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What could we fund for the cost of a pipeline?

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Much of the recent debate around Kinder Morgan’s pipeline and tanker project has centered around vigorous debate between the provinces of BC and Alberta and the question or whether the project is in the national interest. Ultimately, this depends on what kind of economy Canadians want to invest in, and what kind of economic future we want to create. Because of these key questions, we are updating and re-sharing some of our previous research around what’s fuelling Canada’s economy and where Kinder Morgan’s pipeline fits in. 

At the same time, over 800 businesses have joined together to raise concerns about investing taxpayer dollars in Kinder Morgan’s risky pipeline and tanker project at http://LetsMoveForward.ca

Overnight co-owners of a controversial pipeline

On May 29th, the Canadian government announced that it will be purchasing the existing Trans Mountain pipeline from Kinder Morgan for $4.5 billion and investing another $9 billion to construct the beleaguered pipeline expansion. In addition, the government has committed $2.1 billion in financial assurances for spills, and $1.5 billion to a new Ocean Protection Plan. In total, this project will cost taxpayers more than $17 billion.

What else could Canada invest in instead?

We did a quick investigation into what these federal funds could otherwise be spent on, and came up with three quick comparisons:

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According to the federal government, a national housing strategy would cost $4 billion dollars a year, less than the cost of purchasing the existing Trans Mountain pipeline (let alone building the expansion).

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The $17 billion it will cost to buy and build the Trans Mountain pipeline won’t cover the entire cost of a national pharmacare program, which is budgeted at $19 billion, but it would cover the vast majority – more than enough to get it off the ground.

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During the last federal election, the NDP calculated that it would cost $5 billion to put in place $15 a day daycare for every child in care across the entire country. Instead of giving a massive taxpayer bailout to Kinder Morgan’s pipeline, the federal government could fund over 3 years of universal affordable childcare.

On top of this, with a $17 billion investment, we could solve the homelessness crisis in Vancouver 15 times over. According to the City of Vancouver, the total cost to give housing to everyone on the Downtown Eastside is about $1.1 billion. That would give housing to everyone who is currently unhoused or living in unsafe housing (SROs primarily) for 30 years.

And for the cost of this pipeline, not only could we provide clean drinking water to every reserve across Canada, but we could provide it in gold-plated taps.

So which kind of economy do we want to invest in?

 

CRED events and news

What’s Fuelling BC’s Economy?

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Much of the recent debate around Kinder Morgan’s pipeline and tanker project has centered around vigorous debate between the provinces of BC and Alberta and the question or whether the project is in the national interest. Ultimately, this depends on what kind of economy Canadians want to invest in, and what kind of economic future we want to create. 

There are also important questions about whether Canada’s economy is reliant on oil sands expansion, and whether the pipeline would create long-term jobs. Because of these key questions, we are updating and re-sharing some of our previous research around what’s fuelling Canada’s economy and where Kinder Morgan’s pipeline fits in. 

At the same time, over 700 businesses have joined together to raise concerns about investing taxpayer dollars in Kinder Morgan’s risky pipeline and tanker project at http://LetsMoveForward.ca

A remarkably diverse economy

It’s often said that British Columbia is a resource-based province. In actual fact, the reality is a lot more complex. While it’s true that much of BC was built on natural resources, and that even today sectors like technology and construction have a certain amount of linkages and inter-relationships with primary resource sectors, the basis of our economy has overwhelmingly shifted to service-based industries.

Over the past few decades, a monumental shift has been taking place – more than 4 out of 5 British Columbians now work in services, and the majority of our GDP comes from these sectors. Only a small percentage comes from oil, gas, and supporting services.

In fact, technology, tourism, construction, film and television each create more jobs than oil, gas, and mining combined.

BC is also in the middle of an economic boom. It led the country in GDP growth in 2015 and 2016, and is continuing to grow at a fast pace (according to the BMO Blue Book).

A few highly visible sectors are credited with the most recent economic growth and job creation – notably construction and real estate. However, it’s our remarkably diverse economy that anchors our prosperity. British Columbia’s economy is largely made up of non-resource based industries and thousands of small businesses in sectors from tourism to tech.

BC GDP and service vs goods.png

Where Does Our Wealth Come From?

When GDP figures for British Columbia are broken down, service industries make the largest contribution to provincial wealth – approximately 75%.

Real estate makes up the largest share of that, accounting for more than 18% of GDP. Construction, wholesale and retail trade, and health care also make up significant portions. By contrast, oil, gas, and support services make up just 3.4% of BC’s GDP. As a whole, the energy sector’s total contribution to provincial GDP is 5.7% (source).

