The Future of Local Food

This op-ed appeared in the Moncton Times Transcript as an introduction to local food and a talk by radio host Jon Steinman (of “Deconstructing Dinner” fame)

“For climate change; for water; for energy; for all sorts of reasons our diet is going to change. Consumers are not going to like it, although it is probably going to be healthier and definitely more sustainable,” says Tim Lang, a Professor of food policy.

Later this month, we’ll be talking about food in greater Moncton. It’s one of the essentials for life, along with housing. It’s part of our daily social interactions. Yet, we take for granted the existence, quality, and cost of our daily sustenance.

Most of us have noticed the decline of agriculture in New Brunswick over the past century in favour of factory farms and corporate concentration in the processing sector. This is a global phenomenon. Should food be just a commodity like all others? Did you ever wonder why there are 850 million people in the world without sufficient food and over a billion who are obese?

Is there a way to provide a fair living for farmers, improve the economy of our province and increase food security for the people who live here? What is community supported agriculture? What is the effect of processed food on our health? Should we be worrying about the food that we put into our mouths? These are just a few of the questions intriguing to many consumers.

Leading the presentation and discussion at the Dieppe Market will be Jon Steinman from Nelson, British Columbia. His remarkable radio program entitled “Deconstructing Dinner” serves as a sounding board for his belief that “food deserves far more attention than it currently receives and that we owe it to this planet and each other to fully understand the implications of our food choices.” His broadcasts bring together farmers, journalists and researchers who “deconstruct the issues” to provide deeper context to consumers.

Those of you with an internet connection can access past programs at any time via podcasts. A podcast is simply a file found at a website that can be opened by your computer to play an audio recording. In other words – radio when you want it. A wide ranging list of food related topics is covered by this unique program that is heard on 34 radio stations.

The Fundy Biosphere Reserve, the New Brunswick Food Security Action Network and Post Carbon Greater Moncton are partnering to bring Jon Steinman here. Jon brings innovative ideas that may generate community interest to meet the increasing demand for locally produced food.

While we presently see the widest variety of food at our local supermarkets from all points of the globe, Post Carbon believes that food security will become an important issue in coming years. Today’s global market is only possible with cheap and accessible fuel, a prospect that will be changing in the near future.
Your food travels thousands of kilometers to get to your plate – for example, lamb from New Zealand, vegetables from Mexico, or water from Fiji, if you can believe it.

Such a long chain needs a considerable energy footprint, and leaves us vulnerable to transportation glitches or economic damage in the producing countries that will be caused by price spikes following a permanent decline in world oil production. An “oil crunch,” to put it politely, is expected in the next few years by the chief energy economist at the International Energy Agency.

Based on the wonderful Deconstructing Dinner programs that I’ve heard on the internet, I’m looking forward to a very interesting talk by Jon entitled “The future of local food.” It takes place at the Dieppe Market on September 28th at 7:00 pm. A bilingual discussion period will follow. Admission is free.


Develop an energy strategy that serves New Brunswick

Building a new oil refinery with a price tag of $8 billion was never going to be an easy task, but saying goodbye to a project where millions have been already spent must be quite difficult.  Collateral damage may include employees losing work and the investments made by individuals in the community expecting a boom.

There is always a risk of becoming emotionally invested in a concept, whether it’s private or public sector managers.

According to news reports, Irving Oil now sees declining customer demand for gasoline “from 2015 out for the next 25 years.” They didn’t divulge the reason for the decline, despite an expanding U.S. population. One likely cause is the reinvigorated corporate average fuel economy standards (CAFE) in the U.S. gas market and hence in Canada. The new refinery would have added capacity into a declining market.

But looking beneath the surface, rising oil prices in 2007 and 2008 made it clear that we are reaching a tipping point in world oil supply. About 40 of the world’s 54 oil producing countries have passed peak production and are declining. Reduced supply means fewer refineries, as I noted in a previous column from 2007.

Has the present government become so emotionally attached to its self-sufficiency agenda and “energy hub” job strategy that they reject the reality of an oil production decline in coming years with its consequential economic chaos? Or is it just saving face until the next election?

