November 30, 2005
Coal-fired power generation worth a look by BC Hydro
Coal-fired power generation worth a look by BC Hydro
Don Whiteley, Vancouver Sun, 30-Nov-2005
Too good to be true
Arthur Caldicott, GSX Concerned Citizens Coalition, 30-Nov-2005
Coal-fired power generation worth a look by BC Hydro
Don Whiteley
Vancouver Sun
Wednesday, November 30, 2005
The B.C. Progress Board's report on the province's energy future was critical of both the provincial government and BC Hydro for allowing the province to become a net importer of electricity, after decades of money-generating surpluses available for export.
"We do need to do something," the report said. "We haven't done anything significant to increase our electricity supply for 20 years ... the least we can do is to take the opportunity to responsibly meet our own energy requirements."
Hydro will soon file its latest Integrated Electricity Plan with the B.C. Utilities Commission. Along with commitments to pursue conservation and green energy, the power utility is expected to put the Site C Dam proposal forward as its recommended big future supply project.
I wonder if they are missing the boat here. A number of recent developments suggest that B.C. should fully explore coal-fired power generation as the big-ticket item, instead of another hydro-electric dam.
Coal-fired power generation is only a couple of points below nuclear energy on this province's irrational hysteria index, largely due to coal's reputation as a dirty fuel and its contribution to global warming through CO2 emissions.
But the coal industry is well on the way toward solving that problem. The Canadian Clean Power Coalition (CCPC), an association of coal-fired generating companies and utilities, has completed the first phase of what will ultimately be a pilot plant to test commercial feasibility of what could be an emissions-free coal-fired generating plant.
"The fundamental principle underlying the goals of the CCPC was to identify a process that would produce electricity from coal in some fashion and that would also provide a relatively pure stream of CO2 that could be captured, further processed as necessary, and subsequently used or stored," says a report on the first phase of the project.
The goal is to get all the pollutants out of the emissions, except CO2, which could then be captured and stored.
And on that score, the U.S. Department of Energy announced just a week ago the completion of a successful pilot project using CO2 for enhanced oil recovery in southern Saskatchewan. The Weyburn Project took five million tons of CO2 extracted from a coal gasification plant in Montana, and used it to breathe life back into a moribund oil reservoir.
"The success of the Weyburn Project could have incredible implications for reducing CO2 emissions and increasing America's oil production," said U.S. Energy Secretary Samuel W. Bodman in a press release. "Just by applying this technique to the oil fields of Western Canada we would see billions of additional barrels of oil and a reduction in CO2 emissions equivalent to pulling more than 200 million cars off the road for a year."
Mark Jaccard, a professor of resource and environmental management at SFU, has just published a book called Sustainable Fossil Fuels: An Unusual Suspect in the Quest for Clean and Enduring Energy, in which he writes extensively about this project and its potential to help with global warming. [The Sun's Don Cayo gave the Jaccard book a three-part infomercial, available at www.sqwalk.com/blog/000540.html]
"I should emphasize that when we talk about clean coal technology, I mean clean -- nothing," Jaccard said in an interview. While the Weyburn project used CO2 from a coal gasification project, the gas can just as readily be captured from a generating station that burns the coal. He explained that CO2 injection to enhance oil recovery will provide just the kind of economic jump-start that clean coal technologies need.
CO2 injection to enhance oil recovery is not new -- it has been underway for nearly 30 years. The technique was out of favour when oil prices were low, but with crude oil expected to remain well above $40 US a barrel for the foreseeable future, the economics look good.
Another piece to the puzzle, from a B.C. perspective, is that North America's biggest supplier and distributor of CO2 for enhanced oil recovery is Kinder Morgan, the company that just completed its purchase of Terasen.
In the press release announcing completion of the acquisition, Kinder Morgan said it will "conduct a comprehensive feasibility analysis of CO2-related opportunities in Canada utilizing this expertise for the purpose of identifying and pursuing viable projects."
B.C. has huge coal reserves in almost every part of the province. More than 25 years ago, BC Hydro was considering a coal-fired generating plant at Hat Creek, but emissions technology was in its infancy at that stage and the impact was anything but zero.
Hydro spokesperson Elisha Moreno said the company turned its Hat Creek coal licences back to the provincial government more than a year ago, and is not pursuing any coal-fired power generation at the moment.
"Someone can make a proposal," she said, referring to Hydro's commitment to purchase energy from independent power producers.
"We'd look at it on costs. We still have our 50-per-cent clean criteria to meet. Obviously coal challenges that. The resource is there, but the challenge is public perception."
But if Hydro is willing to consider spending $3.5 billion on its own account to build a new hydro dam on the Peace River, why wouldn't it consider the same kind of investment in other technologies -- and not just coal?
© The Vancouver Sun 2005
Too good to be true
Arthur Caldicott
GSX Concerned Citizens Coalition
30-Nov-2005
Loren Duncan of Glenora, referring to this Don Whiteley article, comments:
Why is this concept, technology, not applicable to natural gas fired plants?
And if it is...why not?
At first take it seems to be too good to be true...as close to perpetual motion
as we are likely to get...
Anyway, just curious...
Cheers, Loren
Natural gas WAS attractive, as a generation fuel source, because it WAS cheap, plentiful and burned much cleaner than coal, which was similarly cheap and plentiful.
Once carbon dioxide emissions became an issue, natural gas was even more attractive, with approximately a third the greenhouse gas emissions for comparable electrical output.
Then natural gas became not so plentiful and the price went up and up and up and all those proposed natural gas plants were shelved, everywhere except in Nanaimo, since BC Hydro seemed to be the last place in North America to notice price and supply trends with gas that were becoming evident to others five years ago.
With the increase in gas prices, the interest in coal-fired generation regenerated, so to speak.
But of course, the reputation of coal as a dirty fuel source hindered its acceptability, and other jurisdictions, like Ontario, found themselves in conflicting situations - on the one hand, initiatives to phase-out of coal generation because of its emissions ran smack into the relatively cheap cost of the fuel and our insatiable demand for electricity.
The industry met this with branding, with marketing, and with technology: the word "coal" was no longer uttered by coal people, without the word "clean" prefixed to it.
"Clean coal" has indeed taken on a life, but there's a big cost to it. Building a plant that implements "clean coal" technologies that result in emissions from coal combustion, equivalent to emissions from a state-of-the-art natural gas plant, may guts the competitive edge that cheaper coal has as a fuel.
Capturing greenhouse gases and disposing of them in some way that is more acceptable than simply spewing them into the atmosphere, is another issue. What works with coal, works with natural gas. But a little contemplation of what these guys are proposing - capture the GHGs at the generation source, move them to depleted oil fields to be pumped back into the ground to extract more oil - isn't a simple or inexpensive task. It hasn't been done on any scale yet. It's all new. The capture technologies cost a whack of dough. The infrastructure to get the GHGs back to the oil fields (pipe, rail, truck) doesn't exist and/or needs extensive investment. The sequestration integrity of the exercise is largely unknown.
The US led Weyburn project cited in the article, is all experimental. It has no economic underpinnings. So all this talk about carbon sequestration is so much talk. And experiment. I'm not aware of any company anywhere that is proposing a production coal-fired generation facility that incorporates carbon sequestration - at least nothing on an industrial scale, that does not rely on huge subsidies. Your comment about too good to be true, and perpetual motion is wonderfully apt.
FutureGen is a US-government led proposal, that may result in an emissions-free coal-fired generation plant. But it's all drawing board and lofty vision right now, seeking participation by other countries, blah, blah. http://www.fossil.energy.gov/programs/powersystems/futuregen/
Interesting, too, is coal's ultimate solution to what to do with all the carbon dioxide. It's the same answer the nuclear industry has to the same problem with wastes. Bury it somewhere. Ocean, underground reservoirs. Outa sight. Another great ecological legacy for our kids.
In a roundabout return to your question, why isn't this carbon dioxide method applicable to natural gas plants? Well, it is, but no-one cares very much because a) natural gas is so expensive that no-one is much interested in developing any plants right now, b) natural gas isn't imbued with the same "dirty" reputation that needs to be overcome for this renewed interest in coal to move from unacceptable to acceptable.
Much of the talk about cleaning up coal is just talk - proponents of real projects are not including carbon sequestration in their proposals. Here in BC, proposals for coal-fired generation are likely to crop up again with BC Hydro's F2006 Open Call for Power, which may be open for bids in December. Any proposals are likely to be nickle-and-dime operations, small plants, probably "mine-mouth" plants (where they propose burning unmarketable "waste coals" which cost them nothing and don't have to be shipped anywhere), with only as much emission control technology to meet the BC government emissions guidelines. Anything better than that will cost too much, and may push the project out of competition.
A quick final word about the BC government guidelines for coal plants. The Liberals came to power in 2001 beholden to big coal mining companies and donors like Teck Cominco, Fording, etc. The Energy Plan issued in 2002 promised regulations that would enable coal generation to get going in BC. The Coal-fired Power Boiler Emission Guidelines were issued in 2003, setting limits for three substances - nitrogen oxides (NOX), sulphur dioxides and particulates. The limits were disgusting - among the most lenient limits in the regulated world. Mercury, a powerful toxic in even the smallest quantities, and a predictable emission from coal generation, was not regulated at all.
In August 2005, the new Ministry of Environment revised the 2003 document, and actually came close to a set of limits that is close to those of other jurisdictions. Not only that, they included mercury.
Coal-fired Power Boiler Emission Guidelines
This would seem like a good thing, something the government would laud itself for. But the government has been pretty quiet about these new limits. Why?
The answer may be that the government is quietly setting the stage for coal-fired projects, but wants to remove the charge of "dirtiest plants in North America" from the list of criticisms these projects will be subject to.
Back to your comment about perpetual motion, isn't that the illusion of fossil fuels? When all the fundamental economic and ecological costs of fossil fuels are accounted for, the net outcome is ...
TOP
November 24, 2005
Sustainable Fossil Fuels, by Marc Jaccard
Unusual suspect in the quest for clean, enduring energy
Oil, natural gas unlikely to be replaced soon by other power sources
Don Cayo, Vancouver Sun, 22-Nov-2005
SFU professor flies in face of Chicken Littles of fossil fuels
Don Cayo, Vancouver Sun, 23-Nov-2005
A troubling scenario awaits if we keep on our current energy-use path
Don Cayo, Vancouver Sun, 24-Nov-2005
Oil, natural gas unlikely to be replaced soon by other power sources, book says
By Don Cayo
Vancouver Sun
22-Nov-2005
It's not the dinosaur you may have thought. A new book by SFU professor Mark Jaccard argues that the future of fossil fuels is still bright, as there are few practical energy alternatives that could meet global needs within the foreseeable future.
Can the world assure sustainable energy for the century ahead by turning its back on oil, gas and coal? Can we conserve enough of the massive amounts of fuel we squander, and create most of what we really need from renewables like sun, wind and water, or from clean-burning hydrogen, or even nuclear fission or fusion?
Not likely, says Mark Jaccard, a professor of resource and environmental management at Simon Fraser University.
Until now, Jaccard has spent most of his high-profile career touting those very options. But after a lot of research and reflection he has changed his mind. These "usual suspects" aren't the best bet for the next 100 years, he writes in a new book that's sure to raise hackles among his many colleagues to whom oil is an anathema.
Jaccard argues in Sustainable Fossil Fuel: The Unusual Suspect in the Quest for Clean and Enduring Energy that, as the title suggests, the best path for the future is a variation of the one the world is already on. Oil, although increasingly from unconventional sources, will continue to play a big role, while the use of natural gas and coal will more than double.
What about the well-known drawbacks of fossil fuels -- that their supply diminishes over time, and that they pollute the air? And what's wrong with renewables, and, especially, with hugely cutting back on energy use to take pressure off its supply?
In Jaccard's analysis the world won't run out of oil, gas and coal for a long, long time. The key questions hinge on know-how (How much of the vast resources can we figure out how to tap into?) and price (How much are we willing to pay?). And the same two factors -- technology and economics -- will determine how cleanly we can burn future fossil fuels.
These same questions apply, of course, to conservation, to renewables like biomass, wind and water, and to the inexhaustible potential of hydrogen and nuclear.
Jaccard examines these options at length. He finds each of them not entirely wanting, but limited in their ability to displace fossil fuels.
He notes that the rich world has already gained a lot from using energy more efficiently. "Energy intensity" -- the amount of economic value derived from each unit of fuel -- has soared since the 1950s.
And a lot more saving is possible. Not only is a lot of energy squandered in uses of questionable value, but up to 5/6ths of a fuel's potential is lost in the inefficient conversion of primary energy sources into convenient secondary forms.
Yet, he says, the world won't see the boon that conservationists predict if only we do a better job of mending our wasteful ways. It is not just a matter of technical issues, he argues, but behavioural ones as well.
For one thing, when energy efficiency increases, so does the tendency to use it for new or bigger things. Witness the growth in the size of vehicles and the distances that North Americans drive them following a sharp, but temporary, retraction as a result of the oil shocks of the 1970s. Similarly, the advent of things like energy-efficient fridges tempts consumers to buy a separate one to chill the beer or cool the wine, and so on.
This rebound effect helps explain "the explosion of new energy-using services, including outdoor patio heaters, spas, extra-large sport utility vehicles, decorative natural gas fireplaces, coffee mug heaters, desk-top water coolers, in-home entertainment systems, indoor and outdoor decorative lighting and ... the back-massage chair, to name just a few." And, "More efficient vehicles may make people willing to live further from where they work."
Nor do people always adopt new ideas just because they're available. He cites his own experience with high-priced, energy-efficient light bulbs that are now tucked away in a drawer, as they are in thousands of homes, because they don't fit many lamp sockets and his wife doesn't like the light they cast.
