currently under review at the BC Utilities Commission. The BC Ministry of Environment expressed some concerns about strengthening the environmental assessment process being applied to independent power projects. The federal Department of Fisheries and Oceans expressed its concerns about protecting fish habitat and stressed the need to strengthen the environmental assessment process. The BC Sustainable Energy Association delegate (arriving late due to a cycling incident) emphasized the importance of conservation first, and the desirability of pricing reform to promote conservation. The representative from Save of Rivers Society made an impassioned plea to cancel the BC Energy Plan and its privatization of new sources of generation, to avoid the need for new dams by taking advantage of existing sources of electricity, and restore a strong community voice.

After the initial presentations, a heated debate erupted between representatives of the IPPBC and Save our Rivers Society, and the facilitator had a difficult time steering discussion in a productive manner towards the issue at hand and creating the space for other delegates to make their case. Eventually, the group was able to agree on a list of eleven issues at dispute.

·         Should new sources be public or private?

·         Should the price of electricity be increased to encourage conservation and renewable?

·         Should IPPs under 50 MW be exempted from BC Environmental Assessment processs?

·         Should the Canadian Entitlement to downstream benefits of the Columbia River Treaty be taken as electricity rather than revenue?

·         Should the assessment of cumulative effects of projects be increased?

·         What types of new sources of electrical power should be built?

·         What role should First Nations play?

·         What role should communities play?

·         Should self sufficiency on an annual basis be the provincial objective?

·         What is the actual size of the BC electricity supply gap?

·         Should the province continue to rely on the gas-fired Burrard Thermal plant?

With such a daunting list, the facilitator sought to identify an area of potential commonality first. We began to debate issues around the environmental assessment process. Environmental groups, DFO, and the BC Ministry of Environment were all strongly committed to eliminating the 50 MW threshold for reviewingprojects in Section 10 of the Reviewable Projects Regulation. The representative of the IPPBC was strongly opposed to the proposed change, claiming that IPP projects already had to get 50 permits, licenses, approvals and reviews from over a dozen provincial and federal agencies. A compromise was struck on this issue that received unanimous approval: 

The <50 MW exemption was eliminated, and replaced by a screening process like that existing under the Canadian Environmental Assessment Act that provided for a preliminary review of all projects, and allowed those with no significant environmental impact to be exempted from further assessment. In exchange for agreeing to this change, government officials committed to streamlining the overall approval to reduce its complexity.

Concerned about losing focus on the question of the day, the facilitator (assisted by TA Tom Berkhout) attempted to directly tackle filling in the forecasted supply gap. We put a simple excel spreadsheet up on the screen, using figures from the mammoth table on p. 6-54 of the most recent BC Hydro LTAP. We agreed to use 2026 as the end date. Existing and committed supply for 2026 is projected to be 56,000 GWh/year. Depending on whether you use the mid or high-range demand forecast, the forecasted supply gap is between 21,700 and 27,700 GWh/yr.

The group then went to work nominating candidates to fill the gap. BC Hydro suggested a demand-side management figure of 13,800 GWh/yr, a somewhat conservative figure given the utility’s current thinking, but the figure was not challenged by the other groups. Once DSM is included, the projected gap was reduced to between 6,300 and 12,300 GWh/yr.

Everyone was in favour of BC Hydro’s Resource Smart upgrades to existing Revelstoke and Mica dams, yielding a modest 210 GWh/yr. The Save our Rivers Society urged the inclusion of existing large sources of electrical power in the province or to which the province has access:  Rio Tinto Alcan’s surplus power from its Kitimat operation that is sold to BC Hydro, the power exported by the Teck Cominco smelter operation in Trail, and the Canadian Entitlement to the downstream benefits of the Columbia River Treaty. Neither Alcan nor Teck Cominco were represented by groups in the room, and no one objected to including them in the proposal. However, the Ministry of Energy, Mines, and Petroleum Resources objected to including the Canadian Entitlement, noting that the provincial budget was reliant on those revenues. After discussion, the Ministry softened its position and allowed the CE to be included. Plugging these numbers (7110 GWh/hr) into the spreadsheet, the group was elated to see that we had already closed the gap for the mid-range demand forecast, and were within 5200 GWh/hr for the high demand forecast.

