Generate 2014: Clean Tech in British Columbia

I attended Clean Energy BC’s annual conference over the past three days. This year the conference was entitled: Generate 2014: More than Electrons. The conference opened with a presentation by Energy and Mines Minister Bill Bennett who strayed from his notes and wondered out loud whether or not cabinet will approve the Site C dam project. It was a bizarre address of circular arguments, random musings and priceless quotes.

From everything I have seen over the last two days, it’s pretty clear to me that it makes little economic sense to proceed with Site C. In fact,  the arguments I made last year are even more compelling now as the price of wind continues to drop. China, for example, is building a new windmill every hour. And China’s investment in photovoltaics has led to an 80% drop in price in just five years.

In addition, I share the desire to see British Columbia’s economy managed in a way that ensures a sustainable approach that is not burdening future generations with the cost of decisions we make today. The government has in the past appropriately celebrated the fact that British Columbia has maintained a AAA credit rating. I am concerned that this rating would be in jeopardy were BC Hydro, a crown corporation, to incur another 7.9 billion debt (with substantive uncertainty regarding cost over runs). I have written to the Finance Minister to expand upon these points.

Finally, today I had the honour of participating in a Question and Answer/conversation panel at the conference. The panel, hosted by Denise Mullen, Director, Environment and Sustainability with the Business Council of British Columbia also included Wade Davis, and Elizabeth Mcdonald from the Canadian Energy Efficiency Alliance. Each of us started with a brief statement before the conversation started. Below is the text of my statement.

Text of My Opening Statement

As many of you know, I am trained as a scientist, not a politician. Yet having spent a career studying the physics of the atmosphere and ocean and the science underpinning past, present and future climate change and climate variability, it became harder and harder for me to sit on the sidelines. Over the years I’ve given hundreds of presentations about the challenge of global warming to diverse audiences around the world.

Many, if not most, of my presentations have been in front of youth, both in my university classes and out in our public schools. I’ve spoken about the need for economic policy to ensure the internalization of externalities associated with the release of greenhouse gases to the atmosphere. I’ve praised leaders, including a former Premier and Cabinet Ministers who have taken bold steps to introduce such policies. I’ve pointed out that the predicament we face is perhaps the greatest of all possible Tragedies of the Commons. Every individual in the world shares the atmosphere. Presently, it is in the best interest of every person in every household in every municipality in every city in every province in every country in the world to do absolutely nothing about global warming since the cost of action is born by the individual, yet the cost of inaction is distributed amongst seven billion people globally. There is only one equilibrium solution to this, and other, Tragedies of the Commons. And that is collapse.

Perhaps the most common question I get asked after my presentations is what can a single individual do to be part of the solution to global warming? I’ve invariably responded with two answers. I’d point out the power of the pocketbook and targeted consumer purchasing. I’d point out the importance of participating in our democracy. And the latter, I would target most pointedly to the youth in the audience.

Only between 30 and 40% of youth between the ages of 18 and 24 vote in, for example, federal elections. Those being elected do not have to live the consequences of the decisions that they are making. Yet those who will have to live with such consequences are not participating in our democracy. I suggest to the youth in the audience that in addition to changing their own habits, the best way that they can make a difference is to elect people into office who demonstrate the courage and leadership to deal with the challenge of global warming. And if those who are running aren’t going to address the issues of intergenerational equity and the sustainability of our social, economic and environmental systems, then they should consider standing for election or finding someone who is willing to stand. After giving that response over and over to so many young people, I eventually came to terms with the fact that I had to take my own advice.

My work on global warming and past, present and future climate change and climate variability has allowed me to see firsthand the potential that BC has to develop a leading 21st century economy. From our access to cheap, renewable energy, to our educated workforce, to our innovative business community, to the quality of life we can offer here, together with British Columbia’s natural beauty, we have an opportunity to develop our Province into one of the most prosperous jurisdictions in the world. But such a vision requires real leadership — leadership that is honest about the challenges and the opportunities in front of us; real leadership that also takes the challenge of global warming seriously, understanding the need to build a sustainable, diversified and resilient economy for this generation and the next.