Then there's the matter of a couple of billion poor people on the planet -- people destined in the scenarios that he cites to become much more prosperous over the next century. One of the first things they can be expected to do is stop their inefficient burning of wood or charcoal for cooking and heating, and turn rapidly to modern energy sources. So even if the rich world succeeds in massively reducing its own energy use, the savings will be overwhelmed by increased use in developing countries.
Nuclear's potential faces challenges such as investor antsiness and a long lead time to get it on line, he says. And it's currently so far behind fossil fuels that, given the 33-year lifespan of most plants, as many as five a week would have to be brought online for it to dominate by the year 2100.
That pace of building is unimaginable, given political and economic realities. Because of the horrific potential of an accident or terrorist incident, no matter how highly unlikely those may be, people in developed countries strongly oppose the building of more reactors. And in poorer countries where the urgently desired benefits might persuade people to accept the risk, the rich countries that have the technology don't want to share it for fear it will be used to proliferate nuclear arms.
Strikes against hydrogen, a secondary fuel, include the massive amounts of primary energy needed to create it, and the cost and complexity of establishing a distribution network for the hard-to-store fuel.
Storage is also an issue for most renewables -- wind, water, and sunlight. Because these sources can produce power only intermittently, they must either be relegated to a role as fairly small supplementary sources, or else huge and expensive storage capabilities will have to be built. All three, but especially wind and water, need specific sites that usually aren't found near the places where power is consumed. As the best sites are developed, more marginal -- and more expensive -- ones will have to be found.
Modern biomass energy production -- the efficient burning or conversion of wood or farm waste, as opposed to the dirty and wasteful open fires or crude stoves that proliferate in the developing world -- is relatively cheap, as long as it's small-scale and able to use waste. But if it reaches the point where raw fuel has to be grown just for that purpose, it'll require huge tracts of land that won't be available for other uses. And, as with the other renewables, it'll cost more and more as the best sites for fuel production are taken and marginal ones are pressed into use.
Jaccard still sees a growing role for conservation and all of the renewable technologies. But he sees no chance they'll come close to displacing hydrocarbons as the prime energy source.
Tomorrow: Why oil, gas and coal are the best bet for a clean, sustainable energy future. (link)
- - -
Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy
by Mark Jaccard,
Simon Fraser University
The book's first printing will be available Nov. 27 by direct order only from Cambridge University Press, 100 Brook Hill Drive, West Nyack, NY 10994.
Toll-free 800-872-7423.
Fax 914-937-4712.
http://us.cambridge.org
It will be available in bookstores in Canada Jan. 1, 2006. Paperback: $33.95. Hardcover: $94.95
First in a three-part series (Part 2, Part 3)
© The Vancouver Sun 2005
SFU professor flies in face of Chicken Littles of fossil fuels
By Don Cayo
Vancouver Sun
23-Nov-2005
Second in a three-part series (Part 1, Part 3)
The message from most sustainable-energy advocates is that the world is about to run out of fossil fuels.
Some of them seem to believe that this will happen none too soon -- that we burn so much of it so carelessly that we're poisoning the planet.
And then there's Mark Jaccard, a professor of resource and environmental management at Simon Fraser University who has earned his spurs many times over as a sustainable-energy advocate. His about-to-be-released book, Sustainable Fossil Fuel: The Unusual Suspect in the Quest for Clean and Enduring Energy, argues that oil, gas and coal will -- and deserve to -- remain the dominate energy supply at least until the end of this century.
Why? Because there's easily enough of all three to last the next 100 years, and far beyond. Because they will remain the fuels of choice for a great many uses not only in the rich world, where they already dominate, but also in poor countries where billions now rely on smoky, inefficient wood or charcoal fires for cooking and heating. And because it's both possible and affordable to use fossil fuels cleanly, with minimal harm to the environment.
That's not to say Jaccard endorses the status quo. Indeed, he says the world is on an unsustainable course -- one that, if unchecked, will see energy use grow 324 per cent by 2100, with coal consumption expanding 6.5 times to provide almost half the primary energy.
His preferred scenario, which will require judicious planning and policies if it's to come about, is also hydrocarbon intensive. It foresees increased energy use of 280 per cent, and the near-doubling of the role of fossil fuels, mostly coal.
Where will it come from? And how can it be used cleanly?
Jaccard differentiates sharply between fossil fuel reserves -- the amount that we know where and how to access and that we can afford to get out of the ground -- and fossil fuel resources. The latter is what's there, no matter whether we have the affordable technology to get it today.
Those two estimates are far apart. Coal resources are seven trillion tonnes, or 9.5 times the figure for coal reserves. The conventional oil resource pool is twice as large as the reserves; the unconventional oil resource is four times larger; and the natural gas resource, both conventional and not, is three times larger.
"If current consumption trends and fossil fuel reserves both remained static," Jaccard writes, "oil reserves would not be exhausted until the latter half of this century, natural gas reserves would last into the next century, and coal reserves would last 200 years.
"When the focus shifts to resources, at static consumption levels oil would last 200 years, natural gas 500 and coal 2,000."
However, given growth predictions based on current trends, "then the oil resource would last under 150 years, natural gas under 300 and coal under 400."
But Jaccard's test of sustainability isn't just a matter of supply. It also involves economics and ecology -- the impact of the world's energy use must be reasonably benign for the people and the planet.
So key questions are, do we know how, and can we afford, to tap into more of the resource than is generally assumed? Another is, can we use the fuels we get cleanly, with minimal harm to human health and the environment?
Jaccard's answer to all is yes.
He acknowledges that geologists may be right to note that the world is using up conventional oil resources faster than most people realize. But the economist in him observes that this need not be the catastrophe that's often portrayed. Scarcity is bound to raise prices. But higher prices will spur innovation, innovation will increase supply, and new supplies will moderate the price -- an economic cycle we've seen time and again.
Thus, although recovering unconventional oil is unquestionably more costly than tapping into conventional reserves, it will become ever-cheaper as new technologies are perfected and scaled up.
He points out, for example, that the cost of North Sea oil, once a cutting-edge technology, has plunged from $35 a barrel in the late 1970s to $15 today. And he forecasts that similar kinds of savings are in the cards not only for unconventional oil recovery, but also for natural gas and coal. And the eventual prices are not likely to be much higher than we pay today -- with, of course, a continuation of the periodic short-term fluctuations that feed the cries of Chicken Littles.
The key to using fossil fuels cleanly, he says, will hinge on how they are used.
A huge point often overlooked in rich countries is the immense and beneficial impact that will occur as billions of the world's poor switch from the worst-possible use of biomass -- unhealthy and wasteful open fires or poor-quality stoves -- to cleaner and much more efficient modern fuels. That's a priority for every population as their incomes improve, Jaccard says, and it will hugely lessen outdoor pollution and dramatically improve indoor air quality, which contributes to as many as a million deaths a year.
And, just as importantly, both modern biomass and fossil fuels will be increasingly used to create ultra-clean forms of secondary energy -- electricity and hydrogen -- to heat our homes and offices, power our vehicles, and much more. The technology exists to do this with little pollution from the primary fuels, and it, too, will become more cost-effective over time.
THURSDAY: What will it take to ensure that we are on a sustainable energy path? (link)
A troubling scenario awaits if we keep on our current energy-use path
By Don Cayo
Vancouver Sun
Thursday, November 24, 2005
If the world stays on the energy-use path it's on, it will be in trouble by 2100, if not before, says Mark Jaccard, a professor of resource and environmental management at SFU.
"There is considerable evidence that our current energy system is on an unsustainable path," he writes in an about-to-be-released book, Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy. Problems include emissions that undermine human health, cause acid rain and world-wide climate change; risks from radiation leaks or petroleum spills; and vast tracts of land and water despoiled by large-scale projects. As things are going now, he sees these problems only getting worse.
On the plus side, however, Jaccard foresees a big drop by 2100 in how much energy it takes to generate each dollar of GDP. But a quadrupling of per capita wealth -- also a plus, though a challenging one -- and a 75-per-cent increase in population will still strain energy supplies beyond what can be sustained.
Specifically, he sees the current path leading to a doubling of the biomass, mainly wood, used in scores of poor countries for cooking and heating fires that pollute the air and endanger human health. He sees a 17-fold increase, but still too little, in "modern biomass," including farm waste, converted into clean, green energy sources. Hydro development will focus too much on big, land-drowning projects and too little on small benign ones, and it will fall well short of its potential role in a more optimal mix of energy sources. Wind, solar and geothermal will similarly grow substantially, but not enough, and wave and tidal power will go nowhere without policy-driven help.
His preferred scenario, which he says would be sustainable, is based on several subtle shifts that, over the next 100 years, add up to big results.
It includes a 33-per-cent reduction in traditional biomass, and a 26-fold increase in modern biomass, which would produce far cleaner and more efficient results from the same amount of raw material needed to fuel the current-path scenario. He sees 5.5 times more power coming from hydro, but most of the increase from small projects that do little or no environmental harm. He sees good policy bringing about 33 per cent more wind power, and twice as much solar and geothermal power as would otherwise evolve. And he sees tides and waves tapped to provide about two per cent of the energy needed by this richer and more productive world.
Use of fossil fuels would nearly double under his preferred scenario, but they'd slip from 83 per cent dominance today to 57 per cent in 2100 (as opposed to 66 per cent under the current-trends scenario).
What will change more dramatically is what is done with much of that fossil fuel. Jaccard sees the greatest growth for coal, which is plentiful and widely available around the world. But he sees it used in zero-gasification processes that will be able to produce electricity at comparable cost to other new sources, and hydrogen at lower cost than almost anything else. And electricity and hydrogen will come to play a huge role as secondary energy sources, including fueling much of the transportation of people and goods -- a market now totally dominated by oil.
What needs to be done to get off the path that isn't unsustainable and onto one that is?
Jaccard calls for a mix of approaches in national strategies. Voluntary programs spurred by education, though unlikely to do the whole job, could have a role, as could prescriptive approaches and financial disincentives like a tax on pollution.
But he relies most heavily on market-oriented solutions -- especially emissions caps with tradeable permits, and niche market regulations.
He gets into a detailed discussion of how caps could start out fairly high, requiring only modest reductions in overall emissions, and be strengthened over time to accomplish big gains fairly painlessly.
The niche market regulations, a new concept not yet in use anywhere, would foster projects, large and small, to capture and permanently store carbon by-products of combustion, and it would spread the cost among all producers of carbon emissions.
Internationally, Jaccard sees difficulty, if not impossibility, getting agreements for prescriptive approaches such as the Kyoto Accord, which is said to be merely a first step and is not stringent enough to actually reverse the build-up of greenhouse gases. He reviews a list of alternative proposals such as international trading of emissions permits, equity provisions that ensure compliance but provide a financial break to developing countries, an international carbon tax, various mechanisms for technology transfer from the developed world to the poor, and even bi-lateral emission-reduction agreements between countries like the U.S. and China.
Without really settling on or rejecting any of these, he remains optimistic.
"Energy policy at the global level might never seem as logical and coherent as some would wish, but this is no reason to despair," he writes. "The realities of this level simply require creative thinking, a willingness to compromise, and an ability to seize opportunities as they arise.
"Rising incomes in developing countries provide such opportunities because of the enormous energy investments that will occur over the coming decades. Likewise, if current high oil prices are sustained, the energy market will attract substantial investment in developed countries.
"These two developments create an unprecedented opportunity to shape the character of the future global energy system . . . that we can't afford to miss."
- - -
Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy
by Mark Jaccard, Simon Fraser University
The book's first printing will be available Nov. 27 by direct order only from Cambridge University Press, 100 Brook Hill Drive, West Nyack, NY 10994.
Toll-free 800-872-7423.
Fax 914-937-4712.
http://us.cambridge.org
It will be available in bookstores in Canada Jan. 1, 2006. Paperback: $33.95.
Hardcover: $94.95
Last in a three-part series (Part 1, Part 2)
© The Vancouver Sun 2005
Who's got the power with our power?
BC Progress Board Releases Discussion Paper on Provincial Energy
9-Nov-2005
Who's got the power with our power?
Les Leyne, Times Colonist, 24-Nov-2005
BC Progress Board Releases Discussion Paper on Provincial Energy
On November 9, 2005, the BC Progress Board tabled a discussion paper on energy with the provincial government. The paper, "Strategic Imperatives for British Columbia's Energy Future", was prepared for the Board by Sage Group Management Consultants. The document surveys BC's current energy situation and makes a number of suggestions for action
News Release
Executive Summary (589K)
Summary of Recommendations(572K)
Entire Report (1,391K)
Who's got the power with our power?
By Les Leyne
Times Colonist (Victoria)
24-Nov-2005
There's a revolutionary concept embedded in the B.C. Progress Board report on energy. The 60-page outlook floats the notion that the democratically elected government of B.C. should wrest control of energy policy away from B.C. Hydro.
That's the kind of coup d'etat plotting that can get you strung up in some countries. But the scheme is laid out in the Progress Board report, by the Sage Group. It's no secret that B.C. Hydro is a power unto itself in the province, so a discussion paper that confirms that fact is unlikely to ruffle too many feathers. Recommending a change to that situation, however, is something new and different.
The report comes dangerously close to questioning B.C. Hydro's supremacy in all things electrical. Not only that, but it states that a lot of people are doing the same sort of thinking.
"In discussion with the Progress Board, many parties stressed the importance of the overarching responsibility of the B.C. government and specifically the Ministry of Energy, Mines and Petroleum Resources, to determine energy policy and ensure it is implemented."
Suggesting that the Energy Ministry set energy policy would be a mushy motherhood position in some jurisdictions, but in B.C. it's actually a controversial proposition.
The Liberals came to power in 2001 with an attitude that "political interference" when it came to Crown corporations was a cardinal sin. NDP meddling in the ferry system -- "Go out and build some aluminum catamarans. And make them go really fast" -- was fresh in everyone's minds.
