Jun 18, 2013

Is the Fraser Surrey Docks coal port proposal in the best interest of BC?


Today’s CBC Edition Business Panel focused on the proposal by Fraser Surrey Docks to build a new coal terminal on the Fraser river to export US thermal coal (if you missed it, here’s the recording starting at 1:50).

My co-panelist, Jock Finlayson from the BC Business Council, kept trying to narrow the conversation to technical aspects of jurisdiction and whether the Metro Vancouver council or concerned local citizens have the legal authority to stop the project from going ahead. But I think a much more interesting and relevant question is whether this new project is in the best interest of British Columbians or not, in other words, should this project be going ahead.

The evidence I’ve seen so far leads me to conclude that this project is not in the best interest of the province. Here is why.

There are three main concerns with this proposal, and neither one of the three has been addressed in a satisfactory way by the Port Authority, the federal agency that has the legal authority to approve the project. In no particular order, these are:

  1. The lack of meaningful public consultation into the decision-making process
  2. Potential local health and environmental impacts from the transportation of coal to the port through heavily populated communities (the Port Authority has not agreed to the health experts’ request to conduct a comprehensive health impact assessment at this point)
  3. The effect on expanding coal infrastructure on climate change, given what the science tells us about the need to move away from fossil fuels (with coal being the worst fossil fuel in terms of the climate impact of burning it).

Jock Finlayson argues we shouldn’t let the local community make the call or we risk NIMBY-ism, but who should be making the call? The industry that has a financial stake in the project? (This is de facto what’s happening given the composition of the Port Authority’s board as pointed out here).

The problem is that industry proponents typically do not see any downsides to their industry, whether they represent coal, tobacco, asbestos, whaling or cheap garment manufacturing. They tend to be “deaf to appeals to responsibility and ethical obligation” to borrow a phrase from this excellent article (at least until such time that tremendous public pressure forces them to take some responsibility, for example, after disasters like the Bangladesh garment factory collapse).

The format of a short radio debate doesn’t allow the opportunity to get into a back-and-forth and really engage with your co-panelist’s argument (though I made a strong effort), so let me tackle the coal industry proponents’ three PR talking points.

1. Yes, Port Metro Vancouver has been exporting coal for 40 years and we are a big producer of coal domestically, but this project is not more of the same. Fraser Surrey Docks’ proposal will build an entirely new coal port in Surrey to export US coal, not use existing facilities to export more BC coal. This matters for three reasons.

First, in the standard economic cost-benefit argument this reduces the economic benefit of the facility to BC to the 30 or so long-term shipping jobs created, because the profits will largely go out of the country, while the local health and environmental costs will be entirely borne by our province.

Second, the new coal port’s location means a doubling of coal train traffic through densely populated neighbourhoods in White Rock, Surrey, New West and Burnaby (coal already comes through these communities on its way to Westshore). In addition, coal will be transported along the Fraser River and to Texada island on open barges, which is a transportation method not used in existing Metro Vancouver coal ports. This increases the potential health and environmental costs of the project relative to the existing ports.

2. Yes, a lot of BC mined coal is metallurgical (which is to say that it’s used to make steel) and we need steel, but this is neither here nor there in a conversation about the Fraser Surrey Docks project. The US coal this port is going be exporting is thermal coal, which means that it’s going to be burned to generate electricity, and not to produce steel. Bringing up steel in this debate is a purely diversionary tactic. Don’t fall for it!

3. The industry argues that stopping this particular project won’t have an impact on climate change. This particular argument comes in two forms. The Coal Lobby sometimes argues that if we don’t build the port to export Wyoming thermal coal, somebody else will. But this is dubious given the strong opposition to new coal exporting facilities in Washington and Oregon ports, which is why we’re talking about this proposal at all. It would be much easier for the US coal industry to export its product through US ports, and it’s not like their economy is doing so well that they can afford to turn away good business opportunities put in front of them. Perhaps this new coal exporting infrastructure is not such a good business opportunity for the local community which has to bear the health and environmental impacts while a few profit?

Second, and more importantly, the argument goes that if US coal isn’t exported, then the Asian buyers would be getting their thermal coal from elsewhere (e.g. Australia). The question becomes, can our investment decisions influence global demand. In an individual project-by-project case, probably not. So the industry throws up their hands in the air and says “we might as well make some money from this.”

But here’s the real issue: business as usual is the reason why we have a climate crisis in the first place. We can’t continue relying on the same fossil fuel energy and industrial infrastructure and hope to make a dent in climate change.

The International Energy Agency warns that we’re nowhere near meeting the targets we need to prevent irreversible, catastrophic climate change. Ethically, it’s hard to square what the science tells us (and Jock Finlayson knows what it tells us as well as I do given what his organization is publishing) with building new coal infrastructure that will lock us into this destructive fossil-fuel industry for decades. In fact, the International Energy Agency warns that this “lock-in” effect of infrastructure is the single most important factor increasing the danger of runaway climate change.

To avoid facing those ethical questions, the Vancouver Port Authority, the Coal Lobby and the BC Business Council represented by Jock Finlayson this morning, tell us that climate change is out of their jurisdiction, in other words, it’s not their problem. This is not good enough.

Climate change is not just a problem for the federal government, it’s a problem for all of us living in this country, it will directly affect provinces and local communities, and the business sector must be part of the solution. What I wish I could have asked Jock Finlayson this morning is: if not stopping new coal export infrastructure, what is the business sector plan for tackling climate change?

There’s also an economic argument against new coal infrastructure expansion given the science of climate change. The research is clear: if we are to avoid going over the 2 degree increase in temperature, which is what science tells us is safe, we can only burn a fraction (some estimate only about 1/3) of the remaining fossil fuel reserves worldwide and the rest must remain in the ground. In the long-run, the coal industry will be hit by policies to tackle climate change and demand will fall (failing that, we have catastrophic climate change and everyone, including investors, lose out). The CCPA has published research on this earlier this year, as have a number of other organizations including financial institutions like HSBC, the International Energy Agency and other think tanks and just yesterday, the Australian Climate Commission (a government agency) published a similar report.

Given these realities, it’s hard to see how approving the Fraser Surrey Docks’ coal port proposal would serve anything other than the very short-term commercial interests of the US coal industry.

What do you think?

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