B.C.’s recently-announced climate plan and GHG
reduction targets clearly attempt to balance an industrial policy that
incorporates major expansion of the gas industry, including LNG and other
downstream processing, with a commitment to markedly reduce GHG emissions in
the province. As many have noted, a critical element of the plan is
electrification in transportation and gas industry and other industrial
processes.
Whether the targets as set out in the climate plan
are achieved will depend very much on exactly what this electrification will
entail, how much it will cost and how those costs, in the many billions of dollars,
will be paid for. Industry won’t be able to pay for all of
their electrification costs and still remain globally competitive. Households
will not want to absorb all of the costs of the electrification they are called
on to do. The government won’t want to increase pressure on BC Hydro rates by
forcing Hydro to absorb all of those costs. And it also will not want to crowd
out other important social and infrastructure spending with large electrification
subsidies.
There is a long history of governments announcing
bold GHG reduction targets but abandoning them as it becomes apparent what they
require. It remains to be seen whether this climate plan will meet the same
fate. This is not to say that B.C. won’t make considerable
progress in reducing carbon emissions. There are many elements of the plan that
will go forward and have significant effect. But whether BC will and should
achieve the specific numbers and dates in the plan is very much in doubt.
On the pipeline wars, it was unfortunate B.C. chose simply
to oppose any expansion of pipeline capacity from Alberta instead of seeking
common ground on port location, marine safety and all the other issues the
project proposals raised. Perhaps if there was common purpose and effort to get
a project built in the most safe and responsible way we might not have seen:
-the federal government feeling compelled to take
over the Kinder Morgan project, exposing taxpayers to great financial risk not
only with respect to project completion but also long term pipeline utilization
if and when, as expected or at least widely hoped, the global demand for crude
oil significantly declines;
-increased shipment of Alberta crude oil by rail
with the added cost and environmental risks that entails;
-lower netback prices for Alberta crude oil because
of pipeline constraints, higher rail shipment costs and near complete
dependence on the US midwest market;
-less resources and commitment to needed marine
safety improvements if the quid pro quo,
pipeline expansion, does not proceed.
As for GHGs, it is not clear to what extent pipeline
expansion would increase global emissions - that depends on how it would affect
Alberta production and on the differences in the GHG intensity of the oil that
would replace any reduction in Alberta supply. However, one thing is very clear.
Opposition to all efforts to expand pipeline capacity has set back the
progressive policies the Alberta government introduced to reduce GHG emissions,
including carbon taxes, the phase-out of coal-fired electricity generation and a
cap on oil sands emissions. Just like British Columbia, Alberta too was trying
to balance industrial policy with commitments to reduce GHG emissions, but we
are already seeing how implacable B.C. and other opposition to the former will
undermine Alberta resident and government commitment to the latter.