But things got more heated again when we began to discuss next steps. BC Hydro made an eloquent plea for the Site C dam on the Peace River, which would add an additional 4600 GWh/yr. The delegate from the First Nations Summit raised concerns about Site C in light of BC Hydro’s history with First Nations, and the representatives from the BC government worked hard to convince the First Nations group that the project would be pursued in the spirit of the province’s New Relationship through some form of shared management. The representative from IPPBC was strongly opposed, arguing that the project was uneconomical compared to independent power projects. IPPBC put forward a proposal to include 3000 GWh/yr of IPP power, as in BC Hydro’s Clean Power Call. Before other delegates even got a chance to consider the proposal, the representative from Save our Rivers Society jumped in to oppose IPPBC’s proposal, arguing that it was wrong to be damming BC’s rivers for private profit. We got stuck in finding the next increment, with IPPBC strongly opposing Site C unless the Clean Power Call was included as well, and Save our Rivers Society strongly opposing the 3000 GWh/yr call for private power.

With time running out, however, the Save our Rivers Society offered a concession. Stressing the need to keep as much of BC’s electricity supply in public hands as possible, he expressed a willingness to allow the IPPBC proposal to go forward as long as Site C was also built by BC Hydro. Everyone agreed. The gap was closed, with virtually enough to spare to phase out the natural gas fired Burrard Thermal unit (3200 GWh/yr), and make BC’s electricity production virtually carbon-free. The final numbers are represented in the table below.

 

 

 

 

 

2008

(GWh)

 

Mid-Range

Demand Forecast

 

2026

 (GWh)

High-Range Demand Forecast

 

2026

 (GWh)

Existing and Committed Supply

59000

56000

56000

Less: Projected Demand

59800

77700

83700

Projected Gap

-800

-21700

-27700

 

 

 

 

Planned Demand Side Management (DSM)

 

13800

13800

Solar Water Heating Program

 

1633

1633

Total DSM

 

15433

15433

 

 

 

 

Projected Gap after DSM

 

-6267

-12267

 

 

 

 

New Supply

 

 

 

     Canadian Entitlement to Columbia River Power

 

4300

4300

     Large industrial producers (Alcan & Teck Cominco)

 

2600

2600

     IPPs – Clean Power Call

 

3000

3000

     Site C

 

4600

4600

     Resource Smart (Mica 5, 6, Revelstoke 6)

 

210

210

Total New Supply

 

14710

14710

 

 

 

 

Gap After DSM & New Supply

 

+8443

+2443

 

 

 

 

After the formal meeting adjourned, there was a lot of discussion about whether the concession by Save our Rivers Society could happen in real life, or whether it was just an effort by a thirsty student to allow the group to come to an agreement. Most felt it was unrealistic; that there was little evidence of willingness to compromise in the group’s current positions and rhetoric. A minority felt it was not necessarily unrealistic. While more rivers would be put at risk, the solution of repatriating the Canadian Entitlement and pursuing a new government project at Site C allowed the group’s interests in maximizing public control over electrical power to be satisfied in part.

While this class exercise is obviously a terribly simplified version of reality, it did leave me somewhat more optimistic about the province’s ability to address the looming electricity supply gap. It also strengthened my view that BC Hydro and the BC government should find better ways to involve stakeholders and the public in a deliberative process on solutions to addressing BC’s electricity needs. While some of these questions are addressed in BC Utility Commission proceedings, the overly formal, quasi-judicial nature of those proceedings is not conducive to building public understanding and legitimacy about electricity supply choices and consequences.