The Liberals also remembered the grand New Democrat misadventure in Pakistan, where they sent a Hydro subsidiary off on a questionable venture involving lies, off-shore bribery and missing money. (It's best remembered in the legislature for the Liberals bellowing: "Who is Ali Mahmood?")
New Democrats also dictated the Island energy policy that resulted in the proposed Duke Point generating plant in Nanaimo, which was just turning into a problem when the government changed, and gradually evolved into a debacle, since abandoned.
So the hands-off attitude, combined with the mass buy-outs of staff resulting from the budget-cutting spree, left most of the field clear to B.C. Hydro, when it comes to electricity policy.
As long as it makes the government a few hundred million dollars every year and keeps the lights on, it can do whatever it wants. (A good illustration of their relative status is at the annual Union of B.C. Municipalities convention, where the government and B.C. Hydro throw matching receptions. Grumbling delegates are obliged to line up for a half-hour to shake hands with the premier and make an appearance at the government function. Then they bolt over to the lavish Hydro bash, where the real party is.)
But now the Progress Board is questioning the natural order of things.
"There was particular concern expressed that the government does not have adequate staff and budget dedicated to developing electricity supply policy and ensuring that this policy is adhered to by B.C. Hydro," says the consultants' report.
It then makes the assertion: "It is the role of the B.C. government to speak for the public in this regard and it is the role of B.C. Hydro to follow the direction of government."
The board says Hydro has the government out-gunned at every turn when it comes to staff and resources, "which puts the government in the position of not being able to provide adequate oversight and direction to B.C. Hydro."
Consequently, "B.C. Hydro is seen as setting its own policies with regard to electricity supply or responding to matters of public interest, such as the government's energy plan, in its own time and manner."
The main reason for asserting control over Hydro is the paramount goal stated in the report of regaining self-sufficiency in electricity, an advantage that was lost around the turn of the century. Whether it was a lack of political will or the absence of compelling need, the province hasn't added any major generating capacity in more than 20 years, and is now a net importer of electricity.
Now they're trying to make up the shortfall, but the report said there is growing concern that many of the small-scale projects are being vetoed by local governments, for zoning or other reasons.
Local governments do have a say in approving such projects, but the report says the province must be the final decision-maker.
"B.C. is not yet in a crisis with regard to its supply of electricity, but it does have serious planning challenges and if these challenges are not met in a timely manner a supply crisis will likely follow."
Somebody needs to ramrod some fairly urgent action on this front. B.C. Hydro is compiling an integrated electricity plan that will try to address self-sufficiency. It would be reassuring if the elected officials did more than just wave their hands over it when it's done.
November 22, 2005
Huge green power reserves can fuel jobs, economy
Huge green power reserves can fuel jobs, economy
News Release, BC Sustainable Energy Association, 21-Oct-2005
Sustainable Energy Solutions for BC
Submission to BC Alternative Energy and Power Technology Task Force, BCSEA, 21-Nov-2005
Alternative energy sources potentially rich in jobs
Scott Simpson, Vancouver Sun, 22-Nov-2005
Huge green power reserves can fuel jobs, economy
FOR IMMEDIATE RELEASE
CONTACT: Guy Dauncey (250) 881-1304
News Release
BC Sustainable Energy Association
21-Nov-2005
Victoria, BC (November 21, 2005)-British Columbia has huge reserves of green power that could stimulate enormous economic development and employment opportunity, with as many as 400,000 new jobs over 25 years, and establish BC as a leader in renewable energy, according to a report released today by the BC Sustainable Energy Association (BCSEA).
Tallying the province's green energy potential from wind, solar, tidal, geothermal and other technologies, combined with energy-savings from efficiency measures, would produce 84,000 gigawatt hours (GWh) a year. This is 50% more than BC Hydro's current total generation and enough power for 8.4 million homes.
"BC can be a global leader in green energy technologies if it chooses to," said Guy Dauncey, BCSEA president and author of the report, Sustainable Energy Solutions for BC, prepared as a submission to the BC Alternative Energy and Power Technology Task Force. The Task Force is expected to release its findings soon. BC Hydro is also due to release its 2005 Integrated Electricity Plan that will outline how BC Hydro expects to meet anticipated customer electrical demand over the next 20 years.
The BCSEA report identifies tidal energy as BC's largest long-term source of potential power: 13,000 GWh/yr. A further 12,500 GWh /yr could be freed up by 2025 by saving electricity currently used wastefully. BC also has the potential for 11,000 GWh a year of wind energy. Full- and part-time jobs created over the 25-year period total 413,000 jobs, including installation of solar PV roof systems and retrofitting homes and businesses to double their energy efficiency. The report draws on BC Hydro energy resource data and a variety of employment studies to arrive at these conclusions. (See table "BC's Long-Term Potential for Sustainable Electricity Resources and Jobs" below.)
"BC's impressive solar energy potential is very similar to that of Germany, a world-leader in solar installations thanks to progressive government energy policies," said Kevin Pegg, of EA Energy Alternatives Ltd., a Victoria solar, wind and microhydro company. "Washington State recently announced incentives to grow their renewables industry: If they can do it, so can we."
"The challenge is not technical", said Guy Dauncey. "It lies with the decision to prioritize sustainable energy over other sources, such as coal, coal-bed methane, natural gas, or large-scale hydro." BC Hydro is currently following a voluntary commitment that 50% of its energy will come from "clean" resources, which includes cogeneration from natural gas. BC Hydro's 2005 Integrated Electricity Plan may conclude that BC's future power should come from green resources such as those described in the BCSEA report, or from coal-fired power, the Site-C dam, natural gas, or a combination of these sources.
"Deploying these resources will require a transition over several years along with some transition costs," said Dale Littlejohn, a Vancouver sustainable energy consultant and BCSEA director, "but we can do this profitably while improving jobs, health and the economy. As a bonus, we can make BC fossil-free by 2025 and set an example for the rest of the world."
The full report is available at: www.bcsea.org/policy/taskforcereport.asp
- 30 -
For more information:
Guy Dauncey (Victoria) 250-881-1304
Kevin Pegg (Victoria) 250-727-0522
Dale Littlejohn (Vancouver) 604-785-5130
MW | GWh/year | Cents/kWh | Jobs | |
Wind | 5000 | 11,000 | 6-12 | 31,250(1) |
Microhydro | 2530 | 11,108 | 4-9 | 5,700(2) |
Wood waste biomass | 215 | 1800 | 4-9 | 484(3) |
Geothermal | 1070 | 9,000 | 5-9 | 7,000(4) |
Tidal | 2225 | 13,000 | 11-25 | 13,906(5) |
Landfill | 15 | 85 | 4-5 | 20(6) |
Solar PV | 6000 | 12,000 | 60 - 20 | 210,000(7) |
Total potential power | 58,000 | |||
Efficiency | n/a | 12,500 | 3-6 | 145,200(8) |
Solar Hot Water | n/a | 10,000 | n/a | [60,000](9) |
GeoExchange Heating | n/a | 3,750(10) | n/a | [21,420](11) |
Total | 84,250 | 413,560 | ||
references here
Alternative energy sources potentially rich in jobs
Waning supplies of oil and natural gas will trigger the need for other sources of energy, a report says
Scott Simpson
Vancouver Sun
Tuesday, November 22, 2005
British Columbia could open new industries and create hundreds of thousands of jobs by turning its attention to the world's $200-billion power technology industry, a report submitted Monday to the B.C. government says.
The report says global climate change, and waning production of oil and natural gas, will throw a wrench into 90 per cent of the world's present energy supply -- describing a fossil fuel shortage as "imminent."
B.C. residents are "solidly behind sustainability" but the province must increase its commitment to research and development of lower-cost alternate energy technology, the report from the B.C. Sustainable Energy Association says.
Wind, tidal and solar generation all offer significant opportunities.
"If B.C. makes this transition first, it will be in a position to be a global hub for one of the largest market opportunities in history," the report says.
The association estimates as many as 400,000 temporary, part-time and full-time jobs could be created and adds that B.C. could more than double its present hydroelectric capacity without building another major dam.
"Our analysis shows that B.C. has the potential to generate 84,250 gigawatt hours of sustainable, renewable energy [including efficiency savings]," says the report, which was submitted to the government's committee on alternative energy and power.
The panel is co-chaired by Environment Minister Barry Penner.
Penner said he hasn't had time to review the report but said that, "as Minister of Environment I can't help but be interested in ideas that support sustainable solutions."
Penner noted that B.C.'s alternative power technology sector already includes more than 60 companies providing 3,000 jobs and generating $700 million in annual revenues.
The report follows a 2002 BC Hydro study that listed the province's green energy resources, but focused on sources that are relatively close to the cost of hydro generation.
BC Hydro's generation cost is 2.5 cents per kilowatt hour (kWh) at its existing "heritage" hydroelectric facilities.
The sustainable energy association estimates micro-hydro at between four and nine cents per kWh and six to 12 cents for wind.
Estimated generating costs for tidal power, a fledgling technology, are 11 to 25 cents per kWh.
Solar power is 60 cents to $2 per kilowatt hour.
Association executive director Guy Dauncey said in an interview that Hydro could structure its electricity rates in a way that supports alternative energy, as several U.S. states have done.
"Everyone who pays a BC Hydro bill would pay an extra, say, half-cent per kilowatt hour which supports the development of new emergent technologies," Dauncey said.
He added that Germany, which has "the same sunshine ratio as British Columbia," is going full-tilt on solar power development.
Mary Hemmingsen, BC Hydro manager of power planning and portfolio management, noted the Crown corporation is compelled by the B.C. Utilities Commission to maintain the lowest-possible electricity prices for its customers -- who enjoy the third-lowest electricity prices in North America.
"We probably agree that B.C. has some really significant green resource potential," Hemmingsen said. She also cautioned that while tidal resources are significant, the technology is, as yet, unproven.
SWITCHING HOW WE THROW THE SWITCH:
The B.C. Sustainable Energy Association says the province has huge green power potential that could provide not only renewable sources of energy but could aso stimulate economic development and employment.
B.C.'s maximum long-term (25-year) potential for sustainable electricity resources
Gigwatts/year Cents/kilowatt hour* Jobs
Wind: 11,000 6-12 31,250
Microhydro: 11,108 4-9 5,700
Wood waste: 1,800 4-9 484
Geothermal: 9,000 5-9 7,000
Tidal: 13,000 11-25 13,906
Landfill: 85 4-5 20
Solar PV: 12,000 60-200 210,000
Efficiency: 12,500 3-6 145,000
Solar Hot Water: 10,000 n/a 60,000
GeoExchange: 3,750 n/a 21,420
Total: 84,250** 413,560
* BC Hydro's existing heritage assets: 2.5 cents per kilowatt hour.
Cost of adding new large hydro assets: 6.5 cents per kilowatt hour.
** 50% above Hydro's current total generation
Source: B.C. Sustainable Energy Association, Vancouver Sun
© The Vancouver Sun 2005
November 17, 2005
Prepare for Peak Oil Now
By Richard Heinberg
AlterNet
14-Nov-2005
Editor’s Note: This paper, exclusively available to AlterNet, was presented at a Reception with Their Royal Highnesses The Prince of Wales and the Duchess of Cornwall, at the California Leaders Round Table Dialogue on Peak Oil, Climate Change and Business Action; November 7, 2005 in San Francisco.
The subject I teach -- human ecology -- is a discipline that largely concerns population and resources. Over the past few years I have chosen to study oil, because it is the most important energy resource of the modern world.
Only 150 years ago, 85 percent of all work being accomplished in the U.S. economy was done by muscle power -- most of that by animal muscle, about a quarter of it by human muscle. Today, that percentage is effectively zero; virtually all of the physical work supporting our economy is done by fuel-fed machines. What caused this transformation? Quite simply, it was oil's comparative cheapness and versatility. Perhaps you have had the experience of running out of gas and having to push your car a few feet to get it off the road. That's hard work. Now imagine pushing your car 20 or 30 miles. That is the service performed for us by a single gallon of gasoline, for which we currently pay $2.65. That gallon of fuel is the energy equivalent of roughly six weeks of hard human labor.
It was inevitable that we would become addicted to this stuff, once we had developed a few tools for using it and for extracting it. Today petroleum provides 97 percent of our transportation fuel, and is also a feedstock for chemicals and plastics.
It is no exaggeration to say that we live in a world that runs on oil.
However, oil is a finite resource. Therefore the peaking and decline of world oil production are inevitable events -- and on that there is scarcely any debate; only the timing is uncertain. Forecast dates for the peak range from this year to 2035.
The peaking phenomenon itself has been observed again and again in individual oil fields and in entire producing nations. One of the first countries to hit its peak was the U.S.. During the 1930s and '40s, half the world’s production of petroleum came from Texas and Oklahoma. However, U.S. production reached its all-time maximum in 1970 and has been declining ever since. Currently the U.S. imports 60 percent of its oil.
Concern over the likelihood of an impending world peak has increased markedly in recent months as global spare production capacity has dwindled and as prices have achieved what seems to be a new baseline of over $50 per barrel.
Evidence that we are approaching peak includes the following:
ExxonMobil documents that global oil discoveries peaked in 1964. Declining rates of discovery are therefore a long-established trend.
Chevron notes in recent advertisements that 33 of 48 nations are in decline. We have thus seen the peaking of production in a majority of individual nations, including some important producers such as Indonesia, Norway, Great Britain, and Venezuela. Mexico will reach its peak within the next two years.
As noted by the International Energy Agency, there is evidence that a substantial amount of "proven reserves" in OPEC countries are illusory, the result of a scramble for market share within a cartel that allocates export quotas based on stated reserves.
With regard to this last point it should be noted that reserves figures, even when accurate, have historically given little warning of peaking. The U.S. instance is once again emblematic: in 1970, U.S. oil reserves were higher than ever; so were production rates. But only a year later, American production began its terminal decline. The study of discovery rates and depletion rates gives us a much better idea of when the global peak is likely to occur.
