LNG Canada confirmed that it intends to use natural gas instead of electricity to power the second phase of the liquefied natural gas facility it is building in Kitimat – which will create four million tonnes of GHG emissions annually.DARRYL DYCK/The Canadian Press
With a looming deadline to shift large industrial polluters to clean energy, British Columbia’s Crown-owned utility plans to ask heavy emitters this month how it can help them meet the province’s climate targets. But any assistance will be slow to come: BC Hydro says it needs up to a decade before new transmission lines can provide electricity to mines and other industrial operations that are required by the province to cut greenhouse gas emissions drastically by 2030.
The utility’s outreach plan was announced just days after LNG Canada confirmed that it intends to use natural gas instead of electricity to power the second phase of the liquefied natural gas facility it is building in Kitimat – which will create four million tonnes of GHG emissions annually. The first phase is already under construction, and if a final investment decision is made to proceed with Phase 2, British Columbia will face a major blow to its climate targets.
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Across Canada, investors are looking for opportunities to plug into clean energy, and utilities with renewable power will need to expand both capacity and infrastructure. The message from the Kitimat LNG project is that British Columbia’s clean energy policy is going to have to shift into a higher gear, or it will be left behind.
B.C. Premier David Eby says he is prepared to fix an “old model” of power distribution, to generate new economic opportunities for his province. The new Premier sees huge investment opportunities for his province, but acknowledges that it first must find a way to fast-track clean power expansion and distribution.
“We can’t wait five to seven to 10 years for these kinds of projects, we need to be way faster,” said Mr. Eby, speaking to The Globe and Mail’s editorial board on Friday.
The Premier said LNG Canada has all the permits it needs to build the entire project using natural gas, and the stumbling block to electrification of the project is the $3-billion pricetag for building a transmission line to Kitimat.
B.C.’s government-owned, monopoly electricity utility has been cautious about building out new transmission lines when companies like LNG Canada haven’t made a final investment decision. But that standoff – where the public utility and industry are each waiting for the other to commit – isn’t going to keep the province in a competitive state. “We want to shift to a model where we are creating the generation capacity upfront, and then recruiting and retaining businesses,” Mr. Eby said.
BC Hydro is preparing to launch an “expression of interest” process to ask industrial customers – mining companies and other energy-intensive enterprises – about their interest in accessing hydroelectric power on the north coast of the province. It is a new approach, rather than passively waiting for applications, but it still is forecasting wait times of eight to 10 years to build new transmission lines.
The outreach campaign is starting three years after the Crown-owned utility’s top executive said his team was deep into work to provide clean power to liquefied natural gas proponents and other industries in the region, which includes Kitimat and Prince Rupert, which is seeing significant industrial growth.
“What I can tell you is we have done a lot of different scenarios for how we would serve different configurations of load on the north coast, whether it’s new mining load or different gas export sites coming to fruition,” Chris O’Riley, president and chief executive officer of BC Hydro, assured the B.C. Utilities Commission at a January, 2020, hearing. “We worked for years with the LNG companies and the various incarnations to encourage them to like electricity supply.”
But in January, Jason Klein, CEO of LNG Canada, said his project has to go ahead with natural gas power, for now, because BC Hydro hasn’t agreed to deliver power. “We can’t do an immediate and wholesale electrification of the plant and the pipeline. It’s not possible today because the transmission infrastructure just isn’t there,” he told Reuters. The company says it could switch over to electric power, if a transmission line eventually comes.
Michael Goehring, president and CEO of the Mining Association of B.C., said his members are ready to invest in additional electrification opportunities to reduce their GHG emissions, and new mines need certainty that they will be able to access renewable power. “When our mines plug in, those electrons need to be there.” He said approvals, including Indigenous consultation, take time but it could be faster. “In perfect world we would like to see that timeline decreased.”
Timing was a factor for General Motors Canada and its South Korean partner, Posco Chemical Co. Ltd., in searching for a location to build a $600-million chemical manufacturing plant for GM’s electric-vehicle batteries. Quebec came up with the best package of incentives, landing the project at an industrial park in Bécancour. The site is already fully serviced, including all the renewable power the proponents want for their plant’s energy-intensive processing. Construction is under way and the plant is expected to be operational by early 2025.
“This is a bit of a race. What really helps is to have identified and available land – ideally serviced and ready to go,” said David Paterson, vice-president for corporate and environmental affairs for GM Canada.
“It’s our intention to see this become a net-zero operation. The electricity will be the primary input. It’s relatively intensive in its use of electricity, for the heating processes, and Quebec has that magical, wonderful mixture of not only offering virtually zero-GHG electricity, it’s also lowest cost in North America.”
Mr. O’Riley, in that 2020 regulatory hearing, cited Gold River, B.C., as a reason to be cautious about expansion.
In 1964, B.C. premier W.A.C. Bennett announced a new pulp mill would be built in what he said would soon be “the commercial centre of the West Coast” in the “new model town” of Gold River, on the north end of Vancouver Island. To meet the premier’s commitment, BC Hydro built a transmission line to Gold River’s newly constructed Bowater pulp mill. More development in the region followed: Hydro added an extension to service the pulp mill at Port Alice and the Island Copper mine near Coal Harbour on Quatsino Sound.
In 1987, premier Bill Vander Zalm announced construction of a second pulp mill and a newsprint mill at Gold River – having promised there would be sufficient power. So BC Hydro added another transmission line to Gold River in 1989.
Soon after, the north island’s economic growth stalled.
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Gold River’s last mill shut down in 1999, and the community now touts its tourism opportunities. The old mill site has a couple of small tenants, but there is far more power available than is needed. The village has been in talks with other potential users – most recently a bitcoin mining operation.
Caroline Lee, the Canadian Climate Institute’s research lead for mitigation, said every province is facing a challenge to meet Canada’s net-zero emission goals for 2050. Even B.C., which is currently building the $16-billion Site C dam to add 1,100 megawatts of capacity, will need to dramatically increase the amount of clean energy it produces. But utilities like BC Hydro aren’t in the business of meeting climate targets. “It’s natural for utilities to be more conservative and not want to overbuild the system,” she said, “because they are really concerned about reliability and affordability of their rates.”
The institute is calling for a national clean energy strategy, with federal funding providing incentives to help provinces meet the net-zero challenge.
Editor’s note: An earlier version of this article included an incorrect figure for the cost of the Site C dam. This version has been corrected.