BC GDP by industry.png

Where are the Jobs?

While we may think of BC as a resource-based province, things have changed over the years. The mining, oil and gas sector employs just 1.2% of the workforce, or approximately 27,000 people. By comparison, technology, tourism, construction, and even film and television employ significantly more people.

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According to the BC Ministry of Finance, BC’s biggest employers are:

  • Wholesale and retail trade – 353,000 jobs
  • Health and welfare services – 287,000 jobs
  • Construction – 202,000 jobs
  • Professional, scientific, technical – 188,000 jobs
  • Accommodation and food services – 178,000 jobs

BC’s workforce is growing, and, fortunately, jobs are increasing to keep pace. In 2015, BC saw its labour force increase 1.3%, the fastest annual rate of growth since 2008. At the same time employment activity increased, primarily from full-time jobs in service industries (source).

Small businesses make up 98% of all BC businesses. 

Biggest industries for jobs in BC.png

Read our full 2016 report for more details: WHAT’S FUELLING OUR ECONOMY: Is Kinder Morgan’s Proposed Pipeline Inconsistent with New Economic Trends and Realities?

CRED events and news, Environment, Kinder Morgan news | Tagged , , ,

The Global Significance of a New Kinder Morgan Pipeline

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DOWNLOAD Analysis ‘The Global Significance of a New Kinder Morgan Pipeline’

Building the Kinder Morgan pipeline not only commits BC’s west coast to a specific economic development path, it also jeopardizes our international and national climate commitments. It will cost far more to deal with the impacts of climate change than it will to build a low-carbon economy.

 

CRED events and news, Kinder Morgan news

A Key Moment for the Kinder Morgan Pipeline

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We let ourselves exhale a little when the Liberal government introduced additional pipeline review measures back in February. Three months later, we’re at a key moment where the National Energy Board’s role in the Kinder Morgan review is about to conclude, and the interim measures by the federal government are about to commence.

The National Energy Board will announce their decision later today on whether or not the Kinder Morgan pipeline should be built from Alberta through to BC’s coast. With the entire review process to date being criticized as unfair and unjust, many are expecting the NEB to endorse the project.

On the bright side, the recommendation by the NEB is not the final stamp; Cabinet will ultimately determine the fate of this project. Here’s what we know so far about what happens next: a new, three-member panel will consult with First Nations and communities along the pipeline route. Making up the panel are:

  • Annette Trimbee, the president of the University of Winnipeg and former deputy finance minister in Alberta. She served on Alberta Premier Rachel Notley’s royalty review panel last year.
  • Tony Penikett, the former premier of Yukon and the author of Reconciliation: First Nations Treaty Making in British Columbia.
  • Kim Baird, former elected chief of B.C.’s Tsawwassen First Nation, who now runs her own consulting firm specializing in indigenous policy, governance and development issues.

Additional details on when and how these consultations will roll out are still to be announced, but they’ll be led by the new ministerial panel.

This is the final phase of the review for this project that could shape our economy for 40 years or more, so it’s imperative that the economic case be scrutinized, as with any business proposal.

We’ve been hearing chatter about a potential alignment between premiers Christy Clark and Rachel Notley around the Kinder Morgan pipeline, where Alberta could buy site C power from BC, in exchange for BC endorsing the Trans Mountain Pipeline. Several articles have reported a change in tune from Clark’s formal opposition to the pipeline project and it seems that she is confident that any resource project in BC only has to meet its five conditions to get to a ‘yes’.

The same hopefulness to have both stringent environmental goals and investment in pipelines is coming from Trudeau, so all eyes will be on this new period of consultation to ensure all voices are heard and evidence reviewed. The Kinder Morgan pipeline decision is an opportunity to be a leader in climate change and player in the new economy. Will we invest in projects that spark innovation, benefit our growing industries, and keep up as the world moves to a low-carbon economy or will we continue with uncertainty and risk to BC’s coast in a slowing industry?

 

Photo Credit: Sarama

www.livingsalishsea.ca | facebook.com/thislivingsalishsea

CRED events and news, Economy

How Will the Shift to a Low-Carbon Economy Affect Jobs in British Columbia?

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At this point in history, few would attempt to credibly argue that fossil fuel use is not driving climate change. G7 leaders have targeted the year 2100 for fossil fuel phase-out, 177 countries have signed the Paris Agreement, and the world economy is making strides towards low-carbon. This means existing models will change, including the nature of jobs here in our province.