Optimistic estimates of future discovery and production issued by Cambridge Energy Research Associates and the U.S. Geological Survey have been criticized by several analysts. The optimists have generally failed to anticipate peaks, first in the U.S. and repeatedly in the case of other nations around the world.
This morning the International Energy Agency (IEA) issued a statement saying that the world will have sufficient energy supplies for the next quarter century. However, the statement noted the necessity of the investment of $17 trillion in the supply train in order to maintain sufficiency for so long. Also, the IEA anticipates Saudi Arabian production expanding to 18 million barrels per day by 2030—a figure considerably higher than the maximum possible rate of production from that country cited not long ago by Sadad al Husseini, the recently retired head of exploration for Saudi Aramco.
Expressions of concern have been voiced by corporations, prominent organizations, and knowledgeable individuals, including ChevronTexaco, the Royal Swedish Academy of Sciences, Volvo, Ford Motor Company Executive Vice President Mark Fields, the Chinese Offshore Oil Corporation’s chief economist, and numerous petroleum scientists and oil industry analysts.
The question immediately arises: Will alternative sources be able to make up the difference?
Alternative sources often discussed include oil sands from Canada, shale oil in Colorado, coal-to-liquids, gas-to-liquids, nuclear, and renewables such as solar and wind. Each of these will require immense investment and well over a decade of intense effort in order to produce substantial quantities of energy to offset declines from fossil fuels. And in most cases, rates of production are and will be constrained by non-economic factors. Take the oil sands, for example. Currently Canada produces one million barrels of synthetic crude per day from that source. There is expectation of two mb/d by 2010, and perhaps as much as four mb/d by 2025. We are unlikely to see higher numbers than that even with extraordinary capital investment, because the production process requires large amounts of natural gas and fresh water, both in short supply in Alberta. Moreover, according to the IEA, the world needs six mb/d of new production capacity each year (and that number is growing) to meet new demand and to offset depletion from existing fields.
How about increased efficiency -- surely that can offset any potential oil supply problems. In principle, yes, but most efficiency strategies will likewise require significant lead times. For example, we have the technology now to enable all of us who own cars to be driving ones that get up to 100 miles per gallon. If we were, that would obviously save an enormous amount of fuel. But how long would it take to implement that strategy? It would certainly take four or five years for Detroit to begin producing such high-efficiency cars in large numbers.
Then, not everyone buys a new car every year. In fact, it takes about 15 years to change out nearly the entire U.S. car and truck fleet. So, altogether, it would take about 20 years to fully implement this particular efficiency strategy.
Will the market be able to respond quickly enough to forestall serious economic, social, and political impacts? It is often said that the Stone Age did not end for lack of stones, nor will the Oil Age end because we run out of petroleum -- but instead because we find a cheaper source of energy. However, as we have just seen, that cheaper source of energy has yet to be identified.
Early this year a report was released, prepared for the U.S. Department of Energy by a team led by Robert L. Hirsch, who has a distinguished background in the oil industry and is a senior energy analyst at SAIC and the Rand Corporation. The Hirsch Report (titled "Peaking of World Oil Production: Impacts, Mitigation and Risk Management") concludes that price signals will arrive at least ten years too late to enable a gentle, market-led transition away from oil to other energy sources. The report describes Peak Oil as an "unprecedented" challenge for modern societies, and describes economic, social, and political risks if preparation is not undertaken soon enough, or on adequate scale.
Let me read you a few sentences from the Hirsch Report:
The problems associated with world oil production peaking will not be temporary, and past "energy crisis" experience will provide relatively little guidance. The challenge of oil peaking deserves immediate, serious attention, if risks are to be fully understood and mitigation begun on a timely basis. Mitigation will require a minimum of a decade of intense, expensive effort, because the scale of liquid fuels mitigation is inherently extremely large. Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic.
The report also concludes that the costs of preparing too late for global oil peak would far outweigh those of preparing too early.
The worst-case scenario for the impact of global production peak is very bad indeed. As I mentioned earlier, we are extremely dependent on oil for transportation, agriculture, plastics, and chemicals. In each area, we are already seeing serious impacts resulting from current prices in the $60-per-barrel range. For example,
Currently tens of thousands of farmers are agonizing over whether they can afford to plant next year’s crop, given high fuel and fertilizer costs.
Chemicals and plastics industries are already hard hit: In the chemistry industry alone, more than 100 plants have closed and more than 100,000 jobs have been lost just this year.
In the airline industry, 40 percent of revenues go to pay for jet fuel; most U.S. air carriers are already in bankruptcy or nearing that situation.
Home heating costs are projected to be 40-50% higher this winter than last.
As prices go even higher, and with actual scarcities of fuel, people will experience difficulties commuting, and the maintenance of our far-flung food distribution systems may become problematic.
On top of all this, oil is a strategic resource: as supplies become scarce, there is increasing likelihood of international conflict.
To avoid the worst-case scenario we must begin today to reduce our dependence on oil. The effort must have top priority. It must focus primarily on reducing demand, and only secondarily on producing large quantities of alternative transportation fuels.
A global Oil Depletion Protocol would reduce price volatility and competition for remaining supplies, while encouraging nations to move quickly to wean themselves from petroleum. In essence, the Protocol would be an agreement whereby producing nations would plan to produce less oil with each passing year (and that will not be so difficult, because few are still capable of maintaining their current rates in any case); and importing nations would agree to import less each year. That may seem a bitter pill to swallow.
However, without a Protocol -- essentially a system for global oil rationing -- we will see extremely volatile prices that will undermine the economies of all nations, and all industries and businesses. We will also see increasing international competition for oil likely leading to conflict; and if a general oil war were to break out, everyone would lose. Given the alternatives, the Protocol clearly seems preferable.
National governments, local municipalities, corporations, and private individuals will all need to contribute to the effort to wean ourselves from oil, an effort that must quickly expand to include a reduction in dependence on other fossil fuels as well.
All of this will constitute an immense challenge for our species in the coming century. We will meet that challenge successfully only if we begin immediately.
Further reading:
The Party's Over
Oil, War and the Fate of Industrial Societies
By Richard Heinberg
New Society Publishers, 2005
Powerdown
Options and Actions for a Post-Carbon World
By Richard Heinberg
New Society Publishers, 2004
The Baron talks up China and energy
By ERIC REGULY
Globe and Mail
Thursday, November 17
The Rothschilds have been in business for about 220 years, and every century or so investment banking's royals haul out the yellowed charts and realize the empire has a presence in Upper and Lower Canada. As a courtesy, they pay a visit, shiver in the cold, recoil at the wine -- the family gave Bordeaux snobs Mouton and Lafite -- and politely scurry back to Paris or London or New York.
This week, the Rothschilds' gilded airborne carriage took the dapper Baron David de Rothschild and his entourage to Toronto and Montreal. Mr. Rothschild's first official visit to Canada was a courtesy call. But it was also recognition that the small Canadian offices, formally known as N.M. Rothschild & Sons Canada, probably will take on a more prominent role in the family wealth creation machine.
That's because Canada has a lot of what the world covets -- energy and metals. Mr. Rothschild thinks the Chinese are about to emerge as voracious buyers of not just the commodities, but the companies that produce the commodities. The firm, with its presence in Canada and connections to China, might be in a good position to broker some of these deals.
"The Chinese want to demonstrate that they are starting to do what most big companies in the world do when they are national champions, which is look at opportunities everywhere," he says in an interview.
Ray Smith, chairman of Rothschild North America and former CEO of Bell Atlantic (now Verizon), who joined Mr. Rothschild on the Canadian foray, thinks China will be especially aggressive in oil. "The one thing they do not have is oil. [They] also want a seat at the table when the great energy decisions are made. The ones today are minor compared to what they will be 10 years from now."
Mr. Rothschild says the firm's long history of independence has made it especially attractive to the Chinese. This allowed Rothschild to emerge this year as the adviser to the non-executive directors of China National Offshore Oil Corp.
China National Offshore Oil (CNOOC), made an audacious bid for Unocal last summer but Chevron took the prize.
For that, Chevron can thank the political hysteria set off by various politicians. The Chinese bid was a national security threat, they said, even though CNOOC is publicly traded and promised not to remove oil from American soil and export it to China. Congress threatened to delay any decision to approve the merger for months.
The conventional wisdom is that that the Chinese vastly underestimated the political backlash. Not exactly true, Mr. Rothschild says. "We knew our chances were slim. I think the Chinese wanted to register the fact they are players."
CNOOC or other Chinese oil companies probably will make more acquisition attempts, although unlikely in the United States. The American energy press has speculated that Canada's Talisman or Husky Energy might become targets (China Minmetals last year went after Noranda, now part of Falconbridge, and then mysteriously lost interest).
Mr. Rothschild and Mr. Smith both agree that, in 10 years or so, China's pursuit of big resource companies will be an unexceptional aspect of the global M&A scene.
While the Rothschilds are probably best known among mere commoners for setting gold prices in the London gold market (a business they abandoned last year), the CNOOC adventure shows they have a fondness for grubbier industries. The family has a lot of experience in commodities and resources, especially in mining -- Mr. Rothschild started his career at a family-controlled mine in the 1960s -- and in infrastructure and utility plays.
Thanks to the commodities boom, Canada is back on the resources map, which means Rothschild Canada might be, too. Rothschild hasn't been a big name in Canada since 1953, when it led the syndicate to develop Newfoundland's Churchill Falls hydroelectric project, which wasn't finished until the early 1970s.
Mr. Rothschild, 63, has been chairman of Rothschild Continuation Holdings AG, the top company in the empire, since 2003, when Sir Evelyn de Rothschild, the dominant figure on the British side of the business, retired. The firm is fairly small; it has about 2,500 employees in 30 offices in 20 countries. But it has the distinction of being the only privately held global investment bank and one of the few independent names of any size. Most of its European rivals, including Schroders, Flemings and Casenove, were poached in the past decade or so by the big American banks. Another rival, Lazard, recently went public.
Independence and connections to governments and industries that might go back to the era when Napoleon was in diapers allow Rothschild to snag M&A advisory work, which accounts for three-quarters of its income, from varied and surprising quarters. But Mr. Rothschild knows that the firm can go only so far in a land of Wall Street giants. If nothing else, Rothschild, unlike the J.P. Morgans and Citigroups of the world, can't use its balance sheet to attract clients with loans.
Mr. Rothschild and Daniel Labrecque, the CEO of Rothschild Canada, insist the firm is not working on a transborder deal involving a Canadian company, although the rumours say it has teamed up with a Canadian investment bank on a potential resources company sale. But making a splash in the Canadian market seems only a matter of time as Rothschild thumbs through its fat Rolodex. "The ambition is to become a quality player in Canada," the baron says.
November 14, 2005
Enviros Need to Get With a Program
| By Steven Pearlstein
Washington Post
November 2, 2005
The Sierra Club, the country's leading grass-roots environmental organization, has spent a year trying to figure out what it thinks about liquefied natural gas, so far without success. And therein lies a parable about politics and policy that explains a lot about the current stalemate in national energy policy. Like most environmental groups, the Sierra Club would prefer that we meet our energy needs through conservation and stepped-up use of renewable resources such as solar and wind power. But with home heating bills set to climb as much as 50 percent this winter and some cold-weather states facing the very real possibility of rationing natural gas supplies, even most enviros concede the need to boost supply. |  The liquified natural gas plant at Cove Point, Md., owned by Dominion Resources, is one of six such facilities in the United States. (By Mark Gail -- The Washington Post) |
Enviros, in fact, can take some credit for the current gas shortage. For years, they've fingered oil- and coal-fired power plants that are leading culprits behind acid rain and global warming. But so many utilities rushed to build cleaner gas-burning plants that demand has now badly outstripped supply.
The readiest source of additional domestic supply -- offshore drilling -- is hotly opposed by environmentalists as too risky to marine ecosystems. Instead, they prefer to tap the huge reserves that remain under Alaska's North Slope. They're willing to override their genetic disposition to tampering with the Alaskan wilderness and support a new (non-liquefied) gas pipeline along the trans-Alaskan highway through Canada to the Lower 48. But the pipeline would require a $20 billion investment that even Big Oil is unwilling to make.
Which leaves us natural gas in its liquefied form, which must be transported from abroad in cargo ships and unloaded at coastal terminals that change the liquid back into gas.
There are already six such facilities in the United States, including one at Cove Point in Calvert County, and the industry estimates that it will need as many as a dozen more. Fourteen proposals have already received federal approval, 20 have been proposed, and probably 10 more are in the works.
With all those to choose from, you might think that the Sierra Club would have identified the ones it could support. But with a few notable exceptions -- the expansion at Cove Point being one -- you'd be wrong. It would appear that for the Sierra Club, LNG has become the energy source to be supported in principle, but rarely in practice.
Go to the Web site of the Los Angeles chapter of the Sierra Club, for example, and you'll learn why any of three proposed terminals would be frighteningly dangerous and costly to electricity customers while making the nation even more dependent on foreign fuel.
In Louisiana and Mississippi, the Sierra Club chapter warns of tens of thousands of innocents who would be burned to a crisp if there were ever an explosion and fire at any of the LNG terminals proposed for the Gulf Coast.
On the East Coast, the Sierra Club's Delaware chapter has come out against BP's plan to build an LNG terminal in the Delaware River. In its April newsletter, the New York chapter lists eight environmental catastrophes that would befall the region if Shell were allowed to build a floating terminal 25 miles out in the Long Island Sound. And in Boston, the Sierra Club is leading the charge against a proposal by AES to build an LNG terminal on a small, unused and largely unusable island at the mouth of Boston Harbor.
