The B.C. government is undermining its own climate action plan by granting hundreds of millions of dollars a year in subsidies to the fossil fuel industry, according to a report released Monday that singles out the LNG Canada project as a notable recipient of the largesse. 

The report by the International Institute for Sustainable Development documents a wide array of subsidies that contribute to increased fossil fuel production and use in B.C. ­ — subsidies that in the fiscal year 2017-18 totalled more than $830 million, write authors Vanessa Corkal and Philip Gass.

These subsidies include at least $268 million in provincial tax exemptions for that one year period, according to the report, Locked In and Losing Out: British Columbia’s Fossil Fuel Subsidies, which notes calculations are conservative because not all data related to provincial spending on fossil fuel subsidies is publicly disclosed. 

Fossil fuel producers also claim millions of dollars in credits each year to reduce their royalty payments, and B.C. has accumulated up to $3.1 billion in outstanding credits, the report says. 

Corkal called B.C.’s fossil fuel subsidies the “elephant in the room” as the provincial government touts its climate action plan, CleanBC.

“There is no getting around it: these subsidies promote the production and consumption of fuels that cause climate change,” Corkal said in a statement that accompanied the release of the 35-page report.

“They encourage increases in the same pollution that other policies aim to reduce.”

B.C. has ‘unique’ subsidy framework for natural gas

While many of B.C.’s subsidies are similar to those in other provinces, the report says B.C.’s complex subsidy framework for natural gas production is unique. 

“Through an array of measures, the provincial government continues to make concerted efforts to expand natural gas extraction and export supports, in particular for liquefied natural gas (LNG).”

Despite its CleanBC initiative, the B.C. government has fallen significantly short of meeting its greenhouse gas emission reduction targets, notes the report, which points out that fossil fuel subsidies are often overlooked as one reason why B.C. is failing to meet emissions targets. 

The report says fossil fuel subsidies — including tax exemptions, royalty reductions and direct spending commitments — pull vital government resources away from climate change strategies and other priorities such as health care and education.

“This means that other sectors of the economy must compensate for the vast amounts of government revenue spent on subsidies — which is neither fair nor efficient.”

6 awkward realities behind B.C.’s big LNG giveaway

According to the environmental group Stand.earth, B.C.’s fossil fuel subsidies amount to more than the province’s housing budget in 2019, while outstanding royalty credits to fossil fuel producers add up to more money than the $2.7 billion the province spent building new elementary and high schools in 2019.

“That is simply unacceptable,” said Sven Biggs, Stand.earth’s climate and energy campaigner.  

The report says B.C.’s agreement with LNG Canada sets a precedent for similar subsidies for other fossil fuel producers “and will lock in high-carbon infrastructure for decades.”

The provincial government has already announced $5.3 billion in subsidies for LNG Canada, a consortium of five of the largest and most profitable multinational corporations in the world, including Royal Dutch Shell, Malaysian-owned Petronas and PetroChina Co.  

The companies will ship fracked gas from B.C.’s northeast to Kitimat, where it will be cooled to below 160 degrees Celsius, compressed and turned into liquid for transport to Asian markets. 

“Support for this new wave of fossil fuel production comes at the expense of cleaner — and more affordable — renewable energy,” the report notes.

Publicly funded projects provide electricity for gas sector

In addition to previously announced subsidies, the report says the B.C. government is undertaking “significant efforts” to support the natural gas sector through several capital expenditure projects that provide electricity access. 

For instance, BC Hydro, a publicly owned utility company, will provide $56 million for the $82 million LNG Canada load interconnection project, which includes a new transmission line and substation upgrades to give LNG Canada access to sufficient electricity for its Kitimat operations.

“In this case, project financing comes from BC Hydro ratepayers, which includes the general public,” the report points out.

BC Hydro has provided an additional $205.4 million for expanding transmission infrastructure to the future Site C dam substation near Fort St. John, while the federal government has dedicated $83.6 million for that project.

