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A decisive victory for anti frackers

As the smoke clears, it is increasingly clear that the report of the Yukon legislature's fracking committee is a major victory for environmentalists and, with some caveats, for First Nations.

As the smoke clears, it is increasingly clear that the report of the Yukon legislature’s fracking committee is a major victory for environmentalists and, with some caveats, for First Nations.

It represents, in effect, a moratorium of undetermined length on fracking in the Yukon.

The report is not binding on the Yukon government, but it would require a rapid series of quite improbable events for fracking to happen here (more on that below).

The representatives of the three political parties on the committee could not agree on whether fracking should be allowed in the Yukon.

All of them agreed, however, “the Government of Yukon should have the support of the Yukon First Nations whose traditional territories are affected before allowing hydraulic fracturing.”

This looks like a major win for First Nations, since it would give them a veto over fracking. Under the Yukon oil and gas regime, they don’t have a veto over conventional oil and gas production.

The caveat to this, and it depends on exactly how the veto is worded if the Yukon government implements it, is whether this consent would be irrevocable. Picture how nervous investors would be if a First Nation could agree to an oil and gas project and then, perhaps after a spill or electing a new chief, revoke that consent.

So the veto gives a significant new bargaining chip to First Nations, but may also make it harder to attract investment should any future First Nation want to develop non-conventional oil and gas resources.

The Yukon Party, NDP and Liberal committee members also agreed to 20 other recommendations, many of which involve complex technical studies. My guess is that funding these studies would cost millions and take years.

There was also a huge gap in the committee’s report. Despite over a year and a half of work, the report is sadly lacking in useful economic information. Remarkably, the half-page dedicated to economic impact doesn’t have a single number in it.

When Quebec went through its fracking study, the final report had almost 30 pages of detailed information on job creation, tax and royalty revenues for all levels of government, economic projections and even the effect on house prices near fracking sites. Quebec decided on a fracking moratorium, but at least they had the numbers needed to make a fully-informed decision.

It is exceedingly strange that something named the “select committee regarding the risks and benefits of hydraulic fracturing” would not put serious effort into outlining the benefits as well as the risks. Citizens need to have an idea of what the economic benefits would be in order to put the risks into perspective.

Another gap is around the big question of why, if fracking is so awful, governments of various political stripes have approved the practice in Saskatchewan, B.C. and Alberta. These are three provinces with long experience with oil and gas, so it seems like it would have been sensible to interview ministers in those governments on such a big question and highlight their opinions.

Overall, it looks like the pro-development members of the committee were completely out-manoeuvred by the anti-fracking side. If you read the report, it has pages and pages on risks, issues and problems and just a little hand-waving on jobs and tax revenues. It has virtually nothing on why fracking is permitted in neighbouring provinces.

As a result, the report is a public relations coup for the anti-frackers. And it gives pro-development Yukoners no ammunition at all.

The Yukon Party government has announced it will study the report’s findings. Given the clock speed of this government, and an upcoming territorial election, this will likely take years. The NDP has long had a staunch position against the non-conventional gas industry. On Tuesday the Yukon Liberals joined them, announcing that a future territorial Liberal government would not allow fracking.

So in order for energy companies to produce non-conventional gas in the Yukon, we would first need the Yukon Party to complete the studies agreed to by its members of the committee. Then it would have to stand up in public and take an unpopular stand to permit fracking, either before or after winning the next election. Then the First Nations in the relevant regions of the Yukon would have to agree. Then the oil and gas companies would have to go through Yukon’s assessment board, get financing, find clients not already served by low-cost wells in Alberta or B.C. or Saskatchewan, drill and produce.

You’ll have to call your bookie to see what the odds on all that are.

It’s a major win for the Yukon environmental movement, and especially notable since their counterparts in B.C., Alberta and Saskatchewan have failed to ban fracking in those provinces. Check the liquor store to see if they’re sold out of Anna Spinato organic champagne.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. You can follow him on Channel 9’s Yukonomist show or Twitter @hallidaykeith