The undeniable truth is that British Columbians have been sold a bill of goods with respect to promises of prosperity for one and all from LNG. In an election where the government was set to fall, a Hail Mary pass was thrown. It was packaged in a message of hope and opportunity, so compelling it couldn’t be ignored: 100,000 jobs; $1 trillion dollars to the GDP; a $100 billion prosperity fund; the elimination of our provincial deficit; thriving hospitals and schools. And the end of our provincial sales tax.

As we all know, that pass was caught and we now have a government that is trying to deliver on its political promises — whatever the cost and whatever the risk to our province.

The problem is the economics simply aren’t there to support an LNG industry on the scale of what was promised. I’ve been pointing this out for nearly two years now. The supply gap is too narrow. A recent Peters & Company report estimates that while LNG demand will increase to more than 500 million tons per annum by 2030, LNG supply will reach 800 million tons per annum. In the time since the government first announced its LNG plans, we have already seen Russia sign a $400 billion, 30-year agreement with China. We have seen the U.S. gulf coast become the most efficient place in North America to build LNG plants. Other jurisdictions like Australia, Malaysia, and Qatar have already established LNG export industries. We have seen Talisman sell its assets in BC, we’ve witnessed Apache pull out of Kitimat LNG and just last week we saw Petronas threaten to pull out of the Pacific NorthWest LNG project. We know that drilling in the dry gas fields in and around Fort Nelson is grinding to a halt. And we know that the only thing sustaining the drilling efforts around Fort Nelson in the Montney Formation are the condensates. These are transported to Alberta to be mixed with bitumen to form pipe-ready diluted bitumen. There is no market for our gas as the market is saturated with supply. These developments do not bode well for our hypothetical LNG prospects.

The fact is, this government has no back-up plan. We have staked our jobs, our health care, our education, our debt repayment and so much more, all on the gamble of an LNG windfall. But I ask you this: What if we only get one or two LNG plants? What if those plants aren’t realized until the mid 2020s? What if we don’t get the windfall this government has promised? Is gambling the creation of new jobs, the adequate and sustainable funding of our education and health care systems and the repayment of our debt, on the back of a risky political promise the right thing to do? More importantly, is it demonstrating real leadership? I don’t believe it is.

Our challenges are too big, and the consequences too profound, to ignore the evidence. We need a new vision for B.C.—one that begins with true leadership—leadership that is grounded on the courage to be honest with British Columbians, to recognize our overzealous promises and to move forward responsibly.

A 21^st century economy is marked by a focus on developing diversified industries that provide local, high-paying and sustainable employment over the long-term. Rather than relying on a single industry in one part of the province to provide prosperity for British Columbia’s future, true leadership demands an approach that develops varied opportunities across the province.

We know that the returns to investment will be highest for those who seize the opportunities of the 21st century—not the 20^th century economy. Windfalls will be enjoyed by those who move first with vision, not latecomers to a developed market. We are far too late to be significant players in the LNG export market—that ship has sailed. Instead, we should be identifying and seizing BC’s competitive advantages. One area of the economy in which BC possesses an enormous competitive advantage, if nurtured, is your industry — the clean tech sector.

This competitive advantage is shared with other jurisdictions in the region, and our neighbours to the south are already distinguishing themselves as leaders in the 21st century economy, reaping the benefits that this will provide.

California is embracing the changes to their electrical grid that are necessary to prepare for a massive influx of renewable energy that will flood the grid by 2020. And it’s not solely out of concern about climate change either — they know that this is crucial for making responsible investments of taxpayer dollars into the grid and that they need to be embarking on this strategic planning now.

Washington is joining California in leading the push for increased cost-effective energy storage capacity to improve the efficiency of off-peak energy producers like wind. Washington is also using policy tools to craft win-win situations in which both the consumer and the utility can benefit from installing clean technologies like rooftop solar and small scale wind — making it economically attractive for the utility and affordable for the consumer to install them.