This exercise, and the one earlier this week on oil sands, also greatly strengthened my impression of the creativity of university students and the value of these sorts of simulations in teaching public policy.

Posted in British Columbia Electricity | Leave a comment

UBC Student Simulation: Should there be a Moratorium on New Approvals of Oil Sands Projects in Alberta?

Posted on March 25, 2009 by admin

During dinner break, Pembina staff trying to get a word in edge-wise while pipeline rep makes his case

During dinner break, Pembina staff trying to get a word in edge-wise while pipeline rep makes his case

March 25, 2009
George Hoberg

 

 

 

 

 

As part of a course on Sustainable Energy Policy and Governance, students participate in a simulated multistakeholder consultation about topical policy issues. Half of this year’s students simulated a debate about whether there should be a moratorium on new approvals of oil sands projects in Alberta. The scenario was presented as follows:  After considerable domestic and international conflict, the Premier of Alberta has announced a new multistakeholder consultation process to address the question of whether the province should impose a moratorium on new approvals for oil sands projects.

The learning objectives of this exercise are to develop practical skills — teamwork, research, and communication — necessary for constructive participation in policy development, while simultaneously developing a deep understanding of one crucial component of energy policy. While I feel confident that these simulations perform this educational purpose, I often wonder whether they might provide insights into real-world policy dynamics.  I’m reporting on the process and results here in the event that others inside or outside the ivory tower might benefit from our experience.

NOTE:  None of the statements in this blog refer to any actual positions or statements of real people or real groups, unless explicitly referenced. The views below are only those of UBC students pretending to be actors in the oil sands controversy.

Participating students were randomly divided into nine groups reflecting different stakeholders involved in the process: Alberta Energy, Alberta Sustainable Resource Development, Environment Canada, Canadian Association of Petroleum Producers, Canadian Energy Pipeline Association, Pembina Institute, Canadian Parks and Wilderness Society, Athabasca Tribal Council, and the Regional Municipality of Wood Buffalo. The groups submit 2000 word briefs designed to articulate the position of the group. We then meet for a 4 hour session to try to develop a consensus. I act as facilitator of the process.

The session began with each group giving a 5 minute presentation outlining their initial position. With perhaps one exception, the groups seemed to accurately reflect the position of their real-world models. Industry groups were adamantly opposed as was Alberta Energy. Pembina clearly articulated the position laid out it Taking the Wheel supporting a moratorium until a more effective regime of environmental regulation was put in place. CPAWS took a similar position, focusing more directly on wildlife concerns. The Athabasca Tribal Council delegate eloquently spoke to the health concerns of downstream residents and the need to respect treaty rights. Environment Canada took a softer position, not commenting directly on the merits of the moratorium, but instead emphasizing the importance of pushing through Bill C-16, the Environmental Enforcement Act, recently introduced in the House of Commons, and improving the framework for monitoring through CEMA. The Regional Municipality of Wood Buffalo focused on the need to strengthen social and community impact assessment in the environmental assessment process. The most surprising position was that of the group representing Alberta SRD. In a break with official Government of Alberta positions, the student group advocated adopting the position of the SEWG component of CEMA that there be a partial moratorium until an effective land use plan was put in place to protect conservation values in the region. Not surprisingly, colleagues at Alberta Energy found this disconcerting.

After the initial presentations, groups were asked to comment on each other’s arguments. A lively exchange ensued, much of which was focused on the economic consequences for Alberta if a moratorium were to be enacted. Industry groups threatened divestment. Environmental groups emphasized that they were only talking about new approvals and not affecting facilities in operation or already approved. Industry groups noted that the recession has produced a de facto moratorium in any event, so there was no need to adopt one through policy. Environmental groups countered that that made it a good time to adopt a moratorium, since the costs to the economy would be lower, and the pause allows time to create a more effective environmental framework. The Pembina delegate was very eloquent in expressing the frustration of many environmentalists about participating in stakeholder meetings like this for over a decade, and having their recommendations ignored by government. He very strategically noted that industry representatives had agreed to the CEMA recommendation for a moratorium last year.

