The Ontario Energy Board has rejected a request to immediately investigate Ontario Power Generation (OPG) for selling $5.5 million in clean energy credits to unidentified customers outside of the province.

The energy board is tasked with regulating the province’s electricity industry in the interest of ratepayers. In May, the non-governmental organization Environmental Defence asked the board to look into Ontario Power Generation’s sale of clean energy credits, which it has been doing without government oversight. The power company has declined to identify who purchased the credits or reveal any detailed information about the sales.

In May, Ontario Power Generation said the $5.5 million revenue it earned from these sales was immaterial. In an August 25 letter to Environmental Defence lawyers it published online, the energy board agreed. Mary Ellen Beninger, a spokesperson for the board, told The Narwhal that for a company the size of Ontario Power Generation, a review would be more likely for transactions of at least $10 million.

Each clean energy credit represents one megawatt-hour of electricity from carbon-free sources that businesses and consumers can buy to meet pollution reduction targets or commitments. Environmental Defence called for an investigation into whether it was legitimate for the power generator to profit from selling what the conservation group believes to be public assets. Environmental Defence also asked the board to review how the company used the revenue.  

Other environmental organizations and the City of Ottawa wanted an investigation as well. In a separate letter to the board, Ottawa’s environment manager, Mike Fletcher, said the city was concerned these sales were “removing the environmental attributes from the electricity our community consumes” and increasing emissions from electricity.   

In her letter last week, the board’s chief commissioner, Lynne Anderson, wrote that it would be “premature” for her organization to explore Ontario Power Generation’s sale of emissions credits right now because the provincial government has decided to explore creating a registry.

Ontario currently has no official, centralized registry to sell clean energy credits. In May, The Narwhal broke the story that Ontario Power Generation had been selling credits outside of the province regardless. 

Soon after, in June 2022, Energy Minister Todd Smith instructed the Independent Electricity Systems Operator to look into creating a voluntary registry. It would legitimize sales of clean energy credits by all of the energy generators in the province and create a public accounting system. Ontario Power Generation, which is the province’s largest generator, has agreed to be regulated under such a system if it comes into place. 

The government’s public consultation on this system, which it is obligated to do by law, began in August and is open for comments until September 16. 

In her letter, Anderson said the Ontario Energy Board will monitor the government’s consultations, which she believes will be adequate for collecting public comment on sales like the ones made by the power generator. She said the issue of how revenue from such sales should be used is also within the scope of the government’s consultation, as is the issue of how clean energy credit sales should be reported, tracked and used.

Beninger told The Narwhal “there may be other matters for the OEB to consider” once the government’s consultations are over. “For example, there may be value in a [clean energy credit] reporting requirement for utilities,” she wrote in an email.

On Friday, the energy board released a series of questions it had posed to Ontario Power Generation after the calls for an investigation, with responses. Sent in July, the power generator’s answers were echoed in the energy board’s recent letter — Ontario Power Generation stated that the government consultations precluded decisions about how it would use the $5.5 million in existing revenue and how it would sell credits or manage revenue in the future. The generator also told the board that if the government did not provide any clear direction, it would propose its own regulatory process for approval.

“Such a mechanism would only address future revenues,” Ontario Power Generation told the board.

Beninger did not directly answer The Narwhal’s questions about whether it has a responsibility to ratepayers to ensure that these sales did not undermine Ontario businesses and municipalities which are calculating their own output of greenhouse gases based on an assumption that the province has a virtually emissions-free grid.

Anderson wrote that the board considered establishing “a new deferral or variance account to track any OPG revenue from the sale of [clean energy credits], but has determined that doing so at this time is not warranted.” 

“Again, these are matters best considered after completion of the Government’s consultation,” Anderson wrote.

Palmer Lockridge, a spokesperson for Energy Minister Todd Smith, told The Narwhal the minister is aware of the board’s decision. He said the proposal for the registry would allow the minister “to direct how revenues from [clean energy credits] for Ontario Power Generation should be used, including the future development of new clean energy in the province, and returning value to ratepayers.”

Kent Elson, a lawyer for Environmental Defence, said he hopes Ontario’s auditor general will investigate these sales. “We have not seen a commitment from OPG to stop or hold off on these sales,” Elson said. “That’s really concerning.”

“These continued sales could be making things worse by giving companies an excuse to keep on polluting,” Elson said.

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Ontario Power Generation made $5.5 million selling clean energy credits in a private revenue-making scheme, according to a regulatory document obtained by The Narwhal.

The $5.5 million figure was listed in documents filed with the Ontario Energy Board (OEB) in May, the day after The Narwhal disclosed the sales of the unregulated credits. At the time, the power company hadn’t publicly announced its credit sales. The energy board regulates the province’s electricity industry and is currently investigating Ontario Power Generation’s revenue-making scheme.

In the May letter, Ontario Power Generation deemed the $5.5 million sales figure “immaterial revenues.” Although it confirmed the amount to The Narwhal, the company has been secretive about its program, declining to answer questions about how it used the money, who purchased the credits and whether it was still in the business of selling the credits to customers. 

