Energy & Infrastructure
Natural resources are, and will continue to be, a crucial component of the economic well-being of British Columbians. To advance BC's prosperity, we must responsibly develop new forms of energy resources and build the necessary infrastructure to connect them with global markets. The Council’s work supports the efforts of businesses and governments to develop resource projects, energy systems and transportation networks in a way that minimizes the environmental impacts and maximizes economic benefits for communities and BC’s job creators.
Investment Survey Signals Continued Weakness in Capital Spending
Statistics Canada’s just released capital expenditure survey confirms that the negative fall-out from sluggish energy and materials markets continues to take a toll on business investment across the country.
Peacock Op Ed: Consideration for Transit: More People are Settling in Surrey than any other B.C. City (Surrey Business News)
Which B.C. city has experienced the largest population increase since 2011? Most readers will not be surprised at the answer: Surrey. Between 2011 and 2015, more than 43,000 additional people became residents of Surrey, which translates into an average of 900 more people per month over the past four years. During the same period, the City of Vancouver recorded the second biggest absolute population gain of just over 29,000, followed by Coquitlam (+14,000), Richmond (+11,700) and Langley District (+10,600).
Finlayson Op-Ed: Commodity Slump weighing on Canadian and global economies (Troy Media)
The ongoing decline in the U.S.-dollar prices of most internationally traded commodity products has hit Canada’s economy hard, depressing incomes, triggering layoffs and capital spending cuts by hundreds of resource companies (and their suppliers), and hurting business and consumer confidence across swathes of the country. It’s important to realize that the commodity carnage isn’t restricted to oil. It’s also affecting natural gas, coal, base metals, potash, various industrial raw materials, and some segments of the agri-food sector. Lumber prices have also beaten a hasty retreat in recent months.
D'Avignon & Finlayson: If we don't supply oil, others will (Vancouver Sun)
It is time for a mature conversation on oil exports, against the backdrop of the economic reality we face in Canada and around the world. Simply put, the evidence confirms that all of us will continue to need all forms of energy, including oil, over the coming decades. For Canada, the key question is whether we want to have the option to safely export our oil to global markets other than the United States, currently our only customer, and which pays less than the world market price and requires less of our product each year. In 2013, energy made up one-quarter of Canada’s merchandise exports, of which oil and gas constituted the vast majority. Finding ways to access the world market for our country’s biggest export industry should be a priority for all governments in Canada.
An Overview of Canada’s Environmental Assessment Regime
As the Liberal government takes up the reins in Ottawa, it has signalled a shift in its approach to energy, environment and natural resource development, particularly in the context of resetting relations with Aboriginal peoples. As it sets out to review Canada’s EA processes, several key principles should be top of mind:
- The integrity of the regulatory process and institutions are best maintained when they are at arms-length from the political realm.
- A core purpose of a regulatory body is to evaluate technical matters in an impartial way, free from undue political or stakeholder influence.
- Regulatory reviews that set (and adhere to) timelines promote certainty for proponents and contribute to a favourable setting for investors.
Finlayson Op-Ed: B.C.’ s industrial economy is fading (Vancouver Sun)
Statistics Canada recently reported that B.C.’s economy grew by 3.2 per cent after inflation in 2014, putting B.C. second among the provinces. Gains in residential and commercial construction and a solid advance in consumer spending were the key contributing factors. The job market, however, was surprisingly subdued, with employment rising by less than 1 per cent on a year-over-year basis.
As the clock winds down on 2015, it appears that B.C.’s macro-economy continues to perform fairly well, at least by Canadian standards. Economic growth should end up exceeding 2.5 per cent this year, with strength in retail sales, housing-related activity, tourism, film production, and parts of the advanced technology sector. At a time when Canada’s economy is being pummeled by a deep slump in global oil and metals prices, B.C. is holding its own.
Yet if we look below the surface, the economic picture in the province is less favourable. In particular, what might be described as the “industrial economy” is clearly struggling, with negative implications for business investment and exports.
The “industrial economy” consists of primary resource extraction and related downstream processing in the forestry, mining, and agricultural sectors; the production, transmission and exporting of energy; oil and gas refining, chemical production, and cement/concrete manufacturing; food processing; plastics; non-metallic minerals; metal fabrication; primary metal manufacturing; and beverage manufacturing industries.
