As its offshore energy sector grows and sets it further apart from other Canadian provinces, Nova Scotia on Wednesday released a new energy strategy that involves, among other things, establishing a Department of Energy, introducing limited competition for some electric power customers, adding a royalty trust from offshore proceeds and setting new air pollution standards. The strategy also expects “major future benefits” from using natural gas and has set a plan in motion to remove barriers that would allow the new system to operate on a firm commercial basis.

The new strategy still requires some tweaking, and the Canadian government has agreed to work with Nova Scotia and the affected energy industry to discuss key issues to avoid duplication and overlap. In unveiling the energy strategy, Premier John Hamm said, “We are determined to seize the opportunity presented by a growing offshore energy sector. We see many benefits flowing to the people of our province in the years ahead. We want to use our nonrenewable resources to make permanent changes in our economic and financial future.”

Speaking about some of the reasons the province decided to set its own strategy, Gordon Balser, minister of the Petroleum Directorate, said some of the current systems just didn’t work, including the current natural gas system. “The former system of setting targets for pipelines to be built without consideration for markets and economics has clearly failed. The new policies are designed to ensure that natural gas will be available as markets and new sources of natural gas develop.”

However, Balser said the strategy will benefit the province in several other ways. “A vibrant energy sector needs to invest in research and development and training. It must support Nova Scotia-based businesses that can grow into world-class competitors.” However, before the sector can grow, Balser noted that “new discoveries must be made…To this end, one of the strategy’s prime objectives is to encourage all aspects of exploration.”

Nova Scotia’s 52-page energy strategy covers a range of issues and energy sectors, along with 300 pages of detailed energy sector background papers.

For electric power generation, competition would be gradually introduced, enabling the province to develop new sources of renewable energy and to create opportunities to export power. Municipal utilities would gain access to the transmission system to allow them to buy power from any generator. Open competition for new power generation also would be allowed. Renewable energy standards would be set, and new clean-coal technology would be developed as well.

The strategy also sets a course for new air pollution standards to reduce emissions causing acid rain, smog and other potential health hazards. In particular, the province plans to work with industrial companies and Nova Scotia Power to reduce sulphur dioxide emissions by 25% by 2005 and by a cumulative 50% by 2010.

To enhance opportunities to allow both the province’s fishing industry and energy industry to prosper, the strategy requires coastal communities to be consulted before future exploration licenses are offered for bid within sight of a shoreline of Cape Breton or mainland Nova Scotia (within 18 kilometers offshore).

Research and development are strongly encouraged under Nova Scotia’s new energy strategy, and the province plans to increase private and public research and plans to consider “possible incentives.” Industry support for research, development, training and economic development also will be encouraged through Offshore Strategic Energy Agreements. These agreements with new project developers would ensure that future project developments help the province achieve its energy objectives.

Finally, the province will use a portion of the offshore oil and gas royalties for long-term province-wide economic and financial benefits. When the higher net-revenue royalties begin, a portion will be placed into a Nova Scotia Offshore Heritage Trust. Income from the trust will be used to improve long-term economic growth of Nova Scotia.

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