But while the Enbridge pipeline has huge swaths of BC up in arms, particularly First Nations and “radical environmentalists”, the LNG plans, which already have been approved and have an export permit, have not. Bitumen from the tar sands has a bad name, but natural gas does not. Perhaps because we call it “natural” gas not methane; perhaps because of its familiarity from being piped into many BC homes. Natural gas has long been touted as the cleanest of the fossil fuels – about half the greenhouse gas (GHG) emissions on a lifecycle basis as coal. The advent of hydraulic fracking in deep shale gas deposits closes that GHG gap considerably (according to one study, there is no difference), but it also raises huge local environmental justice issues in the form of contaminated aquifers (water supplies), tailings ponds and even earthquakes (see a great report by my colleague Ben Parfitt).

A review of the numbers, though, shows that the LNG plants will be even worse than the Enbridge pipeline in terms of GHG emissions. Last summer, I crunched the numbers on carbon content of the fuel that will go through the LNG plants — just the emissions from combusting the fuel, whether that is in China or BC, NOT including the extraction, processing and transport emissions — and found that when all of the plants are up and running by 2020, emissions between 81 and 112 million tonnes (Mt) of CO2 per year. The uncertainty relates to the throughput of the pipes; if anything, the true figure by 2020 will be closer to the latter.

I did a similar calculation for the Enbridge Northern Gateway pipeline, and came up with 70 Mt of CO2. So just in terms of carbon content the LNG plants are actually a bigger carbon bomb than the Enbridge pipeline. Those emissions will happen in China, so they won’t count in BC’s or Canada’s GHG inventory, but the atmosphere cares not what land mass emissions come from. In both cases, I’m assuming this is incremental activity relative to a status quo of leaving the fuel in the ground.

We also have to count extraction and processing emissions – the energy and emissions it takes to get the fuel out of the ground and to market. In the case of Enbridge, adding in those emissions will make the total impact on the order to 90-100 Mt per year. For the LNG plant we get into controversies about just how much process (or fugitive) emissions will be (see debate here). Our friends at the BC Sustainable Energy Association have taken a crack at estimating those fugitive emissions, and they come up with a range of 54 to 370 Mt per year. The reason for the wide range is that annual emissions are lower if you take a 100-year timeframe than if you take a 20-year timeframe. This is because methane breaks down in the atmosphere into carbon dioxide and water over time, but while it is up there it has a much higher warming potential. The shorter time frame is arguably more relevant because we don’t have the luxury of waiting 100 years, and that shorter-term additional warming will have impacts on ecosystems, glaciers, permafrost, forests, sea ice and so forth that would launch us into a catastrophic feedback loop or rising temperature.

In any event, those production emissions DO COUNT in BC’s GHG inventory (which totaled 66.9 Mt in 2009), so even if we take the lowest amount, the LNG plants make it impossible for BC to meet its 2020 legislated GHG target of 33% below 2007 levels. In fact, it probably makes it impossible for BC to fall below 2007 levels, period. And the counting is not even done yet, as we still need to factor in the energy used for fracking the ground, processing facilities; transporting gas by pipeline; compressing it; and then transporting it again by tanker. It is hard to say how much annual GHG impacts will be for all of this activity, and some if it will be powered by electricity, but conservatively figure another 5-10 Mt per year (please jump in with your own math!).

Putting all the LNG pieces together, we are looking at a minimum of 140 Mt and possibly up to 492 Mt per year (by comparison, Canada’s emissions were 734 Mt in 2008). Someone recently questioned my claim that this represents a carbon bomb because we are just so small relative to total global emissions, but clearly these numbers are sobering if you care at all about climate change. (These days it feels like I’m the one in denial that humanity can pull itself out of its fossil fuel addiction, since we seem to be upping the dose.)

All of which drives home some truly deceptive spin on the part of the BC government that their natural gas ambitions are somehow good for the planet and in sync with climate action. Here is Environment Minister Terry Lake (I picture him trying to prevent himself from breaking out laughing) in the BC government news release:

Again, B.C. is demonstrating climate leadership with the world’s first clean-energy-fuelled liquid natural gas plants. These two LNG plants will provide Asia with a cleaner alternative for its immediate energy needs as B.C. natural gas displaces more carbon-intensive fuels like coal and diesel. Our abundant natural gas is a bridging fuel that will contribute to global reductions in greenhouse gas emissions, as we move into the future of clean, greener energy alternatives.

Two things to note here. It is proposed that clean electricity power two of three LNG plants, which met praise from the likes of the Pembina Institute. But this is but one very small piece of the lifecycle emissions from the wellhead to the Chinese market that would displace burning gas in favour of renewable energy. Second, this electricity will be massively subsidized by regular BC households. This is because all of the new demand in the province is coming from industry, most notably mining and oil and gas (the two most GHG-intensive industries), who pay a super-low “transmission” rate of about $40 per MWh. But this new renewable energy supply on the margin costs about $124 per MWh, meaning the Crown corp will lose $84 for every MWh it sells. That means residential and commercial ratepayers must make up the difference in higher rates. Far from climate leadership, the BC government’s plans subsidize the very industries causing the climate problem.

[Aside: The release of the Natural Gas strategy provided some political cover for a decision to abandon a policy of electricity self-sufficiency for BC Hydro. This is a flip-flop and policy failure on the part of the Liberals, but it is, in fact, the right call. The self-sufficiency mandate, while sounding good, meant BC would have had to run huge electricity surpluses every year to guard against shortfalls – again buying expensive renewable power from private corporations that for the most part would have had to be dumped at a loss on the North American market. I should say that the complicity of renewable energy industry in all of this is apalling, and that includes a former climate team member of the David Suzuki Foundation who is now the BC director of the Canadian Wind Power Association.]

Back to Lake, the other notable is that there is only one way his statement could be true. If BC’s shale gas is indeed less GHG-intensive than coal, and if it was to displace China from burning coal (i.e. that coal stayed in the ground) then there would be a modest improvement in GHG terms. But that is not the planet we are living on, and the status quo energy pathway for China suggests nothing of the sort. BC’s LNG exports will be used as additional fuel on top of growing coal burning for power.

There is no way of getting around the fact that the LNG plants are a nightmare in climate terms. They will be extremely profitable to industry (which includes the Chinese state oil company as a partner) and governments will benefit from royalties and taxing those profits (though the trend is continually to lower corporate income taxes). It is increasingly a problem that governments who hate taxes rely on resource revenues to fund public services. There will even be some jobs though not many. According to the strategy document about 1,500 construction jobs and 125 permanent ones. And though the document claims “B.C.’s natural gas sector employs tens of thousands” the BC government’s own statistics state otherwise: 3,200 jobs in oil and gas in 2011, plus a perhaps a couple thousand more in “support activities for mining and oil and gas”.