The group dynamics became a bit more promising when the industry groups suggested that they were not necessarily opposed to a moratorium if there was a “business case” to support it (well said), and that they could not live with an indefinite moratorium. When environmentalists agreed to a specific time limit (end of 2011), and the Alberta SRD articulated a thoughtful justification for a moratorium, there was increased optimism in the room about the potential for agreement.

When the specifics of a moratorium proposal were outlined, we ran into stumbling blocks about the conditions necessary to lift a moratorium. Industry groups were concerned that the need to meet some standard for having an effective environmental regulatory regime in place was no different from an indefinite moratorium. Environmental groups feared that removing those conditions would eliminate the pressure necessary to force the Government of Alberta to take more rigorous action. With time running out, environmentalists agree to drop the need to meet specific conditions, so that the moratorium would be lifted at the end of 2011 regardless, and if a more effective regulatory regime had not been put in place by then, everyone would simply have to come back to the table, or otherwise do what they needed to do.

Meanwhile, Alberta Energy was given the floor, and outlined their proposal, instead of a moratorium, to grant large quantities of federal (!) money to the assembled stakeholders to address their biggest concerns. Industry and community groups were enthusiastic, and the Athabasca Tribal Council representative agreed, so long as they were made full partners in the leasing process. Environmentalists, however, were upset with what they felt was an effort to buy off opposition and avoid the issue of a moratorium.

We returned to the moratorium proposal that had previously gotten agreement from environmentalists and industry. At the very last minute, the facilitator canvassed the room for support of the proposal. Despite the facilitator’s best efforts to highlight industry’s support for the proposal, the Alberta Energy delegate could not be swayed. In the end, all stakeholders were in agreement with the proposal for a moratorium until 2011 except Alberta Energy, whose delegate remained steadfast that the evolving policy framework was appropriate, and that a moratorium was not in the interest of Albertans.

The meeting adjourned without agreement.

From my perspective as an external observer of oil sands politics, with the exception of Alberta SRD’s position, the dynamics and outcome were highly reflective of real world politics. Not bad for a group of UBC political science and conservation students.

Next up:  UBC Students address the Electricity Supply Gap in British Columbia

 

Posted in Oil Sands | Leave a comment

Electricity Trade in British Columbia: Are We a Net Importer or Exporter?

Posted on March 17, 2009 by admin

By George Hoberg and Christopher Mallon
March 17, 2009

PDF here for printing and better graphics

The conflict

Electricity policy in British Columbia has become increasingly controversial over the past several years. The conflict has focused on new hydroelectricity projects being developed by private sector “independent power producers” (IPPs). Environmentalists and unions have been highly critical of the Campbell government’s decision to rely on IPPs for new sources of electricity. The critics have raised concerns about losing public control over water resources as well as the cost-effectiveness and environmental consequences of multiple, small, privately operated hydro facilities. IPP advocates emphasize the environmental advantages of hydropower compared to other, especially fossil fuel sources of energy, and the complex review and approval process required.

Part of the conflict over IPPs stems from differences about how much new electrical power we need in BC. IPP advocates point to economic and population growth, and BC Hydro forecasts electricity demand will increase by 32% over the next 20 years (from 59,000 GWh/yr to 78,000 GWh/yr).  They also note that BC Hydro has become a net importer of electricity over the past decade. IPP critics question the need for so much new power. They emphasize the potential for conservation, but also claim that BC has been a net exporter of electricity.

Whether the province is a net importer or exporter of electricity has thus become an important part of the dispute. For example, Western Canada Wilderness Committee’s Gwen Barlee claims. “According to B.C. Stats, the province has been a net exporter of electricity for seven out of the last 11 years.” Steve Davis, President of the Independent Power Producers Association of BC, claims “Prior to fiscal 2008, BC Hydro was a net importer of electricity for seven consecutive years.” At first glance, it is hard to imagine that both claims can be true, and it seems counterproductive to have a dispute about what would seem to be a question easily resolved by examining official statistics.