What infrastructure should we be investing in? Which industries will generate the permanent, high-paid jobs of the future? British Columbia should be on the leading edge of the economic and cultural shift towards renewables and de-carbonization, and thus reap the benefits for society, workers and investors.

It is time to have a conversation about what the shift to a low-carbon economy will look like for BC workers.

We all know that it is far easier to stick with what you know. Progress and innovation require a little discomfort sometimes, and Canada’s economy and fossil fuel dependency is a reminder of this. While our economic wellbeing has undeniably relied on the oil and gas industry for decades, the evolution towards clean technology and a more diversified energy economy is underway. Change is brewing… and opportunity lies in the transition towards lower carbon.

Proponents of the fossil fuel industry have done well to convince Canadians that the movement away from investment and policy supports to oil and gas will cost jobs, send our national economy on a ruinous path, will take decades, and be expensive and highly complex.

Is this true? Will a commitment to energy transition have a negative impact on the BC economy and workers? CRED thinks that it is time to put that rhetoric to the test.

How Long Will It Take?

Many credible energy analysts are positing the concept of peak demand for oil within the next 15 years. This is being driven by nations weaning themselves off of oil, increased efficiency & diversification of fuel sources, and, of course, climate change.

Several recent studies examine the costs, benefits and timelines of pivoting away from a fossil fuels-based economy, and all come to the conclusion that the economy will not suffer through investments in renewable infrastructure. In fact, the commitment to a low carbon economy presents an opportunity to diversify and grow. Let’s explore the results of some of this research and what it means for BC.

A recent University of Sussex Study analyzed the speed of energy transitions over history.  The study cited that Brazil transitioned 90% of their passenger vehicles to sugar ethanol within only 6 years of implementing the program. Closer to home, the study reminded us that the province of Ontario completely divested itself from the use of coal in less than 11 years – even though coal once powered well over 25% of the province’s energy needs.

The study also notes that there are factors unique to this moment in time that could accelerate a transition towards renewable energy; these include the scarcity of resources, the threat of climate change and technological advances. Of course these factors alone aren’t enough for a swift transition. A common feature of energy transitions that are quick and effective, include strong government intervention matched by consumer interest and uptake.

Based on historical analysis, experts are predicting that the transition to an entirely clean-energy driven society could take less than a decade.

Yes.  You read that right.

Ten years is hardly the blink of an eye, of course. We do need to challenge the notion, however, that the transition to a de-carbonized society should somehow be postponed indefinitely because it is going to take too long.

In order to really begin this transition in earnest, we need policy leadership – federally, provincially and municipally. As an example, this will mean looking at how we make our provincial carbon tax more effective by regularly increasing the tax as was originally intended, and in doing so, incentivizing businesses and consumers to make the shift.

What Will It Cost?

It is argued that the movement away from fossil fuels entails exorbitant costs and risks. We need to remind ourselves of the costs of inaction. In western Canada, one of the principal and obvious impacts of climate change will be increasingly dry temperatures and higher-intensity wildfires earlier and later in the year than we have known historically. The struggles being faced across Northern BC, Alberta and Saskatchewan right now – in early May – are exemplary of what we may expect moving forward. The high financial costs to society are acutely being borne at the moment by the residents of Fort McMurray and the surrounding communities.  While all Canadians stand in support of these families in their struggle, we cannot overlook that what they are going through in fleeing ‘The Beast’ fire may become a new reality for the west, rather than a one-off disaster.

We also cannot ignore the costs of society doubling down on infrastructure to support a product such as bitumen, where we exert little control over global pricing. The past two years have shown Canadians the risks of being the highest cost producers of arguably the most carbon intensive fuel source available to society. The current budget deficit in Alberta highlights where the real economic risks lie: continuing to base the economic and social wellbeing of a province on royalties and tax revenue from an industry where demand and pricing is out of our hands.

So what will it cost to bring in policies to support the shift to a de-carbonized society? The Labor Network for Sustainability has recently laid out an accelerated policy framework to reduce Greenhouse Gas (GHG) emissions 80% in the U.S. by 2050. The 2015 study includes cuts in coal power and targets cost reductions for electricity, heating and transportation. The framework is then compared to the ‘base’ model of existing policies, in order to see the impact on jobs, and the costs of implementation.

The report concludes that this Clean Energy Future plan could result in overall job growth – more than 500,000 jobs added per year over business-as-usual projections – mainly due to the rise of energy efficiency programs. These new jobs will be developed in producing, maintaining and installing equipment through renewable energy programs, electric vehicle industry expansion, and massive growth in manufacturing and construction employment.

The truly staggering news?  The cumulative cost of this Clean Energy Future model is $78 billion less than the reference (base) case.