Self-sufficiency, as proposed by Shawn Graham, was fatally flawed from the beginning.

It was based on growing a larger population, a strong industrial economy and sufficient cheap energy, all of which are unlikely in the next decade.

With the passing of the refinery project, the “energy hub” seems an empty shell.

There is talk of an Irving wind power export project, which is like assembling Lego blocks made elsewhere – few construction jobs, and few or no permanent jobs. A related concern: do we want to use the best wind sites for export power rather than local use? A proposed natural gas plant is comparable, giving some short-term construction work but few permanent jobs.

The fallout from the refinery decision means expected tax revenue will not materialize.

Based on reduced revenue expectations, one would hope that the expenditures of government (both capital and ordinary) would be reviewed. As an example, New Brunswick’s latest budget proposes spending $160 million on new technical schools and programs, which were partially intended for training of refinery construction trades.

Demographic forecasts of a 20-per-cent reduction in student population in coming years and with more distance education, would see significant spare capacity in existing“bricks and mortar”institutions.

Does this expenditure still make sense? Perhaps lowering tuition would keep the institutions filled in coming years.

Having misunderstood the threat of an impending energy crisis, it’s time for Premier Graham to return to the basics of government.“Government intelligence” could produce an energy policy that meets our needs.

Should new homes have to meet an energy code? Is Efficiency NB making a serious impact on heating costs for existing homeowners? I recently talked to a hard-working woman in the process of being cut off from electricity. Due to misfortune and remarkably high bills, she couldn’t catch up from the high winter costs. This is real life for the less fortunate among us.

What is the role of wood in New Brunswick for heating homes? Why can’t NB Power reduce its winter peak? Should NB Power be consolidated and work on improving operational efficiency and reducing costs? Should new appliances sold have to meet energy efficiency standards? Since we are facing an impending crisis of very high gasoline prices and energy shortages in the near future, should we be setting a floor price for gas to encourage the purchase of high-efficiency vehicles? Would incentives help us? What about mandatory standards for vehicle mileage or speed limits?

These are but a few of the questions that I would ask the premier. Will he change course? What will be his legacy? His three years of power have shown little progress in setting a new course on energy. Considerable time was occupied in the energy department marketing the “energy hub” idea.  Being a strategy for job generation, it should have been handled by Business New Brunswick.

Who are the losers with three years of an energy policy abyss? The people of New Brunswick, who won’t be prepared for hard times.

But it could be worse, I suppose. Mexico is again facing large decreases in government revenue, as their oil exports declined 14 per cent during the first half of 2009. That decrease of 200,000 barrels a day amounts to $4 billion less revenue for Pemex, the state oil company.

Canada needs lower interest rates

If you look around you can always find someone worse off, and by comparison, you’ll feel better about your own situation. The New York Times recently borrowed $250 million dollars from the Mexican billionaire Carlos Slim. The interest rate: a whopping 14 per cent. Times are tough for the newspaper business, with ad revenue down considerably in the recession and challenges from the Internet. Carlos Slim is betting that the better brands will survive.

Fortunately, the average cost of borrowing for the province of New Brunswick is lower than that, presently 8.3 per cent, down about half a per cent from several years ago, due to the trend of lower interest rates and the rise of the Canadian dollar. Former Premier Bernard Lord isn’t happy with the rising provincial debt strategy taken by Premier Shawn Graham’s government, according to a recent news report. A combination of higher capital spending and lower personal taxes will be financed by debt. The auditor-general indicated in March that the province’s debt could surpass $10 billion by the end of 2013. That’s approximately 52 per cent higher than the legacy of the previous administration.

If the interest rate on the provincial debt remains the same, the annual payment for that $10 billion debt could be $830 million annually, or $253 million more than 2008. To be fair, a higher debt is not necessarily a bad thing, if the money borrowed results in future increased revenue to pay the higher debt interest. For example, if the spending increased economic prosperity, or if our population would increase to provide higher tax revenues – not likely based on our recent history.

