… if the recommended economic and alternatives studies show that there are alternative ways of meeting the electricity demands of the Island over the medium term in a manner that is economically viable and environmentally and socially responsible, the Muskrat Falls portion of the Project should likely not be permitted to proceed for purposes of meeting Island demand.
Joint Fed/Prov Environmental Review Panel for the Lower Churchill Project
The official news release said that both the federal and provincial governments would “take the time required to review the Joint Review Panel’s findings” on the provincial Conservatives’ plan to develop hydro-electric power on the lower part of the Churchill River.
Then, “after consulting with Aboriginal groups", …the “governments’ responses to the Joint Review Panel report will then be made public.”
The report of the five-member federal/provincial environmental review turned out to be so bad Kathy Dunderdale’s dream election project that neither she nor environment minister Ross Wiseman could wait.
The report appeared at 2:20 pm.
Wiseman issued a note to reporters at 2:25 pm telling them he’d be available for a scrum at 2:45 pm.
No sooner were reporters back in their offices than another note arrived - at 3:25 pm - telling them Kathy Herself would speak with them back at Confederation Building at 3:45 pm. Apparently, Dunderdale left them cooling their jets for another 20 minutes beyond that before she showed up to crap on the panel and, at the same time, claim that their rejection of her election campaign centrepiece was no biggie.
Dunderdale said that in her review she could not find where the panel specifically found a problem with Nalcor’s proposal.
The simple answer is: everywhere, on the major issues of economic viability, need and export markets.
For example, the report dismisses Nalcor’s claim that Muskrat is the only viable (i.e. low-cost) way of meeting the island’s energy needs. They recommend instead that the whole thing be reviewed by an independent organization.
There’s nothing in the report regular readers of these e-scribbles haven’t heard in one form or another already.
What makes the joint review panel’s report so devastating for the Dunderdale project is that the five members have studied the entire project since 2008. That includes a round of intensive public hearings that only concluded earlier this year. The panel received hundreds of letters and submissions from experts and from concerned citizens. Nalcor even got the chance to add information after it was warned in January 2010 that its submissions failed across the board to provide any justification for the project.
The joint review is the first and so far only independent review that has been or will be conducted of the project. Nalcor has hired its own consultants but they cannot be considered independent.
The province’s public utilities commission will be paying for an appraisal of the project but the parameters for that appraisal review have been carefully set by Nalcor and the provincial government to produce the result Nalcor wants.
The report also destroys the New Democratic Party’s election position on Muskrat Falls that was based in part on the argument the project was economically viable.
New Liberal leader Kevin Aylward will hold a news conference at noon to discuss the report. This will be his first major test having so far given only weak comments about the controversial plan that will double the public debt and dramatically increase provincial electricity rates while providing subsidised power to Nova Scotia and other export destinations.
The joint review panel released an executive summary on Wednesday that details the conclusions they reached in the full report.
Here are some highlights, with some comments from your humble e-scribbler in square brackets:
Need, Purpose and Rationale
… the Panel concluded that Nalcor had not demonstrated the justification of the Project as a whole in energy and economic terms, and that there are outstanding questions related to both Muskrat Falls and Gull Island regarding their ability to deliver the projected long term financial benefits to the Province, even if other sanctioning requirements were met. The Panel therefore recommended that the Government of Newfoundland and Labrador carry out separate formal financial reviews before sanctioning either Muskrat Falls or Gull Island to confirm whether the component being considered for sanction would in fact deliver the projected long-term financial benefits. [Page 3, Emphasis added]
[Note: Megaproject proponents over-estimate benefits.]
Alternatives to the Project
… the Panel concluded that Nalcor’s analysis, showing Muskrat Falls to be the best and least-cost way to meet domestic demand requirements, was inadequate and recommended a new, independent analysis based on economic, energy and environmental considerations. The analysis would address domestic demand projections, conservation and demand management,
alternate on-Island energy sources, the role of power from Churchill Falls, Nalcor’s cost estimates and assumptions with respect to its no-Project thermal option, the possible use of offshore gas as a fuel for the Holyrood thermal generating facility, cash flow projections for Muskrat Falls, and the implications for the province’s ratepayers and regulatory systems. [Page 3, Emphasis added]
[Note: This basically states that the panel flatly rejected Nalcor’s claims about Muskrat as the only viable way to meet projected needs in the province. Since that’s the core argument Nalcor and government have advanced for the project, it leaves the entire government/Nalcor position without any foundation.
The panel gave a laundry list of things that Nalcor’s presentation should have included but didn’t. Regular readers will know already that Nalcor simply didn’t bother to study natural gas alternatives even though preliminary work suggests it is a cheaper, viable alternative to meet energy needs in the province.]
Alternative Means – Construction Sequence and Pace, and Reservoir Preparation
…The Panel concluded that for reservoir preparation purposes, the two reservoirs [Gull Island and Muskrat Falls] should be considered differently because of their different characteristics. The Panel recommended applying the ‘full clearing’ option to the Muskrat Falls reservoir because it would be technically and economically feasible and would not negatively affect the construction schedule. [Page 4]
[Note: This recommendation relates to the Nalcor plan to build one reservoir and then another at some underdetermined later point. The Panel recommended applying lessons from one project to another. The most significant implication of the recommendation cited here is that Nalcor would have to spend an additional $200 million to clear cut the reservoir. This would reduce greenhouse gas emissions and the release of potentially harmful by-products from rotting wood in flood zones created by the dam[s]].
Atmospheric Environment
The Panel concluded that with appropriate mitigation, including use of best available technology, air pollution and noise would be localized and temporary in nature. While the exact markets for much of the power are not yet known, the power produced by the Project would very
likely displace more greenhouse gas emissions than the Project would cause. Moreover, the Panel recommended that Nalcor make all reasonable efforts to ensure that power from the Project would be used (a) to back-up wind power and other intermittent renewable sources of
energy, (b) to displace energy from high greenhouse gas emission sources, and (c) not to displace conservation and demand management or power from renewable sources. [Page 4]
[Note: “While the exact markets for much of the power are not yet known…”. That pretty much says it all. They don’t exist yet. But when and if they do, odds are the whole Lower Churchill will do some nice green things. Note that last bulleted recommendation. Conservation and demand management are two parts of a strategy that could help meet the island’s energy needs without Muskrat Falls.]
Economic Impacts
… the Panel concluded that considerable uncertainty exists regarding the Project’s ability to deliver financial benefits to the Province in the order of magnitude projected by Nalcor. There are also questions as to how any such benefits might be distributed by the Government of Newfoundland and Labrador.
Concluding Thoughts on the Final Project Decision
The Panel concluded that if the recommended economic and alternatives studies show that there are alternative ways of meeting the electricity demands of the Island over the medium term in a manner that is economically viable and environmentally and socially responsible, the
Muskrat Falls portion of the Project should likely not be permitted to proceed for purposes of meeting Island demand.If market access for Gull Island were resolved based on reasonable transmission costs and the Gull Island facility were to be developed first, or a joint sanction decision were to be made, the Panel believed the situation would be different. The Gull Island facility would produce more
power at a lower unit cost and therefore would offer much greater potential to provide lower cost power to Newfoundland and Labrador and generate revenues for the Province.
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