The B.C. government has approved a $6.6-billion plan to build a massive hydroelectric dam on the Peace River, nearly 40 years after it was first proposed.

Premier Gordon Campbell and Energy Minister Blair Lekstrom announced the approval of the Site C dam project on Monday morning, while standing on the W.A.C. Bennett Dam, located near the project site in northeastern B.C.

"This is a foundational decision for the future of the province," the premier said in a speech peppered with references to the historic legacy of the W.A.C. Bennett Dam.

"Site C is an important part of B.C.'s economic and ecological future and we are ready to take it on."

Campbell said the project will now enter its third stage, which will include consultation with First Nations and detailed design work.

The mega-project will also go through an independent environmental assessment and broad stakeholder consultation, and where harmful effects cannot be avoided, BC Hydro will identify and evaluate potential options for mitigation, according to a statement released by the province after the announcement.

But one of the province's largest environmental organizations and some First Nations in northeast B.C. voiced opposition to the Site C plan Monday.

The Council of Treaty 8 Chiefs, representing First Nations in the Peace region, said in a release that when combined with forestry, oil and gas and mining projects, the dam would cause irrevocable damage to fish, wildlife and local agriculture.

The Sierra Club called the decision to proceed with the dam "misguided."

The dam would destroy forest and farm land, hurt wildlife and increase carbon emissions, said the organization's B.C. executive director George Heyman.

Power could be online by 2020

The regulatory review phase is expected to take about two years, and it is anticipated that Site C will be available for domestic electricity need by 2020, according to the government statement.

Campbell said B.C.'s energy needs are expected to grow by 20 to 40 per cent in the next 20 years and the dam will provide clean, renewable energy that reduces greenhouse gas emissions.

"We need all the energy we can create in B.C. and there is no better way we can do that than here at Site C on the Peace River," said Campbell.

The proposed dam would be located about seven kilometres southwest of Fort St. John on the Peace River, which would make it the third hydroelectric dam on the river, along with the W.A.C. Bennett and Peace Canyon.

Crown-owned BC Hydro says the hydroelectric dam will provide about 900 megawatts of cheap, green power, enough for nearly 500,000 homes.

The project is expected to generate 7,000 direct jobs and about 28,000 indirect jobs during its construction.

Other rivers to be protected

Critics have long opposed the Site C plan, which was first proposed in the 1970s, saying the 83-kilometre reservoir will flood 5,400 hectares of land in the fertile Peace River Valley.

But there could be some good news for environmentalists in Monday's announcement.

"For many years, nine other sites have been available for consideration of large-scale hydroelectric storage dam projects, including two on the Peace River system. Although these sites have never been part of BC Hydro's plan, they have remained legal options for consideration," said the government statement.

"The new clean energy act will change this. It will enshrine in law B.C.'s historic Two Rivers Policy by prohibiting future development of large scale hydroelectric storage dam projects on all river systems in British Columbia, such as the Liard River system. It will also preclude further dams on the Peace River system other than Site C," it said.

With files from The Canadian Press