But Seriously… Won’t We Lose a Lot of Jobs?

The short answer is yes.  And no.

In 2014, Energy and Environmental Economics, Inc. (E3) produced a report outlining multiple pathways to achieve 80% GHG below 1990 levels by 2050 in the United States. Building on that report, NextGen Climate America and ICF International used National Energy Modeling System (NEMS) data to determine how following a decarbonization plan would impact jobs and GDP.

The findings indicated that the transition to a low carbon economy would boost jobs in the U.S. including:

  • More than 1 million additional jobs created by 2030 and up to 2 million jobs in 2050, including 1.2 million additional jobs in the construction sector;
  • GDP increased by $145 billion (0.6%) in 2030 and by $290 billion (0.9%) in 2050 compared to business-as-usual;
  • Household disposable income increased by $350-$400 in 2030 and by as much as $650 in 2050;
  • Families will have saved $5.3 billion on energy bills by 2030 and $41 billion by 2050.

A truly chilling finding in the report was that inaction on climate change will reduce the United States’ GDP 36 percent by the end of the century.

The report also acknowledged that as jobs shift from coal to clean energy some workers and communities will be adversely affected. This is happening in Canada now, especially in Alberta and Saskatchewan, and it is essential that we assist those affected and incorporate employment transition into planning and policy frameworks.

As an example, it is inspiring to see how in Edmonton – truly the epicenter of oilsands country – a group of current and former oilsands workers are pushing governments and industry to invest in retraining programs so that 1,000 oil and gas electricians can become solar technicians, as part of a broader initiative to move towards renewable energy.

These workers themselves state that investing in renewable energy will “open up a huge amount of opportunity for us if we can start diversifying our energy grid and it would ensure that we are less vulnerable to price fluctuations”. The Minister of the Environment of Alberta seems to agree, stating that “we know that as we transition from coal to cleaner sources of power there will be new job opportunities in a more diversified economy.”

What Does It All Mean for BC?

Closer to home, a study by Clean Energy Canada (CEC) looks at BC specifically, and concludes that a larger carbon tax and stronger sector specific regulation on buildings, transportation, and energy supply will result in a healthier provincial economy.

The report states that the economy will continue growing at an average rate of 2% over the coming decades. A quarter million new jobs will be added to the economy in the next ten years, with total jobs growing by 900,000 between 2015 and 2050.

Much like the US findings, CEC foresees most job growth within the service sector. Job losses in petroleum refining and natural gas distribution are offset by new jobs in biofuel and renewable electricity production. One thing to note is that this report includes the assumption of growth in the LNG industry, but with the recommendation of an end of life date in 2050.

Each report uses varying scenarios and methodologies, but the findings are similar:

Thoughtful implementation of carbon-reducing policies will not harm the economy or availability of high-paying jobs.

The reports consistently found that jobs would relocate from fossil fuel industries to construction and service sectors. A prominent universal finding is that solutions and actions to reduce carbon will buoy our economy for the long term.

Change has to start somewhere, and if we can identify the goal, let’s all discuss strategies for how to get there.

One of the challenges of understanding the potential impact of investing in renewable energy is that traditional industry employment data does not specifically capture it… until now.  As of 2015, there is a Clean Energy Jobs Map for British Columbia.

CRED feels it is time to move away from the unhelpful rhetoric surrounding the move to a de-carbonized society, and start talking about opportunities and how to forge the path forward.

The clock is ticking.  Let’s do this.

 

Sources:

http://www.cbc.ca/news/canada/edmonton/jobless-oilsands-workers-look-to-alternative-energy-1.3500533

 

http://www.huffingtonpost.ca/dylan-thompson/renewable-energy-jobs_b_8741606.html

http://www.sciencedirect.com/science/article/pii/S2214629615300827

http://motherboard.vice.com/read/we-can-phase-out-fossil-fuels-within-a-decade-study-says?utm_medium=email&utm_source=flipboard

http://www.businessinsider.com/the-end-of-oil-as-we-know-it-2016-4?utm_medium=email&utm_source=flipboard

 

 

CRED events and news, Economy | Tagged ,

CRED’s Take on Budget 2016

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The new federal government recently came down with its much-anticipated first budget.  Finance Minister Bill Morneau stated that the Liberal government is making “the investments needed to boost the economy over the long term.”

Pundits had speculated for weeks about the size of the projected deficit, how vital infrastructure investments will be made and which industries would be targeted for support in light of the professed movement toward a lower-carbon economy.

