Working to Build on the Potential of Energy Projects & Partnerships

A Discussion Paper to support First Nations and Clean Energy »

InternationalINDIGENOUS SUMMIT onENERGY & MINING

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Consider this conference, and the initiatives and partnerships we launch here, as a power source to build a prosperous future for First Nations based on our visions of how to engage in development; how to share with others and; how to care for the ultimate source of power and of sustenance, Our Mother, the Earth.

Our “Powering Prosperity” discussion paper is being released in Onguiaahra (Niagara Falls) – a significant location for First Nations in terms of politics and power and our spiritual connection to the land and waters. It was here, 250 years ago, that the 1764 Treaty of Niagara was entered into between the British Crown and 24 Indigenous Nations from both sides of what is now the U.S.-Canada border. Indigenous law and Treaty protocol was used to record and sanction the commitments made. It also served to ratify the Royal Proclamation of 1763 which is considered Canada’s first constitutional document and which recognizes the inherent rights of Indigenous Nations as nations. Our right to self-determination and our rights to our lands, waters and resources has been affirmed in more modern legal terms through the adoption in 2007 of the United Nations Declaration on the Rights of Indigenous Peoples.

In geological terms, the history of “Onguiaahra” (Niagara) tells us that the falls were created when the glaciers of the last ice age receded and water from the newly formed Great Lakes carved a path through the Niagara Escarpment. The Great Lakes themselves represent the world’s largest surface freshwater system in the world, about 18% of the world’s supply. However, less than one percent of the water of the Great Lakes is renewable on an annual basis (through precipitation and groundwater) and the rest is a legacy from the last ice age, or “fossil” water.

For over 100 years now, Niagara Falls has also been the site for the largest generation of hydro-electricity for both sides of the border. In fact, a new tunnel has recently been bored under the falls in order to feed the increasing appetite for renewable energy. Eventually, some of the energy generated from that new tunnel will make its way via a transmission line to New York State. However, a major portion of the new transmission line will run through Six Nations territory here in Ontario. As a result of a current dispute over land rights, that transmission line is not being built.

Elsewhere in Canada and the United States, there are a host of energy and mining issues. These include numerous hot spots where there is a fundamental choice to be made - between energy partnerships and mutual learning and prosperity on the one hand or to carry on development in the old colonial style by racing to grab resources and resource benefits without thought for others or the environment.

Early next year, the Government of Canada will begin community hearings on the proposed Northern Gateway oil and gas pipeline which will run 1,100 kilometres from northern Alberta to the coast of northern British Columbia where tankers will make deliveries to feed the growing energy demands of Asia. However, the pipeline

will pass through 60 of our communities. Many communicated opposition to this pipeline, and most indicated they were not properly consulted. It will be First Nations affected by this development who will play a key role in considering this pipeline – if it is ever built, and if tankers are allowed to enter their waters.

The proposed Keystone Pipeline project, and pipeline leaks in existing pipeline projects, also must be resolved with Indigenous peoples consent and input.

In the Northwest Territories, the Aboriginal Pipeline Group owns one-third of the proposed Mackenzie Valley Pipeline, a project which will feed the growing energy demands of North America for decades to come. In fact, First Nations have become active participants and proponents of prosperity.

Since the 1980s, First Nations have also been playing an increasing role in the development of the Alberta oil sands, from employment to the many spin-off businesses that serve the oil industry. We are also very aware of the environmental and health impacts that have severely affected those who live near the oil sands.

Unfortunately, North America, and the world, will continue to rely upon fossil fuels for many decades to come. As a result, we will all suffer from the ill effects that come from extracting fossil fuels – ranging from climate change to cancer. However, our people will continue to participate, and continue to advocate for the safest methods of extraction, as well as safer pipelines that will not pollute our rivers and streams.But there is a way forward.

Our future - North America’s future - relies on creating a green economy that will preserve our land and waters, and benefit First Nations. The peoples of North America – Indigenous and Settlers, need to preserve the physical legacy of our planet with the same dedication we apply to preserving the capital of our monetary investments. One depends upon the other. We cannot build wealth for generations to come by depleting and fouling our physical capital, the lands and waters. It is our time for us to take a leadership role as Indigenous peoples to balance development opportunities and conservation of the earth through environmental protection and green development.

We must seize every aspect of alternative energy—whether it be wind, water, solar or geothermal. In Ontario and the Maritimes for example, Indigenous Peoples are in the forefront of green energy planning and development. There are opportunities not only for our communities to generate power but to become power brokers – selling clean energy to grid systems across North America.

This discussion paper lays out a path for First Nations to work to together to create prosperity through First Nations clean energy enterprises. We must travel this path together with government and industry. We must begin now in order to reach our destination – and fulfil our right to self-determination through the wise use of our resources and the protection of our environment.

