Thomas White Global Investing
Green Reports

June 22, 2011

The Green Report

Plan Nord: Can growth and environmental preservation efforts go hand-in-hand?

Plan Nord: Can growth and environmental preservation efforts go hand-in-hand?

Quebec’s “Plan Nord” is an attempt to balance industrial growth with conservation efforts. The plan, while allowing the expansion of mining industry, will also bring virgin forestlands under protection.


Matthew Coon Come loves to canoe in the ice cold waters of James Bay in Quebec, Canada. Born into one of Canada’s oldest ethnic groups, the Cree, fishing in the frigid waters of the bay is a way of life for Mr. Come. Mr. Come and his friends spent a greater part of their childhood in the company of 200-year old tall spruce trees, thousands of migratory birds, and numerous streams and lakes. Such close contact to nature undoubtedly made Mr. Come one of the most ardent environmentalists and community leaders in Canada. Any disturbance to the environment of his homeland irked Mr. Come profoundly.

One such incidence happened in the late 1980’s. Hydro-Québec, a state-owned power utility proposed a $17-billion hydro-power project called the “Great Whale”. The project’s plan entailed the flooding of an area the size of New Hampshire in Quebec, threatening the livelihood of the Cree. This, and many other issues saw hundreds of Cree jump into protest against Hydro-Québec.

Mr. Come was at the forefront of these protests. He turned his love for canoeing into an artful way of protesting. He assembled the elderly leaders of the Cree, and made each one of them paddle a canoe through James Bay to reach New York, which was to be the chief consumer of power from Great Whale. Members of the Cree and other native inhabitants of the region stood by the banks cheering and waving at as Mr. Come set sail to New York.

Eventually, unwilling to go against popular sentiments, New York and subsequently Hydro-Québec abandoned the Great Whale project. Over the next few years, environmental laws in Quebec only became more progressive, and industrial activities slowed. Over the next two decades, investments in the French-speaking eastern Canada, especially in the areas bordering the sub-Arctic zone, waned.

Canada’s “Plan Nord” or the Northern Plan tries to address the twin
responsibility of ensuring growth and protecting the environment.
The $2.2 billion plan is trying to develop some of its mineral-rich zones
by addressing the concerns of all the stakeholders, including
ethnic communities and investors.

All this happened even as Quebec’s western neighbors, Alberta and British Columbia, rode the boom in demand for commodities. Alberta was raking in billions of dollars of investments into oil sands. British Columbia saw capital pour into the development of thousands of miles of natural gas pipelines transporting gas. Meanwhile, all was quiet in the eastern front.

But that quietness is about to be dispelled. Quebec now seems to be yearning for the same economic prosperity that its western neighbors are enjoying, especially since the province is sitting on a treasure trove of nickel, cobalt, platinum and many other rare earth metals. Blessed with the potential to tap enormous amount of hydro and wind power, Quebec seems to be all set to become one of the world’s commodity power houses.

But extracting these reserves is going to be a delicate task for Quebec. In the quest for economic growth, Quebec is trying not to turn a blind eye to its responsibilities toward the environment. After all, the boreal forests of Canada, which help slowdown global climate change, cover a major part of Quebec. Furthermore, Quebec and parts of Northern Canada together have more fresh water than the entire Amazon.

As a step forward, to handle the twin responsibilities of ensuring growth and preserving the environment, the Government of Quebec has proposed the “Plan Nord” or the Northern Plan. According to this initiative, Quebec will invest nearly $2.2 billion to develop the mineral-rich areas under its control. But at the same time, it will ring-fence nearly 12% of the boreal forests to protect them from industrial activities. The plan, which envisions a development strategy over the next 25 years, is expected to initiate the process of developing at least 11 mines in the region and hopes to attract $83 billion in investments. Plan Nord also envisions making Quebec a “leading worldwide producer of clean energy”. To achieve all these goals, Quebec will open a land area twice the size of France for industrial growth.

Quebec is trying to learn from some of the past mistakes in order to better execute Plan Nord. Care is being taken to explain the various benefits that the project would bring to the ethnic communities. Earlier, companies opening mines in the ethnically rich North, would typically fly in labor from the south. Consequently, the North’s ethnic inhabitants failed to benefit from the industrial expansion. This time around though, the government seems to be intent on inclusive growth. Nearly 4% of its initial budget to kick-start the project will be used to develop labor skills in the various indigenous communities. Plan Nord also promises to build 500 homes for ethnic communities in the region by 2016.

Still, Plan Nord seems to be falling short of convincing all the stakeholders in the project in the wisdom of these initiatives. For a plan that intends to marry growth with environmental responsibility, the roadblocks abound. A case in point involved investment-friendly Alberta, which moved to protect some 20% of its forests, only to have energy companies flail the plan. Quebec, which is at an early stage of developing Plan Nord, is expected to face more challenges with its grand development scheme.

Already, the First Nations, the group that represents nearly 700,000 people of aboriginal origin, is split over Plan Nord. Ghislain Picard, Chief of the Assembly of Quebec and Labrador said that he refused to participate in the plan, citing confusion over sharing royalties and co-management. Even though many communities have agreed to the initiative, five key communities are boycotting the plan. Some environmentalists also say that Canada needs to protect nearly 50% of its boreal forests instead of the 12% announced by the government. Quebec could get some support from neighbors on this issue. Ontario and Manitoba have offered to safeguard additional boreal forests, which could push up the percentage of boreal forests under protection.

Although a relatively hard sell, Quebec’s Premier Jean Charest is working overtime to explain the benefits of Plan Nord. He is juggling meetings with the various ethnic groups and with investors in the neighboring U.S., hoping to address concerns and explain the advantages of investing in Quebec’s resources.

Mr. Charest has won some unusual friends in the process. Mr. Coon Come, the man who organized the canoe-protest against Hydro-Québec is now supporting Plan Nord. As the present Grand Chief of the Northern Quebec Cree says “This (Plan Nord) is new era. We have gone from an era of policy exclusion to an era of policy inclusion”. If this optimism is sustained and Plan Nord is successful, it could usher in a new model for implementing industrial projects in environmentally sensitive areas. It will also confirm that, by involving all stakeholders and actively seeking their partnership, it is possible to gain wide acceptance for large industrial projects. When the world is struggling to satiate the hunger for industrial resources amid growing environmental concerns, Plan Nord could indeed be the “Project of a Generation”.

Image Credit: Harry Rowed, National Film Board of Canada under a Creative Commons license



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