Future Energy

Can you still develop green power in B.C.?

                                              

The most recent issue of BC Business magazine includes a story by Don Whiteley about the difficulties a local renewable power developer has run into attempting to secure permission to construct a multi-site run-of-river on the upper Pitt River adjacent to B.C.'s Lower Mainland region (see Power Play, BC Business, July 2008).

The most recent issue of

Generally, I agree with the premise that project development is tolerated little if at all in B.C., much more so than in most other jurisdictions.  Having lived in the province for much of my life, I would have to say there is little tolerance for new development of any kind (I also think there is a certain naivety about where the wealth will come from to support the lifestyle the province enjoys but that's an argument for another time).

That being said, I am cautious about the kinds of general conclusions this and similar articles tend to draw from these sagas. 

To recap, Run of River Power Inc. has proposed a series of seven run-of-river projects on the upper Pitt together with a small-scale transmission line to connect the projects to the grid, and that would traverse a local provincial park.  The project recently had its application for the transmission line pulled by the province's Environment Minister, Barry Penner, no doubt not wanting to see a substantial "environmental" opposition form at a time when the Premier was trying to paint his government green with aggressive plans to address climate change (see CEO Shocked by BC Minister's decision to Block Power Project, CBC.ca, March 27th, 2008). 

Mr. Whiteley chooses to focus on the opposition to the transmission line and the apparent contradiction in the opposition's position given that there is already one transmission running through the local park and another planned, both owned by the province's transmission operator, BC Transmission.  However, he neglects to talk about the context around the proposed transmission line and the project in general. 

The upper Pitt is an area that many in the environmental community and the province's avid sportfishing community consider to be a pristine wilderness and they want to see it stay that way.  The transmission line just happened to be the first point of contact between the two camps, as I believe they say in German, the schwerpunkt.  However, I would argue that the development of the projects in the upper Pitt was the real concern, the earlier consideration of the transmission line simply gave the opposition a forum to begin registering their concerns.

So is it still difficult to develop projects in B.C.?  Absolutely!

Does Run-of-River's experience herald the end of green power development in the province? No, project developers just have to understand the full scope of what they are stepping into.  As part of that, green power project developers probably need to better understand that they cannot reduce the environmental/social argument to "its carbon-free" or words to that effect.  There are a basket of environmental and social concerns around any project and all have to be successfully navigated.

As for Run-of-River, how are they doing?

From a high of $0.66 a year ago, their stock has fallen to $0.23.  However, they still have an operating project at Brandywine Creek, producing 40+GWHrs per year and a number of development projects that include potential run-of-river developments at Mamquam and Dewdney Creek, both in B.C. as well as plans to develop biomass power using Mountain Pine Beetle killed trees in the province's interior.

       

Sustainable Hydro Power (Or Not)

            

Source: Run of River Inc.                 Source: BBC

A Tale of Two Hydros

As a reminder that "renewable" energy is not always environmentally benign or sustainable, a recent New York Times story looking at the Three Gorges Dam (see Chinese Dam Projects Criticized for Their Human Costs, NYTimes, Nov. 19th, 2007) highlights environmental and social issues facing the newly completed project.  Building on concerns associated with Three Gorges, the story also looks at Chinese efforts to build further mega-hydro projects and the issues associated with these.

As the world's largest hydro project, Three Gorges was certain to result in significant human and environmental costs.  Recent press highlighting the need for further population resettlement on top of the 1.3 million originally planned as well as heavy silting and accumulation of water-borne pollutants, indicate that these costs are becoming difficult to ignore.

(See also Three Gorges Dam is a Disaster in the Making, TimesOnline, Sept. 27th, 2007; and China's Three Gorges Dam Under Fire, Time, Oct. 12th, 2007.)

On a much smaller scale, even run-of-river hydro projects can arouse environmental concerns.  A case in point is the flurry of proposals for new run-of-river power generation in the salmon-rich watersheds of British Columbia.