“Both the federal and provincial governments, as well as BC Hydro, have emphasized the need for additional electricity infrastructure given increasing natural gas exploration and development in the region,” the report says.  

Site C dam construction along the Peace River, B.C., in the summer of 2018. Photo: Garth Lenz / The Narwhal

There is also a “high risk” the publicly funded $10.7 billion Site C dam represents a public investment to support the expansion of the fossil fuel sector “and that electricity rates charged to the LNG sector will be insufficient to recoup the capital costs of the Site C dam infrastructure and related transmission expansion,” the report concludes.

The LNG Canada project will emit 3.45 megatonnes of greenhouse gas emissions annually, according to the provincial government, which has promised the cleanest LNG in the world even though claims of “clean LNG” have been thoroughly debunked. 

By 2050, the project’s emissions will represent more than one-quarter of B.C.’s legislated targets for carbon pollution, set at about 13 megatonnes a year.

Fugitive emissions excluded from carbon pricing

The report also points out fugitive methane emissions and non-methane emissions from the oil and gas sector are exempt from any carbon pricing, including the provincial carbon tax, even though they represent a significant source of B.C.’s overall emissions.

The value of that subsidy is difficult to calculate due to a dearth of data about fugitive emissions, the report notes. However, according to B.C.’s Ministry of Environment, fugitive methane emissions from the oil and gas sector totalled at least 75,000 tonnes in 2016, a figure the report pegs as conservative, also noting that fugitive emissions are self-reported by oil and gas companies. 

“With new LNG facilities under construction, B.C.’s fugitive emissions are expected to grow,” the report states. “As they do, so will the value of this subsidy.”

This Vigilante Scientist Trekked Over 10,000 Kilometres to Reveal B.C.’s Leaking Gas Wells

The report notes that B.C. has also amassed at least $2.6 billion to $3.1 billion in outstanding royalty credits for oil and gas producers, “representing significant foregone public revenue for future years.” 

In 2018-19 alone, fossil fuel producers claimed more than $631 million in deep well credits. 

“These billions in outstanding credits is money that fossil fuel producers will not have to pay in future years and that B.C.’s citizens will not see put toward social services,” the report says, pointing out that royalty payments to the B.C. government have decreased over the past decade.

According to a recent report from the Canadian Centre for Policy Alternatives, companies drilling and fracking for natural gas in northeast B.C. were bankrolled by the province to the tune of $703 million last year, a 45 per cent increase over the previous year when companies were handed more than $485 million in credits.

B.C. grants $1.2 billion in deep well subsidies to fracking companies in two years: new report

Since deep well credits are used to reduce the amount of royalties companies pay to the province when the production process has ended, that means B.C. is increasingly out of pocket even though the amount of gas produced in B.C. has risen more than 70 per cent over the last decade.

The LNG Canada project is expected to significantly expand fracking operations in northeast B.C., where the public is ultimately responsible for the soaring costs of cleaning up abandoned wells and leaking fracking ponds.

B.C. also continues to introduce new fossil fuel subsidies for which annual data is not yet available, the report notes. 

The authors recommend that B.C. publicly release all data related to government spending on fossil fuel subsidies, establish an independent expert panel of advisors to review all provincial fossil fuel subsidies and create and implement a plan to phase out the subsidies. 

They also say B.C. should establish clear guidelines to ensure no new fossil fuel subsidies are created and should coordinate with the federal government as it completes its G20 peer review of fossil fuel subsidies. 

Canada provides more government support for oil and gas companies than any other G7 nation and is among the least transparent about fossil fuel subsidies, according to a June report from a coalition of NGOs.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

As pipeline politics dominate headlines, British Columbia is poised to overhaul the process that guides how major resource and development projects proceed.

The review now underway of the environmental assessment process has the potential to restore public confidence in the system that evaluates large developments — from open-pit coal mines to pipelines to hydro dams — by considering the combined effects of multiple projects in a single region and instituting other sweeping changes that critics say are long overdue.