The headline budget item is $120 billion for infrastructure over the next decade.  As expected, many line items and themes relate to our discussions around responsible economic development here in British Columbia. Consensus thus far seems to suggest that BC was well considered in the drafting of this budget.  While the headlines pronounced that this budget is all about families and cities, many details remain opaque.

For policy wonks who love getting deep in to the details, you can find the complete summarized budget here.

Here are a few of the key points specific to the BC economy:

 Infrastructure

 Transit Funding

  • $3.4 billion over five years allocated across major Canadian cities
  • Federal government willing to extend up to 50% capital cost support to some projects

The commitment to public transit will be welcome news across all levels of government across the country. Better still, the federal government in some instances is willing to extend its support beyond the traditional “1/3 each” inter-government funding model, and provide up to 50% of capital costs for major projects.

What does this mean for BC?  

For municipal governments that have relatively little ability to meet the terms of a ‘third each’ funding model, this is a major boon. In the short term, BC’s 13.6% of national ridership means that BC major municipalities can expect nearly $460 million from the Public Transit Infrastructure Fund. It could allow Translink to target the Broadway Skytrain line as well as the light rail transit network in Surrey, with an initial investment of $370 million to start the planning process.

Serious questions remain, though, about the provincial government-mandated plebiscite requirement for any transit funding through new municipal taxes – a requirement which many observers feel dooms Translink and the municipalities’ abilities to move forward on major capital projects.  So far, the BC provincial government is saying all the right things about continuing to be “all-in” for their own 1/3 capital commitment.  The impact of the failed 2015 transit plebiscite looms large over transit planning, however, and Premier Clark has not yet ruled out another one should mayors choose to attempt to raise their share of project costs through a new tax structure. The Premier needs to act to ensure mayors and Translink have the tools they require to effectively move forward and take advantage of this flood of transit infrastructure money.

Shovel-Ready Infrastructure

  • $1.8 billion in immediate funding over next 2 years for ‘shovel-ready’ green infrastructure

While most announced infrastructure funding will accrue 3-10 years out, the ‘shovel-ready’ commitment is part of a broader $4 billion line item for ‘miscellaneous’ infrastructure. This will provide immediate benefit here in BC, and is on top of Ottawa confirming their willingness to expedite deployment of ~$9 billion remaining from previous infrastructure fund.

A welcome example of the immediate benefit to BC is the announcement of $106 million to rebuild the Lions Gate Wastewater Treatment Plant.

Massey Bridge

  • Proposed $3.5-billion replacement bridge for the George Massey tunnel was nowhere to be found in the federal budget

CRED supports fact-based discussions around investments that reflect the new economy, and how certain generational infrastructure projects (such as pipelines and massive toll bridges) may not necessarily reflect a growth model for the region that is desired, nor supported by dubious economic modeling.

Lower mainland municipalities and the provincial government are grappling with early-stage lessons learned – at a cost of $100 million+ loss per year – of the recent Port Mann bridge reconstruction.  What could this mean for the proposed demolition of the Massey Tunnel, which will open up the south Fraser river for the movement of goods, and open up land south of the Fraser for residential, commercial and industrial development?  A recent public meeting in Richmond demonstrated just how fervently many local residents and political leaders feel in opposition to the proposed bridge.

Clearly there is a space for more public dialogue into infrastructure. The lack of financial support in this budget does not necessarily mean that the federal government opposes the bridge, but it does allow residents and municipal governments to contemplate what the potential implications for bridge development could be before making another massive investment.

Federal Government Support to Fossil Fuels Industry

LNG Subsidies

In spite of international commitments made before the G20, and bold targets made before the Paris COP21 conference on climate change, the federal government has decided to maintain fossil fuel subsidies for the nascent Liquefied Natural Gas (LNG) industry in Canada.

In an era of advanced discussions on how to de-carbonize the Canadian economy, this will come as welcome news to oilsands and pipeline proponents as well as LNG project developers. It will vex those Canadians who feel it is time to make bold policy to appropriately price and/or put a cap on carbon, while focusing on infrastructure and industry supports which will drive the new economy, as opposed to what are widely seen as ‘sunset’ industries.

This decision projects subsidies to LNG until the end of 2024, as a continuation of the capital cost allowance, and was very welcome news to the BC government that has staked its jobs plan over the past few years on natural gas export. With historical low prices and flat global demand for LNG, most industry watchers suggest that BC may have missed its window to enter into forward contracts for our methane, which would in turn spur final investment decisions by the three remaining major LNG project proponents (Shell, Petronas and Woodfibre).