FOREWORD

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Discussion I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The First Nation Community and Focal Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

People and Communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Clean Energy Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Environment and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Proposing Principles Based on Connecting Focal Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Discussion II: A Changing Landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Discussion III: Maximizing Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Potential for Joint Initiatives between First Nation and Tribal Nations . . . . . . . . . . . . . 13

First Nations & Tribal Nations Potential Joint Clean Energy Interests

and Policy Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Examining Economic Benefits to the Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Project Impacts:

Employment Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Clean Power Valuation Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Renewable Energy Generation Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Economic Challenges and Solutions Come in Different Shapes and Sizes . . . . . . 20

Discussion IV: Next Steps – Where to From Here? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

TABLE OF CONTENTS

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Energy is one of the greatest forces of economic security for Canada and potentially, for First Nations. Traditional carbon energy sources have been central to the global economy and particularly North America. Most of that energy, from fossil fuels such as coal, oil and gas, to hydro-electricity from rivers and dams, has been produced and generated on traditional territories.

According to the David Suzuki Foundation (September 23, 2010), Canada is one of the few, perhaps the only, developed country without a coordinated energy plan. This discussion paper begins to explore key focal points to help describe First Nation interests in energy development, to consider planning, and more specifically participation in the clean energy economy. Helping coordinate and identify initiatives to support collaborative action and the economic potential of First Nations are proposed outcomes of this paper.

Clean energy on its own represents a quickly growing market. It also represents a necessity from the perspective of environmentally responsible energy development objectives. While no energy source is totally without some level impact to the environment, green and renewable power, such as hydro, wind, biomass, solar and geothermal electricity generation, are more

consistent with approaches to sustainable community development, while also providing long term economic opportunities – a principle that is also consistent with First Nations-centred approaches to develop our communities sustainably.

New opportunities are being created by clean energy trends that are fuelling prosperity for First Nations. First, innovation in renewable energy technologies is making projects more feasible and robust. Second, provincial and territorial electricity markets are more open to independent power generation providers, including First Nations and partners. Third, and perhaps most importantly, First Nations have secured greater legal, policy, regulatory and public powers.

The challenge is to build on these trends to realize the potential of energy projects broadly, and clean energy projects more specifically through partnerships with First Nations. The Assembly of First Nations (AFN) identified this sphere of economic development as one of its priorities. Building on the pioneering work of energy development amongst the First Nation community and clean energy projects undertaken by dozens of First Nations from coast-to-coast-to-coast, the focus of this discussion paper is to examine a proactive role in advocating

INTRODUCTION

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for national policies and programs that support First Nations direct, meaningful, and active involvement, such as in:

» decision-making governing the use of lands and water for hydro, wind and biomass generating projects;

» finding ways to put into action means that initiatives that will work with free, prior and informed consent, and the recognition of First Nation rights and title around the issues of development;

» free prior and informed consent;» duty of the Crown to consult;» identifying energy programs,

services, and incentives to support First Nations economic growth and infrastructure to support this sector;

» holding equity in clean energy projects; » benefiting from resources development

at the construction and operating stages; » increasing economic education

opportunities; and » utilizing project earnings to

drive the economic and social development of communities.

Effectively supporting economic interests as those noted above often begins with working together and sharing expertise, the same is true for First Nations advancing their respective clean energy agendas. To that end, this discussion paper proposes a collaborative initiative among First Nations

across the country to build toward a First Nations clean energy strategic approach. Part I of this discussion paper coordinates some of these subject matters into four focal points for First Nations consideration, which are People & Communities; Clean Energy Enterprise; Environment & Resources; and Partners.

Part II of this paper discusses the significance of the legal landscape for development in First Nation territories. Part III of the paper discusses maximizing economic growth and business development benefits, and Part IV outlines planning options via next steps providing that interest exists for First Nation national planning initiatives related to clean energy development.

Importantly, in closing, we must acknowledge the ground-breaking work of the communities that have already launched energy and clean energy projects. Some of those achievements are highlighted in this paper. First Nation communities and leaders across the country to are welcomed and requested to provide their feedback and advice on this discussion paper, from how clean energy plays a role in economic development, to sustainable prosperity, to key priorities and issues of concern among First Nations communities – and more.

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The First Nation Community and Focal Points Globally, populations are rising, in addition to efforts to increase standards of living. With both these factors comes the need for a greater energy supply to support energy demand for community infrastructures, homes, public transport, and basic development requirements from around the globe. As described in a National Energy Policy Plan by the US Government almost fifteen years ago (April 1998), North America was not immune to the economic impacts and energy demands this has created, in fact planning for efficiency, reducing energy disruptions, promoting energy security, health and environment protection, expanding future energy choices, and cooperating internationally on energy issues were identified as key policy matters.

Despite the fact that a national energy plan does not exist in Canada, some of these same policy discussions have been important domestically and continue to be important to the Canadian economy and to First Nations.

Today, First Nations in all parts of the country are communicating a strong interest to partake in the energy economy and clean energy development. This is marked by more and more communities starting up or becoming part owners in clean energy projects. This paper proposes a

strategic approach to support First Nations communities in efforts to become integral to a greener and cleaner country.