The absence of immediate answers appears to show how the company can operate without adequate oversight, and profit from province’s largely clean grid at the expense of Ontarians.

Clean energy credits are guarantees that one megawatt-hour of electricity comes from carbon-free sources like hydro, wind, solar and nuclear. Purchasing them allows businesses and consumers to claim that a certain amount of their energy comes from green sources, thus satisfying their environmental and sustainability commitments. Previously, the company told The Narwhal that its credits are based on its production of hydroelectricity.

Ontario has no official, centralized registry to track purchases of clean energy credits for electricity. The registry Ontario Power Generation has created is similar to voluntary registries that exist in more than a half-dozen U.S. states including Ohio, Pennsylvania, Illinois, Indiana and Wisconsin.

Kent Elson — a lawyer who represents the non-governmental organization Environmental Defence at Ontario Energy Board hearings and who first asked the board to investigate the sales  — told the board that Ontario Power Generation’s private credit sales could equate to approximately 6 million megawatt hours of clean energy or almost 10 per cent of the generator’s energy output. 

Ontario’s electricity grid is 94 per cent emissions free — a fact widely publicized by the power generator and the government for years. This fact forms the basis for all the emissions accounting done by Ontario municipalities and businesses. But regulators are failing to monitor whether credits sold by Ontario Power Generation to markets outside the province represent emissions-free energy that’s also being counted towards sustainability goals by locals — whether the credits are actually offsetting pollution from the buyers, or whether these buyers are paying for hot air. 

An Ontario Power Generation executive previously told The Narwhal in an interview that there is no double-counting of these credits, noting the sales are “tracked and monitored carefully” through third-party brokerage systems. 

In its May 6 letter to the energy board, Ontario Power Generation said revenue from these sales “will either flow back to ratepayers or be used to support future clean energy projects.” No evidence has been provided to The Narwhal to show this has occurred.

“The OEB is carefully considering this matter and we will be prepared to comment further at the end of our process,” Mary Ellen Beninger, a spokesperson for the board, said in an email. Beninger did not specify what the timeline of the investigation is. 

While the investigation continues, Ontario’s re-elected Progressive Conservative government is pushing forward with its plan to create a voluntary clean energy credit registry that would legitimize these sales and create a public accounting system for them. Ontario Power Generation has agreed to track its sales in this registry once it exists.

In August, Ontario posted the proposal for the registry for public feedback, as it is legally required to do. Its proposal outlines that the registry would require generators to register to certify their clean energy production, after which each sale would be tracked and each credit retired afterwards, so that environmental credits are not resold, or counted more than once. The province’s goal is to monetize Ontario’s existing emissions-free energy while also incentivizing new clean energy generation. 

In an email to The Narwhal, Palmer Lockridge, a spokesperson for Ontario’s energy minister, Todd Smith, said this type of registry is “a proven tool, used across North America and Europe, which would allow businesses to demonstrate that their electricity has been sourced from a non-emitting resource, while supporting the future development of new clean energy generation in the province and providing value to ratepayers.”

“Establishing a common registry to track the creation, trading, and retirement of all [clean energy credits] produced and consumed in Ontario will ensure transparency, accountability and preserve the cleanliness of Ontario’s electricity supply,” Lockridge wrote. 

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Ontario’s power grid is the province’s pride and joy. 

It is among the cleanest in the world and the tool by which Ontario achieves all its climate goals. If your power is largely emissions free, everything you do with it is also counted as largely emissions free. 

But Ontario’s energy supply is about to become really, really complicated. The province’s thirst for clean energy to power a growing clean economy and electric transportation industry is quickly outpacing supply. By 2025, Ontario will be temporarily without a significant amount of its nuclear energy and so far plans to replace it with less clean, more controversial natural gas. Alternative energy sources and solutions are sparse. 

Meanwhile, the climate emergency poses physical threats to the power grid too. In May, hundreds of thousands of Ontario residents were without power for days after a deadly derecho storm. Electricity distribution and transmission infrastructure was destroyed by hurricane-like winds, and scientists say this type of extreme weather event will become more frequent. 

The Ford government doesn’t have a plan for all this — yet. Until that happens, here’s what you need to know about Ontario’s power grid and the struggles ahead to keep it clean.

How is Ontario’s electricity system organized? 

Ontario’s power industry is complicated and layered. Generators like the Crown corporation Ontario Power Generation, which supplies 50 per cent of the province’s electricity, produce the power supply. Transmitters like Hydro One transport power to towns and cities across the province, while local distributors like Toronto Hydro and Hydro Ottawa ensure the power reaches households, schools and businesses. Meanwhile, the Independent Electricity Systems Operator monitors and balances the supply and demand of the entire system. 

The industry is regulated by the Ontario Energy Board, which is meant to ensure natural gas and electricity companies follow the rules and don’t abuse customers. 