There is an historical precedent for this strategy that comes to mind. What country consistently deficit-financed budgets, lowered taxes over the past 30 years and now finds itself in a financial minefield? While Zimbabwe may have a terrible debt to GDP ratio at 240 per cent, the country I was talking about is the United States. It’s at 85 per cent and will hit 97 per cent in 2010.

Canada’s ratio is slightly less than 30 per cent but will rise in the next few years as we follow the Keynesian expenditure bandwagon suggested by the Obama administration.

So where is these story going? Well, the U.S. makes a link between oil prices and the economy. “Another spike in oil would have consequences in terms of world recovery…” explained Steven Chu, the U.S. energy secretary in Rome at a meeting of energy ministers.

Italian Economic Development Minister Claudio Scajola called for an alliance between the private sector and governments to spur investment. “When the crisis is over, the risk of insufficient energy supply exists, and as a result high and unstable prices.”

From these statements, it appears that some governments finally recognize a precarious situation in oil pricing and supply when they see one. There’s a book that just went on my must read list, “Why your world is about to become a lot smaller – Oil and the end of globalization.” Jeff Rubin, formerly CIBC’s chief economist, foresees future recessions caused by oil price spikes in triple digits.

We’ve seen that recessions lead to reduced government revenues. A logical thought progression would suggest that provincial governments could benefit from lower borrowing rates to help adjust to difficult times in coming years. How could this be done?

The mandate of the Bank of Canada could be enlarged to include purchase of provincial bonds as deemed advisable. Perhaps these funds could encourage an off-oil agenda by conservation and green power construction. At the moment our central bank provides assistance to chartered banks and administers national monetary policy. The short term funding to chartered banks can be as low as the bank rate, presently .25 per cent.

One intent of monetary policy is to limit inflation to around 2 per cent and definitely avoid deflation. Over the past few years, the growth in the money supply has varied between 7 per cent and 12 per cent and depending on which money supply indicator you use, it increases by a double digit and sometimes triple digit billions each year. A portion of this money could be used. The key question is, how the chartered banks would view this type of change?

Simply reflecting on a statement from Senator Dick Durbin of Illinois brings doubt: “we’re facing a banking crisis that many of the banks created..  are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

In Canada, Finance Minister Jim Flaherty’s proposed revision of credit card law doesn’t lay a glove on the chartered banks. There’s no cap on maximum interest rates.

Let’s see if I’ve got this right. The banks have access to billions of government capital at .25 per cent, your deposits for virtually nothing, and they loan it out to us at 19 per cent interest? That’s quite a spread to work with, Jim.

The banks may not own Jim Flaherty or Stephen Harper, but they certainly have a good hammerlock going and didn’t someone just cry uncle.

On Big Issues, Graham’s Government has earned a ‘D’

Does it bother you trying to compare the real price of an airline ticket or vacation? Taxes or fees can more than double the first price you see.

One of the best I’ve seen recently was a car dealer who sent a card to my residence and thousands of others. It appeared that I had won $1000. I turfed the card as being a gimmick, but a friend took the bait and his “win” was a fishing rod which, bought in bulk from China, probably cost $5. The fine print showed 56,000 fishing rods and one $1000 prize. It seemed to be working for them based on the volume of people at the dealership. You can’t sell to a customer until they show interest or step through the door.

Governments do marketing (sometimes called spin) over a long period, which culminates on Election Day. They’re selling a brand, a dream for a better tomorrow because there is little they can do to change today. They have to convince you that they care for you, that they are good stewards of your money and that you are better off if you vote for them again.

Given the short memory of most people, politicians only give you a break in the last 12-18 months before an election. In the first two or three years of a mandate, you often get to feel the cattle prod. Usually, there is a time lag between a change in policy and when the public perceives an actual change. Has there been too much haste to achieve concrete results before the next campaign starts, probably in 2009. Has the thought process on policy been overlooked?