“We had this ridiculous situation in northern B.C. where we had 18 LNG projects, five different pipelines and an oil export project all proposed at the same time here,” said Greg Knox, executive director of the SkeenaWild Conservation Trust.

“People were asking ‘can Kitimat handle these LNG facilities, plus [the] Enbridge [Northern Gateway pipeline], plus [the] Rio Tinto’ [Alcan aluminum smelter], and wondering how it would all impact the environment and people’s health.”

The projects would have affected local air quality at a time when the B.C. government had already granted a permit to the Rio Tinto Alcan smelter allowing the company to increase sulphur dioxide pollution in the Kitimat airshed by more than 50 per cent.

Under B.C.’s current regulations, each resource project is assessed separately, as though the others do not exist. There is no mechanism to study the cumulative impact of various projects on, for example, a single caribou herd, or on overall water or air quality in a community like Kitimat.

Concern about additional air pollution from LNG plants prompted the Kitimat community to ask the B.C. government to conduct a regional environmental assessment to address the combined impact of all the projects and figure out how to proceed with fewer ecological and community impacts.

“We had pipelines going everywhere when it would have made sense to have a pipeline corridor,” Knox said.

But the request was ignored, Knox said.

“They refused. They basically sent some form letter. They rejected doing a regional environmental assessment. It was a boilerplate response.”

The Elk Valley coal mines in southeastern B.C. are another case in point when it comes to the cumulative impacts of resource projects. The valley, which is part of one of North America’s most important wildlife corridors, is home to five operating coal mines.

More than 100 years of coal mining has polluted the Elk River with worrisome contaminants such as selenium, a heavy metal highly toxic to fish and birds. Yet each new mining proposal is examined as though it is the only project polluting the river.

B.C. Auditor General Carol Bellringer flagged the government’s failure to manage the cumulative impacts of the Elk Valley mines as a cause for concern, pointing to the environment ministry’s failure to address known environmental issues and the “lack of sufficient and effective regulatory oversight and action” that has allowed the degradation of water quality.

B.C. Environment Minister George Heyman has said the review of the environmental assessment process is designed to restore public confidence in the system.

But how far must the changes go to examine the impacts of a proposed project like a coal mine expansion in the context of other significant resource projects in the same watershed or airshed? Or to prevent projects staunchly opposed by First Nations from advancing through the system at considerable cost to taxpayers?

Decisions currently made in ‘black box’

West Coast Environmental Law lawyer Gavin Smith and other experts say the overhaul of B.C.’s environmental assessment regime must address the lack of a clear rationale behind government decisions to grant certificates to projects with grievous impacts on First Nations and the environment — projects such as the $10.7 billion Site C dam.

“What’s been happening is that the environmental assessment regime goes into a black box,” Smith told DeSmog Canada.

“All of this work on the assessment happens, and it goes to ministers and they just make a decision. Communities are left feeling like all the time and effort they’ve put into the process has been totally ignored. It’s not actually even clear on what basis the decision was made.”

The B.C. government issued an environmental assessment certificate for the Site C dam in 2014, even though First Nations are fighting the project in court and the dam will cause more ecological damage than any project ever examined in the history of Canada’s Environmental Assessment Act, according to more than 200 leading Canadian scholars.

Only three projects ever rejected in B.C.

No matter how environmentally egregious a project is, or how intense the opposition from First Nations and other local communities, when a major resource project exits B.C.’s current environmental assessment process it is almost certain to be stamped “approved.”

“Even projects which, according to federal law, have been found to have unjustifiable impacts on the environment and on Indigenous culture and governance have been approved through the provincial system,” Smith said.

“It’s a pretty strong indication that the system is built to facilitate getting to yes.”

Only three projects have ever been refused a B.C. environmental assessment certificate, according to an email from the provincial environment ministry.

The Ajax mine, a 1,700-hectare open-pit gold and copper mine proposed for the outskirts of Kamloops by Polish mining giant KGHM, is the only project to be rejected in the past seven years.