The grass-roots politics of all this is easy to understand. For years, environmental groups have successfully opposed power plants, utility lines and offshore drilling by tapping into the not-in-my-back-yard instincts of anyone living near such projects. Now, when an LNG proposal comes along, the response is almost reflexive. Local residents see the need to gussy up their NIMBYisms with environmentalist garb, and local enviros are happy to oblige.
Back at Sierra Club headquarters, however, officials are still struggling to reconcile the knee-jerk opposition of local chapters to just about every energy infrastructure project with the political imperative to confront the realities of Republican rule and soaring energy prices.
"We are very conscious that we need to articulate what we are for as well as what we are against," says David Hamilton, who oversees energy policy issues for the Sierra Club in Washington.
Recently, a number of environmental groups were able to put aside their reflexive NIMBYism to support controversial wind-farm proposals off Cape Cod and San Francisco. And some environmental leaders have become so alarmed by the pace of global warming that they have even indicated a willingness to reopen the debate over nuclear power.
My guess, however, is that unless more enviros figure out how to prioritize their issues and engage in the kind of trade-offs and compromises needed to recapture the political center, their once vaunted movement runs the risk of falling further into irrelevancy.
Online discussion about this column
Washington Post business columnist Steven Pearlstein was online to discuss his latest column, an examination of environmentalists and their continued unwillingness to get behind liquefied natural gas projects. The transcript of the discussion is here.
Steven Pearlstein can be reached at pearlsteins@washpost.com.
FERC's map of Existing and Proposed North American LNG Terminals is here. Note that it is missing the two LNG proposals on BC's coast: Kitimat LNG at Kitimat, and Westpac Terminals (empty website) at Ridley Island, Prince Rupert.
November 11, 2005
Peak-power jolt for homeowners urged
Scott Simpson
CanWest News Service
Thursday, November 10, 2005
The provincial government should order B.C. Hydro to increase electricity rates for homeowners during peak hours, and to charge more for above-average electricity consumption, says a report released Wednesday by the B.C. Progress Board.
The advisory board to the B.C. Liberal government says British Columbians have a "false sense of security" because existing electricity rates are among the cheapest in North America -- and warns that additions to B.C.'s electricity supply will be significantly more expensive.
Hydro is already moving in the direction of variable rates with B.C.'s major industries. It will introduce a new pricing structure for industrial customers that involves a near-tripling of electricity rates on the last 10 per cent of electricity consumed in peak winter hours.
That would bump the price from 2.3 cents per kilowatt hour to 6.1 cents per kilowatt hour to reflect the higher costs of bringing new sources of electricity onto the Hydro grid. Off-peak rates will fall in the summer, allowing industry the opportunity to recoup some of its winter electricity costs.
The progress board says adopting a system of variable rates would send a signal that there are additional costs associated with consumption during peak times.
"B.C. has had the luxury of a secure supply of energy, which has resulted in complacency about where it will come from in the future and what it will cost," says the report, titled Strategic Imperatives for British Columbia's Energy Future.
The progress board was established by Premier Gordon Campbell in July 2001 to review the province's economic and social performance and to provide policy advice to government.
The report says B.C. has made only nominal additions to electricity supply in the last 20 years despite a 33 per cent increase in population over that time.
"The provincial government, through the B.C. Utilities Commission, should direct BC Hydro to introduce pricing of electricity that sends the correct signals to all consumers for their energy decisions, mindful of the government's pricing policy with respect to heritage assets," says the report.
Hydro residential and industrial customers have traditionally paid a flat rate for their power, reflecting the low-cost production coming from B.C.'s so-called 'heritage' assets -- its network of dams and electricity generating facilities on the Columbia and Peace rivers in eastern British Columbia.
New sources of electricity supply cost more. They include run-of-river hydro projects developed by the private sector, and Hydro is also mulling private wind farms, natural gas-fired generation, and a major new dam at Site C on the Peace River.
Variable pricing isn't entirely punitive -- consumers who use electricity-gobbling appliances such as dishwashers in the late evening hours could end up paying cheaper-than-standard rates as a reward for conservation.
Meanwhile, Hydro president-CEO Bob Elton warned in a speech Tuesday to the Vancouver Board of Trade that filling B.C.'s needs with imported electricity is an "increasingly risky" strategy.
B.C. currently relies on imports for 12 per cent of its electricity needs and Hydro projects that dependence to grow unless the province adds supply.
Elton said B.C. faces increased risk of supply bottlenecks due to a limited number of transmission lines, unforeseeable price-increase risks, and the risk of "severe" consequences for the economy if the present situation continues.
He said British Columbians need to be interested in the situation because "there is a long-term challenge that needs long-term planning to solve."
Later this month, Hydro will present to the B.C. Utilities Commission a plan for addressing B.C.'s long-term electricity needs. It will consist of a mix of projects, possibly including the Site C dam on the Peace River near Fort St. John.
In an interview, Elton acknowledged that Hydro's recommendations may stir up some controversy but said it is imperative for British Columbians to consider all the options and make choices that reflect the interests of the entire province.
© Times Colonist (Victoria) 2005
Energy becomes Canada's top export
By Eric Beauchesne
Times Colonist (Victoria)
11-Nov-2005
OTTAWA -- Energy has become Canada's No. 1 export, easily surpassing both machinery and equipment and automotive products, while also boosting total exports to a record high and pumping up the country's trade surplus.
"Energy has now moved firmly into first place among all our exports," senior Statistics Canada economist Philip Cross said.
The only other times that energy was Canada's top export was during the mid-1970s and early-1980s energy crises, he added.
Machinery and equipment had previously been Canada's No. 1 export, followed by auto products.
Energy exports crossed that milestone in August, according to revised figures for the month released Thursday with the September trade figures. Energy maintained that top spot in September with export sales rising above the $9-billion mark for the first time ever.
However, Canadians are also energy importers.
"The value of Canada's exports and imports both hit record highs in September, thanks to soaring outbound shipments of natural gas and inbound shipments of crude petroleum in the wake of back-to-back hurricanes," Statistics Canada said.
However, there is more to the strong trade report than just energy, other analysts noted.
"Canada's trade balance is still holding up, even in the manufacturing sector as the economy adjusts to the higher Canadian dollar," Nesbitt Burns economist Sherry Cooper said.
The strong trade performance, combined with evidence of a strong domestic economy, will reinforce the Bank of Canada's determination to continue raising interest rates to head off inflation, she and other analysts said.
"The Bank of Canada will take this surprisingly strong report, on the back of the surprising strong jobs report, as a sign that they are on the right path and will continue to raise rates," Cooper said.
In September, exports jumped 2.8 per cent to a record $39.8 billion, while imports posted a more moderate 1.4 per cent gain to a record $32.7 billion, Statistics Canada said.
As a result, the trade surplus rose to $7 billion, $1 billion more than expected, and up from an upwardly revised $6.4 billion in August, it said.
"Hurricanes Katrina and Rita sent natural gas prices soaring, resulting in a big gain in the value of natural gas exports going south of the border," it said, noting that about three-quarters of the increase in exports was due to higher natural gas prices.
Canada's surplus with the U.S. exceeded $10.7 billion, the second highest level ever, and up from $9.4 billion in August, as exports to the U.S. surged while imports from there edged down.
Canada's trade deficit with other countries, however, rose to $3.7 billion from $3 billion, as exports overseas shrank slightly, while imports surged nearly six per cent, reflecting increases in consumer goods from China and higher prices for oil from Saudi Arabia and Russia.
Exports of natural gas surged 26.7 per cent in September to a near record $4.4 billion, reflecting a 25 per cent jump in prices, which followed a 14.6 per cent surge in August. While petroleum-product exports also rose, crude-oil exports continued to edge down from what was a record high two months earlier.
Times Colonist (Victoria), Page C06, 11-Nov-2005
Alberta oilsand juggernaut 'could crush B.C. growth'
By Scott Simpson
VANCOUVER -- Alberta's oilsands are an economic juggernaut that could crush British Columbia's efforts to expand its northeast natural gas industry, a new B.C. Progress Board report warns.
The report says British Columbia should seek a collaboration with Alberta on job, transportation, and export strategies, lest Alberta simply "outbid' B.C. for gas industry workers and crimp economic growth in this province.
The report says B.C. has a lot of leverage to apply, if necessary, to encourage Alberta's cooperation.
B.C. assets include highways, transmission lines, oil pipelines, rail lines and ports without which Alberta cannot get many of its energy products -- including crude oil, natural gas, coal and electricity -- to market, says the report.
For example, Alberta-based Enbridge Pipelines just announced a $4 billion pipeline project running from Edmonton to the B.C. port town of Kitimat, planning to export Alberta oil sands crude to markets in China and the United States.
"In many ways, British Columbia holds the key to getting those products and services to market," says the report.
"Just as British Columbia is well advised to strike a joint labour strategy with Alberta to protect British Columbia interests, Alberta is well advised to develop a joint export strategy with British Columbia to protect Alberta interests."
The progress board was created in 2001 by Premier Gordon Campbell to serve as a senior policy advisory body to the provincial government.
This week it issued a report, Strategic Imperatives for British Columbia's Energy Future, that says B.C. must "protect and promote" its considerable energy assets -- and recognize that those assets are central to maintaining and improving B.C.'s high standard of living.
It says that "the development of the Alberta oil sands and the need to get both oil and electricity from the development to market provide an unparalleled opportunity for cooperation and resulting benefit between the two provinces."
Conversely, B.C. has relied on Alberta-based labour and investment to develop the gas industry in this province -- it uses pipelines built by Alberta-based companies to carry some of its gas to markets in eastern Canada and the United States.
"The development of the Alberta oil sands will put the Alberta government in a strong surplus position fiscally for years to come.
"Alberta's coming wealth will create a potential threat to British Coloumbia as better wages, take-home pay, health services and access to education in Alberta are likely to put enormous pressure on the British Columbia labour market, particularly in the area of skilled trades and engineers."
The report notes that those skill sets are "in short supply worldwide."
"Moreover they are the very skill sets British Columbia needs to grow its energy sector and to complete a wide array of transportation projects now underway in the province."
BCUC approves Kinder Morgan takeover of Terasen
KMI - Terasen Acquisition Decision
BC Utilities Commission, 10-Nov-2005
KMI - Terasen Acquisition Application
Document Registry at BC Utilities Commission
Terasen sale to Texas firm wins okay
Scott Simpson, Vancouver Sun, 11-Nov-2005
KMI - Terasen Acquisition Decision
BC Utilities Commission
10-Nov-2005
NOW THEREFORE the Commission, for the reasons stated in the Decision, orders that the Application is approved subject to the conditions contained in the Decision accompanying this Order.
DATED at the City of Vancouver, in the Province of British Columbia, this 10th day of November 2005.
BY ORDER
Original signed by:
Robert H. Hobbs
Chair
KMI - Terasen Acquisition Decision
Terasen sale to Texas firm wins okay
By Scott Simpson
Vancouver Sun
11-Nov-2005
The $6.9-billion sale of Terasen Inc. to a Texas energy firm can proceed, albeit with conditions that protect the interest of the Vancouver-based utility company's 875,000 customers, the British Columbia Utilities Commission ruled on Thursday.
The BCUC, in a 51-page ruling, said Kinder Morgan Inc.'s experience at operating natural gas systems, coupled with Terasen's management record and the continuing scrutiny of the utilities commission, assures that the public's interest will be served by the transaction.
The commission said it received more than 8,000 letters of comment on the sale, from "individuals, businesses, communities, community organizations, and associations," including about 650 form letters.
Last month, the BCUC described the volume of correspondence it had received on the sale as a "record" for any proceeding.
"Virtually all of the letters of comment oppose the transaction," with the "vast majority" expressing concern about foreign ownership of Terasen.
Terasen is a Toronto Stock Exchange-listed company whose shareholders voted 96 per cent in October to sell their shares to Kinder Morgan at an attractive premium to their recent trading value.
Other public objections included "general anger," the lack of oral public hearings on the transaction, "a perceived loss of control/sovereignty over resources (energy security)," a presumed reduction in quality of service, Kinder Morgan's spotty environmental record in the U.S., and general distrust of the United States.
However, the commission says, most of the objections are based on misunderstanding of Terasen's status as a publicly-traded private-sector company, and the presumed jurisdiction of the BCUC.
For example, the BCUC notes, concerns about foreign ownership are the responsibility of Industry Canada, a federal agency, and can only be reviewed through the Investment Canada Act.
Industry Canada has not yet rendered a verdict on the sale.
"The Commission Panel appreciates the input of so many citizens and has carefully reviewed and considered the concerns raised by the public," says the decision, which is signed by BCUC chair and CEO Robert Hobbs, commissioner Lori Boychuk, and commissioner Robert Whitehead.
"The Commission Panel is cognizant of the strong public opposition towards this Transaction, as exhibited by the number and tone of letters received. However, the Commission is also mindful that it must consider and adjudicate this application within its statutory mandate and the relevant provisions of the [Utilities Commission Act].
"The Commission Panel notes that much of the opposition to this transaction appears to be based on misunderstandings about the existing ownership and structure of Terasen, the structure of the natural gas market in B.C., and the authority of this Commission over public utilities operating in B.C."
The decision notes that there were restrictions on foreign ownership of Terasen shares when the company, formerly known as B.C. Gas, was created in the late 1980s out of an amalgam of private and public assets.
"The government of B.C. removed these restrictions in 2003," the ruling notes.
The BCUC put a number of restrictions on the sale and notes that the commission will continue to have jurisdiction over Kinder Morgan -- including regulating gas rates charged to customers and quality of service.
Restrictions include forbidding Kinder Morgan to transfer its Terasen customer and billing information out of British Columbia, and requiring that the company not strip away revenue that should be dedicated to maintaining Terasen's existing quality of service.
Kinder Morgan has already announced that it will keep the Terasen Gas name, as well as all of the company's employees except for some senior managers. The company has also said that, over the longer term, it expects to add more employees in B.C. and invest in new pipeline infrastructure in Western Canada.