Our objective

We’ve tried to address this factual issue by digging into the sources and numbers. The situation is indeed complex, but not so complex that it needs to be mystifying or an unresolvable conflict. We believe a somewhat more nuanced approach produces a clear picture of the situation. We’ve provided a detailed analysis below in the hopes that it will help resolve some of the factual conflicts and make way for a more productive dialogue on the real issues at dispute in the controversy over private power in BC.

Analytical challenges

There are several confounding factors which contribute to this difficulty, including having several different power producing entities in British Columbia, an international agreement that includes power transmission, the fact that BC imports and exports power for profit, and multiple sources of data. Despite these confounding factors, Statistics Canada has collected data on BC’s electricity generation and trade for over three decades, and some clear patterns emerge from this data.

Context Fact #1:  BC Hydro electricity trade is not the same thing as BC electricity trade. BC Hydro is not the only source of generation in the province – Fortis BC operates in the Kootenays, and large industrial generators also provide power to the grid, most notably Alcan in Kitimat, and Teck Cominco in Trail. Last year, the industrial producers contributed 20% of total BC electricity generation – the figure has fluctuated only slightly between 19 and 22% over the past 5 years. Despite how it dominates our thinking about electricity in BC, BC Hydro only generates less than 80% of the province’s electricity (we were unable to find figures separating out BC Hydro from other BC utilities). This critical fact allows the apparently competing statements by Barlee and Davis above to both be correct. Barlee is correct because BC Stats uses Statistics Canada and National Energy Board figures which include all sources of generation (see below). Steve Davis is correct because he’s only referring to BC Hydro (that data is shown at the bottom of this post).

 Context Fact #2:  Through the Columbia River Treaty, BC is entitled to power generated in the US — this is the so-called “Canadian entitlement to downstream benefits.” BC agreed to build dams on the Canadian portion of the Columbia to help the US with flood control, and our dams also increase the amount of power the US can get from their dams. In exchange, we received an entitlement of about 1200 MW of power, compared to BC Hydro’s total capacity of about 11,280 MW. While the US officially delivers this power to BC, we don’t take it as power to be used in the province. Instead, Powerex, the BC Hydro subsidiary that handles cross-border trades, sells it in the US market, and BC gets revenue without ever importing the power (The most recent budget (p. 142) reports this amount as $255 million for fiscal year 08/09). IPP critics argue that the so-called CE – the Canadian entitlement – should be considered part of domestic power resource. If we did, the net trade balance would look more favourable.

Context Fact #3:  BC Hydro does a lot of electricity trading to take advantage of the market to raise revenues, not to address changing power needs to BC customers. As a result, the trades flows in the Statistics Canada data are higher than they “need to be” to serve BC power customers. Unfortunately, it is hard to separate out these flows designed to take advantage of fluctuating prices from those designed to address actual power needs. However, these revenue-oriented exports and imports are likely to balance each other out, so while they may inflate the magnitude of total trade flows, they shouldn’t affect the net flows significantly.

Context Fact #4. There are multiple sources of data. BC Hydro has its own data, but it does not address imports and exports outside the BC Hydro system. The National Energy Board reports monthly statistics for BC, but they only measure flows across the Canada-US border, not interprovincial flows. Statistics Canada data reports trading from all BC entities, and includes international trade from the NEB as well as interprovincial trading. The basis for the Statistics Canada data is provided here. These are complex issues, and if you disagree with our interpretation, please comment below or email.