If Shawn and the Grahamites were a band trying to make a name for themselves, some of their tunes would be the “self-sufficiency reel”, the “UNBSJ breakdown” or a recent cut called “French Immersion –the late waltz”. Is this the best that we can get?

Changes to public policy should start from a clearly defined problem and evaluate a series of solutions, which are weighed from many different angles – in other words, a serious business case. What was the clearly defined problem that required the removal of UNBSJ and the solution of a polytechnic?

What is the definition of self-sufficiency for tomorrow’s world of global warming and energy scarcity? What are the concrete steps that will start the process and how will it work. We were invited to participate in a dream of self-sufficiency that we might all have contributed to and believed in. But it collapsed due to a lack of intellectual clarity at the start and poor execution.

The Early French Immersion review identified a real problem but picked an inferior solution. Was there no time for negotiation and finding a middle ground? To achieve a September 2008 implementation takes time to organize apparently.

There are some bright spots. The government has accelerated the creation of wind power facilities and this should reduce our dependence on oil fired generation to some degree. They are investigating a second Lepreau, which has some positives and of course negative aspects.

As much as I disagree on some of the approaches of this administration, what this government seems to lack is the ability to listen and it is failing to act on the incredible danger to us all from peak oil. Listening to Jack Keir recently, he appears to understand some of the dimensions of the problem. He has unfortunately failed to produce an energy policy and specific approaches that could ease our way into the post-carbon era.

The era of continual growth fuelled by oil is coming to an end. Should Shawn Graham be asking Stephen Harper for $137 million to twin 55 km of Route 1? Let’s evaluate two different ways this money could be invested.

1) Spend on twinning Route 1 – No additional revenue is evident once the road is built but some additional maintenance costs are required for snowplowing and expensive repaving at 10-15 year intervals. No payback from this project. In fact, it is a drain on resources.

2) Provide a $2,500 subsidy for any New Brunswicker’s who upgrades to a fuel-efficient car – Let’s say over 40 mile per gallon. The $137 million would fund 55,000 cars spread over a number of years. Each vehicle would burn 1300 liters less fuel a year than the previously owned gas-guzzler. At $1.50 a liter, which it may be quite soon, it would save $1,950 per car per year. At its maximum impact, the money back into the pockets of our citizens would be $107 million per year. This money is no longer going offshore to Saudi Arabia but staying in our pockets to spend locally. The payback could be as little as 1.5 years.

I won’t go into program details because there are many ways that this program could be designed. Is 40 miles per gallon an aggressive enough target? Would Buzz Hargrove of the Canadian AutoWorkers approve of this idea? Of course not. GM mostly sells gas guzzlers. What the example shows is there are ways to slow down the effect of high oil prices and produce less CO2.

The Liberal government has shown some courage in addressing certain issues and for that reason, I would give them a D on overall performance instead of an F.

Could the government be more creative and effective? Yes, very easily.

Flip this Province

We all have our favourite TV shows, except for the smart people who don’t watch television at all.  What seems to be the rage this year is the “Flip this house” or “that house” phenomenon.  It’s where a person buys a rundown house for less than it’s real value, spends perhaps 5 or 10% of the value of the home on repair of cosmetic problems and then sells the house for a big profit.  Where there’s a quick profit to be made, many people will be attracted – even those have no experience in building.

I first started watching shows like “This old house” because I love seeing the transformation of a deteriorated structure and the use of new technologies to improve an older home and make it energy efficient.   Later, other programs diverged from that formula, becoming reality shows, where people ham it up for the camera, making good decisions and foolish ones.  The sense of greed in us all is attracted to the idea of quick money.

Most of these programs are filmed in the US where a booming housing market seems to make it possible for even a poor flipper to succeed.  The rapid inflation in housing prices over the past years covers many mistakes.  “Flipping” is now a commonplace activity, like going to the gym.  But like everything else, there is a cycle to flipping and it appears to be post-peak.   The collapse of housing market in the US and the economy will, no doubt, shake out a good many of the non-professional entrants to the sport.

