A Peace River trust could offset Site C impact
Benefits to the region would be long term, say Marvin Shaffer and John Richards.
The B.C. Utilities Commission (BCUC) will soon report to the government on the consequences of terminating, suspending or completing the Site C dam. It is an understatement to acknowledge the passionate differences of opinion on what should be done.
Opponents say Site C isn’t needed and there are better sources if and when B.C. Hydro requires additional power to meet the demand for electricity in the province. B.C. Hydro points out that abandoning Site C will force it to write off more than $3 billion in sunk and site remediation costs, and develop or acquire lowervalue, higher-cost alternatives in the future. In total, B.C. Hydro estimates that abandoning Site C would impose some $7 billion in extra costs on ratepayers. BCUC has released for comment a portfolio of wind, battery and conservation alternatives that appear to be of similar or lower cost than Site C, but many of BCUC’s assumptions are questionable and its cost analysis is incomplete.
Whatever BCUC reports, all eyes will be on the government. It will face an extraordinarily difficult decision. If it decides to complete Site C, it will face the anger of many of its supporters, unequivocally opposed to the project, and will risk alienating Green party MLAs whose support it needs to maintain a legislature majority. It will be greatly disappointing to those First Nations opposed to the project who will see this as a betrayal of the government’s commitment to reconciliation.
On the other hand, cancelling the project will require B.C. Hydro to write off more than $3 billion in sunk and termination costs with the risk of additional extra costs and rate pressures in the future. Suspension of the project defers the writeoffs and retains the option to develop Site C at some later date, but would add significantly to the project cost. And the possibility of future development would not satisfy those unequivocally opposed.
There is no middle ground here, but there is a strategy that government could pursue to avoid the certain immediate loss of more than $3 billion and the risk of billions more. The compromise is to complete the project as planned — but take significant steps to address major concerns.
An obvious step is to enhance both the economic and environmental benefit from Site C by pursuing interconnection upgrades and agreements with Alberta. If B.C. and Alberta were one province, the need for Site C would be evident. It would be an important component of the plan to phase out coal-fired thermal power production in order to meet GHG reduction goals.
In the short term, surplus energy from Site C could displace coal and natural gas-fired generation in Alberta, reducing annual GHG emissions by some 2.5 million to 4.5 million tonnes of CO2. Assuming a social cost of carbon emissions of just $50 tonne (and there are those who argue the social cost is much higher), the benefits of those emission reductions would be $125 to $225 million per year.
Over the longer term, the storage, energy shaping and peak generating capacity provided by Site C and the rest of the B.C. Hydro system could provide the needed backup to wind projects. It would enable Alberta to meet or even expand its efforts to replace coal production with wind and renewables without gas-fired thermal backup, thereby avoiding the GHG emissions those facilities entail.
The federal government is currently investigating opportunities for interprovincial intertie capacity. This process could add value to Site C and contribute significantly to the achievement of Canada’s GHG reduction commitments.
The other key step would be to fully recognize and address the unavoidable adverse effects of Site C development, as well as the cumulative impacts of previous hydro development on the Peace River. B.C. could commit to something similar to the Columbia Basin Trust.
Instead of cancelling Site C, thereby locking in a $3 billion loss and risking billions more, the government could direct significant resources to First Nation and other communities to support major investments in education, housing, family and community wellness, and infrastructure, with priorities and programs established by the First Nations and local communities themselves.
The goal of a Peace River Trust would be to enable investments in the region that yield long-term benefits as important as what is lost with the dam’s development. A well-funded trust wouldn’t satisfy implacable opponents, but it would offset in meaningful ways the adverse impacts of hydro development on the Peace.