Well, that didn’t take long.
With minimal legislative resistance, the Christy Clark government’s Liquefied Natural Gas Project Agreements Act is now law.
As in Faust, the deal has been done. Only, in the government’s bizarre twist on that legend, the ones who sold their soul pretty much did so without demanding anything at all in return.
Plus, the term of this particular covenant runs for one year longer than Faust’s 24-year pact with Mephistopheles. Which would only be a “win” if the term of that contract had deferred our date with destiny.
Clark’s deal doesn’t even do that. It rather defines our time in purgatory: 25 years, to begin immediately, after each new LNG project is confirmed.
We will all have to pay the big oil companies subsidies for their pollution.
We will be obliged to guarantee them tax credits that are probably too rich and unnecessary.
We will be bound to give them tax rates and tax avoidance measures to which no else is entitled, locked-in for 25 years.
And as a “capper”, we will be forced to absolve them of any higher specific costs that they impose on our environment in intensifying the challenges of climate change.
If that’s our idea of unbridled “worldly pleasure” in a Faustian sense, we really do deserve to be eternally damned for our stupidity.
For a deal that is mostly motivated by corporate greed and the promise of untold wealth for all, the government seems awfully content to rely on Big Oil’s word that the benefits it seeks will flow as it envisions.
“Trust us,” the companies said, “you are going to love the cash we create for your government coffers and the jobs we will create for your families.”
That was good enough for the Clark government, which was far too quick to sign its own name in blood to give Big Oil its insisted dues.
The government dared not demand any hard benefits in return, too scared that their imagined benefactors might lose their patience and walk away. Given what has transpired, I wish they had.
In Goethe’s tragic play, Faust at least sought to learn all that cannot be gleaned from the frustrating realms of science and religion. Our government had no such aspirations.
Rather, it ignored what science teaches about the drivers of global warming and it put its faith in LNG as something of a religion in its own right. Through the “magic” of LNG we can transcend all rational thought and gain the world that we know in our heart is not a place we should want to go. If only because it’s so much hotter.
Faust uses his deal with the devil to seduce an innocent girl. Depending on the version of the tale, she either helps to redeem him or advances his inevitable trip to hell. In Christy Clark’s modern spin on that classic, no one stands to be seduced in innocence.
The government did what it did with its eyes wide open, in contempt of all it was told and should have learned. It passed its law in spite of the efforts of those who urged it to come to its senses.
The sins of its omissions alone are unforgivable and irredeemable. They look certain to send us very quickly on our way to an untenable position that will inevitably cause even today’s LNG boosters to reflect upon the moral of this sad story.
We will all pay for the government’s failings on this file forever. We will one day live to regret them for all they will cost us in lost revenue, in lost sovereignty and in their lack of any guarantees for Canadian workers, skills training or local suppliers.
Our children and future generations will mostly pay the price for the impacts of those failings on Super un-Natural BC.
So, where does that leave those of us who remain opposed to the government’s irrevocable act of reckless indifference?
Praying for divine intervention, I suppose.
A new government in 2017 might be able to set new terms for new deals that are more favourable to B.C.’s broader interests.
But as of now, we are stuck with the Pacific NorthWest LNG project agreement. The Clark government has free reign to sign other such agreements that will also be legally binding on taxpayers, with no foreseeable avenues for renegotiation.
I, for one, will not be unhappy if the Canadian Environmental Assessment Agency further delays or even rejects the Pacific NorthWest LNG project, as unlikely as that seems.
I will not be aggrieved if the project is eventually challenged and delayed in court, possibly by the Lax Kw'alaams Band, which has rejected Petronas’s $1-billion offer to buy their support because of their legitimate concerns about the project’s environmental impacts.
The Gitga'at First Nation has already stated that it plans to launch a judicial review. And the Fort Nelson First Nation, Prophet River First Nation, and West Moberly First Nations all say they were not consulted on either the project development agreement or on the long-term royalty agreement with Petronas.
They say that their treaty rights were not respected. They will be dramatically impacted by the trillions of cubic feet of additional natural gas that will be drawn from their traditional territory by Progress Energy Canada Ltd. to support the Pacific NorthWest LNG project.
Any of those or other concerns could yet still derail that particular project.
Frankly, I would rather that happen than see that project go ahead under the bad deal that now stands to impose a greater net cost on our province than PNW LNG’s significant economic and fiscal benefits might provide.
I do not support LNG development at any cost.
The broader price of the Petronas precedent to taxpayers and to our environment is simply too high. The benefits we stand to gain are not proportional to the risks we will run, to the costs we will be obliged to underwrite and incur, or to the damage that will be inflicted on our air sheds, on our precious water supplies, or on our marine habitats and land-based ecosystems.
We need the ability to properly price B.C.’s added carbon emissions, which will only be created in the first place because of LNG exports. We won’t have that under this deal.
We need to be able to properly regulate those industry-specific emissions and environmental impacts. We won’t have that under this deal.
We should stand up for the bottom line principle that all taxpayers are fundamentally equal.
No one should get special 25-year tax rights, credits, and concessions that are locked-in and indemnified by B.C. taxpayers and that set them apart as a new privileged class. Least of all Big Oil.