A proposed landfill for Metro Vancouver garbage, on the Ashcroft Ranch near Cache Creek, was turned down in 2011, while the Kemess North gold and copper mine north of Smithers was rejected in 2008 — but then approved last year.

Rejected projects often return

Smith said there must be mechanisms built into the revamped environmental assessment process to ensure rejected projects can’t simply be tweaked and re-tendered.

Lawyer Sean Nixon vividly remembers his reaction on the day he heard Taseko Mines had submitted a new plan to extract gold and copper from the area around Fish Lake in B.C.’s interior, a lake sacred to the Tsilhqot’in Nation.

“The first response was incredulity,” recalled Nixon, who had represented the Tsilhqot’in National Government several years earlier during the environmental assessment for Taseko’s project, dubbed the “Prosperity” mine.

The B.C. government granted Taseko a provincial environmental assessment certificate in 2010.

But Ottawa refused to issue a federal certificate, largely because the mine would drain Fish Lake — known as Teztan Biny to the Tsilhqot’in Nation — and turn part of it into a toxic tailings pond that would destroy rainbow trout habitat and wetlands.

That was supposed to be the end of the matter.

But then the project was back again. This time, when Nixon heard about it in 2011, it had a different name: Taseko called it the “New Prosperity” mine.

The project was virtually the same, with one major exception. The company said it would move the tailings pond upstream from Fish Lake — enough of a change to spark a second federal environmental assessment review, at an unknown cost to Canadian taxpayers.

In B.C., the process the company went through was a breeze by comparison. Taseko merely requested an amendment to its environmental assessment certificate, which was duly approved by the provincial government even though Taseko lacked a clear plan to keep tailings pond contaminants out of Fish Lake.

“The province didn’t need details about how the company planned to keep chemical contaminants from destroying the lake,” Nixon told DeSmog Canada. “The mining company said it would work out the details later. And B.C. accepted that claim at face value.”

As with the Prosperity mine, there’s nothing to stop the Ajax project from being re-submitted to the B.C. Environmental Assessment Office with modifications and a new name.

The KGHM website still lists Ajax as a project “under development,” and the company has said it is considering its options.

Early-planning phase would axe non-starter projects

Smith says the revamped system needs to include the ability for the B.C government to say “this project doesn’t stand a reasonable likelihood of success so we’re not wasting taxpayer money doing, for example, a third assessment on a project that’s already been rejected.”

Sustainability criteria — such as targets for maintaining air and water quality – need to be built into the law, and decision-makers need to justify their decisions based on these criteria, Smith said.

To deal with projects as controversial and destructive as the Site C dam or the New Prosperity mine, Smith said B.C.’s environmental assessment process needs to include an “early planning phase,” during which the views of First Nations and other local communities are taken into account well before the project advances through the system.

Perhaps the project is “a total non-starter from the get-go,” said Smith, in which case communities should be able to say “there’s no way this project is going to happen.”

In the case of Taseko, the former B.C. Liberal government approved exploration permits for the New Prosperity project last summer during its final days in office, while Tsilhqot’in members were under a wildfire evacuation notice, even though the federal government had also refused to grant the project an environmental assessment certificate the second time around.

The company subsequently took the federal government to court and lost in December.

Yet Taseko’s website still lists the New Prosperity mine as one of the company’s five properties, while noting “there is considerable uncertainty with respect to successful permitting of the project.”

Smith said he would be surprised if the company submitted a third iteration of the project to the B.C. Environmental Assessment Office. But until B.C.’s environmental assessment process changes, he said, “on paper, Taseko’s New Prosperity project still exists and is still a risk.”

A 12-member advisory committee, led by ecologist Bruce Fraser and Lydia Hwitsum, former Cowichan Tribes chief and former chair of the First Nations Health Council, is due to release a discussion paper on the review process in May, including feedback from the Environmental Assessment Office.

After a public comment period, the government will introduce reforms in the late fall.

The federal government is simultaneously overhauling its environmental assessment process with Bill C-69, but the bill has been criticized for falling short in several key areas.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

By Maximilian Kniewasser and Stephen Hui.