Developing shared goals and commitments is a fundamental building block for every successful First Nation national strategy, for which the same would be true for a First Nation clean energy strategy. The following focal points reflect on “connecting” energy development within a collective community context:

People and CommunitiesAmong the many critical and immediate issues that First Nations are working to address, governance capacity, employment creation, social services priorities, education and youth development have continued to rise to the top. Education and skills development, especially among First Nation youth, is a primary focus which has been continuously communicated by First Nation leadership – as such including this emphasis in equipping communities to support citizens to capture jobs and develop careers in renewable energy in and out of their territories. Utilizing a national strategic approach on energy projects to assist the socio-economic outlook amongst the First Nation community needs to be one means to assist meaningful change. As such, People and Communities in terms

DISCUSSION I

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of building socio-economic measurements are proposed as strategic focal points.

Clean Energy EnterpriseAn energy strategy would speak to the needs of the First Nation economy and equipping communities with support to engage in this sector. For this, appropriate economic infrastructure to catalyze clean energy projects and establish necessary economic supports for development to take place would need to be considered. Ensuring the necessary tools and mechanisms exist would augment a spin-off base for new business development serving the sector, as found in many sectors, as business development initiatives and commercial ventures grow.

New infrastructure investments are required to realize community potential. Investments must also be complemented by support, coordination and integration of development programs in order to assist community governments’ abilities to respond to economic opportunity. The capacity for communities to better serve and play a major role in determining their economies is a key issue. In addition, access to capital has been, and continues to be, difficult for most communities and First Nation citizens seeking to engage in the energy sector. Whether capacities are coordinated on a First Nation national, regional level or local level, there is a shortfall in First Nation government economic infrastructure.

For these reasons, this paper advocates the creation of support mechanisms to facilitate First Nation clean energy enterprise.

Environment and Resources Environment and resources are integral to a clean energy concept and related strategies. Establishing a focal point that respects natural resources and how they are developed, while generating sustainable benefits in clean energy, will be critical to building a First Nation strategic approach to energy. This would need to include matters from carbon emission reductions to ensuring that habitat, wildlife and fisheries are protected. First Nations have knowledge and contributions for the development of clean energy initiatives and assisting overall success. Consistent with First Nations rights and our responsibilities as stewards of the land, a focal point as this is needed to speak to charting an energy relationship where First Nations can and will take the lead to build our own economies and contribute to Canada’s economy in ways that respect the environment and seek a sustainable future .

The other aspect to this suggested focal point is finding the way through diverse environmental and other regulatory processes of the regions in which we live. This speaks to the need to take into account our governance role as First Nations and our Aboriginal and Treaty rights, as they relate to the regulatory

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processes and the legal systems governing clean energy among other jurisdictions.

First Nations seek to define our own interest in resource revenues. A national initiative with this focal point in hand may be used to support a central place to network and share expertise, meeting consumer energy needs in an environmentally sustainable way.

Partnerships Working with other Indigenous peoples, other jurisdictions, and industry is the final focus point proposed to help guide a national strategic approach in the energy sector. With work relationships and partnerships comes greater potential for full participation from revenue sharing to ownership, from employment to environmental stewardship.

The energy sector can be a leader in putting into action an industry perspective

for engage early – engage often principles; fair sharing; and encouraging economic stability that supports long-term investments in clean energy projects. A key partnership consideration will be to work on energy policy matters with others such as the National Congress of American Indians and Tribal Nations to the south, and Indigenous relatives from other parts of the world. Sharing expertise and building models that are mutually supportive of each others cultural, political, social and economic environment can be an important building block.

Proposing Principles based on the above four interconnected Focal Points

» First Nation public and economic interests are complementary to the public and economic interests of Canada;

Hydropower represents approximately 60% of Canada’s electricity supply. There are vast amounts of untapped hydro capacity in every province and territory the majority of which is located on crown lands which First Nations claim.

The Pic River First Nation has developed and operates 3 hydro Projects on its Lands in Ontario.

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» First Nation communities can not afford to forego the opportunity to participate in the clean/green energy economy and have a growing population of youth in needs of training (trades and professions) and employment opportunities;

» First Nations need to take the lead on defining our interests in this sector and assessing what our participation can include;

» A national approach should promote engage-early/engage-often principles, concrete ways to put such principles into action; recognize the important role of Impact Benefit Agreements at the earliest stages of planning energy projects and the distinct role and necessity for separate agreements with federal and provincial governments on resource revenue sharing;

» Environmental considerations, traditional and scientific, are a critical component of a national approach;

» Partnering with selected stakeholders and Indigenous Peoples would enrich efforts to build a national plan, approach, and/or strategy; and

» A national approach must respect each First Nation’s jurisdiction and each First Nations right to determine their own development including governance and capacity building objectives.

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Not only has the economy become more dependent on global dynamics, the legal landscape under domestic and international law has changed dramatically in recent years to include an increasingly strengthened scope of protection and recognition of First Nation traditional and resource rights.