There is a darker side to this activity and all is not what it seems. Trademark Properties and Richard Davis, one of the first developers featured, is suing A&E network.  Some of the second year successors on A&E are being sued for fraud or foreclosed due to financial problems.  Clearly, the blemishes of flipping and the failures of certain projects are not being shown.

Beyond the Hollywood paintbrush, it is ripe with conspicuous consumption – granite countertops, stainless steel appliances, and hardwood floors being the requirement.  Rip out what’s there and throw it in the dumpster.  The cost of the finished property may be very high but that’s OK, it seems.   It’s a scene in the continual marketing of our disposable society, which consumes enormous quantities of everything. Young couples learn what they should want – that dream house in the suburbs and become house poor.  We take one step further away from sustainable housing that our society needs to have.

Those flippers aren’t the models of energy efficiency in their choice of lighting or insulation.  They seem to be mostly interested in the money.

Here in New Brunswick, we have a different group of flippers.  Their role is to dramatically transform homes in New Brunswick from energy hogs to energy savers.  The group is called Efficiency New Brunswick and their budget is $26M according to a recent article in this paper.   They loan money to homeowners at a zero interest rate or provide a grant of up to $2000 (20%) for items recognized by an audit provided by the agency.  To date “700 grants @$1,600 have been handed out and 400 loans have been issued at an average of $8,700 each”.   1100 people have taken advantage of the program.  In the two years of the agency’s life, 6300 audits have been done.  Vice-President Lesley Rogers indicates that they are hoping for a take-up rate of 80%.  Supposing we have 5000 audits per year and 4000 upgrades proceed, is that enough?  There are 300,000 homes in the province with half built before 1980.  It could be 35 years before the upgrading required is complete.

The organization is new, roughly two years old.  It is progressing but there is little information on its web site – still very basic.  In contrast, has a great deal of information that is useful and directs the customer with frequently asked questions.

Lesley tells me New Brunswick has the highest per capita program participation in Canada.  A number of unique services are available – multi-unit upgrade program, a T8 subsidy program and others.  How about posting some of the good news on the site until a full annual report is published? Perhaps a graph showing the increasing numbers of audits or homes upgraded would be interesting.

The era of cheap oil is over.  The era of super expensive oil is coming.  George W Bush was in Saudi Arabia last week to plead with King Abdullah to turn on the oil tap a little more.  The Saudis refused, saying “that the market was well supplied.” They are the only country with any spare capacity (perhaps 1.5% of world total), but it won’t last long with depletion and increasing world demand.  Perhaps they couldn’t export more.  Jeff Rubin of CIBC World Markets predicts that oil will hit $150 a barrel by 2012.  It could be a lot sooner.  The effect of high oil prices will affect natural gas, electricity and wood to a lesser extent.  This crisis will be like no other in our memory and those who are not prepared can expect to pay considerably higher heating bills

There is a board of directors for the agency.  Perhaps they will do a little strategic planning.  Setting targets for the number of upgrades per year, insisting that the agency get the message out to the public.  It’s still relatively unknown and a poor web site doesn’t help.  Perhaps they could ask why we are promoting oil heat when we have an excellent supply of wood in the province?  Are the targets for energy efficiency of new homes adequate?  Houses are built to last for over a century.  The cost of furnace oil will be roughly $4 a litre in the next five to ten years.  Costs of this magnitude change all of our assumptions on insulation levels and design.  And this is not taking the cost of carbon into the equation.

We all support the work of Efficiency New Brunswick.  We are impatient to see it make progress – Especially those of us who realize what a cold, bleak future awaits us if we do not act agressively to curb energy wastage in housing and business.

Oil Crisis calls for innovation

In previous articles of this series, I suggested that high oil prices are a significant danger to electrical rate stability and we need to take energy self-sufficiency seriously. A big tilt towards high efficiency, low emission wood burning is a start. There are many other ideas, some with little or no cost that can make a big difference. You may find some items a little boring and technical so just skip over any items that don’t interest you.

