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Volume Ten, Number One   January 2005

Running on empty:

B.C.’s energy policy will leave us stranded

Dale Marshall
To get a picture of how British Columbia uses energy, imagine the province as a car.
It’s not a pretty sight. We’re driving around in a rusting gas-guzzler with bald tires and no brakes. The car won’t pass Air Care and the steering wheel is held together with duct tape. 
Not exactly a model of safety or efficiency. Neither is the way we produce, consume and export energy in this province.
A report released from the David Suzuki Foundation and the Canadian Centre for Policy Alternatives says the province is fixated on extracting as much oil and gas from the ground as quickly as possible, and then shipping these non-renewable resources to the U.S. As a result, B.C. is creating fewer jobs and more greenhouse gases than ever before.
Driving this trend is the provincial government’s energy plan, which was released in 2002 and claimed to be based on principles of sustainability and energy security.
Instead, the plan is taking us in the opposite direction – down the road to new coal and natural gas-fired plants; more pipelines and increased oil, gas and electricity production for export; and the break-up of BC Hydro.
There is no strategy for what to do once B.C.’s non-renewable oil and gas reserves run out. Instead, subsidies to oil and gas companies have increased production and B.C. now has barely a decade’s worth of known reserves left. Even the provincial government admits that natural gas reserves are at their lowest point ever.
Finding new reserves has become increasingly difficult and new discoveries are small and quickly depleted. The Ladyfern gas field, touted not too long ago as the next great energy hope, will be dry within a few months after only five years of production.
The province’s energy policy is also doing little for economic development in B.C. Despite increased production of both oil and natural gas over the last decade, B.C. now employs fewer production workers, refines less oil, and has reduced oil and gas royalties for companies making large profits.
In the electricity sector, BC Hydro’s figures show that electricity supply is reasonably secure for the next decade. Provincial government ministers and MLAs have nonetheless declared that a supply crunch is upon us.
The government’s response to this supposed crisis, however is a recipe for energy insecurity. The province now prohibits BC Hydro from generating any new power itself – but it does allow private power producers to generate new supply as well as to sell to outside markets. Perversely, BC Hydro is spending more on the 10 per cent of the power supply it buys from private producers than it does on the 90 per cent that it generates itself.
The government’s energy policy has also created more air pollution. B.C.’s oil and gas and electricity companies are releasing more acid rain pollutants compared to a decade ago. Between 1990 and 2001, greenhouse gas emissions have increased by 179 per cent in the electricity sector and increased by 45 per cent in the oil and gas sector.
With Victoria giving the green light to coal-fired power plants, BC Hydro’s emissions of these climate-changing gases are set to triple in this decade. Meanwhile, the provincial government has not acted on its promise to implement a climate change plan.
There is a better way to develop B.C.’s energy resources in a manner that provides more energy security, cleaner air, and more jobs. First, subsidies to the oil and gas industry should be eliminated and royalties increased to levels found in Alaska or Norway. A portion of royalty revenue should be placed in a long-term fund. The fund should be used to invest in economic development projects in the province in order to diversify regional economies in the short term, and provide transition assistance for communities when oil and gas resources run out.
Exporting crude oil is much like exporting raw logs: it minimizes the economic potential of a valuable resource. Value-added natural gas industries, such as plastics and paint manufacturing, create four times the revenue and jobs compared to simply exporting the unprocessed resource. These activities should be required in exchange for access to B.C.’s public resources.
Substantial job creation is also possible in the electricity sector. The entire gap between electricity supply and demand for the next two decades can be filled through conservation, energy efficiency, and renewable energy. Investment in these clean-energy sources creates many more jobs than the same spending on more oil and gas production or more power plants.
It’s not too late. The province can still reverse its tracks and pick a more strategic, sustainable, and hopeful road for the province’s energy sector. The vehicle to get us there will be more efficient, less polluting and made in B.C.

Dale Marshall is an energy policy analyst with the David Suzuki Foundation and author of a new report, Running on Empty: Shifting to a Sustainable Energy Plan for BC, published jointly with the Canadian Centre for Policy Alternatives.

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