In 2002, the Provincial government adopted a policy requiring all new sources of electricity in the province to come from private power developers rather than from the provincially owned electricity generator and distributor, BC Hydro.  The most common proposals to emerge under this policy have been run-of-river hydro projects (after all, it is a wet province).  While these projects are emissions free and generally not on salmon bearing streams, they have raised some concerns among recreational users of the province's rivers and streams as well as others.

In response to these concerns, a Canadian environmental NGO, Watershed Watch Salmon Society, recently published two documents examining the environmental issues associated with small hydro development and the regulatory system thats in place for approving such projects.

"Green" Hydro Power: Understanding Impacts, Approvals and Sustainability of Run-of-River Independent Power Projects in British Columbia, provides a detailed look at environmental impacts and the regulatory approvals sytem to address them.

Run-of-River Hydropower in B.C.: A Citizen's Guide to Understanding Approvals, Impacts and Sustainability of Independent Power Projects, is a more accessible, illustrated summary of this same information.

Both documents provide Watershed Watch's 10 criteria for judging the sustainability of projects, including:

• the project is located wisely;
• cumulative effects have been seriously considered;
• affected aboriginal and other communities have been contacted;
• the headpond, weir and intake have been designed to minimize impacts to fish, sediment movement and flooding.

All of the projects currently proposed must pass through several levels of review, including the provincial project approvals system, the federal Department of Fisheries and Oceans determination of impact to fish habitat and BC Hydro's green power criteria.  Watershed watch appears most concerned about the lack of coordination between the regulatory reviews and BC Hydro's green power assessment as well as for the potential cumulative effects associated with the number of proposed projects.

The principle run-of-river project developers in the province, including public companies like Plutonic Power (TSX:PCC) and Run Of River Power (TSX: ROR), don't appear to reference these criteria.  However, as the criteria largely reflect the questions posed in the regulatory review process, its difficult to say how they might address them beyond what is already done.

Simplifying the process of determining project sustaianbility for investors and others, project developers such as Canadian Hydro Developers (TSX: KHD) and Brookfield Power, a division of Brookfield Asset Management (TSE: BAM) have sought Ecologo certification for more than 100 low-impact hydro projects across Canada.

Ecologo is an eco-certification program that originated in Canada.  The program currently certifies more than 7,000 products based on detailed, product specific criteria, and includes a standard for renewable, low-impact electricity.  Generally, Ecologo strives to ensure that the environmental claims of manufacturers and service providers are substantiated over the full life cycle of the item in question.  The renewable power standard focuses on four sets of issues in this regard, including:

• displacement of non-renewable power;
• reduction of air emissions;
• reduction of solid waste, toxic metals and nuclear waste;
• reduction of impacts to aquatic, riparian and terrestrial ecosystems.

(An alternative certification system in the U.S. focuses exclusively on hydro power and is available from the Low Impact Hydropower Institute, a non-profit organization based in Portland, Maine.  The Institute's criteria include a focus on river flows, water quality, fish passage and protection, watershed protection and cultural resource protection.)

In the NYTimes' story, the writer pointed to a conundrum facing the Chinese.  While dams such as the Three Gorges have the potential for enormous environmental and human costs, the alternative for their rapidly growing economy is "coal-fired power plants that pollute the air and belch greenhouse gas emissions that contribute to global warming"

I don't think its quite that simple.  Smaller dams, other forms of renewable power and better energy conservation practices all offer some answers.  To some extent a fication on mega-projects may have made the Chinese the engines of their own misfortune in this case.  However, on a much smaller scale, North America and indeed other jurisdictions face much the same conundrum.

So, while I applaud the development of clear criteria by Watershed Watch and others - informed oversight is essential to keeping regulators and the regulatory process on track - I think the run-of-river projects currently being proposed and developed in B.C. clearly fit into any definition of sustainable energy.  The companies proposing these projects , particulalrly those obtaining third-party certification, provide good opportunities for investing in sustainable energy.