What the data say

1.       Historically, BC has been a net exporter of electricity.  As Figure 1 below shows, in the past 32 years, there have only been five years in which BC has imported more power than it has exported. One thing apparent from the long-term data is a significant amount of fluctuation in imports and exports. These fluctuations result from changing environmental conditions that affect supply and demand, such as the amount of precipitation filling BC reservoirs and weather impacts on demand for heating and cooling.

 figure1gh

 

 2.       BC’s trade surplus in electricity is declining, and over the past five years a small trade deficit has emerged.  BC was in a deficit 4 of the last 10 years. Three of the past 5 years have been deficit years. Over the past 5 years (2004-08), BC imports exceeded exports by 4,807 GWh, 1.5% of the 327,271 GWh generated in BC over that 5 year period. Figure 2 shows the electricity trade balance of the last 10 years. Figure 3 puts these trade flows in perspective of total BC generation.

 

  figure2

  figure31

 

 

 

 

3.       The Canadian Entitlement to the downstream benefits of the Columbia River Treaty is not included in current trade statistics. If it were included as a BC generation resource, BC would have access to 1,200 MW of capacity. Table 1 compares that figure to other BC projects. Essentially, it is somewhat larger than one very large new dam project.

Table 1 Capacity of Canadian Entitlement to Downstream Benefits in Comparison

Columbia River Treaty Downstream Benefits

1,200 MW

Currently installed IPP power in BC

891 MW

Site C proposal

900 MW

Bute Inlet proposal

1,000 MW

 

The CE would provide an additional 4,300 GWh/year of electrical energy to BC. If we had been using that energy, it would have eliminated the trade deficit for all put one of the past 5 years. Pooling the past 5 years together, if we’d used the CE it would have turned a 5 year deficit of 1.5% into a 5 year surplus of 5.1%. That compares to BC Hydro’s forecasted increase in demand of 32% over 20 years, or a 16% increase in electricity generation if the province meets the BC government requirements that half that increase in demand be met with conservation. BC Hydro’s current planning assumes even higher potential for conservation – they believe 72% of future demand growth can be offset through conservation, meaning that demand could be met with only a 9% increase in new sources of electricity. Including the downstream benefits of the Columbia River Treaty doesn’t eliminate the forecasted gap in BC electricity supply, but it does narrow it.

Whether or not BC should take the Canadian entitlement as power is a complex policy question that should consider, among other things, that at present that power is currently displacing fossil and nuclear sources of generation in the US. Our purpose here is merely to put the magnitude of the CE in perspective.

Some other notable patterns in the data

The following two figures show the sources of BC import and the destination of BC exports. They reveal that trade across the 49th parallel is far more important than trade across the Rocky Mountains. We also include a table of BC Hydro trading statistics for the record.

 figure4

 

 

 

figure5 

 

Table 2 – Electricity Trade as reported in BC Hydro Annual Reports

Year

Net Sales (Purchase)

GWh

F1996

(1,452)

F1997

6,057

F1998

6,745

F1999

1,499

F2000

2,222

F2001

(1,993)

F2002

(5,238)

F2003

(1,754)

F2004

(5,118)

F2005

(7,381)

F2006

(4,352)

F2007

(6,141)

F2008

1,171

F2009

To be determined

 

 

 

 

 

 

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My First Take on the B.C. Government’s Forestry Roundtable Report

Posted on March 9, 2009 by admin

by George Hoberg

Today the Government of British Columbia released the long-awaited report of its 21 member Forestry Roundtable. The Roundtable was chaired by Forest Minister Pat Bell, and its membership was heavily weighted towards government and industry, and also contained representatives from labour, communities, First Nations, and academia. Environmentalists did not participate as members.

Press conference for Report release - From left to right: Dave Porter, Kaska Dena Nation; Minister Bell; Derek Thompson, Associate Professor, Royal Roads University; and Tom Olsen, President, Triumph Timber

Press conference for Report release - From left to right: Dave Porter, Kaska Dena Nation; Minister Bell; Derek Thompson, Associate Professor, Royal Roads University; and Tom Olsen, President, Triumph Timber

The vision and principles guiding the Roundtable, and the resulting recommendations, are provided in italics in full below. The report is available here.

