OTTAWA — A major Yukon hydroelectric project that served as the showpiece for Prime Minister Stephen Harper's green stimulus fund will create few jobs and only theoretically cut greenhouse gases, according to new two territorial government reviews.

Proponents praise the $160-million Mayo B project as a new source of clean energy made possible only because of Ottawa's $71-million contribution under the Green Infrastructure Fund.

"This is legacy project. It gives us the ability to get green infrastructure in place that the territory can benefit from for 100 years, and it puts us in a position where we don't have to use diesel to generate power to meet customer demands," said David Morrison, president of the Yukon Energy Corporation.

"For us, it's a real win -- a project we couldn't do without the federal help."

The project promises to displace 10 per cent of the territory's reliance on dirty diesel energy, and provide power to new mines coming on stream. A new transmission line will also connect distant power grids.

Harper flew to the Yukon last summer to personally announce the funding for Mayo B, the inaugural project for the $1-billion Green Infrastructure Fund, touting its job creation and environmental benefits.

But right out of the gate, territorial environmental and consumer groups began expressing doubts about Mayo B.

They criticized the Yukon government for sealing the deal -- and then doling out an $85-million dollar construction contract -- before first completing a series of environmental, energy and social reviews, and before examining other sources of renewable energy such as wind.

"Everyone else is getting this infrastructure money throughout Canada, so I guess that's our cut of the infrastructure money," said Roger Rondeau of the Utilities Consumers Group.

"I question whether it was well spent or not because of the amount of money this project costs for the amount of megawatts we're going to get out of it."

Two territorial regulatory bodies finally gave the green light to Mayo B this month as a good deal for consumers.

But they also raised questions about the actual environmental and economic impacts of the project.

The Yukon Utilities Board noted there was no guarantee the project would actually replace diesel. Mining operations that were calculated in the planning haven't come on stream yet, and one of them -- Carmacks Copper -- remains in limbo after failing to win its water licence from the territory.

Infrastructure Canada has said the deal was based on the promise of increasing the availability of renewable or clean energy and reducing greenhouse gas emissions. The territory is required to report annually on its progress on these points.

But the Yukon Energy Corporation has said the federal funding was not tied to any specific level of reduction.

"There's no condition in the contract with the federal government that gives us a specific target or requirement to meet a standard," Morrison testified last month to the Yukon Environmental and Socio-economic Assessment Board (YESAB).

The Yukon Electrical Company, which distributes power in the territory, has said it sees no evidence Mayo B will improve services for people in and around Whitehorse -- where most Yukoners live -- after transmission lines are connected. It added that reliability might suffer for citizens if more mines begin tapping into the grid.

Morrison rejects that view, saying the power will serve industry and other customers closer to the Mayo B area. And he says while there are never guarantees of mines coming on stream, the territory cannot afford to assume they won't.

"The problem with that way of thinking is that if I sit around and wait until something happens before doing something, you'll for sure be burning diesel," said Morrison. "You've got to think about the future. If you don't plan and don't have capacity online, it doesn't take six months to put it online, it takes years."

The project's job creation potential also appears to be less than advertised.

When Mayo B was first unveiled a year ago by MP Brian Jean, parliamentary secretary to Infrastructure Minister John Baird, he said in a news release that it would provide "lasting employment for Yukoners."

But with only a two-year construction phase concentrated mainly in the summer months, even Yukon Energy described local employment as "short term, low in magnitude and not significant."

The YESAB review said Mayo B would not contribute to either resource revenues or the territorial GDP, and create between 65 to 120 jobs at its peak -- some filled by the local No-Cho Nyak Dun First Nation, but others by workers from outside the territory.

A Canadian Press analysis last year found that the federal stimulus money was doled out with little regard to job creation or local unemployment rates.

"The project is not anticipated to employ a considerable number of Mayo residents because of the limited workforce requirements and availability of qualified workers in Mayo," says the YESAB report.

"A few workers from other small Yukon communities may obtain employment, but their low numbers are not expected to affect the economies of their respective communities."

The Yukon Conservation Society has fought the project because of the expected impact on spawning Chinook salmon on the Mayo River, and on freshwater species in the Mayo Lake. They also complain the territory did not properly examine new wind projects that might have supplied more energy where the Yukon needs it, near Whitehorse.

Yukon Energy has said not enough research had been done yet to make new wind projects immediately feasible.

"We argued that there would have been a wonderful wind project that would have helped to diversify the Yukon's energy sources ... and wind would have provided power when we needed it," said Anne Middler, energy co-ordinator with the Yukon Conservation Society.

Former Yukon Energy Board chairman Willard Phelps, now mounting a new political party, says although he backs Mayo B, the project also the need for a policy in the future about who should pay for power that's mostly needed by big corporations.

"Nobody's against mining, but the question is who should pay?" said Phelps.

The Green Infrastructure Fund is under scrutiny by a Commons committee, after it was revealed former Conservative MP Rahim Jaffer has approached officials about renewable energy projects he was working on with his company. Jaffer, and his business partner Patrick Glemad, have denied they were lobbying and said they were only seeking more information about the fund.