Energy policy, though, is centrally planned and managed by the Ministry of Energy. 

How clean is Ontario’s power?

It’s pretty clean — 94 per cent to be exact, meaning only six per cent of our electricity supply emits carbon dioxide that contributes to global warming. In total, electricity generation makes up less than three per cent of Ontario’s greenhouse gas emissions.

That’s largely because Ontario decided to eliminate coal-fired power plants, which in 2003 accounted for a quarter of generating capacity. It achieved this goal in 2014, making it the first jurisdiction in North America to do so. To date, this decision is lauded as the single largest emissions reduction measure across the world. 

Since 2005, emissions from electricity generation have plummeted by 90 per cent, equivalent to taking over 9.4 million cars in total off the road. 

As of March 2022, Ontario’s electricity supply mix was made up of 34 per cent nuclear, 28 per cent natural gas, 23 per cent hydro, 13 per cent wind, one per cent solar and less than one per cent biofuel — though not all used to their full capacity. For example, 60 per cent of Ontario’s energy comes from nuclear power. 

This interactive map from the Independent Electricity Systems Operator shows where these many sources of electricity are located across the province. 

How thirsty is Ontario for clean electricity?

Very. 

According to the Independent Electricity Systems Operator’s 2021 outlook, “Ontario is entering a period of increasing electricity demand.” The operator’s forecasts show that electricity demand will grow an average of 1.7 per cent a year until 2042. A significant portion of this increased demand is coming from political and industrial commitments to electrify transportation, including transit and trucking. 

Major demand increases are also coming from the agriculture sector, driven by an expanding greenhouse industry, as well as steel and auto industries that are being urged to decarbonize their emissions-heavy operations.We need a lot more supply if we want to be prepared for an emissions-free electric future. The operator found that energy shortfalls will begin as early as 2026 and grow substantially over the next 20 years if new non-emitting sources of electricity aren’t found. 

Why will demand for electricity outgrow Ontario’s supply?

Poor planning — and Doug Ford’s government’s erasure of what clean energy plans did exist in the province. 

The Independent Electricity Systems Operator projects that current electricity capacity can meet the province’s energy needs until the mid-2030s. 

This shortfall is not a surprise. The previous Liberal government tried to plan ahead by signing contracts with wind and solar energy companies. But when the Progressive Conservatives came to power in 2018, they cancelled 758 renewable energy contracts worth $231 million, as well as a $100 million wind farm and a number of energy conservation schemes that could have reduced demand. 

Ontario also should have invested properly in energy storage technology, which is needed to make wind and solar power reliable no matter the weather.

We could have had more choices to fill this supply gap. Instead, we’re out of time. Industry experts say the system operator’s mid-2030s projection is generous and that it will change drastically — in large part because of the changes to Ontario’s nuclear generating stations. 

What’s happening to Ontario’s nuclear facilities?

Ontario’s decarbonized grid relies largely on nuclear power, which for a long time provided an energy surplus. The problem is that the province’s three nuclear reactors are old and in need of some major TLC. The Bruce and Darlington nuclear generating stations are already in decade-long refurbishment processes that will hopefully allow them to keep operating for another 40 years, but mean they will operate at greatly reduced capacity until 2033. At least one component of the Darlington refurbishment was delayed and over budget, according to reporting by Global News. But Ontario Power Generation said the entire refurbishment remains on schedule to be completed by 2026 within its overall $12.8 billion budget.

Pickering Nuclear Generating Station — a five-decade-old facility that provides 14 per cent of the province’s annual power supply and generates almost 60 per cent of the province’s electricity — was due to be shut down in 2024. The timeline was extended by Ford by a year when he first got elected in 2018. On September 29, the Ford government announced a proposal to extend this by another year to “support electrification and the incredible economic growth that our province is experiencing right now,” Energy Minister Todd Smith said at a press conference, where he was surrounded by some of the dozens of people who work at the Pickering plant. This would require the approval of the Canadian Nuclear Safety Commission. 

The second extension comes just a month after Smith said there were no plans to extend the plant’s life. Any further operation beyond 2026 would require a full refurbishment of the plan due to aging infrastructure, Smith said, adding he has asked Ontario Power Generation to run a feasibility study to explore this over the next year.

Several people who work in and study Ontario’s energy industry told The Narwhal that any further extension of Pickering’s operation would be a Band-aid solution to long-term planning failures — and an expensive one at tha. According to a 2020 document filed by Ontario Power Generation at the Ontario Energy Board, the station has the second highest operating costs of North America’s 63 nuclear stations. 

“We are in this situation as a result of the province very successfully painting itself into a corner in terms of electricity supply options,” said Mark Winfield, a York University professor in the faculty of environmental and urban change. He cited the Ford government’s axing of efficiency and renewable programs, and its “refusing to talk to Quebec about potential imports.” 

Several times during a Sept. 29 press conference, Smith said a one-year extension would guarantee Ontarians have “the power we need” until 2026. The energy minister didn’t answer questions about what specific steps will be taken to guarantee a robust and clean energy supply after that timeline. 