State-owned oil companies especially don’t need any gifts from B.C. taxpayers. Especially Petronas, whose profits account for some 45 percent of the Malaysian government’s revenues—a company that answers only to its prime minister, who is coincidentally now being investigated for allegedly diverting hundreds of millions of public dollars into his private bank account.
We should not allow ourselves to be dictated to by state-owned Asian oil monopolies that mostly want our natural gas to either rake in huge profits, to further depress the price that their governments pay for LNG, or to diversify their supplies in playing each LNG-producing country off against every other.
We should not add fuel to that race to the bottom for our environment, for taxpayers, and for working families.
We should not sell out our resources for a song, especially at a time when the world least needs our additional supplies of fossil fuel.
We should be moving Heaven and Earth to promote clean, renewable energy. We should not be setting in stone a framework that economically obliges companies to mostly power their LNG plants by burning one-quarter of all the gas they produce to liquefy and export.
If the LNG industry is to proceed, it should be primarily powered with electricity created from clean, renewable sources—solar, wind, run-of-river, geothermal, and other sustainable alternative power sources.
That was the clean energy plan that I worked so hard to help bring about in my role as Premier Gordon Campbell’s chief of staff—a plan that so many of Premier Clark’s ministers claimed they supported, yet have now mostly abandoned, along with the climate action strategy that is also now in ruins.
For too long we have failed to properly price the net cost impacts of fossil fuel extraction activities on our economy, at every level. The Petronas precedent will effectively make any change to correct that error impossible in the LNG and natural gas industry. It will transfer all of the costs for doing that onto taxpayers.
This is dead wrong. The International Monetary Fund has estimated that the implicit hidden subsidy given to the fossil fuel industries amounted to $800 billion worldwide in 2011. Before entrenching any new hidden implicit subsidies to our LNG and broader natural gas industry—let alone, through taxpayer-backed indemnities for 25 years—we should at least have some sense of the cost to our economy of those measures.
We should take a close look at this new analysis prepared for the Cambridge Judge Business School. Those hidden subsidies should be properly assessed and costed, and recognized in our entire tax and regulatory regime in respect of LNG. That won't happen under the Petronas precedent.
For these and many other reasons, I will not be sad to see the LNG industry delayed until more sensible policy can be put in place, whether or not it leads some players to leave B.C. for good.
Ultimately, the markets may force Petronas and the other big players to pull the plug on Pacific NorthWest LNG and other projects, at least for now.
At current landed prices for LNG, even Petronas, Sinopec, JAPEX, the Indian Oil Corporation, and PetroleumBRUNEI will be hard-pressed to profit from exploiting B.C.’s LNG potential. Even with the government’s unprecedented tax and environmental concessions, development costs are likely still too high to make money in the near term.
That is likely below the cost of producing new LNG supplies in British Columbia no matter what new government giveaways the B.C. LNG Alliance might hope to further get from a government that seems prepared to do anything to keep its ultimate LNG pipe dreams alive.
The government points to this fact as its primary rationale for its sweetheart Petronas precedent. It holds it as proof that it had “no choice” but to offer the oil companies the unprecedented concessions it granted to prevent them from walking away in such a globally competitive market.
Nonsense. We always have a choice in the extent to which we are prepared to compromise our principles and our broader interests for any other important value. It also helps if you have some principles in the first place that are not utterly beholden to partisan politics.
No one doubts that LNG supply has already outstripped demand. No one is contesting the fact that natural commodity prices are now so low that LNG prices are unlikely to return anytime soon to their previous levels.
Clearly, those prices will remain depressed for some time, driven lower by new, ever-cheaper supplies of LNG, our anemic global economy, energy conservation, and the rapid shift to truly clean forms of energy.
How long that might last is a mug’s game that should be industry’s risk to figure out and run, without undue cost to taxpayers and our environment.
The answer to that dynamic is not to use B.C. taxpayers’ money to chase that supply curve to its logical conclusion, at the expense of our sovereignty, our environment, and the prudent management of our finite natural gas reserves.
Adding such insult to injury will only aggravate the macroeconomic problem that it is supposedly aimed at remedying. It will also only compound the global environmental challenges that LNG development is falsely touted to address.
Yet the government is clearly convinced that any curse is worth its cause and that all that matters is “landing” LNG investment.
I beg to differ. There are worse things than losing Big Oil’s sizable investments. The Petronas precedent paves the way for those costly mistakes.
If you want to get a sense of how the insane game that the government now seems so intent on playing and losing is playing out in China, read this.
Its message is clear: trust no one who wants to make a deal that is hardly worth the paper it is written upon when push comes to shove. Especially when you are the mouse in the elephant’s room.
It’s time we grew a backbone, British Columbia, and stood up straight and tall for all that should really matter most. The Faustian deal that now holds us under its thumb is anything but a prescription for the better world we want.
And the next time B.C.’s chief cheerleader for LNG tells you otherwise, remember that line from Sympathy for the Devil.
She may be pleased to meet you and I hope you guessed her name. But what’s puzzling you is surely not the nature of her game.
It’s politics. Always, crass politics. And once again, we’ve all been burned.