The decision to subsidize the industry is seen as a life ring thrown to industry and the BC government by the feds, so as not to send project proponents mixed messages at a critical time in their decision making processes.

Investments in Oilsands Innovation

CRED and others consistently raise the question: what is the role of bitumen and natural gas in a low-carbon economy?

The oilsands industry needs to explain clearly to Canadians how their high-carbon footprint, high-cost of production product fits in to a model of sustainability and lower carbon.  This is particularly important during this era of low oil and gas prices and weak, stagnant, over-supplied markets. Given the substantial opportunity cost of massive pipeline investments which are meant to last generations, CRED suggests that short-term market access thinking should never trump long-term opportunities.

Perhaps as a nod towards how the new federal government intends to support the oil & gas industry to define this very role, the budget proposes $50 million in investment over the next two years, starting immediately, to support technologies that will reduce greenhouse gas (GHG) emissions from the oil and gas sector.  This initiative will run through Natural Resources Canada.

As we publish this blog, CRED is hearing that oilsands operations, refineries and upgraders are to be amongst the businesses exempt from the recently-announced Alberta carbon tax. There is no better time to have discussions around how we intend-to de-carbonize our economy.

Oil Price Estimates

CRED finds it curious that the government just established an extremely conservative oil price estimate for the coming year.  At a US$40 per barrel estimate, the government is effectively confirming that weakness in oil prices will endure at a level which few industry watchers or economists feel the Canadian oilsands industry could survive at, long term. While some argue that the government did this to allow ‘wiggle room’ for future deficit reduction and down-the-line ‘good news’ budget results, questions remain about the role of bitumen in a future economy where our own government estimates the product’s market value at less than our industry is able to produce it and get it to market.

What does this say about the business case for building more bitumen pipelines to tidewater?

Clean Technology

  • $2 billion Low Carbon Economy Fund
  • $100 million per year clean technology fund through regional development hubs
  • Recapitalization of Sustainable Development Technology Canada

Perhaps the clear winner in this budget was clean technology, and hopefully as a result, our environment as we move towards a lower-carbon economy.

Coming out of commitments made by Canada in Paris at the COP21, and the recent first ministers meeting in Vancouver, the federal government is working up a Pan-Canadian Framework on Clean Growth and Climate Change.  The budget outlines strategic early stage funding for projects to position Canada as a leader in the clean technology space, while enhancing environmental performance. This is welcome news to CRED, as it was a key part of our recommendations in our research on the Future of BC’s Tech Sector.

As part of the framework, Minister Morneau rolled out a $2-billion Low Carbon Economy Fund, which was teased earlier this month with Canada’s premiers at their meeting to discuss Canada’s climate change strategy. The Fund will subsidize those provinces and territories that participate in a national climate agreement, underwriting activities that will tangibly reduce GHG emissions. Finance Canada clarified that “resources will be allocated to those projects that yield the greatest absolute greenhouse gas reductions for the lowest cost.”

While no national carbon pricing strategy is yet in place, perhaps due to resistance from the premier of Saskatchewan, it is expected that these incentives might help draw the provinces together to support an as yet-undefined national strategy.

As one of the regional development agencies, Western Economic Diversification will get part of a $100 million per year clean technology fund.  This will go to support economic and community development by leveraging local networks and capabilities, and will represent a doubling of the previous clean energy disbursement within the WED portfolio.

The budget includes a re-capitalization of Sustainable Development Technology Canada (SDTC), which serves as a venture capital provider for green and alternate technologies, addressing gaps in current project financing structures. Natural Resources Canada (NRC) will also see significant resources targeted at boosting research and commercialization of clean technology, as well as the advancement of electric, natural gas and hydrogen-powered vehicle technology deployment.

Kitsilano Coast Guard Station

  • $24 million has been committed to re-open the coast guard station.

This is of particular interest to CRED, given our deep concerns around maritime safety and oil spill response. The budget allocation includes expanded environmental response capability.  In 2015, CRED produced research on the economic impacts of the Burrard Inlet oil spill, and how the loss of the Kitsilano coast guard station may have impacted response times.

While the re-opening of the station is fantastic for recreational boaters, commercial traffic and visitors to our beaches alike, CRED wonders whether this announcement were a prelude to the federal government approving the Kinder Morgan bitumen pipeline expansion later this year.

Corporate Taxation

Finally, no major changes were announced to corporate tax rates in Budget 2016.

This will be a disappointment to BC small businesses, many of who were expecting a continuation of the previous government’s promise to drop rates from 11% to 9% on the first $500,000 of qualifying income.  Instead, the rate will drop to 10.5% with future cuts deferred.