This has led to increasing First Nation participation in development projects and in regulatory decisions affecting energy and mining development. These changes in the legal landscape result from a wide array of negotiations and partnerships between First Nations and public and private sector partners and when necessary, from First Nations activism in the courts, in international bodies and direct action on the ground to protect our peoples and our lands. In this regard, First Nations leadership are following the lead of the people on development issues in their territories. This has led to some significant successes.

Our rights as nations and peoples, to participate in the governance of our traditional territories, and in the revenues and other benefits of development, have been affirmed by the UN Declaration on the Rights of Indigenous Peoples, other human rights instruments and a growing body of international human rights case law.

Equally significant is the fact that the private sector is demonstrating as increasing interest in developing industry policies, guidelines and practices to comply with the principle of free, prior and informed consent among others.

Advances also have been made in domestic law to elaborate the duties of the Crown respecting consultation with First Nations and “accommodation” of our fundamental rights in our lands, waters and resources. However, this area of Canadian law now lags behind international law (instruments and case law) which provides a set of minimum standards and a human rights frame for understanding what needs to be done to protect and respect our collective rights as peoples and nations in development issues of all kinds.

This new legal landscape has implications for negotiations, environmental review processes, a broad array of legislation respecting the regulation of energy and mining development as well as the policies and practices of governments and the private sector. There is much work to be done yet, but there are also many exciting opportunities for First Nations to work with public and private sector partners to ensure our peoples have a prosperous and healthy future.

DISCUSSION II: A CHANGING LANDSCAPE

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Collaborative decision-making between federal, provincial and First Nations governments will be required in order to find the right balance between environmental protection and the development needs of all peoples including Indigenous Peoples.

Realizing clean energy projects will require all proponents, including First Nations, to meet the diverse social and legal aspects of the regulatory landscape for clean energy projects across the country, and to do so in a way that includes First Nations governments as partners in development decision-making and revenue sharing. There are many important new policy considerations and legal realities that shape discussions when First Nations, the Crown, and partners consider working together.

1. Clean Energy and First Nations Lands: A large percentage of new potential electricity generation projects in Canada are located on First Nation traditional territory and, activities related to clean energy production may interact with First Nation land use. Most clean energy projects now under development or consideration on Crown lands, and consequently require First Nation approval (e.g. for water power access, grid connection, extraction and harvesting of resources, and more.)

2. First Nation Rights, Title, and Treaties: First Nations in Canada have fundamental rights and titles to our lands, waters and resources recognized by various sources – First Nations law, Treaty, Canadian constitutional law, and international law. These rights and titles have many practical implications for energy and mining developments across Turtle Island.

3. Duty to Consult and Accommodate:

The Government of Canada, as well as

provincial and territorial governments,

must fulfil the legal obligation to

consultation and accommodation.

Moreover, “the honour of the Crown”

is at stake in all matters involving the

relationship between First Nations and

the Canadian Crown. Many provinces and territories have instituted ‘Duty to Consult’ requirements for electricity authorities in the planning of province/territory-wide power systems and projects. Across our respective territories, First Nations are asserting their rights and interests, reshaping the regulatory process and negotiating their role as governments and as peoples in energy and mining developments. While there continue to be major shortcomings with Duty to Consult and Accommodation practices, the formal legal requirement to respect and implement these obligations rests with the Crown and Canada through its federal and

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provincial governments, now must also meet international legal standards.

a. Provincial/Territorial Clean Energy

Regulatory Requirements: Provinces and Territories are beginning to enact new legislative requirements recognizing the need for First Nations approval as part of the overall regulatory process respecting the use of renewable resources. For example, the provinces of British Columbia and Ontario require that First Nation communities give their direct and specific approval for any development of hydro resources in traditional territory.

b. Clean Energy Project Approvals

Process: Energy projects (such as a new biomass, wind or hydro power facility) are subject to a complex mix of approval processes (e.g. of an environmental, land use, habitat, fisheries/fowl, and community interest nature). Many of these approval processes require extensive environmental assessments that require community consultation. Power utilities/private energy developers are beginning to realize that First Nation participation in the design and implementation of

approval processes will make these more effective and efficient.

c. Emerging Industry Standards and

Guidelines: New international principles and norms are also leading to the development of industry codes of conduct that recognize the need to include Indigenous peoples from the earliest stages of planning and exploration. Corporate Social Responsibility codes are now beginning to include guidance meeting the principles of free, prior and informed consent, and other principles found in international conventions, declarations and protocols.

Given that First Nation communities are becoming increasingly active in commercial partnerships for the development of renewable energy resources, partners in the business community as well in order to reach broad economic development goals in the clean energy sector it is important that a strategic approach clearly is consistent with the new legal landscape of Indigenous rights and title while supporting sustainable development and new partnerships.