Under Premier John Horgan and the NDP, British Columbia’s government is no longer promoting liquefied natural gas exports as a once-in-a-generation opportunity to snag 100,000 jobs, a $100-billion Prosperity Fund, and more than $1 trillion in economic activity. Nevertheless, proposed LNG development remains a thorny issue to be tackled by the new provincial government.

This week, the Pembina Institute and the Pacific Institute for Climate Solutions published Liquefied Natural Gas, Carbon Pollution, and British Columbia in 2017, an update on the state of the B.C. LNG industry in the context of climate change.

Here are three highlights from our report.

1. 18 LNG Projects Still Eyeing B.C. Coast

No LNG export projects are up and running in B.C. Currently, natural gas products are produced at two small domestic LNG plants, with two additional domestic facilities proposed.

However, 18 LNG export proposals in B.C. are at various stages of development. Only two — LNG Canada in Kitimat and Woodfibre LNG near Squamish — have regulatory approval and are close to being realized. (The latter also has a final investment decision from parent company Pacific Oil & Gas.) A third approved project, Pacific NorthWest LNG in Port Edward, made headlines in July with the announcement that it “will not proceed as previously planned.”

The remainder of the LNG proposals are in the early stages of development. Most are located on the North Coast, with five projects on Vancouver Island and the South Coast.

2. Woodfibre and LNG Canada Make B.C.’s Climate Targets Virtually Impossible to Meet

B.C. was responsible for 63 million tonnes of carbon pollution in 2014. In contrast, B.C.’s legislated greenhouse gas reduction targets call for annual emissions to be lowered to 43.5 million tonnes by 2020 and 12.6 million tonnes by 2050.

B.C. is currently on track to miss its legislated 2020 target by a wide margin, with emissions projected to increase until at least 2030. Measures in the province’s Climate Leadership Plan are forecast to bring annual emissions down as low as 54 million tonnes by 2050 — well short of the legislated goal.

The two approved projects analysed in our report — LNG Canada and Woodfibre LNG — would collectively increase carbon pollution by 9.1 million tonnes per year by 2030, further increasing to 10.2 million tonnes per year by 2050.

That would leave less than 3 million tonnes per year for the rest of B.C.’s economy — including transportation, buildings, and industry — and make it virtually impossible for the province to meet its 2050 target.

If LNG Canada and Woodfibre LNG were built using best practices and technology — including greater electrification, as B.C.’s Climate Leadership Team recommended — emissions would be halved. However, these combined emissions would still make it very difficult for B.C. to meet its targets without drastically eliminating emissions from the rest of the economy.

What's Up with #LNG in B.C.? Three Things You Need to Know https://t.co/0166XLRGt6 @Pembina @StephenHui #climate #bcpoli

— DeSmog Canada (@DeSmogCanada) August 31, 2017

3. Pacific NorthWest LNG Could Rise From the Dead

Petronas-backed Pacific NorthWest LNG’s cancellation was attributed to prolonged depressed prices and shifts in the energy sector.

Prior to the announcement, PNW LNG was among the projects considered most likely to proceed, having secured export, pipeline, facility, and (conditional) environmental approvals, as well as agreements with some local First Nations.

However, other First Nations groups and the SkeenaWild Conservation Trust launched court challenges in an attempt to block PNW LNG, citing issues involving the consultation of indigenous communities, impacts on fish habitat, and carbon pollution.

Although PNW LNG is officially cancelled, various permits for the project remain valid. These include a National Energy Board export licence and a positive environmental assessment decision by the Canadian government.

Until the permits are forfeited or voided, the project should still be considered a potential LNG development along B.C.’s North Coast.

If the permits for PNW LNG were resurrected by the current or a new owner, the project would make the province’s legislated 2050 climate target impossible to reach.

Such LNG export terminals, fully powered by natural gas, are almost four times more polluting per tonne of LNG produced than terminals using clean electricity.

