VANCOUVER — British Columbians would enjoy twice the GDP growth and three times the job creation by using their limited supply of low-cost hydroelectricity to power clean growth industries as opposed to powering LNG export terminals, according to new research released today by the Pembina Institute.
In their report Power Struggle, Ian Sanderson, Will Noel, and Janetta McKenzie find that a diversified economic strategy focused on critical mineral mining, battery manufacturing, data centres and port electrification provides greater employment and GDP growth per megawatt of electricity allocated than a strategy focused on solely developing LNG export terminals.
Power Struggle highlights the inherent challenge of LNG development – powering energy-hungry terminals comes down to a choice between massive new greenhouse gas emissions from natural gas- powered terminals, or crowding out more economically valuable industries by monopolizing the use of limited hydroelectricity. In any case, the provision of grid electricity to any industry is a form of taxpayer subsidy, given the need for new publicly financed transmission lines to hook industries up to the grid. LNG terminals still need to be held accountable for their emissions; but they are not entitled to government resources or public financing, particularly as our analysis finds that there are better options for B.C.
The report explores the trade-offs and opportunity costs in three scenarios: an LNG-Focused scenario in which all new electricity generation is devoted to electrifying existing and proposed LNG terminals, a New Foundations scenario in which this generation is used to power battery supply chains and other clean growth industries, and a Mixed Growth scenario that supports some clean growth alongside a less aggressive electrification of the LNG industry.
“The benefits of diversification are significant, generating more than double the GDP and creating more than triple the jobs per annum relative to investing exclusively in LNG expansion,” Sanderson said.
Critical mineral mines, battery manufacturing, and data centres all match or outperform LNG export terminals in job creation and GDP contribution on a per-megawatt basis even during their construction periods – which is also the point when the economic benefits from LNG development are at their greatest.
This report comes at a point when requests from industries for electricity supply in B.C. are outpacing available capacity. BC Hydro is seeking to expand its grid capacity and has issued requests for proposals for new generation in 2024 and 2025 totalling 10,000 gigawatt-hours (GWh) per year; this is on top of the 5,100 GWh from the recently completed Site C hydroelectric dam. Nevertheless, the government faces difficult choices about which sectors to electrify and on what basis that decision should be made. The B.C. government recently introduced Bill 31, legislation that would allow cabinet to allocate electricity to industrial consumers based on economic benefit rather than on the current first-come-first-served basis.
“Our results strongly suggest that over-investment in LNG development risks crowding out high-growth, transition-aligned industries while locking B.C. into a sector with uncertain long-term viability,” Sanderson writes. “Diversification enhances economic resilience while aligning with global investment trends.”
There is one operational LNG export terminal on the BC coast (LNG Canada Phase 1) and two more under construction (Cedar and Woodfibre). The federal government has referred another two (LNG Canada Phase 2 and Ksi Lisims) to its new Major Projects Office, although neither proposal has reached a final investment decision. If these proceed as planned, a previous Pembina Institute report Squaring the Circle finds they will drive oil and gas sector emissions three times higher than the province’s CleanBC sectoral target.
Quotes
“An outsized focus on LNG – in terms of government time, resources, and public subsidy in the form of provision of low-cost electricity – comes with significant opportunity costs. Sectors like critical minerals, battery manufacturing, and data centres offer greater GDP and job creation than LNG projects.”
“Prioritizing clean electricity exclusively for LNG development risks crowding out other emerging sectors and missing a vital opportunity to diversify B.C.’s economy and lock in sustainable economic benefits.”
— Ian Sanderson, Senior Analyst, Pembina Institute
Quick facts
- During construction, LNG terminals create 12-25 jobs per megawatt of electricity demand while critical mineral mines create 23 jobs per megawatt during construction, data centres create 33 jobs, and battery factories create 44 jobs.
- Once facilities are in operation, an LNG-Focused scenario would support 4,100 jobs, while a Mixed Growth Scenario supports 11,400 and a New Foundations scenario supports 11,500 jobs.
- Annual GDP and employment impacts from operations across scenarios
- An LNG-Focused scenario would produce 26 million tons of CO2 equivalent emissions (MtCO2e) annually, while a Mixed Growth scenario would produce 30 MtCO2e due to increased use of natural gas in LNG operations. A New Foundations scenario would emit 18 MtCO2e.
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Download a copy of Power Struggle.
Contact
Benjamin Alldritt
Senior Communications Lead, Oil & Gas
587-328-1955
Background
Report: Squaring the Circle