Taken together, the industries carry significant weight in our economy. Collectively, they employ almost 200,000 British Columbians, most of whom enjoy wages and benefits that surpass the average. These industries also represent an important source of demand for the outputs of many B.C. service sectors, including transportation, engineering, scientific and technical services, other professional services, environmental consulting, and financial services. Perhaps most strikingly, the enterprises that comprise the industrial economy dominate B.C.’s export base, accounting for around four-fifths of the province’s international exports, year after year.
Alberta Announces a New Approach to Managing Greenhouse Gases
Our high level summary of the Alberta government’s just announced framework for addressing greenhouse gas emissions.
An Updated Look at the Future of Energy
Ahead of the climate change conference in Paris next month, the International Energy Agency has just released the World Energy Outlook 2015. The data, projections and analysis in this well regarded annual publication provide an excellent foundation to ponder the future of global energy supply and demand.
Finlayson, Ragan Op-Ed: We need a serious discussion about congestion pricing (Vancouver Sun)
In the past year, public debate in Metro Vancouver has focused heavily on how to pay for new transportation capacity. But there is a critical missing piece in this mobility puzzle. Improved transit services and more investment in roads are needed but they aren’t enough. Experience shows that we can’t just build our way out of gridlock. We won’t solve the problem of traffic congestion without also changing the underlying incentives. That’s why we need a serious discussion about congestion pricing.
This summer’s transit referendum was about how to pay for new transit investments. Its failure doesn’t signal that people are happy being stuck in traffic; nor does it signal that we are using our current infrastructure efficiently. There are several things that pretty much everyone agrees with regarding transportation in Metro Vancouver. First, traffic congestion is extremely costly: time lost in traffic costs people and businesses in the region at least $1.4 billion per year. Second, more and expanded public-transit options are necessary, as are maintenance, repairs and upgrading of existing roads and bridges. Third, those transportation investments somehow will have to be made, for neither businesses nor residents can afford to live without them indefinitely.
Another point of agreement is that traffic congestion is getting worse. Given that Metro Vancouver’s population is projected to grow by about million people over the next 25 years, one can easily imagine how bad things could get. As population and port activities increase, container truck traffic will also grow. Who pays for the time that trucks spend idling on backed-up highways and arterial roads? These time delays raise costs for businesses and increase prices for consumers. We all pay for traffic congestion.
Winners and Losers from the Slumping Loonie...Through a British Columbia Lens
In the final months of 2012 the Canadian dollar was trading slightly above parity with the US greenback. Nearly three years later, one Canadian dollar is worth ~76 US cents. This marks an unprecedented depreciation of the Canadian currency – more than 25% in a bit less than three years. A decline of this speed and magnitude has significant economic implications.
Finlayson Op-Ed: Renewables, fossil fuels will share energy landscape (Business in Vancouver)
Is the world in the midst of an accelerating migration away from fossil fuels toward much greater reliance on carbon-free energy? If one takes seriously the speeches of many politicians or the content found on the web sites of environmental advocacy organizations, the temptation is to answer “yes.” The reality, however, is more complex.
Important shifts in energy production and use are under way, but the magnitude and timing of any overall global “energy transition” are apt to be less dramatic than many believe. Growing energy demand, the vast scale of the world’s existing energy system, and the tens of trillions of dollars of embedded capital that underpin it all stand in the way of rapid change.
That said, there is evidence of an incremental move away from fossil fuels as a primary energy source, in favour of low/no-carbon forms of energy. Over time, natural gas and renewables will comprise rising proportions of the world’s energy supply, while the shares of oil and coal will decline. However, because energy demand will be increasing and natural gas use is expected to double by 2040, this does not necessarily equate to an absolute reduction in the quantity of fossil fuels in the global energy system in the short- to medium-term.
Some Reflections on the Global Energy Transition
Is the world in the midst of a rapidly accelerating migration away from fossil fuels, toward a much greater reliance on carbon-free sources of energy? If one takes seriously the speeches of Environment Ministers or the content found on the web sites of many well-known environmental advocacy organizations, the temptation is to answer “yes.” The reality, however, is more complex.
In this edition of Environment and Energy Bulletin, Jock Finlayson analyzes the recent projections of three well-respected sources - the International Energy Agency (IEA), the United States Energy Information Administration (EIA) and British Petroleum (BP). He concludes that for the world as a whole, there is certainly evidence of an incremental move away from fossil fuels as a primary energy source, in favour of low/no-carbon forms of energy. However, looking out over the next two decades, the trend-lines point to a real, but far from revolutionary, energy transition, one that is unlikely to entail an absolute reduction in the quantity of fossil fuels produced and consumed globally by 2035 or 2040.
