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Big challenges ahead for B.C. in energy transition

Indigenous partnerships proving key to developing industry and infrastructure
Rob McPhee, left, president of Castlemain, and Paul Gruner, CEO of the Tahltan Nation Development Corporation. | Nelson Bennett

B.C. has some big challenges ahead, if it hopes to achieve energy transition targets without stifling economic growth.

One is a regulatory and permitting process that just takes too long. Another is just the sheer scale of the energy transition project.

For B.C., it means switching 84 per cent of the province’s energy use to non-emitting energy sources in less than 30 years, those attending a Business Council of BC (BCBC) business summit Thursday were told.

One way to accelerate infrastructure and industrial development may be through partnerships with First Nations.

Success stories involving First Nations and industry in B.C. include LNG projects, two major real estate development projects in Vancouver, and mining in northwestern B.C.

Robin Silvester, former CEO of the Vancouver Fraser Port Authority, noted that gateway services (ports, airports and associated transportation) account for 250,000 jobs in B.C. and $20 billion in GDP. One of the biggest challenges for these gateway services and industries is a shrinking industrial land base, he said.

“We have an overwhelming failure of regional land planning, and it’s strangling gateway growth,” Silvester said.

He said vacancy rates for industrial land in the Lower Mainland are in the one per cent range.

“The lack of available industrial land has contributed to land costs tripling over the last five years,” he said.

“Firms are leaving Greater Vancouver, along with the new jobs and investments, to neighbouring jurisdictions like Calgary, Edmonton and Washington State. From a gateway perspective, it’s meaning the gateway here in B.C. is shedding good jobs to Alberta and to Washington and adding costs and inefficiency to supply chains Canadians depend on every day.”

He said Whirlpool, Ikea and Home Depot have all set up distribution centres outside B.C. in recent years.

Land use planning is managed by a patchwork of municipalities, he said, and some industrial land has been rezoned to other purposes.

“It’s shrinking when we need it to grow,” Silvester said.

He said a second major challenge for B.C. is the energy transition, the sheer scale of which is daunting.

“We aren’t nearly facing up to the scale of the challenge to transition to net zero both globally and locally, and the scale of the infrastructure needed to make that transition,” he said.

Although 98 per cent of the electricity produced in B.C. comes from non-emitting sources (hydro power, bioenergy, wind), electricity only accounts for 16 per cent of the total energy used in B.C., Sylvester said. The rest comes from fossil fuels.

Fully electrifying just the Port of Vancouver and YVR would demand the total generating capacity of Site C dam, Silvester said.

“The infrastructure needed for a transition to net zero, even just here in B.C., is huge,” he said. “And I can say, from experience, we are woefully bad at permitting infrastructure in a timely way.”

He pointed to the recently green-lit Roberts Bank terminal expansion as an example. Getting provincial and federal environmental certificates took 10 years and $250 million, he said.

“We’re going to have a made-in-Canada supply chain problem because that project is now going to be late,” he warned. “As a country and a province, we have to urgently get better at permitting the necessary infrastructure to grow our economy and meet our 2050 targets.”

He suggested partnerships with First Nations is one way to develop infrastructure and industry in a more timely fashion, and pointed to the Jericho Lands and Senakw projects – both First Nations-led residential real estate projects – as examples of developments that appear to be moving “quite a lot faster than many of the other developments that are stuck in the process.”

Two success stories involving industry and First Nations are the Haisla First Nation – who helped facilitate the $40 billion LNG Canada project and are now developing their own LNG project -- and the Tahltan First Nation, who have capitalized on mineral exploration and mining in the Golden Triangle of Northwestern B.C. to develop a whole range of service businesses.

The Tahltan Nation Development Corporation (TNDC), which last year became a member of the BCBC, has leveraged resource industries, especially mining, to develop a range of business, from airport management to construction.

“Our gross revenue will probably be around $100 million next year, so that puts us in the top one per cent of private businesses in the province, and we’re certainly a core economic driver within the region,” said TNDC CEO Paul Gruner.

A major catalyst for economic development in northwestern B.C. was the building of the Northwest Transmission Line, which has allowed new mines to be built and powered with clean hydro electricity.

Prior to the line being built, economic activity in the area was largely limited to mineral exploration, said Rob McPhee, president of Castlemain, a First Nations consulting firm, and a Tahltan member from Dease Lake.

“The mining landscape at that point in time was a bunch of junior exploration companies, and there wasn’t too much investment by majors in our part of the territory,” he said. “The mining world has changed because of that transmission line. We now have got Newmont here – the world’s biggest gold mining company. We’ve got the major players here now.

“For Tahltan, what changed for us, there was some really good outcomes, and one of them is we’ve got 100 per cent employment. Our people make north of $100,000 a year on average. The social outcomes, we have no kids in care. That’s an outstanding achievement.”

The Haisla First Nation have had similar successes, due to partnering with industry, including oil and gas companies involved in LNG development. Leveraging partnerships with LNG Canada, the Haisla developed the capacity to develop their own, smaller scale project – Cedar LNG – which moved through the environmental approval process relatively quickly.

“We are working towards a final investment decision fairly quickly,” said Haisla Chief Crystal Smith, who is also chairperson of the First Nations LNG Alliance.

While the Haisla have been direct beneficiaries of the natural gas and nascent LNG industry, so has the rest of B.C., said Richard Wong, vice president of regulatory and operations for the Canadian Association of Petroleum Producers (CAPP).

"The natural gas industry in B.C. is a really significant part of our overall economy," Wong said.

He noted that, when natural gas prices were high in 2021, it contributed to a $2 billion government surplus.

"This year the story has changed a bit," he said. "I think that we've seen a significant deficit materialize over the last six months -- I think about $2.3 billion -- and about $1.1 billion of that is from natural gas royalties decreasing, in large part because natural gas prices in North America have also decreased.

"While that's certainty not a good thing, I think it is a sobering metric just for us to understand natural gas in B.C. does have real and material impacts on the treasury."

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