Many details remain to be finalized around the 2016 budget. Stay tuned as CRED will continue to explore the budget and how it will impact British Columbia’s business community and those who hope to continue moving us toward a dynamic low-carbon economy.

 

CRED events and news

Having a Say in Carbon Tax

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British Columbia is often celebrated as an early leader in climate solutions, largely due to the successful carbon tax implemented in 2008. Premier Clark has even touted that she’d welcome other provinces taking some very specific lessons from British Columbia’s (carbon tax) approach. Yes the province was an early leader, but we’ve done little to build on that first ground breaking initiative eight years ago, and our GHG’s are increasing. If BC is to remain a trailblazer, it needs to continue to take action.

CRED has signed on to a letter written by Board of Change, Clean Energy BC, Climate Smart, the Pembina Institute and Clean Energy Canada to show support for implementing an incremental increase to carbon tax. BC is in a consultation phase of developing a Climate Leadership Plan, so now is the time to let Premiere Clark know that the business community supports more climate action.

As a component the Climate Leadership Plan process, an appointed advisory panel reviewed the province’s current climate action, and in November it recommended that the carbon tax be increased by $10 per tonne, yearly, beginning July 2018. With a show of support from the business community, we hope that this recommendation will be adopted.

Please consider signing on to the letter and register support for a stronger carbon tax in BC. You can find more info at Pembina’s website www.pembina.org/bc-carbon-tax

 

Image: Solar panels on top of Dawson Creek City Hall. Photo: David Dodge, Green Energy Futures.

CRED events and news, Kinder Morgan news

BC Business Groups Call for Additional Interim Measures in Kinder Morgan Review

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VANCOUVER, B.C – Leading business groups Conversations for Responsible Economic Development (CRED), the Board of Change, and the Green Chamber of Commerce BC are calling on the federal government to add measures to the Kinder Morgan review that will reflect the concerns of coastal businesses. The business groups and their numerous member businesses and organizations outline concerns in an open letter to Prime Minister Trudeau that asks for additional measures that will accurately estimate how bitumen behaves in coastal waters, take into consideration the economic risks of a significant spill, and allow for rigorous cross-examination of the evidence presented so far.

Prominent business leaders and entrepreneurs in the high tech, tourism, renewable energy, finance and creative sectors are concerned that the business case for the Kinder Morgan pipeline is weak. Michael Tippett, CEO of Wantoo says “We need to be assured that our government is looking out for our best economic interests far into the future. I’m not confident that this pipeline review has done that to date”.

The signatories urge the Prime Minister to take action on his commitments to subject the project to a review that is open and inclusive, and to ensure that the business case and potential impacts to BC businesses – especially those dependent on a healthy marine environment – are fairly assessed.

CRED Program Director Andrew Grant comments, “As business people, we know that investors and project proponents need certainty. As it currently stands, even with recently announced interim measures of increased First Nations consultations and inclusion of upstream GHG emissions, many BC businesses have significant concerns about the review and approval process. It is in the best interests of all stakeholders – including the proponents – to have the review conducted under a mandate that Canadians consider valid, and that demonstrates the rigour we would expect in fully acknowledging and addressing project risks.”

In August of last year, 35 intervenors stepped away from the review process because it was seen as flawed, biased and unfair. Meeru Dhalwala, co-owner of celebrated local restaurants Vij’s and Rangoli, says “I am not convinced that the project has undergone any form of fair examination.”

Board of Change Director and Hamazaki Wong Marketing Group Creative Director Sonny Wong echoes the need for a robust, fair review of the Trans Mountain expansion: “BC’s unique brand is integral to establishing ourselves as the hub of the new economy. If this one project has the potential to significantly impact the brand that businesses depend on to attract talent and investment, that project needs to be very carefully considered, in a process that has the support of British Columbians.

Interim measures announced last week by Ministers Carr and McKenna are unlikely to clarify the economic case for the project, and may not effectively capture the risks that other BC businesses face by an oil spill along the BC coast. The signatories feel it is important to do the hard work now of conducting a review process that is effective, transparent and has the support of Canadians before potentially subjecting a major infrastructure project to significant resistance from local residents, affected businesses, First Nations and governments at the provincial and municipal levels.

BC business groups encourage the federal government to protect the long-term prosperity of Canadians by carefully considering this proposed pipeline expansion that could impact our economy for 40 years or more.