Forget the rhetoric about competitiveness and market diversification. This is about a short-sighted push for big profits that come at the expense of people in vulnerable parts of the world and in the future. They are externalized costs that lead to odious profits. In that, and in the China connection, there is little difference between the Enbridge pipeline and the LNG plants. For the BC government to state that this is “a climate solution” is beyond belief; the federal Conservatives, at least, are more honest about not caring for the future. The true tragedy in all of this is that we need not go this route at all – the solutions to the climate problem already exist; the barrier is politics-as-usual. If we want a jobs strategy there is a great alternative available in the shift to a green economy. That means BC’s shale gas reserves need to stay in the ground.

The two, climate and profit, are very much related. The gains from doing this are “odious profits” that exist only because of massive costs externalized onto third parties (I’m riffing off the term “odious debt” — that incurred by dictators, usually for military hardware, for which the people are forced to pay even after the dictator has been deposed). Anyone who advocates well-functioning markets, as opposed to unbridled capitalism, should see the logic of ensuring that all costs of production are captured in the market price. The huge negative externality associated with fossil fuels is what prompted Nicholas Stern to call climate change the biggest market failure in history.

How much are we talking here? The pipeline itself is a $5 billion investment so it will have to make back a decent annual return. Enbridge’s estimates for toll structure and throughput imply revenues of just under $900 million per year. Based on financial statements in Enbridge’s 2010 Annual Report, profits from pipeline operations (after-tax earnings plus dividends) averaged 34% of revenues over the past three years. At this rate, profits from NGP would be over $300 million per year. These are not trivial amounts, and they do not include “costs” such as lucrative executive compensation – for example, Patrick Daniel, the CEO of Enbridge, made more than $6 million in 2009, and several other executives had more than $1 million in compensation.

Beyond the pipeline itself, we can also include the gain in profits to oil sands producers from higher market prices in Asia, estimated to average $3.6 billion per year by Wright Mansell, a consulting firm whose report is included in the application. So call it $4 billion in annual profits and you can see why a government with no morals would want to cozy up to the pipeline and start calling it ethical oil.

But at what environmental cost? There is a certainty of oil spills from the pipeline itself and tankers on the BC coast. Enbridge pipelines had 800+ oil spills on its pipelines over the past decade and a bit, and the record of other pipeline companies is no better with 5,600 incidencts in the US alone gong back to 1990.

But I’m more interested in the climate impacts. The Northern Gateway Pipeline would transport 525,000 barrels of diluted bitumen per day. The carbon content of this fuel is translates into annual global emissions of approximately 70 Mt CO2e. In addition, there are emissions associated with extraction of the resource (6.5 Mt CO2e, according to Pembina) and emissions associated with the energy needed to run the pipeline and ship bitumen to Asia. Finally, there are emissions from upgrading and refining bitumen into oil and other petroleum products (8-9 Mt CO2e per year, although this emissions-intensive process would happen in the importing country). All in, annual emissions associated with the pipeline could be in the range of 90-100 Mt CO2 per year, and this is not counting emissions associated with construction (manufacturing and transport of steel pipe, and machinery and equipment on-site).

So what is the damage — the negative externality — from all of that carbon? The most credible recent study estimating a range of values for the “social cost of carbon”, with most estimates in the range of $150-500 per tonne of CO2, but possibly as much as $893 per tonne. To put this in more recognizable terms, BC’s $25 per tonne carbon tax translates into less that six cents per litre. Internalizing the external costs of the pipeline into market prices would require a mix of regulation, carbon pricing and removal of any caps on liability in relation to spills. Indeed, the corporate form in practice limits liability to the initial investments made by owners of stock, which could be exceeded in the form of massive clean-up costs for a catastrophic spill.

Based on the numbers above, a low estimate of 80 Mt of CO2 into the atmosphere per year with external costs of $50 per tonne would imply $4 billion per year in externalized costs. Using a higher estimate of 100 Mt at $200 per tonne, external costs reach $20 billion per year. These numbers assume that bitumen would stay in the ground in the absence of the NGP, which may not be realistic given other options, but the point is that the NGP would facilitate the combustion of large volumes of fossil fuel, and doing so imposes very large costs on third parties from future climate impacts.

Bottom line: the Enbridge pipeline makes odious profits and they must be weighed against the costs of GHG emissions and oil spills. Privatize gains, socialize losses. Which is why the industry and their government make no reference to either the profits to be gained or climate change. While there will be some jobs created along the way, they are very small in number. Governments get a cut, too, through royalties and taxes (though the latter are being phased out for people fortunate enough to be corporations), but these are like the royalties on export of blood diamonds.

So thanks to Natural Resources Minister Joe Oliver, who unintentionally shone a massive spotlight on this project. The Conservatives would have been better off had he just shut up (though I’m figuring his letter came from central command and he was forced to sign his name to it). Let’s follow the money and have a real debate about the impacts of this pipeline from Alberta to China.

• Who are the real ‘radicals’ – those working for a sustainable climate and environment – or those who promote carbon-bombing the atmosphere, making us all guinea pigs in one of history’s most reckless experiments?
• Who are the real hypocrites – those who drive to public meetings because we have not sufficiently invested in realistic lower carbon alternatives, or fossil fuel industry executives who enjoy mild summer days, fresh drinking water, vacations on low-lying ocean islands, or food grown next to expanding deserts – all things that will become scarcer if they continue having their way?
• Who is undermining Canada’s national interests – advocates of responsible inter-generational stewardship and careful development of our resources, or a government turning Canada into an international environmental pariah?
• What’s the more short-sighted job creation strategy – investment in labour-intensive lower-carbon infrastructure, or short-term construction projects to export unprocessed raw materials to foreign economies?

Like the Orwellian oxymoron “ethical oil,” the double standards in political and media discourse constitute a temporary triumph of greed over reason, of vested interest over collective well-being.  A decently human future requires a reversal.

Many of us found the explosion of the Occupy movement onto the local and North American scene particularly exciting. Notwithstanding some misgivings about some tactics, I feel immense gratitude towards what these mainly young activists have accomplished. We at the CCPA have been struggling to put the issues of inequality and corporate power into the spotlight for years. We first noted the phenomenon of the run-away rich in a report called The Rich and the Rest of Us a few years ago, and have been systematically highlighting the growing gap ever since. But the Occupy movement brought those issues to the forefront of public consciousness in just a few short weeks.

Occupy hit a nerve, and invigorated people. It broke through people’s isolation, and told us we are not alone in our distress about these trends. Creatively and peacefully, Occupy has fundamentally shifted the political discourse.

Now we need to regroup and build on that was accomplished last fall. We need to show people that there are known policy solutions to reduce inequality, restore economic security, rise to the challenge of climate change, and reign in the power of the corporate sector in our democracy. No clear demands? Nonsense. The alternatives abound. And we at the CCPA have been assembling them for years. Now the task of us all is to popularize and promote them, and to push our political parties to give these bold ideas political expression. Together, we need to Occupy the media, Occupy the public debate, creatively Occupy real sites that highlight solutions, on the one hand, and the untenable influence of corporations on the other. And Occupy the ballot box. And we should have fun doing so.