2) Institute a province wide changeout of Christmas lighting to LED technology. Based on the figures in my article of January 07 entitled “The value of thinking small”, NB Power could save up to 35,000 barrel of heavy fuel oil a year ($2.8 M @ 80 / barrel). In addition greenhouse gases are reduced by 18,000 tonnes a year (worth $450,000 @ $25 / ton)

The cost of a changeout program would be about $5 million with a payback of less than two years. Saint John Energy made a start in this direction in November 2007

3) Advance legislation on light efficiency from 2011 to 2008.
Going from incandescents to higher efficiency lighting isn’t rocket science. It doesn’t cost a lot to government either. The government of Shawn Graham has indicated that it will legislate the issue in 2011. Why wait for 2011? Ireland is implementing legislation in 2009.

The value of conversion to higher efficiency lights is probably in the range of 188,000 barrels of heavy oil but could be more or less. The annual fuel savings to NB Power could be as high as $15 million. Subtract lower kWh sales of $9.3 million and you have a net benefit to NB Power of $5.7 million.

4) Introduce Electric Thermal Storage (ETS) furnaces or heaters similar to those used in Nova Scotia or Quebec. Supplying electricity poses some difficulties because the demand changes greatly over the course of 24 hours. There is very little demand at night when people are sleeping and much higher when everyone showers or is getting ready for work in the morning. Peak load timing may vary depending on the components of commercial or industrial load.

Utilities meet the varying load curve with the lowest cost generation first, such as nuclear or hydro, followed by coal, with natural gas, oil and diesel being the last to run. The sequence may vary somewhat depending on the cost structure of each utility. Not surprisingly, flattening the load curve can pay big dividends. The ETS device turns on and stores heat in a ceramic brick core during the night when the electrical load is low and releases heat as required during the day. Nova Scotia has implemented a time of use scheme where the power rates are much lower at night facilitating these devices.

Not every building will be converted off electric heat. This technology has a place in the mix of solutions. This EUB may wish to investigate.

5) Revisions to demand charges on commercial and industrial customers.

Utilities like NB Power introduced a demand charge to certain classes of customers to entice customer to flatten their load. In most cases the result has been less than satisfactory. The demand meter records the monthly peak and a charge per kW is added on the bill. Although the customer cannot mathematically reduce his demand below the average demand he is charged between 0 kW and the average demand.

A better approach would be to charge demand on only the difference between the peak and average monthly demand because that is what the customer could actually affect. Done with a higher $ / kW and a revenue neutral approach, it would actually encourage more customers to invest in load control. This may interest the EUB.

6) Review the specifications for wind turbines supply contracts.
The use of wind turbines has the potential to reduce the use of heavy fuel oil in the province. However, there are some technical problems to overcome before more than 10 or 15% of the system load can be supplied by this technology.

First, most types of wind turbines are induction motors, which cannot supply “vars” to the system and create stability problems under certain conditions. One company at least, Enercon, builds a synchronous generator with no direct coupling to the power system. Power electronics simulate the attributes of a typical power generator including var supply. This might permit higher system participation assuming the other issue of scheduling of the wind can be resolved to some degree.

Not the last or the least of ideas is the use of combined heat and power (CHP), which will be the subject of an article soon. But the journey of a thousand kilometers begins with the first step. We are ready to take that first step but in what direction? The Department of Energy has, as its prime function, the security of supply and the reasonable cost of the energy supplied to the citizens of New Brunswick. There is little spare oil production capacity in the world according to some OPEC sources.

Our department seems to hold the belief that the near doubling of crude oil prices has little significance and that the market system will soon correct the temporary supply problems. From the outside, it appears that the principal departmental activity is marketing the energy hub concept – exporting of power or energy.
The recent appointment of Shelley Rinehart, whose expertise is in marketing, would seem to confirm that.

The government is 17 months into its mandate without an up to date energy policy. The issue of rising oil prices and particularly heavy oil cost for NB Power may become an albatross around the neck of Shawn Graham, his own “Hurricane Katrina” on a scale that will mark his legacy.