About 12 per cent of Canada’s installed capacity is thermal generation fired by coal.Source: Compiled by the Canadian Centre for Energy Information from provincial and federal government websites, 2010

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Fiscal and program mechanisms are needed to assist communities in establishing and acquiring equity interests in clean energy projects. Such initiatives are in the interest of First Nations, as they will establish a foundation for long term development, employment, wealth creation and prosperity – and certainly with this reality would be a much improved prognosis for the recovery and health of the national economy. The benefit also of building capacity is that clean energy projects will move forward faster and more robustly, creating employment and business opportunities for First Nations peoples.

Potential for Joint Initiatives between First Nations and Tribal Nations The situation in Canada for First Nations has some parallels with Tribes in the United States – first and foremost being considerable interest around long-term, gainful, economic participation in this sector. In a report posted by the US Department of Energy (April 2011), it was identified that recent dialogues among Tribal leaders and the Department of Energy brought forward several key messages during round table meetings. In general, these have included messages such as access to financing, navigating government programs, education on energy, and sharing best practices. First Nations have similarly often communicated concerns for financing

large projects, lack of necessary program infrastructure, capacity, and best practices.

South of the border, Tribal Nations have been involved in clean energy developments for a longer period of time; and it has been observed that systems to instil an environment for engagement differ. Impacts and comparisons of each are yet to be assessed. However, it appears that there is a shared priority on funding and economic barriers that minimize the number, and speed by which, First Nations and Tribal Nations may become engaged in projects in this sector.

That being said, there are a set of potential joint interests that First Nations and Tribal Nations may share in the clean energy sector, some of which are based on diverse or mutually-shared challenges, strengths and opportunities. First Nations and Tribal Nations may benefit from working more closely together on any number of these technical issues, leading/overarching factors, or their sub-issues.

DISCUSSION III: MAXIMIZING BENEFITS

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First Nations & Tribal NationsPotential Joint Clean Energy Interests and Policy Discussions

A. Shared objectives: to participate in domestic and international economies, achieve economic independence, and realize our respective nations’ autonomy.

B. Shared repository of information

resources: experiential information that transcends borders around project development, benefit agreements, training tools and a host of other data.

C. Project Financing: Develop mutual

financing options, such as a shared lending fund or senior debt and debt-for-equity investments by First Nations and Tribal Nations into each others respective clean energy projects, where opportunities exist.

D. Power Exports: Transmission and trading of clean energy power generation from respective domestic projects/markets into markets recognizing the clean, green and sustainable value of these sources of electricity.

E. GHG Offset Sales: Trading and sale of Greenhouse Gas (GHG) Offsets generated by respective clean energy projects into the Canadian and US markets, through a North American Indigenous framework.

F. Energy Economic Infrastructure: general support toward projects, incentives, programs and services as a necessity to establish systemic supports, from both a financial and non-financial development standpoint.

Examining Economic Benefits to the Community Clean energy projects can provide a range of potential economic benefits to communities. The specific benefits/outcomes/dividends that would relate to a clean energy project would depend on the type of project (e.g. power sources, technology, etc.) and the terms negotiated with partners/financing sources. Potential economic benefits include the following:

» Joint ownership and related income/earning of the project construction corporation

» Construction-based employment and procurement first rights of refusal during development

» Supply of on-going feedstock rights (notably for biomass)

» Development of business relationships with other First Nations corporations

» Management of employment related to on-going participation on the project

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» Annual revenue related to equity on the basis of carried/bought interest in the project

» Access/supply and related pricing of power for the First Nations community

» GHG (Greenhouse Gas) carbon offset sales

» Additional economic development built on the power project

Employment The scale of employment opportunities may be seen as substantive. For example, a large hydro project (approximately 300 MW in size) would require the following kinds of skills and person years of employment.

» Total Peak Construction Employment 800 workers

» Average Construction Employment 500-600 @ 3-4 years construction

» Professional Designation Breakdown: Carpenters: 65,000 person-days Labourers: 50,000 Operators: 45,000 Drivers: 18,000 Mechanics: 20,000 Electricians: 23,000

Pipe fitters: 23,000 Iron Workers: 25,000 Rebar: 17,000 Management: 135,000

Long Term Employment 40 Full Time Workers

In total, Lumos Energy estimated, for the purposes of providing a project example within the discussion paper, that there is potential for 6,000 – 18,000 personal years on construction based employment in First Nations Clean Energy Projects, should Indigenous communities secure rights to approximately 25% of project employment. A further potential of 300 – 600 on-going positions also exists. Further, clean energy projects offer the potential for the creation and/or expansion of First Nations enterprises and partnering opportunities in areas such as: Construction Management, Logistics, Hauling, Accommodations and Hotel services, Site Preparation and others.

A key focus of the employment and enterprise efforts should focus on First Nation youth – whether they opportunities are in future development prospects or immediate career pathway development. Investing in First Nations is not only a benefit to First Nation communities; it’s a long-term and sustainable stimulus plan for Canada’s economy. Statistics Canada has predicted

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that Canada will face a labour shortage by 2017 as baby boomers retire and there are fewer workers to replace them. With more than half of First Nations people under the age of 23, our youth can fill this gap, but only if they are empowered with the skills and education to meet the need. If we reach the targets we have set, First Nations workers would add $179 billion to Canada’s GDP by 2026 through employment and by reducing government expenditures on income support, social services, health care, and security.