“The Pickering extension is a get-out-of-jail-free card,” one energy industry official who wasn’t authorized to speak publicly told The Narwhal. “It will buy [the government] some time. Hopefully they won’t squander it.” 

How else can Ontario meet increased electricity demand?

The easiest option available is to let the natural gas taps run.

The Independent Electricity Systems Operator is looking to boost natural gas supply in the short term. At the moment, Ontario’s natural gas plants operate 60 per cent of the time, but they will run at full capacity by 2033. The operator recently announced four new contracts for natural gas plants. Contradictorily,  it will also be releasing its reports on the possibility of a moratorium on new gas generation and a plan to get to zero emissions in the electricity sector this fall.

Won’t increasing natural gas supply increase Ontario’s emissions?

Yup, and by an extremely concerning amount. 

The Independent Electricity Systems Operator projects that emissions from the grid will increase by 375 per cent by 2030 and by more than 600 per cent by 2040. This makes Ontario the only Canadian province “that seems to be planning on major increases in its electricity-related emissions,” according to an op-ed in the Hamilton Spectator last December by Winfield and Colleen Kaiser, a postdoctoral fellow at the University of Ottawa. 

This solution is not without controversy. More than 30 Ontario municipalities that are home to 60 per cent of the provincial population have passed resolutions urging Queen’s Park to phase out natural gas plants in order to fight the climate crisis. 

Last year, Energy Minister Todd Smith asked the operator to study whether this phase-out was possible by 2030. 

The operator warned it wasn’t, and that such a rushed timeline would lead to blackouts and higher electricity bills. However, critics said the operator’s conclusion lacked cost-effective, climate-conscious alternative pathways. 

Can Ontario increase energy supply without increasing emissions?

According to the Ontario Clean Air Alliance, there are a number of things the province could try. These include banning gas-fired electricity exports to the United States. The group also suggested purchasing more solar and wind power and expanding transmission lines to Quebec in order to triple the purchase of its hydropower.

The alliance also thinks electric vehicle infrastructure should include bi-directional chargers, which would allow vehicles to be plugged in and used like generators on houses, including during blackouts. Electric vehicles are only as clean as their power source, but using their batteries to smooth out fluctuations on the grid could reduce the need to fire up gas plants when other, cleaner sources of energy are maxed out.

Multiple reports by independent energy associations and research associations have also urged the Ontario government to develop detailed, long-term power system plans that prioritize the need to decarbonize the grid. 

The energy industry seems to also be searching for innovative solutions. In March, the Ontario Energy Board and the Independent Electricity Systems Operator said they have committed $37 million to pilot projects that will help communities store and produce energy locally. 

Why should I care about all this? 

Well, electricity prices are already rising because of the supply crunch, emissions from the grid are on the rise and Ontario doesn’t have a long-term plan to meet our energy needs. 

Despite the Progressive Conservatives’ mass shutdown of solar and wind projects, Ford confusingly said during last June’s election that he “won’t be happy” until the grid is 100 per cent emissions free. He’s likely to be sad for a long while then, as Ontario will have to first identify new sources of clean energy for our houses, businesses, schools, hospitals and vehicles, and then build or secure them. 

Meanwhile, the federal government is urging provinces to meet a new net-zero clean electricity standard by 2035 — a decision that will have a huge impact on the future of Ontario’s power generation.

If Ontario’s power grid is projected to become less clean, that will mean the emissions-reduction efforts of municipalities, residents, businesses and more won’t count as much towards our goals — or towards a healthier climate. What happens in the energy industry will impact all of us.

Updated July 22, 2022, at 4:28 p.m. ET: This article was updated to correct a sentence summarizing a 2017 report by Global News regarding the Darlington refurbishment. The Global News report stated that one component of the project was delayed and over budget, however the news report did not state that the entire project was delayed and over budget. The article was also updated to add an additional statement from Ontario Power Generation explaining that it says the overall project is on schedule to be completed by 2026 and that it would be within its $12.8 billion budget.

Updated on September 29, 2022 at 3:46 p.m. ET: This story has been updated to include the Ontario government’s decision to seek permission to extend the life of the Pickering nuclear generating station, as well as the Independent Electricity System Operator’s natural gas acquisitions and studies. 

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What do electricity prices have in common with the rain? Politicians don’t control either. However, hearing the Ontario Conservatives and NDPs slamming the Liberals this week for rising electricity costs and pretending they somehow have the answer, you’d hardly know it. But the fact is, any politician who promises low electricity rates is selling a lie — one that all of us end up paying for sooner or later.

Ontario’s electricity woes stem back to the late 1970s and, over the past 40 odd years, all three parties have had a hand in them. It started with the building of the Darlington nuclear station, which the Bill Davis Tories approved and the David Peterson Liberals saw through to completion — 10 years late and almost $12 billion over budget. No one could afford to pay the real cost of Darlington, so Ontarians carried that debt for the next three decades.

