You are hereB.C. abandons self-sufficient energy plan

B.C. abandons self-sufficient energy plan

Justine Hunter, Globe and Mail, Feb. 03, 2012

Victoria — British Columbia will abandon its current commitment to move the province back to a position of energy self-sufficiency, Premier Christy Clark is announcing today.

The watered-down version of the policy is being rolled out as part of a new energy strategy aimed at fuelling a new liquefied natural gas industry.

Because the province does not expect to have enough electricity to supply the energy-intensive production of LNG, the targets to wean the province from relying on electricity imports became an integral part of the natural gas development plan.

"This opportunity will not be before us forever," Ms. Clark said at a news conference announcing the change in direction. "The strategies that we are setting out today will take a resource that exists in the northeast, move it to the northwest and add value to it before export."

Natural gas is worth a lot more in Asia, she said. "Climate change is a global issue - by using natural gas to displace other fuels we can be part of a greener future."

The current law requires BC Hydro to expand its energy supply to the point that it could meet domestic demands by 2016 even when water supplies are critically low – plus some additional supply as insurance to meet changing demands.

Under Ms. Clark’s new policy, the targets will be lowered so that BC Hydro only needs to supply its domestic market with home-grown power when water levels are average.

When water supply is below-average, the province will still have to rely on imports – often from coal-burning electricity producers.

The original self-sufficiency target was established after the drought-fuelled California energy crisis led to rolling blackouts and spiralling power costs a decade ago.

But in the current economic climate, Ms. Clark’s government has decided, the bar has been set too high because it would require BC Hydro to lock in to long-term purchase agreements with private power producers at a higher cost. In years when there is a surplus of hydro-electric power, that could leave the province exporting electricity for less money than it is paying.

Ms. Clark is also announcing her plan to create a liquefied natural gas industry that will aim to carve out a international marketing niche as green power, using renewable electricity sources to fuel the energy-intensive process.

Except when it is not.

The new energy strategy for natural gas anticipates at least three LNG plants online this decade – but even with the new self-sufficiency targets, BC Hydro does not have enough electricity to supply all three plants.

The energy strategy will require those plants to draw from renewable energy sources, but natural-gas fired power will be allowed as a back-up to ensure “firm” electricity. That is only expected to be required for the third and any subsequent plants.

Most LNG plants around the world use natural gas to generate power for their operations.

Acknowledging that creating additional electricity supply will cost BC Hydro more money, LNG companies will be expected to pay a higher rate than BC Hydro’s other industrial customers. Those negotiations are now underway.

Ms. Clark’s jobs strategy, announced last fall, relies heavily on the expansion of natural gas development. The sectoral strategy rolled out on Friday sets out how that will work.

It promises greater incentives to develop unconventional natural gas in the northeast. At the same time, the government will ramp up air monitoring and regulate the use of ground water in response to concerns about the use of fresh water for hydraulic fracturing – the unconventional process used to extract natural gas.

The province will promote greater reliance on natural gas domestically as an alternative to diesel – for example BC Ferries is considering converting the fuel supply for some of its vessels.

Internationally, the province will look to markets in Asia as the price of natural gas in North America drops.



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