And consider this hopeful prediction (with a hat tip to US activist Van Jones): a remarkable demographic transition is underway, as the “Millennials” (the largest demographic group in history) come of age. This is a largely progressive cohort, managing more diversity with less strife than any before it. Many are non-plussed by the prevailing system. And many many have a strong environmental orientation. The point is this –– arguably the days of right-wing governments who refuse to act on climate change and inequality may well be numbered. Will this younger demographic (who we saw starting to flex their mussel in the Orange Wave during last spring’s federal election) really abide these guys? Or, over the next 10 years, will they come into their own politically just as the reality of climate change is unavoidable (a powerful alignment), and be ready for the new ideas groups like the CCPA must have at hand.

Our task is to prepare for those tipping points. To create political-cultural space. To lay the groundwork. To seed the public discourse with bold ideas, in anticipation of those moments – and they are coming – when the seemingly impossible is suddenly inescapable.

Best,

Seth Klein, CCPA-BC Director

I’ve been trying to make sense of Canada’s utter intransigence on climate. After all, our Prime Minister has children, too, so what could possibly be going through his head when the science is so clear about our need to act. Perhaps Stephen Harper and the Conservative party are simply climate deniers, who frown on any evidence, no matter what the scientific consensus, that contradicts their worldview of small government and unbridled capitalism. One can also point to the 2011 Crime Bill as another case in point of ideology trumping evidence.

Another factor is that the politics of opposing climate action is just too compelling for a conservative to resist: the oil and gas industry is a fundamental part of Harper’s base, and therefore a key source of political power; plus it is easy to demonize people who want to challenge the status quo in tough economic times, no matter how unsustainable the present course may be.

It is not just about the tar sands of Alberta, either. In BC, the provincial government is narrowly focused on new coal mines and shale gas fracking as the centrepiece of a provincial economic strategy. Since coming to power earlier this year, Premier Christy Clark, also a mother, has shown little interest in pursuing further climate action, leaving BC set to follow in the unfortunate Canadian tradition of reneging on climate commitments. BC cannot meet its legislated targets for GHG reductions by 2020 while pursuing a fossil fuel export strategy.

Coming back to the kids, I think Harper and Clark know very well that climate change is upon us. Reports from the federal government itself, via Environment Canada, pin the blame for freak weather on climate change. The mountain pine beetle infestation has devastated BC’s interior forests, and extreme weather incidents have been widespread. We know climate impacts will continue to get worse, leaving a terrible legacy for our children.

But rather than act, perhaps the Conservatives are making a leap of faith that wealth and technology will spare Canada from the ravages of extreme weather and altered climate patterns. Or at more personal level, wealth and technology will enable their children to maintain a high standard of living.

This is, of course, nonsense. It is like being unconcerned about a plane crash because you are sitting at the back of the plane. And this callous disregard guarantees a massive injustice perpetrated across generations. Failure to act is already condemning millions of people around the world to suffering and death.

But we are rich, so why should we care? Such is the fundamental injustice of climate change: those who have done the most to cause the problem – rich people in rich countries – are not the ones to pay the price. Executives in the oil industry who have gotten rich by externalizing their costs of production are thus in terrific position to seek shelter in fortified compounds, while the poor and innocent, who have not benefitted from fossil fuels, who must live with the consequences.

Climate change embodies injustice: the rich screwing the poor; the old dumping on the young; humans robbing other species. To make it right we need climate justice, and our work at the CCPA has been to develop a vision of what a post-carbon society could look like, and how we get there. But we have to collectively choose that future.

Two other big stories of 2011 may show a glimmer of hope that we have hit bottom, and change is coming. The Occupy movement came out of nowhere to oppose the inequality of savage capitalism. And Big Oil’s push for pipelines to get tar sands crude to market has run into massive opposition in the US, led by red meat states like Nebraska, and in BC, led by a unified wall of First Nations.

We will need new governments, federally and provincially, to spearhead the collective action required for a climate just world, and that will address our ecological deficits with the zeal we have for budget deficits. The wall of denial will come tumbling down in short order, and our Climate Justice Project is preparing us for a rapid transition that is smooth and fair. In the meantime, as our governments have been occupied by fossil fuel industries, take heart in the fact that people can still say no, leaving the carbon bombs held by Alberta and BC trapped underground.

And with good reason.

Earlier today, I outlined why in a new report for the CCPA which looks at the rapidly expanding usage of fracking in two regions of the province where the gas industry is steadily increasing its efforts to extract natural gas from deeply buried shale rock formations.

The report – Fracking Up Our Water, Hydro Power and Climate: BC’s Reckless Pursuit of Shale Gas – concludes that when all is said and done the gas produced from such operations is the natural gas equivalent of the oil produced from Alberta’s tar sands. The parallels between the two are downright spooky, and even spookier when you consider that a goodly amount of natural gas currently produced in BC is headed to Alberta to . . . facilitate the extraction of raw bitumen from the tar sands.

Both the shale gas fracking indusry and the tar sands oil industry are big consumers of water, big consumers of energy and big emitters of greenhouse gases. And they will be even more so in the years ahead. I was lucky to gain an inkling for what that may mean during a field-trip last year, which took me into the heart of one of the emerging fracking zones in BC’s south Peace region. Fortunately, I had award-winning photographer, Garth Lenz along for the ride. He captured some amazing images of all the ways our public water and hydro resources are being placed at risk as the fracking industry expands. Later, the CCPA’s Terra Poirier worked with the images to create a nifty slideshow which you can access on-line here. You can also check out more of Garth’s images on his website – which also includes portfolios of his photographs in Alberta’s tar sands and over the Athabasca river delta.

Like I said earlier, and as Garth’s work vividly portrays, the parallels between BC’s shale gas industry and Alberta’s tar sands oil industry are many. But the big three of water use, energy demand and greenhouse gas emissions clearly stick out. When you look at those three, the need to enact tough new policies and regulations to deal with BC’s natural gas sector is obvious.

In fracking, immense amounts of water – up to 600 Olympic swimming pools’ worth at some BC fracking operations – are pumped underground along with unknown chemicals and sand to break open cracks or fractures in the shale rock, fractures which allow the trapped gas to be released. That water use is very loosely regulated in BC, leading to all kinds of potential environmental abuses.

The power that the rapidly expanding shale gas industry in BC is projected to need, could, according to BC Hydro, amount to the equivalent of 2 and possibly 3 times the power that would be produced at the proposed Site C dam, on the Peace River, not far from where the pictures in the above-mentioned slideshow were taken.

Lastly, there’s all the additional greenhouse gases associated with shale gas production in BC – emission increases that will undercut any ability for BC to meet its legislatively mandated greenhouse gas emissions reduction targets.

That’s why I argue in today’s Province newspaper that it’s time to put a cap on annual gas production in the province before our shared water and hydro resources and our climate are totally fracked.

While the effectiveness of smart metering in BC is yet to be seen, the upfront capital investment for the utility is unquestionably significant. Initial estimates report costs of $660 million for the meters and $270 million for the grid, for a total price tag of just under $1 billion. That does not include a box in your home to give you access to your data — a couple hundred dollars that will come out of your pocket, though BC hydro says it will provide some rebates.