In 2009, Governor Christine Gregoire created the Clean Energy Leadership Council tasked with developing strategies which would accelerate the state’s transition away from fossil fuels to create a “21^st century economy”. These strategies would accomplish this goal by building on Washington’s competitive advantages in clean tech to attract new investment, create new partnerships all with a focus on creating green jobs in the state. Washington’s approach was based on a very clear idea — one that arguably used to be present here in BC — Washington aligned both public and private sector efforts in order to develop “market leading clean energy solutions that [could] be replicated not only in Washington but beyond its borders”.

Washington’s approach is working.

This past summer, BMW announced an expansion to the Moses Lake carbon-fiber plant, which would see a tripling of its capacity. BMW uses the plant to produce carbon fiber ribbon employed in its i8 concept “sustainable car”. BMW cited the access to cheap, renewable power and the ability to create a “green supply chain using sustainable energy” as the reason for their investment in Washington.

Let’s move to Oregon, where on April 19^th Governor John Kitzhaber proudly proclaimed “It is time to once and for all say no to coal exports from the Pacific Northwest”. Here of course he is referring to thermal coal exports, not metallurgical coal exports. But for Governor Kitzhaber and for me as well, it’s not just about saying no. Here’s what Governor Kitzhaber said just a few days ago “Oregon has the challenge and opportunity to transition to clean, renewable energy like wind and solar because it will help the environment and create good-paying, local jobs that can’t be outsourced.”

Oregon’s vision is also paying off. Google, a company that sees itself as a powerhouse of the 21^st century wants to ensure it has access to clean, renewable energy. Oregon was able to provide Google with price certainty and so the company invested $1.2 billion in the creation of a major data distribution centre in the Dalles.

Recently, the Canadian Geothermal Energy Association released a report outlining the extent of the opportunity that BC has to produce geothermal energy. Looking at only a portion of BC, this study clearly shows that we are missing a massive opportunity to tap a renewable resource. In fact, BC is the only jurisdiction in the Pacific Rim’s ring of fire that is not producing geothermal energy.

We stand to gain by building on the expertise that our neighbours have already developed in these areas. And yet, there is still so much room to grow in this sector, to improve upon current technologies and policy innovations. We need to learn from what has worked for our neighbours, and craft them into a “made in BC approach” that respects the unique characteristics of our economy, our environment and our energy needs. A “made in BC approach” will require bold leadership to bring industry leaders, academics and government to the table to lay out a new vision for the energy system that a diversified, sustainable 21st century economy will require.

This vision will also require a serious look at the mandate of BC Hydro. Its scope should be expanded to allow for the production of geothermal power. Its role could also be expanded to facilitate the partnering of industries with clean energy producers, both existing and new, that want access to long term stable pricing for their electricity needs. In BC we have what many others do not. These are our legacy dams — the rechargeable batteries of the 21^st century energy grid that can be drawn upon when other intermittent sources are not producing electricity.

In essence, the same leadership, innovation and natural advantages that could provide us with the opportunity to become North America’s centre for clean tech can be harnessed to develop new opportunities including those within our traditional industries like forestry.

When we singularly focus on LNG, we fail to value the sectors in BC that actually exhibit promise for growth. Instead of banking on empty promises, why do we not look instead to industries like your clean tech, a sector that is already characterized by fast growth. From 2012-2013, investment in the clean tech sector tripled in Canada. Canadian individuals and business alike recognize the opportunity clean tech poses, even if our government does not. Furthermore, clean tech provides us with a rare opportunity to both mitigate climate change by reducing our emissions and to adapt to it with more resilient and localized energy systems.

Instead of tying our jobs, and our children’s jobs to the boom and bust cycle of fossil fuel industries, we should instead be looking at the long-run growth in clean industries. Rather than promising our youth positions in a hypothetical LNG industry, imagine if we trained our graduates to retool the BC economy for 21^st century industries.

Now is the time for British Columbia to take control of our own future. Instead of enslaving ourselves through reliance on hypothetical exports of a commodity that may or may not find a market elsewhere, we could, and should show leadership in the development of a diversified, sustainable, 21^st century economy.