B.C. Energy Minister Richard Neufeld said in an interview that the BCUC's requirement that Terasen and Kinder Morgan maintain "totally separate" finances "makes good sense" because it will protect the B.C. operation's ability to borrow money.
Neufeld described the New Democratic Party's anti-sale campaign as "pure politics" because Kinder Morgan won't own B.C. natural gas resources -- just the pipelines that deliver them.
"They will still be regulated by the B.C. Utilities Commission for what they pay for the services that are delivered to them by pipes. The cost of natural gas is priced on the North American market. That's just a pass-through on the costs -- although those pass-through costs are still reviewed by the B.C. Utilities Commission. They were before this deal and they will continue to be."
Terasen president and CEO John Reid said in a prepared statement that the company is "pleased with the Commission's decision and we remain confident that combining the assets, skills and people of Terasen with Kinder Morgan will provide long-term value and economic benefits to Canadians.
"There will be no change of service levels for Terasen Gas customers as a result of this acquisition. Natural gas consumers in BC will continue to be served by a first-class utility committed to public and employees safety and meeting the energy needs of its customers," Reid added.
Kinder Morgan chairman and CEO Richard Kinder echoed Reid's comments.
"We are pleased with the Commission's order and look forward to providing the same safe, reliable services to which Terasen's customers have become accustomed," Kinder said in a prepared statement.
"When the transaction is completed, the transition for Terasen's approximately 875,000 natural gas distribution customers in British Columbia should be seamless. The Terasen Gas name will remain the same, its headquarters will continue to be in Greater Vancouver (Surrey) and the BCUC will still maintain regulatory supervision and oversight of the company. Additionally, we intend to retain virtually all of the Terasen Gas employees, policies and procedures."
ssimpson@png.canwest.com
- - -
TAKEOVER TIMELINE:
Aug. 1: Kinder Morgan announces $6.9-billion bid to buy Terasen Inc.
Oct. 14: B.C. Utilities Commission reports record amount of correspondence about the sale, most object.
Oct. 19: Terasen shareholders vote 96% in favour of deal.
Oct. 24: BCUC rules out holding oral public hearing on sale, stays exclusively with written hearing.
Nov. 10: BCUC approves sale.
What's next: Industry Canada to render verdict on sale under Investment Canada Act.
November 10, 2005
BC SEA sponsors events in November
Victoria, Sat & Sun, Nov 12 & 13
Showcase Event:
Sustainable Energy Now!
Solving the Energy Puzzle
University Canada West
950 Kings Rd. in Quadra Village
Vancouver, Tue, Nov 22
Climate Change: The Biggest Show on Earth
UBC Robson Square, 7 pm
For more info:
www.bcsea.org
November 09, 2005
Powerline route ignores E&N corridor potential
By Dunc MALCOLM
Goldstream News Gazette
Nov 09 2005
A presentation concerning a proposed underground power transmission line produced sparks at the Nov. 1 council meeting in View Royal.
Sea Breeze Power Corporation, a Vancouver-based company, informed council of the proposed route for the underground and underwater transmission cable that will carry power from its Knob Hill wind farm, through View Royal to McCauley Point and on to Port Angeles, Wash.
Mike Wise, the project manager for the Juan de Fuca transmission cable, briefed council on the Sea Breeze's upcoming application to the National Energy Board.
Wise said he hopes the application will be heard by next spring and construction can begin in t hefallof2006.
According to Wise, although the application has to include alternative routes for the underground cable, the preferred route would see the cable running from the Pike Lake sub-station and along the hydro right-of-way between Thetis Lake and Francis King regional parks. The route would split into two lines at Creed Road with each line running to a single line along Old Island Highway, to Craigflower Road and south on Lampson Street.
The alternatives included a line through Thetis Lake Park and along Highland Road and a route following Munn's Road. There were no alternative routes put forward for the Old Island Highway section of the route.
Council had expected that Sea Breeze would discuss various alternatives with them prior to settling on a preferred route.
Indeed, it was the lack of alternatives and the logic behind Sea Breeze's preferred route that disturbed council the most. Coun. John Rogers asked pointedly why the E&N rail right-of-way was not included in the alternative routes to be presented to the federal government.
Wise stated that for the section of line north of Old Island Highway, Sea Breeze excluded the Munn's Road and Thetis Lake Park alternatives after identifying problems associated with both routes. He said the number of trees in Thetis and the park's topography made it unsuitable for an underground cable and that the Munn's Road route was too windy and took the line too close to residences to allow for safe.
"Like the Old Island Highway," responded Rogers. "If traffic is a consideration, then go along the E&N right-of-way," he added. Council also expressed concerns over the possible need to relocate existing utilities on Old Island Highway to accommodate the Sea Breeze cable and who would cover the cost.
"That could be negotiated," replied Wise.
The proposed line would cross the Juan de Fuca Strait and come ashore in Port Angeles, Wash. It would run beneath city streets and tie into the Bonneville power station - about a mile inland.
According to Scott McLain, Director of Public Works and Power Systems for Port Angeles, although no formal application has been made by Sea Breeze, any costs stemming from the city having to temporarily move or permanently relocate any utilities will be the responsibility of Sea Breeze. "It is an absolute condition of the license to use the public right-of-way," explained McLain.
In referring to the map showing the cable's proposed route along city streets, View Royal Mayor Graham Hill stated emphatically, "The town would like to see that red line gone."
Added Rogers, "To put it another way, we want to see the E&N back on as an alternative (to Sea Breeze's application before the NRB)."
Federal Court of Appeal Kills Sumas 2 Appeal
News Release
Sierra Legal Defense Fund
November 09, 2005
VANCOUVER - In a startling end to a long running dispute, the Federal Court of Appeal today dismissed Sumas Energy 2's challenge to the National Energy Board's March 2004 decision. The original ruling denied SE2 permission to build an international power line connecting its Washington State power plant to BC Hydro's power grid near Abbotsford.
After two full days of argument, the Court took the rare step of issuing a decision on the appeal immediately, finding that SE2's appeal has no merit and should be dismissed. It also ordered SE2 to pay the costs of the parties that have opposed its appeal.
"This is a huge, huge victory for opponents of SE2" said Sierra Legal Defence Fund lawyer Tim Howard. "It is extremely rare for the Court to dismiss an appeal right at the hearing, and the Court's decision to do so states loud and clear that SE2's appeal has no merit whatsoever."
Sierra Legal worked with Thomas Berger, Q.C. who spoke on behalf of the Society Promoting Environmental Conservation and the David Suzuki Foundation at the Federal Court of Appeal hearing. SE2 had argued that the NEB decision was not valid and that the Board overstepped its jurisdiction by making a decision involving a foreign company. The American Company unsuccessfully tried to use NAFTA to justify going ahead with the power project.
"This is good news for Abbotsford and everyone living near the U.S. border. It sets an important precedent for U.S. power companies looking to set up shop on the border, where their emissions will pollute Canadian airsheds, so that they don't have to deal with strict state laws governing domestic air pollution," said SPEC Executive Director Karen Wristen. "Our national regulators have a duty to protect the health of Canadians too, and the Court has confirmed it today.
Morag Carter, climate change program director for the David Suzuki Foundation added, "This is a huge victory for British Columbians. The judge's decision sends a clear message that air pollution and public health should be major considerations when it comes to energy supply. It bolsters the case for clean, renewable energy and a new focus on conservation and efficiency."
While the Court issued the decision denying the appeal today, it will still write detailed reasons to support that decision for release at a later date. SE2 could apply to the Supreme Court of Canada for permission to bring a further appeal. Background on the Sumas 2 hearings can be found online at www.sierralegal.org.
-30-
For more information, please contact:
Sierra Legal Defence Fund:
Tim Howard, lawyer
Cell: (604) 313-3132, (604) 681-4146
David Suzuki Foundation:
Morag Carter
Climate change program director
(604) 732-4228 ext. 280, cell: (778) 386-1448
SPEC:
Karen Wristen
Executive Director
(604) 736-7732, cell: (604) 788-5634
Sierra Legal Defence Fund (www.sierralegal.org) is a national non-profit organization dedicated to environmental justice.
November 08, 2005
Sea Breeze response to BCUC IR#1
concering Vancouver Island Cable
On October 6, 2005, Sea Breeze Power Corp. filed an application to build a transmission cable system from the Lower Mainland (Surrey's Ingledow Substation) to Vancouver Island (Victoria's Pike Substation). See Sea Breeze: Vancouver Island Cable
See also, BCUC Sea Breeze - VIC CPCN Project site (link)
On October 17, the BCUC presented Sea Breeze with its first Information Request (IR#1). The extensive IR was challenging, and intervenors in both the Sea Breeze - VIC proceeding and the competing BCTC - VITR proceeding have awaited the Sea Breeze response with interest.
On November 7. Sea Breeze responded in a set of documents totalling 40 megabytes. The entire response is available in one humungous download at the BCUC Sea Breeze - VIC CPCN Project site. (link)
The response is also available at the Vancouver Island Cable website (www.vancouverislandcable.com), in smaller, more convenient chunks: 269 page main document, plus separate appendices.
One of the more interesting BCUC questions was 1.11.3
1.11.3 If the Commission were to conclude that HVDC Light® technology as set out in the VIC Application and/or the VIC route is the preferred option, is there any reason why it should not direct BCTC to adopt this option?
RESPONSE:
Sea Breeze VCC is satisfied that the near term transmission needs of Vancouver Island could be met in a satisfactory way if the BCUC were to direct BCTC to utilize HVDC Light® technology, provided the interconnection points to be used are Ingledow and Pike, as proposed in the VIC Application.
However, in the circumstances, it would be unfair and unnecessary for the BCUC to grant a CPCN to BCTC for that purpose (as opposed to Sea Breeze VCC), given that BCTC has, to date, demonstrated a complete lack of interest in the HVDC Light® option, and has failed to adequately consider that option in
the VITR Application, despite Sea Breeze VCC's active promotion of HVDC Light® as providing the best solution for the Island's transmission needs; and, considering that, as a result, Sea Breeze VCC has now dedicated very substantial resources and has incurred very significant expense to put forward the VIC Application.
ABB's support for the Sea Breeze VCC proposal, its involvement as part of Sea Breeze VCC's technical team, and its contemplated responsibility for design, delivery, installation and commissioning of the parts of the system under a turnkey contract are also critical factors which the BCUC should consider. If, despite the foregoing, the BCUC does grant a CPCN to BCTC for the purpose of constructing an HVDC Light® facility substantially similar to what Sea Breeze VCC has proposed in the VIC Application:
• the BCUC should make an order under section 118 of the Utilities Commission Act requiring BCTC to compensate Sea Breeze VCC for all of the substantial costs it has incurred over the past two years prosecuting the HVDC Light® solution with the BCUC and BCTC; and
• the BCUC should also require BCTC to employ an objective project manager with experience in the construction/installation of HVDC Light® technology, to ensure that the prejudicial attitude previously demonstrated by BCTC toward this technology does not create a situation that could compromise the timeliness and effectiveness of the Project.
---
Spinning tar into oil
As Canada rushes to supply fuel-hungry nations by tapping its oil sands, northern Alberta is transforming from a sleepy backwoods into a bustling cash cow
Karen Warren / Chronicle
The eight-story-tall cranes used to scoop up the oil sands tower over the landscape near Fort McMurray in Alberta, Canada. With crude prices hanging so high, Canada's unconventional oil sands — or tar sands, as they're often called — have become wildly profitable, adding more than 170 billion barrels of oil to Canada's reserve base
By LYNN J. COOK
Copyright 2005 Houston Chronicle
Nov. 6, 2005, 12:49AM
CALGARY, ALBERTA - Think Saudi Arabia has a lock on oil? Think again.
Turns out Canada has almost as much crude, if not more.
For years Canada has pumped oil from traditional wells, shipping it across the border to U.S. consumers.
In fact, our neighbor to the north is the top oil exporter to the United States. (Saudi Arabia ranks third after Mexico.)
But with crude prices hanging so high, Canada's unconventional oil sands — or tar sands, as they're often called — have become wildly profitable, adding more than 170 billion barrels of oil to Canada's reserve base.
Today, the sands produce as much oil as Texas — about 1 million barrels a day.
Output is set to nearly triple during the next 10 years, and the Canadian Association of Petroleum Producers is predicting a yield of 6 million barrels of oil a day by 2030, a little more than half of what Saudi Arabia produces now.
This swelling supply will feed Americans' voracious appetite for oil far into the future, but the promise is not without problems.
Extracting valuable crude oil from sand is labor-intensive and expensive. And the process, which involves leveling acres of evergreens and spewing greenhouse gases into the air, has riled environmentalists.
Still, energy companies such as Shell, Suncor, Exxon Mobil and ConocoPhillips press on.
As Bob Gibson, managing director of independent investment bank Mustang Capital Partners of Calgary, points out: "All the issues get diluted at $60 oil."
From above Fort McMurray, hundreds of miles north of the U.S. border, the landscape looks more like the cratered surface of the moon than the boreal forest of Alberta.
The sandy soil is sticky with crude, so energy companies have rushed in to clear-cut the land and strip mine for oil where vast stretches of pines and firs once stood.
At the Millennium mine, operated by Calgary-based Suncor, eight-story-tall cranes fitted with enormous shovels carve up the earth, scooping it into the back of dump trucks so big that operators have to climb a staircase to get into the cab.
Oil-soaked sand — called bitumen — is hauled to giant bins and dumped into an elaborate system of machinery, where it is crushed, washed, superheated and chemically treated. What's finally spun out is thick, sludgy crude that can be turned into, for example, the asphalt used to pave roads or the gasoline that fuels the vehicles driven on them.
Jim Proudfoot, Suncor's chief safety engineer, said 1,000 operators work in the mines every day as part of a round-the-clock operation that has a goal similar to that of air traffic control — constant movement.
