An Electrification Plan for Northwest BC: The Way Forward

“An Electrification Plan For Northwest BC: The Way Forward” is a series of six blogs to be posted on a weekly basis throughout April and May.

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Part 1: Electrification: The Ambitious Climate Policy BC Needs

INTRODUCTION

First Nations, BC, and Canada are aligned in the vision of driving new investment in clean electricity. This alignment is evident in the mandate letters from BC’s Premier, Canada’s Prime Minister, and from the Reconciliation Agreements signed by First Nations.

This vision goes hand in hand with the BC Government’s goal of achieving economic growth while also meeting greenhouse gas (“GHG”) reduction targets and its share of Canada’s national climate obligations. Accomplishing these mandates can be supported with a comprehensive electrification plan in Northwest BC, a region rich in both industrial development opportunities and the potential to lead in realizing new climate-action policies and a low-carbon future.

Through its December 2018 release of the CleanBC plan, BC has signalled its intention to pursue a strategy of electrification as means of meeting its economic and environmental goals. Unfortunately, CleanBC falls short from the perspective of actionable policy, leaving many questions still unanswered.

The result: Government has correctly identified a strategic path forward, but lacks a clear and defined process to achieve meaningful electrification. The approach so far is defined by a failure of current policies to pay the costs and create the framework for electrification. Instead, Government needs to quickly identify a policy strategy that will enable the province to achieve its economic and environmental targets. Climate policy in this domain must be ambitious and able to invoke real change. It must also be policy that works for, and meaningfully includes, BC’s First Nations communities.

An Electrification Plan for Northwest British Columbia (“the Plan”), as laid out in the following series of posts, explores how it is possible to realize First Nations reconciliation, efficient regional growth, and carbon reduction objectives through a set of four related policy actions. Moving forward, BC should establish the mechanisms necessary to investigate, develop, and (where viable) implement the policies that will be discussed in this series in order to institute the comprehensive policy development necessary to achieve meaningful electrification in the province.

WHY ELECTRIFICATION?

In order to meet its economic and environmental goals, as well as its share of Canada’s national climate obligations, BC is in need of ambitious change. For a number of years, the province has held out its GHG mitigation targets and associated fiscal and regulatory programs as vehicles for meeting its climate targets. These programs, installed under the previous Liberal government, have been largely preserved and carried forward by the current NDP government.

These policies, however, present a fundamental problem: the targets are province-wide, so no individual emitter has a defined mandate to contribute to them. Given this, the Province has relied on taxes (such as the carbon tax, and other obligations on LNG producers) and incentives (like the proposed clean investment fund) to induce the needed corporate behaviour.

The problem: the signals generated from taxes and incentives are demonstrably too weak and too diverse. For example, the BC Carbon Tax, even looking forward, will only send a $50/tCO2e price signal. Comparatively, the true cost of industrial carbon mitigation is at least $150 per tonne, and likely higher. Given this discordance in value, these signals as they exist in practice today should not be expected to materially steer investment behaviour toward electrified industry, buildings, and transportation.

However, national and international competitiveness puts a practical limit on the carbon tax. This means that sending strong-enough price signals in that manner is likely not feasible. Similarly, proposed programs such as BC’s incentive program for large emitters is not likely to incent material behavioural change, since this merely offsets a portion of the tax rather than actually strengthening the underlying price signal. Clearly more ambitious change is needed. Our GHG targets will simply not be met without a more broadly-based plan. And our current trajectory of GHG emissions is not an acceptable outcome to many British Columbians, including First Nations.

Given these realities, we believe the most practical path to achieving climate goals is through an electrification mandate: a system where individual plants (major emitters) are impressed with a duty to contribute to GHG targets.

At the same time, however, we recognize that simply imposing the mandate will not lead to the achievement of our goals. In BC, large industrial facilities seeking electric service face inhibitive supply and price obstacles. To impose a constraint on industry that industry could not meet would be to invite one of two unacceptable outcomes. Industry would leave BC, or industry would compel government to back down.

We also recognize that the cost burdens of the mandate cannot fall on industry alone. This is a by-product of BC’s position in a world of economic competition where other major jurisdictions have far more lenient environmental standards. Inevitably some social cost is required for the parallel objectives of economic development and environmental protection to be met. 

Electrification represents an opportunity to incite the much-needed change to reach BC’s GHG targets.  Our Plan recognizes the challenging problems that accompany a broadly-based electrification goal, and provides creative solutions. The Plan will ensure that industry is provided with the supply-side partners they require in order to make electrification of their plants and equipment viable. Similarly, the Plan challenges Government, First Nations, and industry to find the lowest cost, most efficient, and fairest way to fund and distribute the inevitable social costs.

Further, electrification represents a critical opportunity to install climate policies that work for First Nations. If BC were to allow heavily carbon-emitting plants to proceed as usual, it would be exacerbating its history of excluding First Nations from the benefits of the industry that surrounds them, while imposing on them disproportionately the environmental costs of that development.

The four policy actions to be presented in this Plan are consistent with the principles of environmental justice. Such principles recognize that industrial development must be conditioned by material GHG reductions. The suggested policies in the Plan take the critical step of recognizing regional, rural, and indigenous inequalities, and the interests of other low-income populations.

Local communities in BC’s Northwest are under-serviced or disconnected from the grid entirely, stymieing potential economic development in First Nations communities. With the Plan, industry is offered a viable way to contribute to GHG reductions in a manner that is compatible with the concept of environmental justice and that contributes to social and economic equality, to the benefit of communities in the Northwest.

This element is critical: First Nations communities have a history of supporting policies that protect the local and global environment, while rejecting the conclusion that their prescient concern should saddle them with the bill. The Plan presents an opportunity to garner First Nations support by achieving this, while also putting communities in the position to benefit from future economic opportunity.

With CleanBC, Government has identified electrification as a means of clean growth moving forward. Unfortunately, Government has yet to provide a comprehensive plan for how electrification should work in BC. Our Plan, as set out through the policies in this series, uses electrification as a vehicle to realize public goods – First Nations reconciliation, GHG reductions and economic development. Our plan represents a strategy of clean growth, one that will lead to realizing a better British Columbia.