An essential element to a First Nation clean energy project model is the direct involvement of First Nation citizens and the generation of soft and direct benefits which flow to the community. In straightforward terms there is a “trifecta” of benefits that projects should promote. First, clean energy projects help build capacity in First Nation governments and economic development agencies, and

also support business know-how and skills/trades amongst First Nation citizens. Second, benefits are equitably distributed since they flow from the project construction and operations process to communities. Third, social and economic benefits are derived from the earnings of clean energy projects.

Wind Power is rapidly growing as technologies become more cost efficient and the ability of utilities to “blend” wind with other sources of electricity improves.

The Eskasoni First Nation in Nova Scotia has made the development of wind power to replace coal generation a priority

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Clean Power Valuation ExampleClean energy also offers a range of values for the provincial and territorial power systems, energy consumers and society at large. A summary of the Value of clean energy is listed below.

Summary of Clean Power Valuation FeaturesFeatures Valuation Attributes

Energy Security

Being more decentralized and closer to power users, clean energy enhances the stability of power systems and reduces demand on transmission capacity. Clean power also adds diversity to the power system.

Reduced Environmental Impacts

By reducing Criteria Air Contaminants (CAC) and Greenhouse Gasses (GHG), waste products and air toxic emissions, clean energy offers a significantly decreased environmental footprint than fossil fuels and nuclear energy.

Health BenefitsClean energy reduces risk factors to human health which results in lower morbidity and mortality, and lower costs borne by the health care system.

New Clean IndustryClean energy is a source of economic development for local economies offering job and wealth creation multipliers.

Price Hedging & Reducing Fossil Fuel Pressures

By diversifying power sources, clean energy reduces pressures on fossil fuel consumption, notably the marginal fuel source of natural gas. Thus, clean energy acts as a price hedge against higher natu-ral gas prices.

Shorter Development Timelines

Clean energy projects, such as small scale hydro, medium-scale biomass and solar, are subject to faster project timelines of devel-opment which represents a potential cost advantage and have an ability to respond to market needs faster.

Source: Lumos Energy, 2007

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The First Nation energy project pipeline is already large, and interest in green energy supply as an economic development opportunity is growing. Listed below are a number of projects currently in operation:

» Umbata Falls Hydro + 2 other small hydro projects, Pic River First Nation, Ontario

» China Creek Hydro, Hupacasath First Nation, BC

» Wind Dancer, Pikani First Nation, Alberta

» Big Beaver Falls Hydro, Wabun Tribal Council, Ontario

» Atlin, Taku River Tlingit First Nation, BC

» Lac Seul Hydro, Lac Seul First Nation, Ontario

» Canoe Creek Hydro, Tla-o-qui-aht First Nation, BC

The scale of these projects across the country is substantial. Such clean energy projects have major economic and

environmental benefits, such as reduced Greenhouse gas and air emissions.

The nature of growing clean energy markets provides interesting opportunities for First Nations. These opportunities reveal that clean energy business potential is emerging in several regions of Canada. While many First Nations may be able to partner on clean energy business developments in traditional territories, others may find the most profitable commercial ventures lie in: providing services to projects, investing resources, or providing “feedstocks” (e.g. biomass) for projects.

As with other major development projects, a key development principle will need to examine clear benefits to First Nations, such as: direct control, ownership, and access of resources and their use. These principles will undoubtedly complement First Nation objectives around ownership of revenue generating assets, employment, and capacity development in managing projects and enhancing First Nation governance, legal and ethics models.

Canada is the third largest producer of hydroelectricity in the world. In 2009, Canada generated 363.5 terawatt-hours of hydroelectricity. China, with 549.04 terawatt-hours-hours, is the largest producer of hydroelectricity, and Brazil at 387.1 terawatt-hours is second. Source: Energy Information Administration, International Statistics, 2010; Canadian Electricity Association, 2010

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Renewable Energy Generation Project ExampleThe potential contribution of First Nations renewable energy generation projects relative to Canada’s overall potential, for high, medium, and low growth scenarios is shown below. Corresponding overall potential capacity additions are 1,373 MW, 2,375 MW, and 3,247 MW respectively (Source: Report of The Delphi Group to INAC, 2010).

The Ougebougamou Cree Nation of Quebec utilizes waste biomass to produce high-quality heat for the community

BioEnergy has huge potential given Canada’s large endowment of forestry and agricultural feedstocks and wastes that can be converted in heat and power.