That's because to wring one barrel of crude from the oil sands, 2 tons of earth has to be pulled from the mine and processed.
At Suncor, more than 330,000 tons of earth is excavated to produce 166,000 barrels of oil every day.
The equipment used to tap the oil sands is expensive, energy-intensive and beyond huge.
"You know how they say everything is big in Texas? Well, everything's big in Fort McMurray, too," Proudfoot said.
Caterpillar-brand dump trucks weighing 360 tons buckle the dirt roads beneath them as they ferry loads of bitumen out of the mine.
In the hot summer months, a wave of road will crest in front of the trucks' tires. They kick up so much dust, water trucks have to routinely spray the pathways that lace through the mine.
The trucks' 925-gallon tanks hold enough fuel to fill 40 new-model Hummers and burn through it in about 18 hours.
Even more immense are the cranes that gouge out the pits, So large there are no diesel engines big enough to run them, they are plugged into a power station by supersize electrical cables that worm their way around the site.
In the winter, Fort McMurray's thermometer can dip to 40 degrees below zero — the point at which mercury freezes. Then, the oil sands often come off in chunks the size of a Volkswagen bus, breaking several "teeth" on the shovel every shift. The cost to replace one tooth: $3,500.
When a dump truck needs a new tire it costs $50,000.
"I describe it as the ultimate big-toys-for-big-boys scene," Gibson said, though Suncor likes to note that 20 percent of its mine work force is female.
Only about 18 percent of Canada's oil sands are accessible by mining. The remainder is locked too deep underground to be accessed without drilling. Energy companies are turning to horizontal drilling and flooding wells with steam and fire to get at it.
The most common technology used when drilling in the oil sands is steam-assisted gravity drainage — or SAG-D.
Two horizontal wells are drilled parallel to each other. Piping-hot steam is blasted down the top chamber to heat the hardened bitumen, allowing the warmed, gooey oil sands to drain into the lower chamber, where it can be pumped out.
But once it gets to the surface, there are more headaches.
At about 50 degrees Fahrenheit, bitumen has the consistency of a hockey puck. So just getting the carbon-intensive solid to flow through a pipeline requires a lot of chemicals and condensate to dilute it.
Right now, most oil sands crude gets upgraded and refined pretty close to home in Alberta's Edmonton industrial complex and across the border in Washington state and the Midwest. Several proposed pipelines could take it a lot farther afield, namely to the Gulf Coast and China.
Enbridge, which has offices in Houston, is working on a project dubbed "Gateway," which would run oil sands crude across the Rockies to Kitimat on British Columbia's coast. The $4.1 billion project would require a new deepwater port to be built so supertankers could dock there to pull away with cargo bound for China or California.
Brian Fowler, the commercial manager for the Gateway project, said refineries in Los Angeles and San Francisco already are capable of processing heavy crude because they get that kind of supply from Alaska, where the resource stream is slowly but surely tapering off.
But it's China's demand for oil, which has been increasing even faster than U.S. demand, that's captivated Enbridge.
"Candidly, we're underpinning the success of this profitability to Asia," Fowler said.
He said most people don't realize it, but Canada is closer than the Middle East to China's major ports. A supertanker of crude takes 34 days to travel from Canada and 45 days from Saudi Arabia, he said.
The Gateway project will sink or swim based on whether companies that ship to Asia will agree to 15-year commitments. It's a lot to ask since most tanker contracts are locked in for only one year.
"It takes five years to build a pipeline, and, I'll tell you, getting a refinery to make that decision five years in advance is tough," Fowler said.
Houston-based pipeline company Kinder Morgan is spending $5.6 billion to buy Terasen, which operates a trans-mountain crude pipeline that moved oil sands output to Vancouver.
The company, which mostly operates natural gas pipelines, likely will double that line's capacity and continue to expand in the oil sands region, said Kinder Morgan President Park Shaper.
"We will remain agnostic," he said. "We're happy to go whatever direction people want as long as they're paying for it."
Enbridge and Exxon Mobil also are working to reverse the direction of some pipelines that ran Gulf Coast crude up to the Midwest. Now, those pipes will bring Canadian crude down to Cushing, Okla., and the heavy-oil-refining complexes on the Gulf Coast.
Not everybody in Alberta is happy about the way the oil sands are progressing.
A recent report from the University of Alberta's Parkland Institute said Canada is backsliding into the ancient role of "hewers of wood and drawers of water" and neglecting the development of Canadian industry.
The report frets about pipeline expansion into the United States, saying it has the potential to destroy Alberta's refining and petrochemical industry. The report's conclusion: Without drastic measures to protect itself, Canada could quickly turn into one more pool of raw resources for the United States to pillage.
The Alberta government and 16 energy companies are considering a huge, new
$6 billion refining and petrochemicals complex near Edmonton that would churn out upgraded — and more expensive — fuels and chemicals, keeping more money in Alberta. The proposal is in its initial stages.
Alberta Energy Minister Greg Melchin is on the ropes. He wants to make sure the sun doesn't set on Alberta's heyday, but a lot of Canadians are fighting mad about the province's economic windfall and greenhouse-gas emissions.
Despite levying only a 1 percent tax on most oil sands projects right now, Alberta is taking in almost as much money as the entire federal government.
The province also gets royalties from regular oil wells and earns even more from natural gas production.
The Canadian Association of Petroleum Producers said Alberta's energy prosperity is creating new wealth and jobs in other Canadian cities, including Ontario, where steel is manufactured.
Alberta, which became the only debt-free province in Canada last year, has a budget surplus, so the provincial government is cutting a $400 check to every man, woman and child who lives there.
The province, which churns out the lion's share of the country's carbon dioxide emissions, has put Canada's commitment to the Kyoto treaty on climate control in peril.
The accord calls for Canada to slash greenhouse-gas emissions — carbon dioxide output — from its 1990 benchmark level. That reduction is supposed to be achieved by 2012, but, thanks in large part to activity in the oil sands, Canada's carbon emissions have jumped more than 20 percent.
Many policymakers and energy executives say there's a solution that can keep the oil sands progressing while keeping Kyoto alive. None seems willing — or able — to spell out exactly what that answer is.
Shaper said Kinder Morgan is interested in carbon sequestration — binding up the greenhouse gas and injecting it back into the ground.
The company has experience with it in Texas because it runs a pipeline through which captured carbon dioxide is taken to old oil fields and pushed down wells to force more oil to the surface.
Energy Minister Melchin likes the idea of sequestration but said that, as it stands, the economics are marginal at
best.
One industry insider said that despite Kyoto's impending deadline, most decision makers aren't giving it too much thought.
"Not really," he said."Everybody's too busy making money."
Coal Smoke Adds to Band's Cancer Alarm
Elk Falls mill We Wai Kai say they were steamrolled by mill's permit approval.
By Quentin Dodd
TheTyee.ca
Published: November 4, 2005
A Campbell River area mill has been granted permission to continue to burn coal, outraging leaders of nearby First Nations band worried about high cancer rates among their people.
Less than a month after the We Wai Kai First Nation on BC's Quadra Island formally complained that the government hadn't met the law by consulting with them sufficiently, the permit approval was rushed into place, claim band leaders and their lawyer.
The granting of the permit to the Elk Falls mill is the latest twist in a struggle by the We Wai Kai to discover why, over the last decade, they've seen much higher levels of cancer at their Cape Mudge Village Reserve on Quadra Island than at their Quinsam Reserve in Campbell River.
The reason, they say, may be that the Cape Mudge reserve receives higher and more regular seasonal fallout from air-borne smoke-stack emissions from the nearby Catalyst (formerly Norske Skog) mill than does the Quinsam Reserve. For years the band has requested testing of mill emissions at Cape Mudge to shed light on their health crisis.
Toxic plume?
For several years the mill has been testing the burning of coal as an auxiliary fuel in its boilers, and applied to continue the practice indefinitely.
The We Wai Kai, through Vancouver lawyer Alan Donovan, informed the government they didn't want to see the mill's coal-burning test-period permit extended until proper monitoring studies have been done directly at the island-village reserve to assess the amount and nature of chemicals the site receives each year during the peak season from August through October. During that period, prevailing wind frequently blows the mill emissions over Quadra Island that eventually settle directly over the village.
On Thursday, the We Wai Kai received notification that the provincial waste management branch has granted Catalyst a permit to burn coal on an indefinite basis, according to band administrator Brian Kelly.
The permit-approval notification to the We Wai Kai indicates the mill will be required to install and operate an emissions-monitoring station at the village by April 30, as the band had long been requesting, says Kelly. But it's still not clear how long the monitoring station will be required to be in place, says Kelly.
Band demands more consultation
Kelly and other band leaders charge the government has failed to properly consult with the band.
He said after Donovan's letter went to regional waste manager Randy Alexander, the official extended the public-consultation period by a month to the end of October. Alexander let it be known that a decision could still be handed down before Oct. 31 if the government agency was satisfied it had addressed the First Nation's concerns and issues, and then held a meeting which lasted just a couple of hours with a few band officials.
"There wasn't time to meet with the (Band) Council," Kelly said, adding that the meeting had basically consisted of a question-and-answer exchange in which the government representatives asked questions to find out what the First Nation's main concerns were, and the Band personnel outlined their biggest concerns.
That, Kelly said, does not constitute sufficient consultation, and the council will discuss the situation early next week to decide its next move.
Mirror image communities
Backing the band on coal burning issue is the Sierra Club and activists running the Reach For Unbleached (RFU) campaign against pulp mill pollution.
The Cape Mudge Reserve and its sister community the Quinsam Reserve share similar age, gender and population-size figures, as well as identical lifestyle and diet patterns. Yet Cape Mudge villagers, exposed to more of the mill's air pollution, have three times the cancer rate recorded by its sister community over more than 10 years.
Recently, in preparation for its request to extend its temporary permit to burn coal, the Catalyst mill finally did launch a study of its air emissions. But the We Wai Kai claim that study wasn't going to include a monitoring or sampling station at the We Wai Kai's Cape Mudge village, even during the August-through-October period when the area of the village receives the plume of emissions from the mill's stacks most often.
'Extraordinarily high cancer death rates'
Donovan's letter to the provincial government on behalf of the First Nation, citing "respiratory ailments and extraordinarily high cancer death rates", reminded that Cape Mudge band members had for years asked unsuccessfully for suitable mill-emissions monitoring at the village.
Donovan said that studies should be conducted over at least two years, to cover that number of peak-fallout periods.
Upon learning of the terms of the permit approval on Thursday, Donovan, accused the government of "rushing ahead with little to no scientific data. They don't have the science and they haven't done the groundwork for a properly-informed decision."
"Additional contamination from the burning of coal would create further damage to the health, safety and enjoyment of life of this aboriginal community," says Donovan's letter on behalf of the band. In October, mill manager Norm Facey downplayed the band's concerns, telling Canadian Press that if the mill were causing health problems, mill employees would be the ones most affected and the Workers Compensation Board would have stepped in.
Facey also said that if the Elk Falls mill was not allowed to continue burning coal, it would seriously hurt the mill's bottom line.
Campbell River based journalist Quentin Dodd is a regular contributor to The Tyee.
The Conscience of Canada strikes again
BOOK REVIEW: Too Close for Comfort: Canada's Future Within Fortress North America
By JENEFER CURTIS
The Globe and Mail
Saturday, November 5, 2005
Back in the seventies, an energetic housewife named Maude Barlow jumped onto the feminism bandwagon. A few short years later, she was advising prime minister Pierre Trudeau on women's issues. When she failed in her bid for federal office, she helped found the Council of Canadians, now Canada's main citizen's advocacy group. Ever since, along with a few other citizen's groups, she and the council have been the conscience of Canadian politics. Free trade, the bank mergers, the Multilateral Agreement on Investment, safe milk, public pensions -- no other group has bellowed a critical voice at as many issues as the Council of Canadians.
Sadly, thanks to some of its methods and the elite accommodation that plagues today's Parliament Hill and provincial legislatures, the council has had little actual influence. But it raises awareness. And Barlow churns out a lot of books. This one is her 14th. Every Canadian should read it, its oversights notwithstanding.
Barlow's thesis in Too Close for Comfort is that, driven by the interests of both American and Canadian big business, our government is committed to create a "North American fortress with a common economic, security resource and regulatory and foreign policy framework." This despite antipathy by Canadians toward U.S. President George Bush.
Bush is probably the chief villain in this typical Barlovian call-to-arms, followed closely by the Canadian Council of Chief Executives' Thomas D'Aquino. The latter, Barlow delights in reporting, went on a 10-city "tour" of the United States, apologizing for Canada's refusal to support the Ballistic Missile Defence Plan. John Manley, positioned here as an accomplice of D'Aquino and referred to by one source as "the politician in whom the Bush administration had the greatest trust," and Conservative Party Leader Stephen Harper also get severely scolded.
Barlow's catalyst for the "deep integration" of our two countries (Mexico is hardly mentioned, despite the title's reference to North America) is security measures. The U.S. government is "retooling its military" to the annual tune, in 2005, of $445-billion -- the Iraq occupation alone is costing $220-billion -- and we are following suit, copying its laws, increasingly sharing information with it and potentially allowing for unprecedented invasions of privacy and violations of human rights.
She rightly attacks Bill C-36, the Anti-Terrorism Act, put in place right after 9/11; its sweeping powers include the rights to carry out a preventive arrest without warning, compel a person believed to have information about a terrorist to testify before a judge (and thereby remove a person's right to remain silent), wiretap suspected terrorist groups for up to a year, and lay criminal charges against anyone who knowingly participates in activities of a terrorist group. The bill's broadened definition of terrorism is such that, as academics have commented, South Africa's Nelson Mandela would be considered a terrorist.
