Marc Lee: B.C.’s Natural Gas Strategy is bad economics and bad for the climate
By Marc Lee
B.C.’s quest to substantially boost natural gas development seems like a real winner at first glance: heaps of new jobs in the liquified natural gas (LNG) industry, billions in government revenues, and exports that fight global climate change by displacing coal in China.
Alas, this story is too good to be true. Many are questioning whether these ventures work at all from a corporate profitability perspective, given interest by other countries in LNG exports. But it is also the case that economic benefits for ordinary British Columbians, in terms of jobs and government revenues, will be miniscule, and environmental costs high.
Last week’s front-page story that Chinese temporary foreign workers will be brought in to mine coal in northern B.C. should give us pause. Use of temporary foreign workers has surged in recent years, particularly in the oil and gas industry. In Alberta, more than 58,000 temporary foreign workers were on the job in 2011.
Even assuming all work is done by British Columbians, the natural gas industry is very capital-intensive, and not a big employer. Extraction and processing of gas, plus various support services, amounted to about 7,000 jobs in 2011, or just 0.3 percent of BC’s 2.3 million workers.
Jobs for LNG projects are mostly in the construction phase, with a much smaller number of long-term jobs. For the Kitimat LNG facility, the government estimates 3,000 short-term jobs in the construction of pipelines and the LNG terminal facilities, but only 125 long-term jobs once built.
On the higher end, up to 2,500 long-term jobs have been claimed, if five large LNG plants are built. This seems willfully optimistic, but even at face value that latter number represents a mere 0.1 percent of B.C.’s current employment.
As for royalties to the government, don’t bank on them. Current year natural gas royalties are estimated at $157 million, 0.3 percent of the B.C. budget, in spite of record high production levels. B.C. is basically giving away the resource right now, even as the North American market is flooded.
B.C.’s gas reserves are not going anywhere—this is a finite resource after all—so why the rush to liquidate? A real commitment to reforming the gas royalty regime is needed to ensure that British Columbians receive fair compensation.
Big picture: activity in this sector needs to be managed for wind-down, not ramp-up. Natural gas may be the cleanest burning fossil fuel, but it’s still a significant contributor to global warming, which is now breaking weather records all over the world and causing tens of billions of dollars per year in damage to housing, infrastructure, and food production.
B.C.’s plans for expanding the natural gas industry would be like adding 24 million cars to the roads of the world. And emissions from extraction and production would mean B.C. breaking with 2007’s Greenhouse Gas Reduction Targets Act, and its 2020 target of a 33 percent reduction in GHG emissions.
The government’s assertion that B.C.’s natural gas is good for the climate because it will displace coal use in China is wishful thinking. Natural gas will only pile on to China’s growing demand for energy. Meanwhile, Japan wants LNG to displace its nuclear capacity, which will mean a major increase in their emissions.
Natural gas can only be a useful transition fuel if managed as part of an international climate action plan, and only if exported to jurisdictions that have GHG targets as tough as our own. Otherwise, it’s just another fossil fuel contributing to global warming.
The infrastructure investments B.C. really needs are in public transit, building retrofits, district energy systems and waste reduction. Funded by a rising carbon tax, these investments would create 10 to 20 times the number of jobs per million dollars as fossil fuel investments.
B.C. would be much better off by finishing what we started five years ago, and by making sure all political parties commit to obeying the law of the land by sticking to its GHG reduction targets. Some progress has already been made: GHG emissions were down 4.5 percent between 2007 and 2010.
The B.C. government lacks a strategy to meet its 2020 legislated target. Jettisoning natural gas ambitions and making a new round of investments in a Climate Action Plan 2.0 is not only better for the climate, but it’s a much better jobs plan for B.C.
Marc Lee is a senior economist with the Canadian Centre for Policy Alternatives and codirector of the Climate Justice Project. His recent report is B.C.’s Legislated Greenhouse Gas Targets vs. Natural Gas Development: The Good, The Bad and the Ugly.