Build a wood-fired energy market

My previous article pointed out that a $2 billion dollar problem is developing at NB Power.  No, it’s not Orimulsion again but it’s related.  That previous $2 billion incident was the loss of long-term savings between low cost Orimulsion fuel and the world price of oil that evaporated when the agreement with Venezuela went sour.

Since then, the price of crude has gone through the roof.  Back in 2002, heavy oil was $15 a barrel and today it’s roughly $60.  It’s going considerably higher as the utility’s18-month hedging of prices moves along.  NB Power hedges to know well in advance what it will pay down the road.

The increasing price of heavy oil will cost $100 million extra this year and perhaps $175… or $200 million next year. NB Power has been pointing out that its oil costs are rising.   They have been working on displacing oil with a small percentage of petroleum coke and that could save $60 million.

The Energy department has not yet revised its energy policy but perhaps we will see some new ideas in the spring.  In the meantime, I have a suggestion today that will set us on the right direction for self-sufficiency.

Get a large number of NB Power’s electric heat customers off electric and onto wood or natural gas.  The essential elements are:
* A customer will buy or be leased a high efficiency, low emissions stove from an approved list.
* The kWh reduction between the months of October and March on the customer’s bills will be reimbursed at a rate to be determined, perhaps 3 cents.  For example, if the customer bills were reduced by 15,000 kWh, then the rebate would be $450.  This rebate would continue for four years.  The funds for the program might be split 50/50 between NB Power / Government.

The program would encourage customers to participate by effectively paying a substantial portion of the heating appliance over the time period.  NB Power would benefit over the long term by a lower oil bill.  The provincial government would benefit from the multiplier effect of the money staying and circulating in the province as opposed to being sent offshore to oil-rich countries.  As well, the reduction of greenhouse gases could be considerable.

Let’s look at an example to understand it better.  Supposing NB Power had 20,000 participating customers each of whom would save 15,000 kWh in year 1.  That becomes 300 million kWh / year savings.  It would reduce NB Power’s oil bill by 483,870 barrels a year (10% of oil burnt) or $38.7 Million dollars (at $80/barrel).   KWh sales would diminish by $24 million and the subsidy program would cost them $4.5 million for a net gain of $10.2 million.

The cost to government (year 1) would be $4.5 million.  The $38.7 million dollars formerly spent on imported oil now remains in New Brunswick mainly for labour and machinery to cut / split wood, and delivering the product to NB homes.  Refocusing the money back into the community brings enough income tax to the government to pay for the subsidy program.  Each year, the program grows by 20,000 until the fifth and final year when the subsidies begin to taper out.  It is conceivable that NB Power’s oil consumption could be cut in half.  The inclusion of commercial and industrial customers in this program will ensure these savings goals are reached.

The possibility of selling 20,000 stoves a year should be adequate incentive to install a manufacturing plant in NB. (20,000 @$2500 = $50 Million)

As increases in demand for wood fuel increase and this is not a small program, government may consider providing support for community-based pellet or briquette plants at a number of locations around the province.  This could take the form of loan guarantees or product purchases for a short time.

George Jenkins, a forest researcher, indicates that a significant number of local plants could be supported by the softwood biomass in the province.  It also appears that the economic damage due to the downturn in the lumber and paper industry could be alleviated by the relatively small investments in this plan.

New Brunswick is vulnerable to large increases in the cost of electricity in the near future.  A plan of this size could cut future power rate increases in half, put people back to work in the rural areas of the province, and reduce greenhouse gas by as much as 1.2 million tonnes per year.

NB Power’s total investment of $90 million, spread over 8 years, is totally paid for by reduced oil purchases.  The Province’s investment is also $90 million over the same period, plus investments ensuring the supply side is ready for the sharp increase in demand.

The direct economic development impact of this plan is $820 million.  Would these dollars contribute to self-sufficiency in Dalhousie and Miramichi where the mills are closing as well as other small communities that have lost their sawmill?   The alternative is to sit and watch an extra $2 billion dollars in fuel costs fly out the window to Saudi Arabia or Venezuela between now and 2016.

The next article will provide other suggestions.