BC Hydro’s “business case” argues that after considering implementation costs, smart meters will provide a net benefit of $3 billion over a two-decade period through to 2033, with 80% of the benefits internally to the utility, and the remainder dependent on uptake of additional in-home tools. The analysis assumes that smart meters will not need to be replaced during this period, and that no other unintended consequences are manifest. The benefits are based on: improvements in safety and reliability, such as real-time information about power outages; enhanced customer service; reductions in electricity theft; and improved operational efficiencies.

About 17% of the “benefit” to BC Hydro of smart meters arises from eliminating jobs for meter readers across the province due to automation. File those 1,200 lost jobs under “BC Jobs Plan”. [Update: COPE 378 informs me that 398 of their members will lose their jobs as meter readers. Another 400 or so are being lost on the admin side via Accenture. And BC Hydro has been ordered to shed another thousand or so.]

The largest source of benefit to BC Hydro (56% of estimated benefits) is reducing the theft of electricity for marijuana grow-ops and other illegal activity. BC Hydro claims theft costs the utility $100 million per year in lost revenue, although it is not obvious that smart meters would convert every kWh of stolen electricity to legitimate revenues. Smart meters may make it easier for criminals to steal electricity by hacking into the smart metering system (Jim Quail makes this case here). This could, in effect, increase the prevalence of power theft as well as give rise to a range of other security concerns.

Beyond eliminating jobs and reducing theft, other gains are small amounts that are difficult to verify, particularly when spread over a two-decade time frame. While I’m inclined to think that there will be some gains, it is not clear whether we can bank on them. I’m betting that there are also costs that are not fully understood right now, and unintended consequences of the move. And some of those benefits hinge on customers buying additional equipment to avail themselves of new information. This will be challenging for many low income households or the 30% of households that are renters.

The other wild card in this has to do with implementing time-of-use (TOU) pricing. While BC Hydro and the government deny that they want to bring in TOU pricing, most experts seem to agree that the whole point of smart meters is to have TOU pricing. So once they are implemented, I’m betting we see TOU within a few years. At any rate, TOU pricing is more of benefit to smoothing and shifting peak load, a benefit in coal or nuclear systems that are hard to ramp up and down; this is less of an issue in BC where we have huge hydro reservoirs that act as batteries for electricity storage.

Overall, smart meters will do little to reduce household energy consumption. So, could almost $1 billion have been better spent to conserve existing power resources? BC Hydro’s 2007 Conservation Potential Review (CPR) was commissioned to identify potential for electricity conservation through demand side measures (DSM) in the residential, commercial and industrial sectors. Over a 20-year study period, the study estimates the total potential electricity savings and peak load reduction from new and emerging energy efficiency technologies, customer-supplied small-scale renewable energy and behavioral change.

The CPR’s estimates of potential savings from conservation are substantial, ranging up to 40% of business-as-usual consumption by 2026. The cost of achieving these reductions is way cheaper than acquiring new expensive electricity, as BC Hydro has been mandated to do by the government. In addition, investment in DSM is more likely to be distributed within the local economy while smart meter installation will likely be contracted out to a single firm. And to add some crony capitalism to the story of smart meters, the announcement the smart meter contract was met with some controversy, as it went to a firm with ties to the BC Liberal party.

Note: This piece was developed as part of our recent Energy Poverty publication, but did not make the final cut. So special thanks to my co-authors Eugene Kung and Jason Owen, whose insights are reflected in the post.

This has been one of the more challenging research projects I’ve engaged in to date. It is the first attempt I have seen anywhere to bring together research in different fields – home energy efficiency, climate change and energy poverty – towards a coherent action plan. In particular, we look at BC Hydro’s pricing policies and model distributional impacts, and we take a closer look at energy efficiency retrofit programs. We then outline a series of next steps for BC that strive for win-win outcomes that reduce energy poverty and create green jobs (about 12,000 direct jobs per year) in the context of aggressive climate action.

I have an oped in today’s Vancouver Sun:

Power policy should protect low-income households

By Marc Lee

If BC is going to meet its climate action targets, the province needs to shift away from natural gas and rely instead on clean electricity. Coupled with aggressive conservation and energy efficiency investments, this transition could be the source of new green jobs, particularly in the residential housing sector.

The challenge is this: while upper-income households tend to consume (and waste) more energy, it is low-income households who spend a larger share of their incomes on energy, and are the most constrained in terms of changing their behaviour.

This means that across-the-board price increases can worsen energy poverty, a condition where a household spends a disproportionate share of their income on energy. Living in energy poverty poses a range of health risks, including respiratory, cardiovascular, and other health problems, as well as preventable winter deaths.

BC Hydro’s proposal earlier this year to dramatically increase electricity rates is a case in point. While a recent review of BC Hydro led to compromise that would slow rate increases for the next couple of years, higher prices are to some extent inevitable due to the higher costs of new electricity supplies, the installation of smart meters, and new capital projects.

More than three-quarters of energy in the home is used for temperature control and hot water. For low-income households – especially ones with electric baseboard heaters – the real issue is keeping the heat on.

Lower-income households already spend a greater share of their income on energy. The bottom 20% of households spent 5% of their total income on energy in 2009, and 3% of income just on electricity. Households in the top 20% spent only 1.5% of their total income on energy, and less than 1% on electricity.

But BC Hydro also shows us what a fairer path could look like. The shift to two-tier pricing in 2008 has moved modestly in this direction, with modest savings for low-income households and increases for higher-income households. The greediest 20% of electricity consumers use up 44% of the residential power, and they should indeed pay more.

If electricity price increases are needed, they should be concentrated on the second tier of rates. Increasing refundable tax credits for low- to middle-income households could also offset price increases. Assessing the impacts of pricing policies across income levels needs to be part of the BC Utilities Commission’s rate approval process.

The BC government can also help by delivering targeted energy efficiency programs for low-income households and multi-unit buildings, including rental units. Low-income households are typically renters. This means they are less likely to have capacity to invest in energy efficiency upgrades.

Currently, the vast majority of public subsidies for retofits (for example, BC’s LiveSmart program) goes to affluent homeowners in single-family dwellings. Existing programs have been criticized for two common problems: free rider effects (public subsidies going to households who would have made investments anyway) and rebound effects (where savings are offset by increased energy use).

In contrast, well-designed programs for energy efficiency for low-income households are “low-hanging fruit” that would dramatically reduce these effects, target some of the province’s least efficient housing stock, and make better use of public dollars.

A danger is that electricity price hikes will create a perverse incentive for people to switch to natural gas for their home heating. In the Lower Mainland, the delivered cost of natural gas is about half the cost of the lower tier electricity rate and 39% of the tier two rate.

But this would add to BC’s greenhouse gas inventory at a time when the province needs to reduce and eventually eliminate those emissions. This should be a key component of a next generation LiveSmart program for BC, and it should also be linked to green job creation and skills development.

