CRED events and news

What could we fund for the cost of a pipeline?

Screen Shot 2018-05-29 at 2.57.05 PM

Posted by

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:

CRED_kmbuyout_rev1_housing


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).

CRED_kmbuyout_rev1_pharmacare

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.

CRED_kmbuyout_rev1_daycare

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?

lifestyle_2432868269-cc-kenny-louie

Posted by

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.

BC_jobs_snapshot.png

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?

Economy, Kinder Morgan news | Tagged , , , , ,

Does Canada’s economy need Kinder Morgan?

Port of Vancouver

Posted by

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

Where Does Canada’s Wealth Come From?

A diverse mosaic of industries forms our national economy, from tech start ups to winter sports to microbreweries. Although key industries vary significantly across regions, some clear national trends are also evident.

Real estate is by far Canada’s largest sector overall, contributing a full 13% of national GDP. Manufacturing and retail and wholesale trade are also significant, each bringing in some 11% of GDP (according to 2017 data by StatsCan). Construction and finance each generate another 7% of GDP.

Comparatively, in 2017, the oil and gas extraction sector was responsible for 6.5% of national GDP (again according to StatsCan). Although still significant, this economic contribution is less than most Canadians realize, as reported in a poll conducted by Environics.

Canada 2017 GDP by industry
Of this, the Alberta oil sands (what Statistics Canada calls “unconventional oil and gas extraction”) contributed just 2% of GDP – a number that has remained relatively consistent over the past several years.

Relative size of oil sands


Which Sectors Contribute the Most to Social Spending?

Another part of the ‘national interest’ conversation has focused on whether Kinder Morgan’s pipeline is necessary to pay for other public investments, like schools and hospitals. To answer this question, first it’s important to put the energy sector in context.

In 2014, the total the oil and gas sector––including oil and gas extraction and support activities––contributed 3.6% of all federal corporate tax revenue. This number is relatively low compared to financial and insurance services, which together contributed 23% of all federal corporate taxes, and construction, which contributed 7.6%. It is also notably lower than the manufacturing sector, which covered 14% of federal tax revenues in 2014.

Canada tax revenues breakdown
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

vancouver-stanley-park-cc

Posted by

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.

 

Economy, Kinder Morgan news | Tagged , , , ,

New Economic Trends and Realities, and Kinder Morgan

lifestyle_2432868269-cc-kenny-louie

Posted by

DOWNLOAD ‘What’s Fuelling Our Economy: Is Kinder Morgan’s Proposed Pipeline Inconsistent with New Economic Trends and Realities?’

Which Industries Employ British Columbians?

BC is made up of thousands of small businesses, mainly in service-based sectors. We may think of BC as a resource-based province, but only 1.2% of British Columbians work in the oil and gas sector.

credbc_bc-economy-report_jobs-graph1rev1_infographic-copy

What About the National Economy – Where Does Canada’s Wealth Come From?

Real estate is by far Canada’s largest sector overall, contributing a full 13% of national GDP. Manufacturing and retail and wholesale trade are also significant, each bringing in 11% of GDP. Although key industries vary across regions, some clear national trends are also evident.

Would the Kinder Morgan Oil Pipeline Create Jobs?

According to Kinder Morgan, building the pipeline would create 50 permanent jobs in BC and 40 permanent jobs in Alberta. It’s uncertain how many temporary jobs would be created, and if they would benefit otherwise unemployed workers.

Download our report to read more

Economy, Environment, Kinder Morgan news

Oil Spill and Leak History in BC

kminfographic2-02

Posted by

It’s a fact that oil spills are a risk with any oil transport – we know from past incidents. Take a look at the overview of the more significant leaks and spills that happened in BC, most along the existing Kinder Morgan pipeline route.

Since we produced this infographic, there was yet another fuel spill in BC waters, near Bella Bella in 2016. The costs to the economy and environment must be weighed, as a decision on a new Kinder Morgan pipeline is considered.

 

Kinder Morgan news | Tagged ,

The Panel Report Is Out, and the Kinder Morgan Decision Looms…

kinder-morgan

Posted by

After an overwhelming number of people spoke, wrote, or presented their opinions on Kinder Morgan’s proposed oil pipeline, the Ministerial Panel has released their report to Cabinet.

The Ministerial Panel received the highest-ever response rate to a government of Canada questionnaire. 35,259 people responded to the questionnaire, and the panel’s online portal drew over 20,000 email submissions from people expressing their views on the proposed project. There were 2,500 people who took time out of their day to participate in person at a panel meeting in Alberta or BC.

The report includes verbatim comments and general themes heard during the public engagement period. It also identifies six high-level questions that the panel heard repeatedly and commends to the Government of Canada for serious consideration.

The six questions are as follows:

  1. Can construction of a new Trans Mountain Pipeline be reconciled with Canada’s climate change commitments?
  2. In the absence of a comprehensive national energy strategy, how can policy-makers effectively assess projects such as the Trans Mountain Pipeline?
  3. How might Cabinet square approval of the Trans Mountain Pipeline with its commitment to reconciliation with First Nations and to the UNDRIP principles of “free, prior, and informed consent?”
  4. Given the changed economic and political circumstances, the perceived flaws in the NEB process, and also the criticism of the Ministerial Panel’s own review, how can Canada be confident in its assessment of the project’s economic rewards and risks?
  5. If approved, what route would best serve aquifer, municipal, aquatic and marine safety?
  6. How does federal policy define the terms “social licence” and “Canadian public interest” and their inter-relationships?

CRED can answer some of these questions. No, it is not compatible to build the Kinder Morgan pipeline and still meet Canada’s climate commitments.

In addition, CRED finds that the pipeline would create few jobs, minimal tax revenues and would not impact energy security. The Kinder Morgan pipeline also comes with the additional concerns (and costs) of an oil spill. Beyond the direct cleanup costs, the indirect economic impacts would be long lasting, impacting sectors from tourism to agriculture.

Look for our specific findings to be published in the coming days.

CRED events and news, Kinder Morgan news

A Key Moment for the Kinder Morgan Pipeline

kinder-morgan-protest

Posted by

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?

BC jobs WP banner collage

Posted by

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

federal budget 2016

Posted by

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.