Several policies in place in B.C. are designed to reduce emissions from LNG and associated upstream development. However, these policies fall short of requiring projects to adopt best practices and technologies. They should be strengthened to ensure that, if development proceeds, it is with the lowest impact to the climate.

Maximilian Kniewasser is the director of the B.C. Climate Policy Program at the Pembina Institute, Canada’s leading clean energy think-tank.

Stephen Hui is the B.C. communications lead at the Pembina Institute.

Image: Former B.C. Premier Christy Clark visiting a Petronas LNG facility in 2014. Photo: Government of B.C. via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

By Andrew Nikiforuk for The Tyee.

Every day, methane promoters in British Columbia’s government manage to out-trump Donald Trump.

The hoopla over the $1.6-billion Woodfibre LNG terminal, which will industrialize Howe Sound and the city of Squamish, illustrates just how far the Christy Clark-led BC Liberal government will go to subvert the truth.

The government billed the event as maker of economic prosperity and the beginning of a winning fight against climate change.

Both claims read like Trump balderdash with no basis in reality.

In fact, every B.C. citizen should be alarmed by the Woodfibre LNG deal because it will fleece every taxpayer.

Let’s start with the subsidies and a little context.

Back in 2013 Premier Christy Clark promised that LNG would make the province rich, create a $100-billion savings fund, erase all debt and employ tens of thousands of people.

None of the hype materialized, nor will it for the long foreseeable future. Thanks to a global methane glut and a collapse in methane prices by 75 per cent, the LNG industry faces “an extremely challenging business environment.”

According to Forbes, Australia’s LNG industry is now bleeding billions of dollars of cash and earning nothing for the owners of the resource: Australians. It is also noteworthy that Asian markets have contracted four per cent despite the fall in LNG prices.

As a consequence, no company has made a final investment decision on 20 LNG proposals in B.C. — with the single exception of Woodfibre, a company owned by a Singapore tycoon, Sukanto Tanoto.

It is telling that one of Tanoto’s companies, Asian Agri, has been found guilty of tax evasion. (But that hasn’t caused Clark to rethink who she invites to do business in B.C.) 

Taxpayers Subsidize Slim Odds LNG Gamble

Meanwhile, methane from British Columbia — due to the high-cost fracking of shales and their frontier remoteness, is among the world’s most expensive gas. Global markets now offer prices of $7 per million British Thermal Unit (Btu) but B.C. needs at least $10 per million Btu to make a dollar.

To save face on her outrageous LNG promises, Clark has now offered some significant giveaways to Tanoto that every British Columbian will pay for.

The first is a major electrical subsidy. Clark promised Woodfibre and any other LNG developer this month a reduced electrical rate or what’s known as an “eDrive rate.”

Two years ago, the government promised energy-intensive LNG projects electrical rates at $83.02 per megawatt hour.

Now Clark has offered LNG developers a stunning give-it-away “eDrive rate” of $53.60. That is less $30 below the original quote and about half the expected $100-plus cost of a megawatt-hour from the $9-billion Site C dam. That dam will raise electricity prices so Clark can give away money to tax evaders and LNG developers.

According to Eoin Finn, a former high-level consultant for KPMG, the electrical subsidy borders on larceny. “For Woodfibre’s power-hungry 140 Megawatt plant, the annual subsidy represented by the eDrive rate will total some $34 million per annum, or $860 million over its 25-year lifespan.”

But that’s not the only subsidy.

The government has halved the LNG tax rate to 3.5 per cent — among the lowest in the world and locked it in for 25 years. It granted Woodfibre and other LNG projects an 18-month holiday on carbon taxes. It accelerated capital cost write-offs. It lowered natural gas royalties to next to nothing and offers the industry nearly $200 million in drilling credits every year. And there will be no sales tax on methane purchases.

In addition, the province encouraged Woodfibre on Oct. 25 to pitch the District of Squamish a reduced property tax rate of $2 million instead of the normal mill rate of $8 million to $10 million.