We estimate a budget of $220 million per year in support of a decade-long retrofit of BC’s housing stock would lead to substantial reductions in GHG emissions and energy poverty in BC homes. Carbon tax revenues are an ideal source of public subsidies for such a program.

This investment would lead to 12,000 direct green jobs per year (and a total increase in employment of 20,000 jobs if we include indirect and induced job creation).

The challenge of the next generation is to enable a smooth transition to zero-emissions housing, while paying attention to impacts on low-income households and other vulnerable populations, as well as the housing stock where they live.

Rather than trying to sell more polluting fossil fuels to Asia, the BC government should be leading the charge on climate action. A coherent housing strategy could provide win-win opportunities for the province, and is the type of jobs program BC needs.

Creating a new industry with the capacity to export B.C.’s natural gas to overseas markets for the very first time will instantly increase economic prosperity and create jobs. By adopting a more aggressive approach to the development of the natural gas sector, I am confident British Columbia can create a prosperous LNG industry that will bring local jobs to our communities and deliver important dollars into our economy.

A couple months ago I did the math on the greenhouse gas emissions associated with these LNG facilities. Basically, GHG emissions represent a massive carbon bomb:

If we take the 5.5 billion cubic feet per day production number that “could ultimately be much higher”, that adds up to 112 Mt, almost double all of the emissions in BC’s total inventory of GHGs (burning fossil fuels in province and all other sources).

Because the gas will be exported, most of these emissions will count in the GHG inventories of other countries rather than BC. Still, it is our crack they are smoking.

What is the payoff in term of jobs. The press release goes on: ”projects are each expected to create approximately 1,500 person-years of work during construction. The export terminal will create 120-140 permanent positions once it is in operation.” There will be additional jobs from fracking all that land to get at the sweet gas.

But overall, our green jobs and sustainable production paper estimated that mining and oil and gas extraction created 523 tonnes of CO2 per worker per year. That is just emissions in BC from extraction and processing. If we were to count emissions elsewhere due to the carbon content of the fuel that is combusted, that figure would be eight times higher.

If the objective of public policy was to put as much carbon in the atmosphere, as quickly as possible, Day One of the BC Jobs tour would have to be counted as a stunning success. For those of us who want a viable future for our kids, it is a tragedy.

I am in Prince Rupert today because if you are looking at Canada from Asia, with an eye to investing in our country, Canada truly starts here. It is through British Columbia ports where resources are shipped to Asia, and where goods arrive for distribution at home and to the rest of North America. A bright economic future for British Columbians is linked to opening up Asia-Pacific markets to the rest of Canada, and B.C.’s transportation network will be the key to success.

This is some wonderfully fresh thinking about BC’s economy and how government can create new jobs for the future. Oh, wait a sec, expanding exports to Asia has been the status quo for a couple decades now. Extracting resources for foreign markets goes back a century and a half.

But not only is this a replay of Greatest Hits from the 1980s and 1990s, it shows a government totally trapped in a resource extraction mentality, and an utter lack of imagination about developing an industrial strategy for the 21st century. While China has turned itself into an industrial super-power over the past couple decades, BC continues to rely on digging up and shipping out raw materials, then importing finished products. Increasingly, we have been exporting less processed materials like raw logs. If we are harvesting resources, minimally they need to have much more value added to them if we want to create good jobs.

Technically speaking, the government is committing a mere $15 million in support of transportation infrastructure, part of a $90 million project for which $30 million being put in by CN Rail. The Port of Prince Rupert is kicking in another $30 million, and the hope is that the feds will contribute another $15 million, so the full public subsidy is $60 million. A sweet deal for CN, who gets to pay 33 cent dollars on the project. And given the press release’s talk of transporting goods to market, let’s remember that CN is the company that bought BC Rail when it was privatized.

There was a time when the BC Liberals stood in stern opposition to public subsidies to business. But when we look across the resource landscape to private power projects, coal mines, and oil and gas, we see massive public subsidies all over the place.

This plan is predicated on continued expansion of trade to Asia, even as the price of fuel closes in on all-time highs. And that is with a global economy teetering on the brink of recession — if global demand were to pick up in a major way the costs of transportation could escalate even further. It is also trapped in a mindset that says all governments can do is create the conditions for foreign investors to come to BC and create our jobs for us.

In addition, there is also no consideration whatsoever of any environmental consequences in BC or elsewhere of ripping coal and other materials out of the ground for export markets. BC’s environmental assessment is essentially a rubber stamp for whatever big resource companies want to do, and provincial government workers that used to be eyes and ears of British Columbians on the ground have mostly been laid off (the context for the so-called “jobs plan” is a provincial effort to cut even deeper into public sector).

There are both local and global dimensions to environmental problems. The destruction of habitat in BC is just another cost of the resource extraction game that fails to be represented in the price of commodities we sell. Fossil fuel exports like coal also lead to huge greenhouse gas emissions in the Asian locales where they are combusted. Already, the amount of GHG emissions from burning BC coal in other jurisdictions are about the same as all of the fossil fuels we burn in BC each year.

Instead of rebranding the status quo to make it look like a jobs plan, I’d much prefer to see an industrial strategy aimed at weaning ourselves off of fossil fuels by investing in zero-emissions transportation infrastructure, retrofits of homes and buildings, aggressive recycling of materials in BC, and training and education to supply a skilled workforce to take on these green jobs. Phase one of the jobs plan will only lock us further into being a quarry for the rest of the world.

UPDATE: Clark will be expounding on plans for liquid natural gas terminals in Kitimat this afternoon. See this post for a review of this carbon bomb that would put almost twice BC’s current GHG emissions into the atmosphere each year.

The purported policy change seemed scary — the government might roll back the requirement for BC Hydro to be able to meet domestic electricity requirements in drought conditions. And the scientist’s description of the consequences is also quite a fright– BC Hydro will be forced to rely on coal-fired electricity if the policy change goes through.

It is quite a story and would be of concern if true. But there is no basis for the story that was told and little need to be concerned. There was no science in the scientist’s reported remarks. It was sadly just another effort, sponsored by the IPP lobby, to  encourage the government to retain the now widely discredited ‘self-sufficiency’ policy that is forcing BC Hydro to buy more power than it needs to ensure reliable supply.

The policy issue is not, as characterized by Justine Hunter in the Globe, whether BC Hydro should be able to meet its requirements in drought conditions. Of course it must be able to do that. BC Hydro must ensure reliable supply under all water conditions. The issue is how that can best be done.

The government’s self-sufficiency policy requires BC Hydro to guard against the risk of drought by entering into long term firm power purchase contracts with British Columbia IPPs — power that in many years it will not need and be forced to sell at a loss. It precludes BC Hydro from even considering more cost-effective and in many ways less environmentally damaging options — in particular relying on the spot market for electricity in those years that its own hydro production is limited by drought.

Would relying on the spot market in low water years increase GHG emissions in British Columbia? No . There would only be an increase in provincial emissions to the extent BC Hydro were to use the Burrard natural gas thermal plant more than otherwise, and BC Hydro simulations and spot market price forecasts suggest that would not occur to any great extent. There almost certainly would be no significant impact on B.C.’s ability to meet its GHG reduction goals.