And she offers up dozens of smaller yet eerie examples: What about the fact that the private data of thousands of Canadians with outstanding student loans is now available on request by U.S. Homeland Security officials, thanks to the sale of the Canadian Imperial Bank of Commerce student loan subsidiary Edulinx to a U.S. company called Nelnet?
Did you know that the new U.S. Ambassador to Canada, David Wilkins, was once campaign chairman for the late Strom Thurmond, the former senator most known for his opposition to equality for blacks? Barlow spends too much time passing on such accusations and lamenting the neo-conservative movement, the rise of the Christian right and U.S. military aggression before coming to the crux of the book: the "incremental and systemic harmonization of Canadian and American regulations and standards governing health, food safety and all aspects of the environment."
Anyone who works with a border-associated body in Ottawa can vouch for the accuracy of this phrase. They will tell you, as Barlow does, about "Smart Regulations," a laborious federal government initiative that is bringing countless regulations in line with international trade and investment policies. (That this initiative was started before 9/11 disrupts her thesis that this whole "fortress" has its roots in security matters.)
Many of Barlow's evil ramifications of Smart Regulations are factually correct: that it is crystallizing relationships with like U.S. bodies, that deregulation of certain industries is happening and that certain U.S. methods might infiltrate Canada. For instance, if C-27, the Canadian Food Inspection Agency Enforcement Act, becomes law, there is evidence that the U.S. preference for industrial livestock feed, which allegedly caused bovine spongiform encephalitis (BSE), will prevail here, over our more costly family-farm methods.
The book contains some oversights, a glaring one being the fact that a document she quotes frequently -- the CCCE's final report from its Task Force on the Future of North America -- was rejected by current Minister for Public Safety Anne McLellan. Also, many of our anti-terrorism measures came in response to our international obligations, and are not evidence of kowtowing to the United States. As well, her sources all seem to be activists or fringe groups. If she had, for example, talked to a government bureaucrat, she might realize that the line between "harmonization" and "co-operation" is fine, and that Canada is holding onto "made-in-Canada" approaches in several policy areas.
Moreover, there are examples where working together with Americans might be advantageous to Canada. Consider again the BSE crisis. "If we had openly shared all the science with the States," one agricultural insider recently commented, " they might not have been able to justify closing the border on a food-safety basis as they did."
But Barlow is onto something important, especially in the area of security, where any government always risks disrupting that delicate balance of protecting both the community and individual freedoms and privacy. The Senate's report on the Anti-Terrorism Act -- essentially a review-to-date of the legislation -- is due out Dec. 18. Already, the government has claimed that the contentious clauses in the act have been used sparingly, a sheepish defence if ever there was one.
Meanwhile, as retired Globe and Mail political columnist Hugh Winsor wrote this week, Canada's Muslim and Arab communities, thanks to U.S.-inspired heavy-handedness on the part of our security services, are beginning to feel like second-class citizens.
She may make a few errors, but the wake-up call that Barlow sends out in this informative and timely book more than makes up for them.
Jenefer Curtis is an Ottawa political writer. Her book The Hired Guns: How Lobbyists are Shaping Canada will be published next spring.
Dates in BC from Maude Barlow's speaking tour:
November 7 Prince George, British Columbia
University of Northern British Columbia, CANFOR Room
This event is co-sponsored by Prince George PIRG 7:00 p.m.
November 8 Parksville, British Columbia
Parksville Community and Conference Center
132 Jensen Avenue East
Sponsored by Oceanside Coalition for Strong Communities, 7:00-9:00 pm
November 9 Victoria, British Columbia
The Da Vinci Centre, 195 Bay St. (Victoria West) 7:30 p.m.
November 10 Vancouver, British Columbia
Maritime Labour Centre,1880 Triumph St.
(Triumph and Victoria) 7:30 p.m.
Council of Canadians website for Too Close for Comfort
November 02, 2005
Is Grid West Dead? - RTO spells inefficiency in power
Compromise on unified power grid is blocked
Ted Sickinger, The Oregonian, 02-Nov-2005
RTO spells inefficiency in power
Steve Johnson, Seattle Post Intelligencer, 01-Nov-2005
Non-profit agencies keep the lights on
James P. Thorgerson, Seattle Post-Intelligencer, 20-Oct-2005
Grid West: Home Page
Grid West: Current Activities Overview, 29-Aug-2005
Compromise on unified power grid is blocked
Ted Sickinger
The Oregonian
02-Nov-2005
The Bonneville Power Administration and a cast of utilities, independent power generators, Native American tribes, environmental groups, regulators and consumer groups spent millions of dollars over the past decade haggling over how best to improve the efficiency and reliability of the Northwest's power grid.
Tuesday, the participants all but admitted their effort to create an independent entity capable of managing a unified grid is dead. A group of investor-owned utilities that had supported the project, called Grid West, voted to reject a compromise proposal that BPA had cobbled together to appease critics, most notably publicly owned utilities in Washington.
Instead, the investor-owned utilities will go forward with a scaled down version of Grid West, absent BPA, which controls the largest chunk of transmission assets in the region.
"It's unfortunate," said Dave Kvamme, a PacifiCorp spokesman. "We have 10 years of history working toward a not-for-profit entity that would oversee the region's transmission lines independent of buyers and sellers of electricity."
Grid West is the most recent regional iteration of an effort by federal regulators to increase efficiency and reliability in the electricity industry by eliminating piecemeal management of the power grid. Proponents maintain that a grid managed by a single cooperative entity rather than a host of competing interests would eliminate many bottlenecks, rate disputes and scheduling conflicts that plague the system today.
Regionally, supporters of a unified grid hoped it would clear the way for overdue investments in new transmission equipment that would improve reliability, help make it easier to access renewable power projects in remote areas, and help the BPA sell into power-hungry markets to the south.
But the effort has been controversial from the start. The most vocal opponents have been the publicly owned utilities in Washington, many of which have long-term contracts to buy power from BPA at preferential rates. BPA owns 75 percent of the high voltage transmission grid in Oregon, Washington, Idaho and Montana, so its participation was a linchpin in the organization.
The public utilities, backed by Washington's congressional delegation, worried the plan would increase their costs, and were skeptical that a regionwide organization would deliver any new efficiencies.
They were loath to see control of BPA's transmission grid pass to a private entity, particularly one that would be regulated by the Federal Energy Regulatory Commission. They waged an intense campaign to get BPA to say no to Grid West, and created an alternative proposal to solve transmission problems without creating an entity regulated by the federal commission.
Grid West "would have been a profound change for the region . . . the loss of local and state political control of Bonneville's operation," said Marilyn Showalter, executive director of the Public Power Council, a Portland based organization that represents public utilities in the region.
Investor-owned utilities, meanwhile, have been pressured by the Federal Energy Regulatory Commission to form the regional organizations, in part because the federal agency wants to eliminate utilities' incentives to use control of the grid to make life more difficult for competitors. With limited access to cut-rate BPA power, investor-owned utilities also have a greater appetite for electricity generated in remote areas -- by coal-fired plants and wind farms, among other things -- but don't want to deal with a complicated tariff structure to move the power to their customers.
BPA, the 800-pound gorilla of generation and transmission in the region, has come under enormous political pressure, and has tried to tack between the two camps. Earlier this year, it proposed a compromise plan that would have moved forward with some of the public utilities proposals, and taken incremental steps toward the implementation of Grid West.
The compromise satisfied neither camp.
On Monday, nine of eleven members of Washington's congressional delegation wrote to BPA Administrator Stephen Wright urging him to avoid going forward with the so called "convergence" approach.
A day later, a majority of the investor-owned utilities voted against Bonneville's compromise. Instead they decided to soldier on without BPA's participation and transmission assets.
PGE and PacifiCorp had both supported Grid West, as did the Oregon Public Utility Commission.
BPA said Tuesday its compromise proposal would have been the right way to go. In its absence, said spokesman Ed Mosey, "Nothing will change in terms of the operation of the system. We'll operate the way we always have."
Robert Kahn, executive director of the Northwest Independent Power Producers Coalition, said that's the problem. "Something needs to be done," he said. "The status quo is a mess."
RTO spells inefficiency in power
By STEVE JOHNSON
GUEST COLUMNIST
Seattle Post Intelligencer
November 1, 2005
James Torgerson claims the Northwest's power grid needs a regional transmission organization called Grid West because of the resounding success of the electricity transmission operators elsewhere ("Non-profit agencies keep the lights on," Oct. 20). Torgerson, who heads an RTO in the Midwest and an RTO interest group, is too buried in his rhetoric to realize the opposite is true. RTOs don't work there, and they won't work here.
Seven RTOs were created to deregulate markets and hypothetically lower electricity prices and increase reliability. But the letters R-T-O have spelled inefficiency, market abuse and higher bills for customers. Every one has failed to protect its consumers.
At Torgerson's own RTO, the Midwest Independent System Operator, founding members Louisville Gas & Electric and Kentucky Utilities Co. are withdrawing because of concerns over "keeping rates down and maintaining reliability," the utilities wrote in a Federal Energy Regulatory Commission filing.
MISO's operating budget increased 861 percent -- from $21 million in 2000 to $202 million in 2004 -- according to a Cambridge Energy Research Associates cost comparison.
Customers of PJM Interconnection have rebelled against the Mid-Atlantic RTO because of a pricing model that sent costs soaring.
"We are struggling to find out what the benefits are to us," one member utility's vice president was quoted as saying. PJM Interconnection's operating budget increased 166 percent since 2000, according to the same Cambridge comparison.
All told, the Cambridge costs study found that experiments in the organized markets -- which RTOs are intended to promote -- have cost the West $7.3 billion. The American Public Power Association has voiced its displeasure over "the dysfunctional nature" of RTO pricing efforts.
Torgerson claimed RTOs foster "significant new investment in their region's transmission infrastructure," yet FERC reported that RTOs in New England, the Midwest and New York built zero transmission circuit miles in 2004. The Northwest, without an RTO, built more than 300.
Nonetheless, some in our region, including the Bonneville Power Administration, are intent on forming Grid West, which would turn over Northwest control to private hands and federal regulators. One study estimated Grid West RTO would cost Northwest ratepayers $122 million a year. That estimate is likely to go up as the RTO comes online.
Most public power utilities in the region favor a "better, faster, cheaper" approach relying on local control and the region's history of working together. The Transmission Improvements Group has proposed an alternative that uses contracts and existing entities to improve the power grid -- not turn the keys over to a private entity.
Given the abysmal track record of RTOs in protecting consumers, it would be crazy to plunge ahead with a similar organization in the Northwest.
Steve Johnson is executive director of the Washington Public Utility Districts Association.
Non-profit agencies keep the lights on
By JAMES P. TORGERSON
GUEST COLUMNIST
Seattle Post-Intelligencer
Thursday, October 20, 2005
A debate is heating up in the Pacific Northwest about what direction regional power authorities should take to ensure the reliability and affordability of the electricity system that serves much of the region.
Like the rest of the nation, the Northwest faces growing electricity demand, transmission and generation needs, rising fuel prices, protection of the environment and the need to balance the competing needs and interests between producers and consumers, as well as those of public and for-profit entities.
A response that has proved effective for much of the country is the creation of Regional Transmission Organizations (such as the proposed Grid West). It's important for Northwest consumers to know how the not-for-profit organizations work and how they produce meaningful results.
RTOs and Independent System Operators deliver two-thirds of the electricity used in the United States, to two-thirds of the nation's population, with the core function of keeping the lights on.
These organizations also coordinate long-range planning for their respective regions and foster new, much-needed grid expansion. In addition, many RTOs and ISOs operate wholesale electric markets that save customers billions of dollars every year.
With the economies of scale RTOs employ, we bring more sophisticated tools to the complex management of vital grid operations. RTOs have built extensive networks to collect information about conditions across the grid, to meet customers' ever-changing electricity demands by coordinating the performance of thousands of power plants, and to deliver energy across hundreds of thousands of miles of utility-owned transmission lines.
RTOs and ISOs coordinate generation and transmission to make grid operations more efficient. For example, in the mid-Atlantic region, PJM Interconnection's plant scheduling software has reduced its customers' wholesale electricity costs by $56 million per year. ISO-New England's coordination of power outages saved customers about $40 million annually between 2000 and 2004, and New York's ISO has reduced generation outage rates to 4.5 percent today from a level of 9.5 percent in 1999. Total improvements in plant efficiency are equivalent to adding 1,500 megawatts of generation at no cost.
Through rigorous planning and analysis, RTOs and ISOs also fostered significant new investment in their region's transmission infrastructure.
As one example, New England has sited five major transmission upgrades totaling more than $1.5 billion and enabled more than $5 billion in construction of new, cleaner power plants between 2000 and 2004. These generators use natural gas more efficiently and reduce air pollution -- sulfur oxides are down by 48 percent and nitrogen oxide by 32 percent.
Transmission planning coordinated by the California ISO helped break a regulatory logjam and led to construction of several critical transmission lines. Since the California ISO opened access to the state's wholesale power grid, more than $3 billion in transmission improvements have been approved for construction. Four new transmission upgrades went into operation in 2005, improving grid reliability and leading to about $100 million in savings, which will eventually be passed on to consumers.
PJM's planning efforts have led to more than $1 billion in transmission upgrades since 1999.
In the Midwest, the Midwest ISO has overseen the addition of more than $600 million of transmission facilities and access to more than 1,000 megawatts of renewable resources since 2002.
Finally, RTOs are closely regulated and held accountable on many levels. Federal oversight takes place by FERC and there is local accountability as well. Formal councils of state officials oversee and contribute to our planning and cost allocation decisions. Transmission owners, local citizen groups and state regulators all participate actively in our activities and have input in our decisions.
The bottom line: RTOs are helping to deal with the difficult challenges facing the industry across much of the nation.
James P. Torgerson is the president and CEO of the Midwest ISO and chairman of the ISO/RTO Council, which is comprised of the seven ISOs and RTOs in the United States and two in Canada.