In February this column asked the question: “Are B.C.’s greenhouse gas reduction targets history?”
The answer is contained in a new draft plan from BC Hydro on how to meet future power demand. And while it’s not explicitly stated, the answer is yes.
The draft plan was released in May for discussion purposes, but so far there hasn’t been much discussion. This is surprising given some of the recommendations, such as firing up the Burrard Thermal natural gas power plant more often and buying fossil fuel power from the North American market to keep up to demand.
The plan confirms a few things that have been evident for a while. Dreams of exporting B.C. hydroelectric power are gone for the foreseeable future. And with mining ramping up along with natural gas development and population growth, BC Hydro now projects electricity demand could rise by 50 per cent over the next 20 years.
The emergence of huge shale gas sources in B.C. and across the United States has changed the North American energy picture dramatically, as U.S. electricity producers replace coal by burning cheaper and cleaner gas to ramp up power production. B.C. is losing gas market share in the U.S., its only export customer for heating fuel and electricity use.
Former premier Gordon Campbell’s climate goals officially remain in place: 33 per cent greenhouse gas reduction by 2020 and a whopping 80 per cent by 2050. If the gas boom proceeds as planned, B.C. domestic emissions will not be down, but up considerably by 2020.
Premier Christy Clark has a new target for 2020: three liquefied natural gas production lines feeding high-pressure tankers at Kitimat, for export to Asia. Not only will B.C. need to buy gas-fired power from outside the province to keep up to industrial and residential demand, but the natural gas industry will need its own new gas-fired electricity to produce LNG for export.
Natural gas passed forestry as B.C.’s top resource revenue source many years ago. In 2005, the volatile gas price spiked up and produced $1 billion in windfall profits that allowed the B.C. government to buy a rare period of public sector labour peace through the 2010 Olympics.
Now a glut of shale gas has pushed the North American price down from its historic range of $4 to $6 per thousand cubic feet to about $2.40. Despite that low price, gas producers in B.C. are going flat out to develop the Horn River and Montney shale gas deposits in northeast B.C.
I asked David Pryce, vice-president of the Canadian Association of Petroleum Producers, why so much gas is being developed now. He said producers have made huge investments in B.C. shale gas drilling rights, and are in an international race to supply LNG to Asian countries where the price is currently four times higher than in North America.
Whatever the domestic price, B.C. gas producers have to show LNG investors such as Mitsubishi and Korea Gas that they can fill a steady procession of LNG tankers at a competitive rate.
If LNG doesn’t fly here, B.C.’s gas export market soon evaporates. Currently gas producers pay about $400 million a year in royalties, and that much again to buy up shale gas drilling rights. The industry already employs about 12,000 workers in B.C.
The B.C. government has little choice but to redefine its climate targets. Instead of cutting domestic emissions, it will try to take credit for displacing coal power in Asia.
Fortunately, B.C.’s main coal exports are for high-grade coal used in steel-making.
Tom Fletcher is legislative reporter and columnist for Black Press and BCLocalnews.com