Over that time, electricity — like cars, and coffee, and just about everything else we buy — didn’t get cheaper, it got more expensive. And when the recession hit in 1993, and electricity prices were rising, people got angry. The party in power at that time, the NDP, did the popular thing; it froze electricity rates, halting investment in the power system.

Electricity became a wedge issue yet again in the election that followed. This time it was Conservatives elected on a promise of cheaper electricity through the power of the free market. They broke up Ontario Hydro and created Hydro One and Ontario Power Generation to unleash competition.

But instead of prices going down, they skyrocketed — increasing a-250-fold at one point. Why? Years of artificially suppressed electricity prices, massive nuclear debts, and U.S. trading partners that paid far more for electricity than Ontario. It turned out that no one wanted to pay the “fair market price” of electricity after all. And, just as the NDP before them, Conservatives quickly shut down competition and froze electricity rates.

However, they didn’t do it quickly enough to win the next election, which was, again, all about electricity prices. The year was 2003, and the McGuinty Liberals had inherited a seriously broken system. Not a single power plant had been built in Ontario in 10 years, and blackouts were forecast for the coming summer. So the government had a choice: build infrastructure and raise prices, or do nothing and risk the political fallout of failing to maintain basic electricity service to the province. They built. Costs leapt. And the lights stayed on

Cutting Through The Spin on Ontario’s Electricity Prices https://t.co/Yv01pUX6sv #cdnpoli #onpoli @brucelourie pic.twitter.com/yDbSqvFrIm

— DeSmog Canada (@DeSmogCanada) February 28, 2017

Once the reliability was stabilized and the electricity planning function restored, the government began the challenging process of ramping down the aging and polluting coal fleet and augmenting the gas plant investments with hydro upgrades, nuclear refurbishments and renewable power. Huge investments in distribution and transmission infrastructure continued apace.

Billions of dollars were spent over a 10-year period to make up for more than 20 years of neglect and ill-informed policy decisions by all three political parties. And that is the long answer to why Ontario’s electricity rates have risen over the past decade.

Here’s the short answer: electricity requires infrastructure, infrastructure costs are tied to commodities and labour, and these costs go up over time. What people pay for electricity in any given region is a product of geographic luck (the availability of cheap hydro for example) and having rare — but possible — infrastructure foresight (the ability to plan effectively for the electricity of the future).

No politician can snap their fingers and make electricity instantaneously cheaper — at least not without making it simultaneously more expensive for all of us down the road.

That isn’t to say we can’t look after those who are clearly and legitimately harmed by price increases — specifically rural Ontarians with limited options. Last week, the government passed a law preventing electricity disconnects for Ontarians in winter. That is the right thing to do and it is supported by all parties — a rare moment of non-partisan sanity, in what has been an insanely charged political discussion.

But more needs to be done, especially to make sure Ontarians are in safe and efficient homes where electricity isn’t being wasted. We should hold all of our politicians to account for their past records and future claims regarding electricity — including how they will deliver it in a way that is clean and consistent and fair. But we should never trust a politician who says they will “make electricity cheap again.” It might win them the election, but it won’t do us any good at all.

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Two new reports prepared for the U.K. and the U.S. militaries suggest that the consequences of climate change are immense in scope and will create severe, sustained challenges for the world and its growing population.

The fifth edition of Global Strategic Trends, prepared for the U.K. Ministry of Defence, says climate change will likely create a lengthy list of defence and security implications in the next three decades.

Key predictions include more sexual violence in war zones, failed and failing cities posing major security repercussions for nations and more extreme weather events causing widespread damage and loss of life. The report also raised the prospect of the increased use of nuclear energy increasing the likelihood of fissile material being obtained by non-state actors,

Written for military and political leaders, the 172-page report is stark, frightening and pulls no punches.

“In the process of identifying threats, challenges and defence and security implications for policy- and decision-makers, there may be a tendency for the document to seem rather negative in its outlook. This is an inevitable consequence of its purpose. There is of course scope for human ingenuity to have a significant impact on the future, and hence there are considerable grounds for optimism.”

The second part of the report examines what 2045 might look like in eight geographic areas, as well as in space. It is a world in which the estimated population of between 8.3 and 10.4 billion people is putting increasing demands on the global environment while many nations spend larger and larger amounts on military budgets.

Looking at North America, the report notes that climate change is likely to open up summer shipping routes in the Arctic and new areas for extracting minerals and hydrocarbons.

“However, it is also likely to cause significant harm through heat waves, droughts, and flooding across the region,” the report said. “Northern America’s economic outlook is positive, boosted by newly accessible energy reserves, and it is expected to integrate ever-more closely with the global economy.”

Sub-Saharan Africa, however, “will almost certainly remain a region of significant political and economic differences by 2045,” the report said, even though the region’s economy could grow, depending on country, available infrastructure and the presence of political stability.