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The numbers for First Nations Clean Energy Projects are as follows,

according to Lumos Energy:

» 15 First Nations Clean Energy Projects are now in operation across Canada

» 25 First Nations Clean Energy Projects were approved for power contracts in 2010

» 20-30 additional First Nations Clean Energy Projects will be given approval over the next 1-4 Years

» Another 25 Projects will be approved over the next 6-10 years

» A total of 85-95 First Nations Clean Energy Projects will be developed over the next decade

» Possible implications toward a sizable reduction of Greenhouse Gas (GHG) emissions with renewables instead of fossil fuels

» Potential to point to positive environmental management models and outcomes, following evaluative processes

Economic Solutions and Challenges come in Different Shapes and SizesThe simple fact is that First Nations face major constraints in the ability to maximize potential benefits from clean energy projects, including:

1. Increasing clean energy knowledge within First Nation communities;

2. Limited human resources and management experience with clean energy projects within First Nations, economic development agencies, tribal councils, government or other levels of support;

3. Constraints on the part of many communities to participate in projects as partners due to limited financial equity;

4. The need to build relationships between First Nation communities and utility/private power developers, and other jurisdictions; and

5. Linkage of clean energy projects into broader community Economic Development Plans.

The challenge in securing the investment capital resources is one that comes to the forefront often in order to maximize business interests in clean energy projects. While in some scenarios it may be more viable for project proponents to negotiate

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a minority “carried interest” (i.e. an equity percentage provided at no cost) of 5-10% in a clean energy project based on the rights of traditional territory, there needs to be the funding and resource opportunities for First Nations to consider greater ownership positions. Obtaining a substantial minority or majority/outright ownership of a project requires significant investment capital resources that are generally beyond the capacity of the majority of First Nations. Thus, there is a pressing need for both development financing and project financing resources and mechanisms for First Nations in the clean energy sector. Such mechanisms could include:

» Early Stage Project Assessment Funding

» Pre-Feasibility and Feasibility Study Support

» Construction Planning and Procurement Resources

» Construction Stage Capital

» Take Out Stage Equity Financing Contributions

» Loan Guarantees Based on Commissioned Projects and Guaranteed Power Purchase Contracts

To assist communities in overcoming some of these challenges, it would be worthwhile to further explore:

» Project Development Know-How to establish an advisory resource and subject experts network to assist communities in all areas from project assessment, planning and approvals, to negotiation, to managing the pre-feasibility and feasibility processes, to accessing technical skills, and to construction stage activity.

» Human Capital and Labour Force

Development to respond to human resources needs for every project and its spin offs, from technicians, construction personnel, managers, service industry, apprenticeships and more.

» Project Partnerships with Private Sector

to enhance/establish the business foundation to pursue clean energy projects which respect First Nations rights and cultures, and integrate business capacity and know-how.

» Financial and Project Investment

Capital to ensure that the commercial interests and equity positions of First Nations are secured to generate long term earnings and benefits.

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» Energy Economic Infrastructure

General Support toward projects, incentives, programs and services as a necessity to establish systemic supports, from both a financial and non-financial development standpoint.

» Clean Energy - First Nation Community

Governance and Accountability

Mechanisms to ensure that the approval processes, engagement, and interests of First Nation citizens are an integral part of the process and that there is full financial and business performance transparency. This is particularly important for managing the flow and distribution of project earnings needed to build community capacity and long-term wealth generation.

» Clean Energy Literacy to share information, build curriculum and tools on clean energy. Transfer of

knowledge integrating sustainable development into project planning, implementation and management.

» Negotiating and Preparatory Work to help ensure all information to assist communities to undertake a proposal and negotiation process such as project budgeting, cash flow planning, partner identification/ assessments, and project capitalization, etc. However, importantly, prior to any negotiation ensuring mandate and community engagement requirements are fulfilled.

» Planning Competencies for Realizing

Clean Energy Benefits to help structure projects to maximize economic development benefits; harmonize community clean energy plans with community economic development plans; and on-going project management and benefit realization.

The T’Souke First Nation on Vancouver Island in BC has implemented solar power on a wide scale

Solar Power is an emerging source of energy, particularly for community needs in regions where electricity costs are high, such as off-grid regions.

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Unquestionably, the gaps and needs in the above areas of community clean energy capacity building vary in significance from one community/region to the next. Addressing these gaps/needs is a shared responsibility between First Nations, First Nation organizations, governments, utilities, advisors and private partners. In effect, there is a shared interest among all players in ensuring that communities possess the capacity and ability to move quickly and help ensure the necessary capacities – from infrastructure to training – are established to take projects forward.

Photo courtesy Canadian Electricity Association (CEA).

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This discussion paper represents a first draft of energy dialogue topics, policy issues, challenges, and opportunities that are currently shaping First Nation participation in the energy sector – and to begin outlining where planning and other structural supports would assist First Nations. Canada is said to be well positioned to responsibly face current challenges and seize opportunities to be recognized as an energy leader. Yet, First Nations may communicate a different assessment around our position as communities interested in engaging in this sector. The next steps proposed as part of this paper are centered on information gathering, considering political and economic relationships, and building consensus on key focus areas.The following are options for building the necessary background information, measuring and encouraging multi party interest, and identifying mechanisms to assist First Nation participation in the energy sector. Ultimately, to begin this course of action each next step and all phases of consideration require First Nation input and development.