Jock Finlayson Presentation
Does Canada have an Economic and Environmental Carbon Bubble?
Presented to the Eco-Pragmatism Summit, Vancouver, June 15, 2015
On June 15, 2015, Jock Finlayson participated in a panel debate with Jeff Rubin focused on energy and the economy. Jock's presentation included a review of the top global oil producers, Canada's place as an energy exporter and global energy consumption trends. He also looks at energy transitions and some implications of lower fossil fuel prices.
D'Avignon Op-Ed: Great News for British Columbia
Remember June 11and 12, 2015. We will look back on this 24 hour period years from now as a point in which B.C. started to see a material change to its economy. Specifically, it was when some $44 billion worth of investment decisions were made in two separate projects that will strengthen B.C. as a significant player in two global sectors: energy and shipbuilding.
Finlayson Op-Ed: Canada flirting with recession (Troy Media, Business in Vancouver)
The latest economic growth report from Statistics Canada casts a cloud over the country’s economic outlook for 2015. Real gross domestic product (GDP) fell at a 0.6 per cent annualized rate in the first three months of the year, considerably worse than even forecasters of a pessimistic bent were expecting. Digging into the details, it is clear that the slump in global oil prices is taking a measurable toll on Canada’s energy-centric economy.
Non-residential investment plunged by 15 per cent in Q1, led by sharp cuts in capital-spending by the oil and gas industry. In recent years, the energy sector has accounted for more than one-third of all non-residential investment, as well as for roughly one quarter of Canada’s merchandise exports. So the epic downturn in oil and natural gas markets is dampening overall private sector capital outlays and weighing heavily on Canada’s export receipts.
Harsh winter weather also played a role in the gloomy Q1 report -- consumer spending came in below consensus, as many Canadians apparently decided to stay indoors.
Economists define a “recession” as two consecutive quarters of declining real GDP. We are half way there, and some recent economic data signal further softness into the second quarter.
Rethinking Social Licence to Operate -- A Concept in Search of Definition and Boundaries
This edition of Environment and Energy Bulletin, guest authored by David Bursey, a partner with Bennett Jones LLP, examines the evolution of Social Licence to Operate (SLO) in the approval of resource development projects and its recent rise in popular use. It then considers how the concept relates to political governance and law. Finally, it assesses the implications of how SLO is being applied – for good and for bad, but most often without a proper context..
Ken Peacock presentation to Construction Council of Vancouver Island
Building BC for the 21st Century
On May 13, 2015, BCBC Chief Economist Ken Peacock presented to the Construction Council of Vancouver Island's first annual Capital Project Forum in Nanaimo. In his presentation, Ken makes the case for increased infrastructure investment due to its strong economic impact and the role infrastructure plays in enabling access to foreign markets and improving quality of life. With the current climate of low interest rates, now is an opportune time to borrow capital in order to finance essential infrastructure projects. The presentation also looks at a variety of financing options from both the private and public sector, and notes the need for a long term infrastructure development strategy to ensure we keep pace with the global economy and our shifting demographics here at home.
This presentation is based on the Business Council's November 2014 whitepaper on infrastructure policy and financing, Building BC for the 21st Century, authored by Ken Peacock and Jock Finlayson.
Whitworth Op-Ed: Liquefied Natural Gas is a Generational Opportunity (Vancouver Sun)
The debate about the future of liquefied natural gas in British Columbia is generating plenty of heat, but often too little light. A casual observer can be forgiven if he or she is just a bit confused about whether LNG will come to B.C.
Strip away the rhetoric, however, and a truth remains: In a growing world economy hungry for cleaner forms of energy, the market for B.C.’s natural gas remains strong.
As CEO of Seaspan ULC and chair of the British Columbia Business Council, I think it is important we remember this when considering LNG’s potential to shape our province for the better.
Plunging Oil Price Good for the BC Economy in 2015…
The rapid and steep decline in world oil prices has prompted a fair amount of commentary on the accompanying economic impacts. For Canada, much of the analysis points to modestly negative economic implications, stemming from reduced business investment, lower corporate revenues, a decline in the value of exports, and diminished job creation in the oil patch. Lower oil prices also translate into a decline in revenues flowing to the federal government and to provinces like Alberta and Newfoundland.
An Updated Look at BC’s Inventory of Major Capital Projects
In this issue of Policy Perspectives, we provide a summary of capital spending on “major” projects in British Columbia.