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Well, it’s official: the proposed natural gas-fired power plant to be built in Nanaimo on Vancouver Island was approved today. The Duke Point power plant makes poor business sense and even worse environmental sense. It’s a strange decision that’s certainly linked to ulterior motives and the proposal’s long and checkered history.

To bring you up to speed, Vancouver Island has limited local power generation capabilities and relies heavily on power supplied by aging undersea cables to the mainland. Demand during peak times (i.e. a couple of mid-winter days) has continued to rise and will soon exceed supply. BC Hydro has plans to upgrade the cables by late 2008 but they forecast this will not satify the increased demand in time.

Enter a public-private project to build a $280 million gas-fired power plant to “save the day”. Ironically, the plant will only be operational in late 2007, making it a one year solution. Compounded with a 25-year binding agreement with their private partner, and you really start to wonder why this decision was made.

Local paper mills have already offered to reduce their usage during peak periods. Local residents are worried about the effects of pollution - natural gas is cleaner than coal, for example, but is still a pollutant. $280 million would go a long way towards speeding up the cable upgrade or putting together a local energy conservation campaign. But rational ideas like these seem to have fallen on deaf ears.

The BC Sustainable Energy Association reports that BC Hydro’s plan is based on natural gas prices of $3 per million cubic foot (mcf) whereas current prices are double at $6/mcf. Natural gas well lifespans are much more difficult to predict than crude oil: gas production tapers off suddenly at the end versus crude’s steady and predictable decline. Combine the declining North American supply and the number of new gas-fired plants coming online in the US and you have a recipe for further price increases. Decreased supply, increased demand - they must be dreaming if they think prices will drop to $3/mcf and stay that way for the next 25 years.

Gas-fired power plants may have seemed like a “green” idea ten years ago when the Duke Point idea was first hatched. But from a truly green perspective gas-fired plants produce large amounts of greenhouse gases. Not to mention that gas supplies are finite, making this solution far from sustainable. I find it especially ironic that regulatory approval has come the day after Kyoto went into effect.

Further reading: CBC.ca - Duke Point power project gets green light