I had one meeting with the Roundtable, but have not followed its deliberations closely. I have been teaching forest policy at UBC for 12 years, and the following themes strike me upon first reading.

1.       The report offers little near-term solace to the struggling forest sector and forest-dependent communities. But that is realistic. The causes of the deep crisis in BC forestry are largely beyond the control of government policy.

2.       In a further indication of the Campbell government’s commitment to reconciliation with First Nations, the report includes as one of its six priorities “First Nations becoming full partners in forestry.”

3.       Forging consensus for action among so many stakeholders is challenging under the best of circumstances, so it is not surprising that many of the recommendations are very vague. A telling example of overly vague recommendations is # 8 – “We should work to streamline transactions between government and industry to support a vigorous, efficient and world-competitive wood processing industry.”

4.       Several recommendations (e.g., #2 wood first in taxpayer supported buildings, #16 creating a Wood Innovation and Design Centre) were already announced in the recent Throne Speech or earlier.

5.       In some cases, instead of providing specific recommendations, the report simply encourages that policies be “reviewed” or actions should be “encouraged.” One example is # 3 – “We should review our forest management and silviculture practices to ensure that they encourage maximum productivity, value and support forest resilience.” This style of recommendation is discouraging to those who thought the purpose of the Roundtable was to perform this sort of review.

6.       Given the times, it is not surprising, yet still notable, that environmental values are barely mentioned. They do not show up explicitly in the priorities. In a 56 page report, the word biodiversity appears twice. While environmentalists might take some comfort in the absence of any specific indication of environmental deregulation, they will find little solace in the absence of commitment to maintaining strong environmental standards. The closest the document comes to such a commitment is a line on page 20 “At the same time we need to ensure we maintain sustainable forest management practices.”

7.       There are real indications of a commitment to diversify the mix of products. The report disparages the province’s mindset that “saw logs are the only forest crop” (p. 19), and talks about carbon credits and bioenergy. But the report is not specific on what actions need to be taken to move in this direction. For example, recommendation #15 states  “We must advance bioenergy and biofuel projects by creating competitive tenure and pricing frameworks to attract private sector investment.”

8.       There are real indications of a commitment to diversifying tenure arrangements. The Roundtable recommends giving First Nations larger, more secure area-based tenures, and recommends expanding community forestry. It also recommends (#5) enabling the establishment of short-rotation fibre plantations, and (#7) establishing “commercial forest land reserves for key portions of the current forest land base where wood production will be a primary focus.” The combination of these recommendations conforms to longstanding recommendations by policy observers that BC would be better off by having more refined and differentiated forest land use zones.

9.       While the commitment to tenure diversification should be applauded, the document is silent on how far the province should go, or how it should get there. It does not contain targets for either aboriginal or community forest tenures, although in a press conference Minister Bell said that they intend to increase those two categories from the current 10% to 20%. The report does not indicate from where the new land or harvesting rights would come.

10.   Recommendation #7 on the commercial forest land reserve sounds remarkably similar to the Campbell Government’s failed “Working Forest” proposal of its first term. Can the Working Forest, like a phoenix, rise from the ashes? It would be helpful to know how the government plans to overcome the obstacles that the Working Forest initiative could not.

11.   The text around both Recommendations #7 and #5 (“we should enable the establishment of short-rotation fibre plantations”) seems to flirt with the idea of granting more private rights to public land without ever coming out and using the P word – privatization. Given that privatization has proven to be the third rail of B.C. resource politics (see conflicts of Western Forest Products schedule A lands removal on Vancouver Island and current battle over private hydropower projects), it is not surprising the Roundtable chose caution.

These are immediate reflections based on one reading and several hours of thinking. Greater clarity in how Campbell government plans to pursue the substance and direction of the Roundtable’s recommendations will no doubt emerge as they are engaged by the NDP in the upcoming May election.

What follows are the text of the vision, principles, and recommendations from the press releases and backgrounders.