‘The hoopla over #WoodfibreLNG illustrates how far the @ChristyClarkBC gov’t will go to subvert the truth’ https://t.co/FpWo9QJj0i #bcpoli

— DeSmog Canada (@DeSmogCanada) November 11, 2016

Bearing Great Risk for Puny Reward

B.C.’s LNG advocates may argue that it took such incentives in order to jumpstart an industry that will produce revenue for the province and jobs for citizens.

But with so few jobs (just 100 permanent jobs for the Woodfibre plant) and no guarantee of revenue given all the subsidies, and a global LNG glut, the B.C. government has ignored the marketplace and embraced a Soviet model of LNG development.

In this special Clark model, taxpayers pay for everything: from the water given to shale gas frackers for free to the electricity provided to energy-gobbling terminals.

Even $100 million placed into a so-called LNG prosperity fund came out of taxpayers’ wallets via the Medical Services Plan.

Not even Trump has been that brazen in his outrageous business dealings.

Fraudulent Claims that LNG Fixes Climate Change

But there is more unreality.

Clark claimed that the Woodfibre approval “marks the beginning of a tremendous opportunity for British Columbia to play a significant role in the global fight against climate change, using the world’s cleanest LNG to help countries transition away from coal and oil.”

Incredibly, Clark has also claimed that LNG exports will help stop climate change from igniting and feeding wildfires across the west and burning up places like Fort McMurray.

But that’s a pipeline full of falseness.

Last spring, more than 90 scientists wrote a letter to the federal government, which the Trudeau government ignored. It outlined why LNG makes the climate more unstable, and it’s all due to methane leakage.

The scientists explained how the Petronas LNG terminal in particular “would be one of the single largest point source emitters in Canada” at five million tonnes a year and account for nearly 25 per cent of the province’s GHG emissions.

The scientists underscored a host of problems in provincial GHG accounting. Most specifically, the province has never told the truth about methane leakage from fracking, transport, turning the gas into liquid and converting it back into gas.

The B.C. government pretends that methane infrastructure only has a 0.28 percentage leakage rate, but that figure hasn’t been verified by field studies.

In contrast, the U.S. Environmental Protection Agency, an organization that President Elect Donald Trump has proposed to shutter, uses a methane leakage rate of 1.33 per cent. Other research has found some methane shale fields leak as much as nine per cent, which makes the product three times dirtier than coal.

In other words the government has underestimated leakage rates in order to pretend its LNG is “clean.” (There is, for the record, no such thing as clean energy: every form has an environmental cost.)

The scientists also noted that there is no guarantee that LNG from any terminal in B.C. will be used to replace coal-burning plants in Asia. Clark hasn’t signed that non-existent trade deal. (By one rough estimate Woodfibre will emit nearly 22 mega-tonnes of climate changing gases over a 25-year period.)

Secondly, methane just can’t serve as a climate saver or clean bridge fuel due to rising methane emissions from shale gas fracking and mining. Cornell researchers add that methane “is more than 100-times more powerful (than carbon dioxide) for the first decade after emission, 86-times over a 20-year period, and 34-times over 100 years.”

David Hughes, one of the nation’s foremost energy experts, calculates that B.C.’s LNG — if delivered to China — would be actually 27 per cent worse than coal over a 20-year timeframe.

He starkly concludes: “On a full-cycle emissions basis, the planet would be better off if China built state-of-the-art coal plants rather than burning B.C. LNG for at least the next 50 years.” It is true that at the burner tip, gas produces about half the carbon dioxide of coal.

More Wounds to B.C.’s Land and Water

In addition to failing to truly account for methane leakage, the government of B.C. has never assessed the cumulative impacts of LNG on land disturbance, water consumption, groundwater contamination or earthquake hazards, which fracking has greatly aggravated in the province.

But that doesn’t seem to worry the government at all.

Years ago the great conservationist Roderick Haig-Brown lamented the province’s adolescent politics and its abusive obsession with resource booms. He called B.C. a “profligate province.”