Would BC Hydro’s relying on the spot market in drought years mean more coal-fired power generation in Alberta or the U.S.? There is no evidence or reason to think so.  The coal plants in those jurisdictions do not ramp up and down to supply spot market demands by BC Hydro or anyone else. They will continue to produce as much power as they can as long as the governments in those jurisdictions allow it.

In any event, a large proportion of the spot market power that BC Hydro could buy would be as green and clean as any B.C. supply. There generally are opportunities to buy very low cost surplus hydro power during the spring freshet period, even in low water years. Increasingly, there is low cost surplus wind  production  that BC Hydro could purchase when high wind conditions occur during light load hour periods. And at least until 2024, there is the Columbia River Treaty power that BC Hydro could use if no less costly sources of electricity were available. That power is owned by the province and managed by BC Hydro’s own power trading subsidiary Powerex.

Too much of the debate (and headlines) about the government’s self-sufficiency policy has been cast in slogans and fears. The good scientist speaking at the IPP press conference would do a service by presenting some analysis of impacts, benefits and costs — not just spectres of self-serving concerns.

In the Lower Mainland, the delivered cost of natural gas is approximately 3.28 cents per kWh, plus 0.45 cents per kWh in carbon tax.  This compares to BC Hydro residential rates of 6.67 cents (tier one) and 9.62 (tier two) per kWh for electricity.  Thus, gas prices are 56% the cost of the tier one electricity rate and 39% of the tier two rate, creating a perverse incentive to use gas as a fuel source instead of electricity.

Unfortunately, prices do not tell the truth. In terms of climate action and economics, there is an externality, or a cost borne by third parties to the market transaction, associated with burning fossil fuels. A recent study put the value of these external costs at up to $900 per tonne of CO2.  While this is the top of the range, it would translate into about 16 cents per kWh, and implies that the price of natural gas is as much as five times lower than it would be if all costs were included in the market price.

Decarbonizing homes requires, minimally, that the gap between current natural gas and electricity prices be eliminated over time through effective carbon pricing. And this must also take into consideration looming increases in electricity prices. The cost of natural gas may rise on its own account, but additional carbon pricing measures may be required to avert a widening gap. Longer-term, making prices tell the truth is needed if BC is to reduce and eventually eliminate fossil fuels like natural gas over the course of the next few decades.

A deeper problem is that the BC government puzzlingly considers natural gas to be a source of clean energy, and often talks about GHG reductions and increased gas production in the same breath. At best, it is merely the cleanest of fossil fuels. In regions where electricity is produced by coal, a switch to natural gas can lower GHG emissions per unit of energy, although in the case of shale gas fracking, natural gas emissions may actually be on par with coal.

From a consumption perspective, space and water heating are the two sources of GHG emissions in homes: space and water heating together comprise 99% of residential emissions (the remaining 1% is from appliances).  Electricity and natural gas are  competing energy technologies for providing these services. Existing homes using natural gas heating/cooling and hot water systems (typically hydronic systems) could be converted to renewable fuel sources such as waste heat, biomass, geo-exchange, and solar thermal. Heap pumps of various types (including ductless models that can replace electric baseboard heaters) are also a very efficient way of providing space heating. Neighbourhood-level or district energy systems (including waste heat recapture) could also play a major role in the transition away from fossil fuels.

BC’s population is expected to increase from about 4.6 million residents to over 6 million by 2036.  New housing and redevelopments should not be adding to BC’s appetite for natural gas, nor should energy efficiency programs subsidize conversion to natural gas. Instead, a slow-and-steady transition off of natural gas toward clean electricity from the grid and other on-site and neighbourhood-scale alternatives is needed, synchronized with energy efficiency gains to avert a major increase in electricity demand that could drive up prices.

The biggest overarching concern is that any such moves would massively increase poverty, or specifically energy poverty, where households spend a disproportionate share of their income on energy. A major plan for retrofit programs aimed at low-income households, and the older housing stock, multi-unit buildings and rental stock where low-income households are more likely to live is needed. Current energy efficiency grant programs are aimed at owners of typical single-family homes, which pretty much makes the irrelevant for low-income households. In addition to this, some form of income transfer (ideally, funded out of growing carbon tax revenues) would likely be needed.

But scratch the surface just a little and questions arise about the legitimacy of Environment Minister Terry Lake’s recent claim that “from this point forward, every government building in our province will be carbon neutral.”

Since it is almost impossible for government buildings – cash-strapped schools and hospitals among them – to not be net consumers of energy and therefore net greenhouse gas emitters, purchasing carbon credits to allegedly counteract those emissions is essential to the province’s claim to carbon neutrality and its self-anointed status as continental environmental leader.

By law, the provincial government requires institutions to buy those credits from just one entity – the Pacific Carbon Trust or PCT, a Crown corporation set up for specifically that purpose. This gives the PCT a monopoly position for a segment of the carbon market, which at present is largely a voluntary market dominated by private sector carbon sellers and buyers.

Bob Simpson, Independent MLA for Cariboo North, says not only is the PCT’s monopoly position hurting cash-strapped school districts and health authorities that are forced to pay the PCT as much as four times more money than they would otherwise pay for the same credits from a private credit marketer, but the legitimacy of a good number of the credits that the PCT has bought and sold may be of questionable merit as well.

An examination of the PCT’s “2010 Carbon Neutral Government Portfolio” published in June of this year reveals that fully 55% of the 729,782 tonnes worth of carbon offsets that it has purchased and marketed to meet the provincial government’s “carbon neutral” goal for 2010, came from just one project known as Darkwoods, a chunk of privately owned forestland purchased three years ago by the Nature Conservancy of Canada when, Simpson says, the PCT “was nothing more than a just fledgling organization.”

Simpson also says that the project does not appear to meet the PCT’s own standards for qualifying carbon offset projects. That standard is known as additionality. Part of the additionality test is that any project supported by the PCT must face “economic, investment or technological barriers to implementation that are overcome or partially overcome by the money from the sale of offsets.”

“The Trust must prove that without its money this purchase would not have happened and therefore the credits would not have been generated. I don’t buy that in this case,” Simpson says. “And we’re talking money from kids and patients to make this happen?”

As a matter of policy, PCT does not disclose what it pays for its carbon credit purchases, says its managing director of business development, David Moffat. However, enough facts are known about the Darkwoods project to give a good idea. The sale of the credits was announced June 8 in a jointly issued press release that included the NCC and PCT.

The press release notes that the NCC as “Canada’s leading private land conservation organization”, had just completed the largest ever forest carbon project to date in North America, with the successful marketing of 700,000 tonnes of carbon credits. The sale of the credits not only raised the bar for conservation in Canada, the press release claims, but it “contributes in excess of $4 million for NCC’s conservation work.”

