The Lower Churchill and Atlantic Canada’s energy security

Larry Hughes

One of the arguments for the federal government’s proposed support of the high-voltage, sub-sea transmission cable from the Lower Churchill hydroelectric project to Nova Scotia is that it will allow “clean energy” exports to the United States. The required grid upgrades through Nova Scotia and probably New Brunswick are seen as essential not only to the developers of the Lower Churchill but by many independent power producers in the region.

It is estimated that Muskrat Falls, the first of two possible hydroelectric sites on the Lower Churchill, will produce about five terawatt-hours (TWh) of electricity a year, of which two TWh are for Newfoundland and Labrador, one TWh is for Nova Scotia, and the remaining two TWh are intended for other jurisdictions. Although Nova Scotia, New Brunswick, and Prince Edward Island could have access to this electricity, the fact that many New England states have renewable electricity targets and consequently are willing to pay higher rates for low-carbon electricity means that most, if not all, of the remaining two TWh could be consumed outside Canada.

Electricity from the Lower Churchill should not be exported to the United States. This is neither an attempt to appease Quebec’s objections to the planned export of Lower Churchill electricity to New England nor is it a nationalist’s call for energy protectionism—it is an argument for sensible energy policies that recognize the need to improve Atlantic Canada’s energy security.

Most of the energy consumed in Atlantic Canada is imported. For example, although the region has access to Newfoundland and Labrador’s offshore crude oil, the Atlantic Provinces still import almost 80% of the crude oil they consume. On the surface, there is nothing wrong with energy imports; however, in Atlantic Canada’s case, its major suppliers are either in decline (Norway and Venezuela), have reached a plateau (Nigeria), or are in politically unstable regions (Iraq and Saudi Arabia). Even Newfoundland and Labrador, which meets about 20% of the region’s crude oil demand, is in decline.

The fact that Atlantic Canada imports most of its crude oil often comes as a surprise to many Canadians, as there is a common belief that Atlantic Canada gets its oil from western Canada. Nothing could be further from the truth-Atlantic Canada is not connected to the western Canadian oil pipeline, meaning that although the tar sands will inevitably help the United States improve its energy security (and allow the prime minister to claim that Canada is an “energy superpower”), it will do nothing for Atlantic Canada.

Despite the necessity to improve the region’s energy security, what little domestic energy existing in the region is invariably exported. Nova Scotia’s export of its crude oil, natural gas, and wood chips are all examples of misguided energy policies that fail to recognize the importance of either provincial or regional energy security.

The International Energy Agency defines energy security as, “the uninterrupted physical availability [of energy] at a price which is affordable, while respecting environment concerns,” and the World Bank has shown that energy security is necessary for economic growth and poverty reduction. Our research suggests that many parts of Atlantic Canada, already facing significant economic and social challenges, will be particularly vulnerable to supply shortfalls and price increases caused by growing volatility in world energy markets coupled with rising energy demand from countries such as China and various emerging market economies.

Although energy security is a major political topic in many OECD countries, including those in the EU and the United States, it has failed to resonate with Canadian politicians. A good place to start would be the introduction of policies to improve energy security in Atlantic Canada, such as ensuring that the electricity from the Lower Churchill is used to meet some of the region’s on-demand electricity, heating, and transportation needs.

Published Chronicle-Herald, 13 April 2011