U.S. Military Infrastructure Vulnerable

The other study, written for the U.S. military, focused on potential threats to military assets from global warming, including rising temperatures, changing precipitation patterns, more storms, higher sea levels and higher ocean temperatures.

Referring to “mission vulnerabilities” caused by climate change, the 63-page report by the United States Government Accountability Office (PDF) found that the Department of Defence is already collecting data on how its installations around the world may be affected in the future in terms of readiness and economic costs.

In a note to federal politicians, the report said that the Department Of Defence manages a global real-estate portfolio that includes more than 555,000 facilities and 28 million acres of land with a replacement value of close to $850 billion.

“Within the United States, the department’s extensive infrastructure of bases and training ranges, which is critical to maintaining military readiness, extends across all regions, as well as Alaska and Hawaii. This infrastructure is vulnerable to the potential impacts of climate change,” said the report, Climate Change Adaptation.

The report also urged the Pentagon to more effectively and rapidly plan for changes required because of global warming.

Photo: U.S. Navy

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Major industrial power users in British Columbia fear that if the proposed Site C dam becomes a reality, rate hikes could put mills and mines out of business while saddling taxpayers with a costly white elephant and ballooning BC Hydro debt.

A decision on the $7.9 billion plan to build a third hydroelectric dam on the Peace River will be made by the federal and provincial governments this fall.

Economic questions about the mega-project were raised by last month’s joint review panel report, which noted the dam would likely be “the largest provincial public expenditure of the next 20 years.”

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The panel, which did not come out for or against the project, found that, based on cost comparisons provided by BC Hydro, Site C would be the most economical way to provide new power — but said it could not measure the true cost or need and recommended the B.C. Utilities Commission should look at it, an idea immediately dismissed by Energy Minister Bill Bennett. (The commission turned down the Site C project in the early ’80s.)

Strong opposition to Site C is now coming from the unlikely direction of the Association of Major Power Customers of B.C., an organization representing about 20 of the largest employers and industrial customers in the province.

“We have absolutely no confidence that this is the least cost plan,” association executive director Richard Stout told DeSmog Canada.

“It’s not the right project right now”

Major industrial power users in B.C. have seen a 50 per cent increase in rates over the last five years and are looking at another 50 per cent over the next five years, he said.

“It is unusual for us to criticize a government of this stripe, but BC Hydro has been out of control for a good 10 years,” Stout said, pointing to almost $5-billion in deferred accounts.

“Any other business would have been declared bankrupt by now,” he said.

Site C will take a decade to build and, with changing markets and a burgeoning natural gas industry causing a surplus of generating capacity in North America, it is almost impossible to accurately predict demand and prices, Stout said.

“All we know is the original load forecasts are going to be wrong,” he said. “It’s not the right project right now.”

Craig Thomson, energy and environment supervisor at Canfor Taylor pulp mill told DeSmog Canada that industry in B.C. was built with a foundation of low power rates, but in the last five years that has changed and Site C would be the final straw.

“I think the cost of hydro-electric dam construction is so astronomical that no one will ever do it again and we’re going to have this huge white elephant,” he said.

“Potentially it’s going to drive our industry out of business.”

B.C.’s natural gas hypocrisy

Doubts are growing about cost comparisons made by BC Hydro, which didn’t include the use of gas power because the 2010 Clean Energy Act demands that 93 per cent of the province’s energy needs be met by clean, renewable power.

The act effectively eliminated the use of gas turbines and sent the gas-fired Burrard Thermal generating station into early retirement.

But the province has now handed a Clean Energy Act exemption to the liquefied natural gas (LNG) industry, a move that allows gas plants to meet their massive power needs with natural gas. Meantime, BC Hydro is prevented from using natural gas even as a backup to renewables.

“It’s really hypocritical to allow them [LNG facilities] to burn gas,” Merran Smith at Clean Energy Canada told DeSmog Canada. “The carbon emissions, as well as the air pollution, are inconsistent with the province’s goals.”

“Gas is a fossil fuel. It may be cleaner than coal or oil, but it still has a heavy carbon footprint.”

Should gas turbines be allowed for backup power?

Like many others, Stout believes alternatives to Site C should be considered, including the use of gas turbines as an intermittent source of power — something that would first need the government to change the Clean Energy Act.

Thomson is looking at new technologies coming on stream and, in the meantime, Burrard Thermal, with a similar capacity to Site C, could provide sufficient intermittent power, he suggested.

“Electricity is 32 per cent of our operating cost and, if it goes up and up, someone is going to say the business is not viable and the doors will close,” he warned.

Energy economics expert Marvin Shaffer, adjunct professor at Simon Fraser University, believes Burrard Thermal should never have been eliminated as a source of backup energy.

“I’m not suggesting that an old, relatively inefficient plant like Burrard should be used as a base load facility. What Burrard can do is provide a very cost-effective backup to the hydro system as well as back-up peak capacity exactly where it might be required,” Shaffer said.