Based on the number of credits sold and the selling price, the sale worked out to roughly $5.70 a tonne. While PCT will not disclose what it paid for the 403,112 tonnes of credits it purchased from the NCC, the price that PCT’s captive public sector “clients” are required to pay is known. That price is $25 a tonne, or more than four times the average price generated from the Darkwoods carbon credit sale, meaning that public sector entities including school districts and health authorities will fork out $10.07 million to help meet the government’s carbon neutrality goals.

And that’s just the beginning of where things get murky from a public policy perspective. Just how much additional carbon has actually been stored at Darkwoods since the NCC stepped in to purchase them in 2008?

Well, it turns out the answer to that question is, at best, hypothetical. Here’s why.

Darkwoods encompasses 55,000 hectares of land between the communities of Creston, Salmo and Nelson in B.C.’s Kootenay region. The lands also border a lengthy strip of Kootenay Lake’s shoreline, and cut deep into mountainous terrain. For decades prior to the NCC purchase, the lands were logged under the ownership of a German aristocrat, Duke Carl Herzog von Wurtemberg.

In July 2008, the NCC announced that it had purchased the extensive parcel of private forestland – a rarity in B.C. where 94 per cent of land is publicly owned – for $125 million (a price that included projected future management and carrying costs of $385,000 per year, of which $150,000 was property taxes.)

On its website, the NCC hailed the purchase as “the largest single private land” conservation acquisition in Canadian history. The group benefited enormously from a $25 million contribution toward the purchase from the federal government.

In announcing the purchase, the NCC highlighted the climatic benefits of a conserved Darkwoods estate saying its forests represented “an immense carbon sink” of some two million tonnes – an amount “equal to the annual carbon footprint of nearly half a million Canadians.” It also clearly stated that its vision for the property was one that could fairly be characterized as “business as usual” for an organization dedicated to protecting biological diversity. (This is important because according to PCT standards a successful offset project must demonstrate an “incremental benefit” in terms of carbon storage and cannot be “the outcome of business as usual”.)

“Darkwoods,” NCC president and CEO John Louds said at the time, is “part of a greater vision that will set new standards for conservation success.”

What the NCC didn’t say then was that it wished to turn that green asset into greenbacks, and plenty of them. By monetizing the carbon storage capacity of Darkwoods the NCC could in effect have its very own green ATM generating cash to help it pay for Darkwoods and other conservation acquisitions.

And here’s where things get murkier, because while Darkwoods’ trees had pulled a great deal of carbon out of the atmosphere and stored it in their trunks, branches and needles, the incremental or additional carbon stored would be relatively small based on a “business as usual” conservation approach.

“Harnessing the power of the carbon market,” became NCC’s goal and that of its advisors Ecosystem Restoration Associates or ERA, a Vancouver-based company described as a “pioneer” in the development of forest-based carbon offsets, and 3GreenTree Ecosystem Services, a Vancouver company billed as a “full service forest ecosystem asset development, acquisition and management company.”

To boost the future market worth of Darkwoods, a strategy was hatched that cast into the future and honed in on a hypothetical situation in which an entity other than NCC succeeded in buying Darkwoods. This hypothetical buyer then embarked on a massive, unsustainable logging operation as well as subdividing tracts of land for resale to wealthy individuals wanting their own little slice of lakeside paradise; in general a company intent on making off like bandits to the delight of its short-sighted, profit-driven shareholders. The scenario is outlined in a voluminous “project description” posted on the Verified Carbon Standard website. VCS self describes itself as founded in 2005 “by business and environmental leaders”. Its stated mission is to “ensure that carbon credits bought by businesses and consumers can be trusted and have real environmental benefits.”

This hypothetical situation then became the “baseline” against which NCC’s light-handed approach would be judged. A hypothetical logging rate was assigned the phantom company and set at 300,000 cubic metres per year – a cubic metre equalling one telephone pole’s worth of wood. By comparison, the NCC said it would engage in only low levels of logging to a maximum of 10,000 cubic metres per year for “conservation and management” purposes. The difference between the hypothetical baseline rate and the NCC’s proposed rate then served as the basis for calculating additional carbon storage. This scenario was ultimately given a green thumbs up by, among others, Scientific Certification Systems, a third-party “validator” of the Darkwoods carbon project.

The company’s senior vice-president, Robert Hrubes, hailed the “unique methodology” developed by the carbon project team and said he believed it “will benefit the entire carbon industry.”

The hypothetical rate, however, represented an astonishing increase over what had actually occurred on the same lands over decades. Searches of a provincial government database on logging rates reveal that the company managing Darkwoods – Pluto Darkwoods Corp. – logged nearly 396,500 cubic metres of timber between 2001 and 2007, the last full year of operations before NCC took over. That worked out to an average of just 56,631 cubic metres per year, less than one fifth of the hypothetical rate used to generate those $4 million worth of carbon credits.

Tom Swann, the NCC’s associate regional vice president for British Columbia, maintains that Pluto’s logging record was not indicative of most private forestland owners and that the company’s logging rates were “well below what they could have been doing if they were a commercial logging company.” That was because the aristocratic German owner placed a higher premium on conserving forests and therefore chose to log less than others might.

Be that as it may, Simpson remains concerned that a conservation organization buying lands with the express purpose of conserving them should on the basis of a hypothetical scenario involving liquidation logging by someone else then be able to lay claim to millions of dollars worth of credits, many of which are paid for by tax dollars directed to public institutions, which are then clawed back.

And he is not alone in worrying about the precedents this sets. NDP environment critic Rob Fleming, says the government’s carbon neutral claim has achieved very little in terms of actual greenhouse gas emissions reductions, which are “a tiny part of the overall total.” Furthermore, Fleming says, the requirement to buy credits from the PCT applies only to government buildings, which represent less than one per cent of the total greenhouse gas emissions sources in the province, leaving unaddressed the emissions from big industrial emitters.

Meanwhile, the same document outlining the hypothetical industrial logging rate that generated all of the carbon credits generated at Darkwoods and subsequently purchased by the PCT notes that for decades running the NCC hopes to market large numbers of additional credits – 400,704 credits, on average, per year over just the next 10 years alone, which based on the NCC’s most recent carbon credit sale would be worth another $2.28 million per year.

Whether the PCT will buy more such credits in future years to meet the government’s future “carbon neutral” goals remains to be seen.

Personally, I frown on offsets most of the time. Some colleagues have tried to make the best of them to use for forest conservation or to fund fuel switching and other desirable practices that move us toward a no carbon economy. I like all of these things but have concerns about how offsets work in the real world, and whether they make sense at all when we need to be at 350 parts per million when we are currently at 390. I can live with some limited and shrinking amount of offsets in the medium-term, but by 2020 or so they should be phased out completely in favour of real reductions in emissions from polluters.

In the case of carbon neutral government, there has been an additional concern cited about public dollars, at $25 a tonne of CO2, being diverted to the Pacific Carbon Trust, a Crown corp created to invest in private sector offset projects, typically by contracting out to private firms like Offsetters. The public sector in BC also pays the carbon tax, recently increased to (also) $25 a tonne as of July 1. (Aside: Happy Belated third birthday carbon tax; you’re getting so big and strong, you worry us that you will inadvertently crush the poor; we’ll have to fix that before we let you get any bigger.)

