Will the Site C dam produce benefits to make it worth the cost?
Energy: The priority in our conversation should be LNG
How will the taxpayer fare now that the government of British Columbia has approved the construction of the Site C dam in northeastern B.C. near Fort St. John? We fear that this project may cause more trouble than its hefty $8.8-billion price tag is worth.
There are several factors that cause the Canadian Natural Resource Alliance to question the construction of the Site C dam. The first is pure economics. The dam is projected to cost almost $9 billion and it should be noted that megaprojects that take a decade to construct have a history of cost overruns. These are technically complex and the cost of materials and other inputs can fluctuate. Site C is projected to produce 1,100 megawatts of power, certainly a large boost to the provincial electrical supply, but it takes a long time to get it built.
A key point is that if BC Hydro, and by extension, the B.C. government take on a $9-billion project, that is a tremendous amount of debt and has the potential to cause B.C. to lose its AAA credit rating. That would raise the cost of borrowing and, consequently, the cost of the project.
However, if an independent power producer can build a 1,000 MW plant based on natural gas generation for about $1.3 billion and can complete the project in about four years from conception through construction, isn’t that the better option? Taxpayers are no longer on the hook for the cost as it is up to the producer to have a power agreement. A gas plant can also be placed near existing transmission infrastructure, saving a great deal of money.
Everyone loves clean, renewable energy with good reason, but, there has to be a full analysis of the environmental and social impacts. Hydroelectric power is generally assumed to be lower impact than natural gas generation because of lower greenhouse gas (GHG) emissions and the renewable feature of using river flow for power generation. But is it truly a lower impact?
There is no question that a dam will disturb a great deal of land — flooding forests, agricultural lands and wildlife habitats. If the costs were reasonable, we would have to say yes — but with greater impacts and higher costs, perhaps not. GHG emissions may be higher from natural gas, but the plant footprint is relatively small.
Natural gas just makes more sense.
There is also the aboriginal problem. West Moberly and other Treaty 8 nations have banded together to offer the B.C. government an ultimatum — Site C or LNG exports, not both.
The goal of the Canadian Natural Resource Alliance is to transform the conversation about the export of Canadian energy and natural resources. The export of natural gas should be the absolute priority. Achieving the goal of LNG exports off the West Coast would be a major win for B.C., Canada, natural gas producers and First Nations. The work surrounding the production of natural gas, the pipelines, the terminals and the shipping are all revenue positive — royalties, employment taxes, construction and operations jobs and all of the spinoff benefits are worth billions to the country.
Why risk all of that when Site C is a money loser from the start? Not only are there First Nations in favour of LNG terminals, some are actively invested. This level of participation between government, industry and aboriginals is unprecedented in Canada and can continue to transform those relationships for decades. Site C should not be not the priority in this conversation. In any case, the dam will not be constructed in time to provide power to the LNG plants.
Many First Nations will welcome a natural gas plant in their efforts to attract infrastructure and create investment and jobs. This is a polar opposite of a dam that they oppose for flooding traditional lands.
There is also the question of the use of natural gas to generate the power that B.C. needs. Canada can produce an abundance of it if the National Energy Board approves several LNG export permits. If one of our reasons for exporting is to help other countries green their energy production by replacing coal with natural gas, a clean burning fuel, why is it not good enough for B.C.? An excellent way to boost the price of natural gas in North America is to increase its use, particularly in power generation and natural gas vehicles.
The priority should be LNG exports. Don’t let a battle over Site C distract us from that opportunity.