Burrard Thermal generating station was sent into early retirement with the introduction of the 2010 Clean Energy Act. Credit: Niall Williams via Flickr.

With Burrard in place, B.C. would have no shortfall of energy until 2033 and, even without Burrard, strategically placed gas thermal plants could supply low cost energy as needed, he said.

Faced with Site C as the alternative to intermittently using gas turbines, even Joe Foy of the Wilderness Committee comes down on the side of occasional gas use.

“It seems a better solution than drowning 100 kilometres of farmland when you don’t even need that power for 300 days of the year,” he said.

Oxford study: Dams routinely come in 90% over budget

Many also have concerns that, when costs such as transmission lines are factored in, Site C’s cost will soar above $7.9 billion.

Fears that costs will run amuck are backed by an Oxford University study of power dams that found construction costs of large dams are, on average, more than 90 per cent higher than their budgets.

Mark Winfield, associate professor in the environmental studies faculty at York University, sees parallels between Site C and costly nuclear power plant plans in Ontario.

“Large hydro projects like Site C and nuclear power plant construction or refurbishment reflect a focus on large, centralized, high-cost, high-risk, high-environmental impact, long-lived generating infrastructure,” he said.

That limits opportunities for the system to adapt to market changes and sets the focus on only one path, Winfield said.

“In both cases there are significant uncertainties about future demand and, therefore, substantial risk of making major investments in projects which may turn out not to be needed or which are overtaken by newer, better technologies,” he said.

Site C’s legacy: cheap power or wealth destruction?

Dan Potts, former executive director of the Association of Major Power Customers of B.C., believes the lasting legacy of Site C would be wealth destruction.

“The huge cost will rob the province of valuable resources that could be used to deliver other needed government services as well as burden the B.C. economy with debt and high electric power rates that will sap our competitiveness,” he said.

Times have changed from when previous dams were built on the Peace and Columbia Rivers, said Potts, who has calculated that gas prices would have to almost quadruple before power from Site C would be economically viable for export.

“B.C. Hydro has filed information that the cost of electric power from Site C will be in the range of $100 per megawatt hour. Current market prices are in the range of $30 per megawatt hour. If Site C were now operational, the market value of the power produced would be $350 million per year less than the cost,” Potts said.

Site C will lose $800 million in first four years: report

The possibility of exporting excess power to help fund the dam was discounted by the joint review panel, which predicted that, unless prices changed radically, B.C. Hydro operations would lose $800-million in the first four years of operations:

These losses would come home to B.C. ratepayers in one way or another. B.C. Hydro’s expectation is that it might sell Site C surpluses for only about one-third of costs, leaving B.C. ratepayers to pay for the rest.

But the panel also says that Site C, after an initial burst of expenditure, would lock in low rates for decades and produce fewer greenhouse gas emissions than other sources.

Ignoring the Clean Energy Act is not an option for BC Hydro and there is no doubt Site C compares favourably to other clean energy costs, said Hydro spokesman Dave Conway. In comparison to Site C power at $100 per megawatt hour, new generation from wind or micro-hydro comes in at $128 per megawatt hour, he said.

However, the panel noted that geothermal energy would cost about the same as Site C power — and as a firm source of power could present a viable alternative to the dam. Geothermal could be built incrementally to meet demand, eliminating the early-year losses of Site C, the panel noted.

Even without Site C, customers are looking at a 28 per cent increase in rates over the next five years, but British Columbians should bear in mind that they are paying one of the four lowest energy rates in North America, Conway said.

However, Foy would like all British Columbians to consider what else could be done with almost $8-billion.

“Maybe better education for kids or health care?” he asked.

“If we spend $8-billion on Site C, what community doesn’t get a health care facility?”

Image Credit: An area of the Peace River Valley threatened by Site C. Photo by tuchodi via Flickr.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is the third part of three-part series exploring the German Energy Transition or Energiewende, by David Ravensbergen. In Part 1, The Land of Wind and Solar, Ravensbergen describes how decentralized, small-scale changes can amount to a broad energy revolution. In Part 2, Is the German Energy Transition Everything It's Cracked Up to Be?, he takes a closer look at the promise and the reality of the German response to climate change along with energy researcher Tadzio Müller. In this third and final installment, Ravensbergen asks what the German experience can teach North Americans looking to make the transition away from fossil fuels.

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In Canada, hopes of implementing a national strategy on climate even remotely equivalent to the German Energiewende are continually sabotaged by the federal government’s unwavering commitment to propping up the fossil fuel sector. For Canadian climate activists struggling against the expansion of tar sands pipelines and Harper’s Paleolithic energy policies, one big question looms: how do the Germans do it?

According to Tadzio Müller, the explanation is simple. “What the German government has done was the result of 35 years of social struggle by movements.” While it may be tempting to chalk up the change to a healthier public discourse or more reasonable elected officials, Müller insists it wouldn’t have happened without the tireless work of activists. “The laws that were passed were fought for by movements. The government has done only what it has been forced to do.”