Consideration 1: Need for regional energy resource opportunity and market profiles:

» Compile information on current and expected energy requirements in regions and territories, statistical

profiles of the scale and value of past/current energy resource production

» Consider energy resource supply potential and options among First Nations

» Gather information on market reform

» Gather project development and planning tools

» Gather First Nation, federal, provincial and territorial environmental protection regulations

» Gather regulatory environment from region to region, and cross border, to help inform current energy development/management considerations

Consideration 2: Reinforce and expand relationships in the sector

» Seek First Nation leadership support to oversee and provide guidance to relationship development and to identify planning objectives

» Dialogue on working jointly to promote meaningful inclusion of First Nations in the energy sector and exercising First Nation inherent jurisdiction

DISCUSSION IV: NEXT STEPS – WHERE TO FROM HERE?

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» Dialogue with proponents such as federal/provincial/territorial governments, financial market leaders, and energy sector leaders (eg, electricity utilities sector and independent power developers), academia, sector councils, energy advisory boards, and others

» Prepare/gather overviews of policy objectives of energy sector proponent

» Reflect upon varied federal, provincial and territorial government courses of action in a number of legislative and policy domains, including: Clean Air Framework, Climate Change, Regional Economic Development, Human Resources Development, Environmental Protection, Energy-Driven Economic Development, Cleantech Innovation, Energy Diversity and Supply, Federal - Provincial Relations and Northern Sovereignty

» Encourage relationship building with Tribal Nations and other levels of government as part of the overall process

» Encourage the creation of an experts advisory network

Consideration 3: Building consensus on key priorities, issues, and proposed activity

» Identify community, regional, and national priorities and issues

» Overview of interests of other sources involved in the energy sector

» Discuss/facilitate a national plan for energy sector participation

» Consider economic infrastructure needs both financial and non-financial, such as,» Labour force planning

and development » Identifying financial

requirements and options» Identify management strengths,

capacity, and development needs» Identify operational

capacities and gaps

» Study the legal environment

» Explore accountability and planning tools

» Examine and include environmental stewardship objectives, from climate change, water and natural resources protection, sustainable management, and traditional knowledge.

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» Examine environmental planning considerations, environmental and cumulative impact assessments, and environmental health considerations

» Provide an assessment/analysis of critical information

» Draft a communications plan on promoting First Nation energy interests in regional and national decision making processes

» Pending direction and instruction,

prepare a strategic plan intended to support First Nations in energy development

The Peguis First Nation of Manitoba has utilized geothermal energy to heat community facilities

Geothermal Projects are in their infancy and involve utilizing the Earth’s energy to heat facilities or generate power

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This paper was prepared as a starting point for discussion – and does not represent any final word or agreement on subjects dealing with energy development and First Nations.

There is a strong and compelling business case to be made in providing tailored and flexible capacity building support at the early stage of clean energy project development for First Nations communities across the country. To fully demonstrate this business case, background research, national market trends, socio economic outcomes, operation and management capacities, and financial forecasts will need to be compiled. Nevertheless, building on new and existing relationships and increased attention to establishing First Nation capacity to respond to these types of economic opportunities will, in themselves, represent benefits to communities, Canada, and the economy.

In order to build the capacity required to become active partners in clean energy projects First Nations will need to explore initiatives that encourage many forms of energy literacy, project management and development tools, negotiation skills, and access to expertise. The work to be completed, from a distinct First Nations approach, will need to be cognizant of the current regulatory environment in greater

detail, establish an inventory of project and market information, and consider practical issues from labour force development needs to financial tools, in addition to the more complex relationship building approaches.

Importantly, successful First Nation clean energy projects aim to respect cultural priorities and build community capacity in ways that assist First Nation leadership to negotiate fair agreements, protect and enhance Indigenous rights and ensure benefits from project development and operating processes. Taking this forward into the domain of clean energy may be a challenge however there are many attributes that are changing in the business environment that may also welcome this value – such as sheer economic viability and corporate social responsibility principles.

With First Nation input, it is hoped this discussion paper will be a stepping stone toward facilitating energy sector involvement among our community. An important part of this effort, if approved, will mean identifying an ambitious yet realistic approach for catalyzing mechanisms to support clean energy projects across the country – and with an outlook to plan for opportunities that support other Indigenous Peoples to benefit and take part. Knowing First Nation communities across the

CONCLUSION

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country have begun taking steps toward being a part of the solution for clean energy, climate change action, sustainable development and economic prosperity may also point to timeliness for a national strategic approach.

Photo courtesy Canadian Electricity Association (CEA).

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The Assembly of First Nations wishes to acknowledge contributions made by:

Chris Henderson, LUMOS EnergyWendy Cornet, Cornet Consulting and Mediation Inc.

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InternationalINDIGENOUS SUMMIT onENERGY & MINING