The Working Roundtable on Forestry’s vision is for “a vibrant, sustainable, globally competitive forest industry that provides enormous benefits for current and future generations and for strong communities.” The Roundtable Report sets six priorities to help achieve the vision:

1. A commitment to using wood first.

2. Growing trees, sequestering carbon, and ensuring that land is available from which to derive a range of forest products.

3. Creating a globally competitive, market-based operating climate.

4. Embracing innovation and diversification.

5. Supporting prosperous rural forest economies.

6. First Nations becoming full partners in forestry.

ROUNDTABLE RECOMMENDATIONS

1. We should continue to inform British Columbians and forest product consumers about the beauty, carbon friendliness, economic and other benefits of British Columbia’s forests and forest products.

2. All taxpayer supported buildings in British Columbia – federal, provincial and municipal must, and private sector buildings should, utilize and demonstrate wood and wood products whenever and wherever possible.

3. We should review our forest management and silviculture practices to ensure that they encourage maximum productivity, value and support forest resilience.

4. We should encourage the Western Climate Initiative to include forests in the identification of cap and trade opportunities for carbon credits.

5. We should enable the establishment of short-rotation fibre plantations.

6. We should establish a Carbon Offset Credit program for restoration of forests killed by the Mountain Pine Beetle where credits could be purchased.

7. We should establish commercial forest land reserves for key portions of the current forest land base where wood production will be a primary focus.

8. We should work to streamline transactions between government and industry to support a vigorous, efficient and world-competitive wood processing industry.

9. We should offer competitive bid timber sales as area-based sales and review our timber pricing system to ensure it is as simple and transparent as possible.

10. The provincial government and Union of British Columbia Municipalities should work with industry to ensure municipal tax structures support competitiveness and industrial activity in British Columbia communities.

11. We must establish labour arrangements that advance productivity and support competitiveness and investment while maintaining good working conditions and an adequate standard of living.

12. We should clearly define compensation rules for agreements between government and licensees, and in particular, what constitutes a taking of rights awarded through agreements and how compensation levels will be assessed.

13. We should establish clear competition policies to guide the transfer of tenure between licensees.

14. We should respond to the urgent needs of business, workers and communities during the current global economic downturn.

15. We must advance bioenergy and biofuel projects by creating competitive tenure and pricing frameworks to attract private sector investment.

16. We should establish a Wood Innovation and Design Centre focused on bringing together builders, architects, designers, artists and engineers to advance the commercialization of value-added wood building and design products.

17. We should create a forum to bring together leaders from the forest sector with those from chemical, energy, and other sectors to identify new wood based product and market opportunities.

18. We should continue to diversify forest product markets with particular emphasis on emerging markets such as China, ensuring that marketing efforts are sustained, coordinated and based on what end users want.

19. We should be proactive in exploring ways to ensure wood fibre is available for industry growth and product diversification while respecting tenure holders’ rights.

20. We should increase the percentage of fibre that is available through competitively-bid timber sales.

21. We should develop an internet-based wood market.

22. Logs that are surplus to British Columbia manufacturing needs should be exported until local manufacturing capacity exists. The surplus test currently in use should be reviewed to ensure it is rigorous.

23. We should expand the Community Forest Agreement Tenure program.

24. British Columbia forest policies should reflect the unique forest attributes and socio-economic circumstances in different parts of the province.

25. We should create more long term, area-based forest tenures that are of an economically viable size, and create legislation for a First Nations forest tenure.

26. Revenue-sharing with First Nations should be proportional to the value of timber harvested in their respective territories instead of being calculated on a per capita basis.

27. We should encourage business and First Nations to become full partners in forestry businesses, in particular in emerging areas of opportunity including biofuels, bioenergy, carbon and reforestation.

28. We should strive to build capacity among First Nation governments, First Nation forest corporations and First Nation forestry institutions to achieve full participation in forest activities.

29. We should collaborate with First Nations to involve First Nations youth in forest employment opportunities.

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