Open letter: BC's emissions cap will cost more than we think

BC's new carbon pricing system and emissions cap will be bad for the economy, environment and Indigenous opportunities, writes Stewart Muir in Resource Work's latest regulatory submission.

On October 24, 2023, Resource Works submitted the following letter to BC Premier David Eby,?the Minister of Environment and Climate Change Strategy, and the Minister of Energy, Mines and Low Carbon Innovation. This submission was a response to the province's Oil and Gas Emissions Cap Policy Paper's call for input.

Dear Premier and Ministers,

Over the last decade, we have been pleased to see leadership from Premiers of two major parties, including both Christy Clark and John Horgan, recognize the importance of natural gas and LNG (liquefied natural gas) to economic opportunities for British Columbians, reconciliation with First Nations and decarbonization around the world.

However, the new Action Energy Framework, with its proposed BC Oil and Gas Emissions Cap Policy, and the Output Based Pricing System (OBPS) are steps away from this positive legacy. We believe they will harm not only BC’s contributions to the fight against global climate change but will unduly harm our economy and reconciliation journey, particularly with nations who are charting their own economic future in responsible natural resource development.

BC’s energy industry has already achieved significant decarbonization success under existing policies, including the BC price on carbon, regarded as among the most stringent in the world. In 2023, the BC Energy Regulator identified that our province is on track to achieve methane emissions reductions from the oil and gas sector of 45 percent, relative to 2014 levels, by 2025. In 2020, the BC GHG inventory showed oil and gas emissions had fallen below 2007 levels while investment and job creation continued, with production more than doubling.

Thanks to provincial leadership, these existing policies are working: the industry is decarbonizing while creating jobs and investment for the province and its workers. But to achieve the new emissions cap by the stated timeline of 2030, the oil and gas industry, including Indigenous project proponents, may have no other recourse than to cap their production (or potential production) rather than simply their emissions.

This is because the Action Energy Framework offers no real path to compliance. Zero emissions hydroelectric power generation will be insufficient to power the industry and electrify the rest of BC under the provincial government’s goals. Moreover, even if more capacity could be built in time to complement the emerging LNG industry, the state of transmission lines to the industry in northern BC is completely inadequate. To make matters worse, BC Hydro is a crown monopoly, which means it alone is allowed to build the necessary infrastructure implicitly required under the Action Energy Framework. It has not done so and has no hopes of doing so by 2030. The only other realistic source of zero emissions baseload power, nuclear energy, is banned in BC despite overwhelming success in Ontario.

The provincial government has the right to propose decarbonization timelines for the industry. However, those timelines must not be divorced from the presence (or absence) of enabling infrastructure, especially if said infrastructure is a provincial prerogative.

Similarly, the proposed OBPS for pricing industrially emitted carbon, while a positive mechanism in principle, carries higher compliance costs than either equivalent federal or Albertan policies (much less international competitors). Unless compliance costs are reduced to be brought in line with competing jurisdictions, the OBPS risks exporting jobs, investment and tax revenue without making any change in regional, national or international carbon emissions.

We all want to see BC reduce its emissions, but these policies will not reduce emissions except insofar as eliminating the industrial economy itself would reduce emissions. To all concerned about affordability, workers – especially in the skilled trades — and Indigenous energy aspirations, this would be a regressive outcome.

We thank you for considering these factors as you strive to balance economic, environmental and Indigenous interests in our shared economy.

Stewart Muir , Founder and CEO of the Resource Works Society.