New Carbon Tracker Report Calls $82 Billion of B.C.’s LNG Ambitions into Question

A new report released by the London-based Carbon Tracker Initiative finds more than $283 billion in potential liquefied natural gas (LNG) projects worldwide are likely unfeasible in a carbon-constrained world. The report identifies $82 billion in potential Canadian LNG projects — almost entirely in B.C. — potentially headed for the rubbish bin.

If the world is to limit global warming to an increase of 2 degrees Celsius, “energy companies will need to be selective over which gas projects they develop,” the Carbon Tracker Initiative stated in a press release. Many high carbon, high cost LNG projects will simply need to be abandoned. LNG is natural gas cooled and compressed to a liquid form for transportation via tanker.

“Investors should scrutinize the true potential for growth of LNG businesses over the next decade,” James Leaton, Carbon Tracker’s head of research, said. “The current oversupply of LNG means there is already a pipeline of projects waiting to come on stream. It is not clear whether these will be needed and generate value for shareholders.”

“The size of the gas industry in North America could fall short of industry projections — especially those expecting new LNG industries in the U.S. and Canada,” Andrew Grant, lead analyst at Carbon Tracker and co-author of the report, said.

“Natural gas is complex when seen in the context of a climate-constrained world,” Mark Fulton, advisor to Carbon Tracker and a co-author of the report, said.

Although often seen as performing better than coal in a climate sense, leaked gas known as fugitive emissions from extraction, processing and storage, significantly increase the fuel’s global warming potential. As DeSmog has previously reported, the climate impact of fugitive emissions from B.C.’s gas industry may be dramatically underreported.

“It can deliver better outcomes than coal, but gas must continue to work on reducing its fugitive emissions and there is a possibility that if it reaches too large a share of the energy mix then in the longer run this could still be incompatible with a 2⁰C outcome,” Fulton said.

B.C.’s LNG Gamble

The report’s findings call the B.C. government’s LNG ambitions into question.

The Liberal government under Premier Christy Clark has promised three LNG facilities will be up and running by 2020. There are currently 20 proposed LNG projects for B.C., with the government relying on a projected $175 billion in industry investments.

Yet co-author Mark Fulton said incoming investments might not be such a sure bet in the current market.

The report argues a “perfect storm” of cheap renewables, decarbonization pledges and global health concerns have thrown major gas projects and the future of LNG into suspension. “2015 has only confirmed the direction of travel away from fossil fuels.”

“As far as we can see,” Fulton told the Canadian Press, “from our demand scenario the LNG market is pretty fully built out in terms of supply for the next seven years at least. It wouldn’t be a great bet in our view…to expand further at this time.”

Much of the B.C. government’s LNG plan relies on a strong market in Asia as it transitions away from coal, although the report finds the lower cost of renewables means regions are “leapfrogging” straight to renewables rather than relying on gas as a bridge fuel.