Offsets are really just another way of pricing carbon emissions, so mandatory offsets in the public sector mean government bodies are currently facing a carbon price of $50 per tonne, or double that of the private sector (school boards get a rebate for carbon tax paid but are still on the hook for PCT contributions). The rub is that PCT only funds projects in the private sector. The Sun reports:

Among the private corporations that benefited from such offset expenditures: Lafarge cement; forest companies Canfor, Interfor and TimberWest; natural gas company Encana; and Kruger Products, a manufacturer of toilet paper and related products. They earned the right to sell offsets to the public sector based on energy-saving initiatives.

Bob Simpson also writes about a particularly perverse case:

In May, the PCT purchased, for an undisclosed amount, 84,000 tonnes of carbon emissions from EnCana, a highly profitable company and one of British Columbia’s largest emitters. EnCana’s greenhouse gas reduction was reportedly obtained between 2008 and 2011 from a technological improvement in its extraction operations.

However, in the same region of the province that this reduction was supposedly achieved, the Horn River basin, EnCana is building its Cabin Gas processing plant without using carbon sequestration as originally promised. At full production, this one plant alone will add 2.2 million tonnes per year of new carbon emissions to the province’s total emissions. This is more than double the greenhouse gas emissions produced by the entire public sector on an annual basis, and represents 6.5 per cent of the emissions reductions needed to meet B.C.’s legislated targets by 2020.

This seems typical of BC’s typical flow of perverse subsidies to businesses – super-cheap green electricity for new coal mines and shale gas fracking; high prices paid to other private companies to generate that electricity; P3 projects for transportation and hospitals. Crony capitalism with a Lotusland twist.

The total bill for carbon neutrality was announced at $18.2 million. Some of the bigger chunks include $1.1 million for Vancouver Coastal Health, $664,000 for BC Housing, $406,ooo for the Vancouver School Board, $1.5 million for UBC, $444,000 for SFU, and $389,000 for UVic. Local governments are not technically part of carbon neutral government, but most have signed on to be so as of 2012 in exchange for rebates on their carbon tax (if they had been part in 2010, they would have kicked in roughly $4 billion extra to PCT).

Given the size of these institutions and a BC public sector of $40 Billion per year, none of these are huge amounts. Relatively clean electricity powers much of the public sector, and over time we need to cut out the gas. And the high carbon price has led to real projects that are reducing emissions. Perhaps the biggest concern to me is for schools, where the overall budget has basically been frozen for years, forcing real cuts in services due to inflation. It would be easy enough to cut school boards a cheque as they do for carbon taxes paid, but this has not been the case.

To be fair, there another side to the story and that is the BC government’s own investments in retrofitting buildings and its efforts to reduce emissions through videoconferencing and reduced travel. These are good things, and $75 million has been spent on such projects over the past three years through the Public Sector Energy Conservation Agreement. The problem is that the program is unfunded as of April 1, and the original one was over-subscribed. So there are projects that could be done if funds were made available, but they are not so the public sector must pay into the PCT, which does not fund projects in the public sector.

There seems to be an increasing recognition that this state of affairs does not make sense. Upon release of the carbon neutral government report, the Sun story adds:

Environment Minister Terry Lake said talks are underway with the Pacific Carbon Trust on how offset funds might be returned to public institutions such as schools. While “people don’t like the thought of public money going to help big organizations,” Lake noted that companies such as Encana also generate revenue for the province that goes back into funding health and education. Non-profits such as the Nature Conservancy of B.C. have also benefited from selling carbon offsets as a result of carbon sequestered in a Kootenay property that was not clearcut.

So we’ll wait and see. I’d much rather see a higher carbon tax applied to both public and private sectors on equal terms – and use some of the proceeds of the tax to fund mitigation projects through the PCT or otherwise. Another possibility is that the public-private carbon price gap be eliminated over a few years – the idea of government taking initiative and leadership on climate action is a good one to preserve. In the meantime, compensation should go to public bodies to ensure services are not adversely affected, and retrofit dollars should flow to create a asset base of low-carbon public buildings. And let’s see some real climate action from big industrial polluters, too, which the government’s right hand seems to be encouraging, just as its left hand is pointing out climate achievements.

[Note: This post builds on analysis on carbon pricing for the Climate Justice Project. See Fair and Effective Carbon Pricing: Lessons from BC.]

Below the radar, however, and not counted in the inventory are all of the emissions from coal and natural gas that come from BC but are exported. I did the math on what this means last year and found that BC exports about 52 million tonnes of CO2 equivalent from natural gas, all to the US and Alberta (and about the same amount from coal). This was in 2008, and together coal and natural gas exports have emissions about double what BC generates internally from combusting fossil fuels. As I say, we are not just an addict, we are a dealer. And a big one at that.

Along comes the prospect of liquid natural gas (LNG) terminals on the north coast, with dreams of shipping to power hungry China. According to this piece in the Sun, quoting Scotia Economics:

“Altogether, four proposed terminal projects could see up to four billion cubic feet of gas exported a day, the lion’s share of the region’s expected daily production of 5.5 billion cubic feet — though production could ultimately be much higher.”

In typical fashion for our mainstream media to deliberately fail to connect the dots, the article contains not a word about greenhouse gases. So I went and did the math, and 4 billion cubic feet of natural gas per day converts to 81.5 Mt per year. That is equivalent to 1.5 times existing BC’s gas footprint associated with exports.

If we take the 5.5 billion cubic feet per day production number that “could ultimately be much higher”, that adds up to 112 Mt, almost double all of the emissions in BC’s total inventory of GHGs (burning fossil fuels in province and all other sources).

This project is therefore a carbon bomb of mammoth proportions, but if it proceeds it will be counted in China’s GHG inventory not BC’s, due to accounting convention. So it is completely plausible that BC would meet its 2020 legislated targets for GHG reductions, and still have massively increased global climate change. Expanding this industry, when it needs to be decommissioned, is deeply wrong — that gas must stay in the ground.

But destroying the future is just so massively profitable that development goes ahead unabated, even as climate change impacts in 2011 are more evident worldwide than ever. Jim Stanford recently estimated that in 2010 Canadian resource industries made $27 billion in after-tax profits. Externalizing costs on other people around the world now and in the future is extremely lucrative.

Note: I have just calculated the emissions associated with the resource itself. There will also be large domestic emissions associated with getting the stuff out of the ground — “fracked” shale gas is equivalent to coal or worse when it comes to lifecycle emissions — which pretty much kills any likelihood that BC would meet its 2020 GHG target.

This project’s massive expansion of the oil and gas industry is a crime against humanity and must be stopped. Obviously the BC government supports it (and former oil and gas exec Gwyn Morgan is one of Premier Clark’s top advisors). NDP energy critic John Horgan has endorsed the project, though it is not entirely clear that Leader Adrian Dix has signed on. Yet.

So like a good action movie, there may still be time to defuse this carbon bomb. But the clock is ticking …