Nowhere is this lesson more visible than in Chancellor Merkel’s 2011 decision to completely shut down German nuclear power in the wake of Fukushima. Müller notes that Merkel’s government at the time was “a conservative-neoliberal coalition that had being in favour of nuclear power as one of its key brand elements.”

For some environmentalists who see nuclear power as a necessary component of a post-fossil fuel energy mix, the German public’s resolute anti-nuclear stance is difficult to grasp. But regardless of where you stand on nuclear power, the remarkable fact that a center-right government legislated the end of its own domestic nuclear industry while committing to a massive expansion of renewable energy begs explanation.[view:in_this_series=block_1]

A large part of the answer lies in the breadth of the social coalitions that mobilized around environmental issues like industrial pollution and acid rain in the mid-70s. As Joachim Jachnow writes in his excellent summary of the changing fortunes of the German Green Party, environmental activism gained critical mass around the issue of nuclear power: “Ecologists, feminists, students and counter-cultural networks joined with farmers and housewives in mass protests that brought nuclear-plant construction sites to a halt in Wyhl (Baden-Württemberg), Grohnde (Lower Saxony) and Brokdorf (Schleswig-Holstein).”

Out of these successful mass actions against the expansion of nuclear power, an unlikely coalition between the radical and conservative wings of the environmental movement began to take shape. As Müller explains, it was this loose alliance that slowly began to change German public opinion on energy and the environment. When renewable energy went mainstream with the introduction of feed-in tariffs the alliance grew bigger still, bringing those motivated by profit as well as conviction into the fold. By the time Fukushima happened, the anti-nuclear movement had become so powerful that Merkel was left with no choice but to expedite the nuclear industry’s downfall.

So what lessons can be drawn for people outside of Germany working towards building a movement capable of stopping climate change? The important thing to keep in mind is that the environmental movement in Germany had 35 years to achieve the limited progress of the Energiewende. We haven’t got nearly that much time. “How do you mobilize the green constituency to take action beyond what they’ve been doing so far?” asks Müller.

Owing to the urgency reinforced by the latest IPCC report, Müller argues that the time has come to step up the both the frequency and efficacy of nonviolent civil disobedience. “We need a drastic expansion of disobedient actions beyond what 350 has been doing so far. From Germany it looks a bit funny when people do these actions where they cross a line and then count the number of arrests—I’ve never seen an action in Germany count its success according to the number of arrests.”

While Müller acknowledges the major differences between North American and German movement culture, he says the strength of civil disobedience undertaken by the German environmental movement has been its focus on ambitious goals rather than symbolic gestures. In addition to mass protests and blockades that halted the construction of new nuclear reactors, tens of thousands of activists have taken part in highly coordinated lockdowns to prevent train shipments of nuclear waste from France from arriving at their destination in the German nuclear waste storage facility in Gorleben.

Often carried out in freezing conditions and with the help of local farmers using their tractors to build roadblocks for logistical support, these actions worked to keep the pressure on politicians who were looking for ways to renege on their commitments. “The radicals in the anti-nuclear movement were absolutely crucial in keeping the flame alive through the years when the issue didn’t have a lot of play in the media.”

Müller argues that radical activists have the necessary experience, skill and imagination to coordinate the kinds of ambitious direct action that could increase the pressure on climate change. Just as importantly, however, those radicals need to be integrated into a broad movement capable of winning support from diverse sections of society.

“The interesting challenge is how do you get all those different types of actors to work together: anti-capitalists, climate justice radicals, big greens and farmer’s groups,” says Müller. “That requires constant and active coordination and getting out of your comfort zone.” Drawing on the experience of the German anti-nuclear movement, Müller argues that building a popular front against climate change is the task ahead.

For a popular front strategy to work, groups with strong disagreements about both the causes of and solutions to climate change need to temporarily suspend their differences in pursuit of the common goal of drastically cutting emissions. Working together doesn't necessarily mean adopting the same strategies, but it does mean refraining from actively undermining other sections of the movement. Selecting a viable focus for action is also key. For Müller, struggles against pipelines like Northern Gateway and Keystone XL represent key points where a broad-based environmental movement can have the strongest impact. 

“We are too weak at this point to achieve the outcomes and effects we want to achieve, so we need to find points of leverage where we can amplify our power. We need to look at systems and at weak points,” says Müller.

“We know we can pressure Obama because we know that environmentalists are part of the Democratic coalition, and since the Keystone XL is an international decision we know that this goes over Obama’s desk. It’s these details that make choosing the Keystone XL as a focus a sound strategic decision.” 

Ultimately, the differences between different sections of the environmental movement will need to be worked through. But with the latest IPCC report confirming that the majority of remaining fossil fuel deposits need to stay in the ground if we are to have any chance of avoiding the wholesale destruction of runaway climate change, broad alliances are more important than ever. 

In the months and years ahead, Canadian environmentalists would be well advised to learn a bit of German: Fossil fuels? Nein danke. 

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.