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BC Announces Tech Strategy

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The BC Tech Summit wrapped up recently in Vancouver, and the biggest news to come out of the two-day event was Premiere Clark’s unveiling of BC’s tech strategy. It is no secret that the tech industry in BC is flourishing. The sector is one of the highest GDP generators of all industries in BC, contributing $15.5 billion to our provincial economy in 2014. Tech employs 84,000 people in our province, providing high-paying jobs, and accounting for double the total jobs in forestry, oil, gas and mining.

It seems that the BC government has now recognized the potential of this industry and has announced significant support to help it grow. It’s not clear if this interest in tech is a way to divert attention from the long-promised and as-yet unrealized LNG boom.  CRED_tech2rev2Nonetheless, the tech sector needs supportive policies in order to catch up with other provinces and countries, like our neighbours to the south.  CRED’s tech report recognized that BC falls behind other jurisdictions in terms of output , but the potential is great. If BC’s tech sector were to catch up to the average US state, we would see 65,000-74,000 more jobs and an additional $9.1 billion in GDP.

In her announcement, Clark said that the BC government heard our concerns and has recognized three main issues: developing the talent pool, access to capital, and access to new markets. This makes us smile, as our report recognized a need for strategic government support, increased access to venture capital, investment in talent development and reduced barriers to recruitment. Right on! The only missing piece we identified is the support for regional tech hubs, but hopefully that can come soon too.

Amongst the new initiatives introduced are:

 1. $100 million BC Tech Fund to address an early stage (A-Round) funding gap.

The fund is targeted at new and emerging tech companies that need resources to get off the ground. The province is seeking a private sector fund manager to administer it.

2. Introduction of IT skills & concepts, and adding coding to the K-12 public school curriculum beginning this September.

Further details on implementation or teacher education have not been announced, and no new funding has been allocated.

3. Streamlining public sector access to software innovation through developer exchange 

The detailed breakdown of BC’s tech strategy can be found online http://bctechstrategy.gov.bc.ca/wp-content/uploads/sites/10/2016/01/BCTech_Strategy.pdf

It’s fitting that this announcement comes just days after BC announced its opposition to the proposed Trans Mountain Pipeline project. While more details are still to be revealed, we feel it is a good start and a much-needed bolster to the tech industry. It’s also a good indication of where BC’s economy should be headed – away from higher-risk, shrinking asset industries and towards the future in knowledge-based, value-added economic activity.

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First Nations Victory Could Impact Future Pipelines

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Big news – A BC Supreme Court ruling yesterday has set the Enbridge Northern Gateway bitumen pipeline project back a few steps. The court ruled that the BC government failed in their duty to consult First Nations when they signed an equivalency agreement regarding the assessment of environmental and social impacts of Northern Gateway.

The agreement that BC signed effectively waived the province’s responsibility to do an environmental assessment of Northern Gateway, putting the final say in the hands of the National Energy Board (NEB). Gitga’at First Nation and the Great Bear Initiative Society – representing coastal First Nations – challenged the province in court when they were not consulted prior to this agreement.

Where does that leave Northern Gateway?

The Supreme Court has deemed the equivalency agreement invalid for Northern Gateway. That means that although the NEB has approved the project, BC is now obligated to carry out a full environmental assessment and must consult with and accommodate the needs and concerns of First Nations. This essentially brings the project back to the beginning, though the province does not agree with that sentiment: Justice Minister Suzanne Anton has stated there is no need to duplicate the review process.  We will see how this rolls out in the coming months.

This will be an interesting challenge for Enbridge, the project proponent, as the clock is ticking on them meeting the 209 conditions laid out by the NEB, while at the same time attempting to secure contracts for the bitumen. This all speaks to the uncertainty of the pipeline project, and the overall challenges facing companies who want to extract and transport bitumen across our province.

While the company is stating that it is simply a ‘jurisdictional issue’ between the federal and provincial governments, they are well aware that statement belies the actual challenges that lie ahead – both in terms of process, as well as meeting the needs and expectations of policymakers and stakeholders.

How does this affect the Trans Mountain Expansion Project (TMEP)

Not only is this ruling a significant setback for Northern Gateway, it could mean changes for future pipeline projects, including the Trans Mountain expansion. The ruling affirms our provincial government’s duty to consult with First Nations, and it will also apply to the province’s obligation to conduct assessments in relation to five other projects, including the Trans Mountain Expansion. It is unclear yet if the equivalency agreement will also be voided for the TMEP, but it is perhaps the clearest indication yet of the importance of First Nations engagement in these reviews, and in the development of all industrial projects in the province which have a potential impact on First Nations.

Hopefully a diligent environmental assessment, as well as a revised National Energy Board and review process will be the norm for all energy projects as we continue to move towards a responsible, forward-looking and prosperous economy in BC.