The province’s ruinous resource booms left behind crackerbox towns, derelict forests, ravaged acres and scars upon the hillsides.

In the process, lamented Haig-Brown, the province became “a playground for economic imperialists with the spoils going unfailingly to the strong.”

And that’s exactly what Clark has done with her Trump-like promotion of LNG.

She has decimated the truth while making grandiose promises impossible to deliver. She has given away the farm to tax evaders with a Trump-like flourish. 

Image: Christy Clark at the annoucement of a final investment decision for Woodfibre LNG. Photo: Province of B.C. via Flickr (CC BY-NC-ND 2.0)

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

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.

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One of the thorniest issues raised in the joint review panel’s report on BC Hydro’s Site C dam proposal is that of the B.C. government’s hypocritical policy on the burning of natural gas for electricity.

“The LNG developers have been promised a free hand to burn their gas here for their own purposes, but BC Hydro has been denied the same privilege,” the panel wrote in its report on the $7.9 billion proposed dam.

The controversy revolves around the 2010 Clean Energy Act — and who it applies to and, perhaps more importantly, who it does not.

The act limits BC Hydro’s options for generating electricity by demanding that 93 per cent of the province’s energy needs be met by “clean or renewable resources” — eliminating the use of gas turbines and sending the gas-fired Burrard Thermal generating station into early retirement.

It’s a reasonable policy from a climate change perspective — but there’s a catch.

In June 2012, the province exempted the liquefied natural gas (LNG) industry from the Clean Energy Act, enabling plants to burn as much natural gas as they’d like to power their giant compressors — despite originally promising they’d be powered by clean electricity — and, as of now, that’s exactly what they intend to do.

“If it is acceptable to burn natural gas to provide power to compress, cool, and transport B.C. natural gas for Asian markets, where its fate is combustion anyway, why not save transport and environmental costs and take care of domestic needs?” the Site C panel wrote.

To turn natural gas into a liquid for export, it must be cooled to 163 degrees below zero. Doing so essentially requires running a gigantic refrigerator 24/7. Each of the large LNG plants proposed for B.C.’s coast (there are 10) would need the equivalent of an entire Site C dam to power it by electricity.

Oilsands-sized pollution problem

The Pembina Institute reports that for the province to meet its annual revenue hopes of more than $4 billion (five to seven LNG facilities) by 2020, the resulting carbon emissions from that industry would rival that of Alberta’s oilsands.

In case you missed it, this is the industry that Premier Christy Clark has repeatedly touted as producing the “cleanest LNG in the world.”

For B.C.’s LNG industry to come anywhere near to being “clean,” plants would need to be fuelled by renewable electricity, not natural gas.

With that in mind, Clean Energy Canada recently commissioned a feasibility study that looks at meeting the energy demands of LNG plants with regional renewables, such as wind on the north coast, which wouldn’t require transmission upgrades or power from the Site C dam.

“Any LNG facility on the North Coast could primarily power its production facilities with renewable energy and do so reliably, affordably and on schedule—using established commercial technologies,” Navius Research concluded. “Further, doing so reduces that plant’s carbon pollution by 45 per cent, and increases local permanent jobs by 40 per cent.”

Seems like a no-brainer, doesn’t it?

If the province is going to forge ahead with an LNG industry, 91 per cent of British Columbians say it’s “very important” or “somewhat important” for LNG plants to maximize their use of renewable energy, according to a poll conducted by NRG Research Group in October 2013.

I haven’t seen any poll results on the matter, but methinks British Columbians wouldn’t respond to kindly to the natural gas industry playing by a different set of rules than the rest of us. After all, a Strategic Communications poll from April 2014 found 78 per cent of British Columbians supported the province moving off of fossil fuels completely in favour of clean sources of energy to prevent climate change from worsening.

B.C.’s natural gas contradiction

Due to the Clean Energy Act, BC Hydro couldn’t include gas-fired electricity in any of its scenarios presented to the Site C panel — even though the LNG industry can now burn gas willy-nilly.

That means natural gas facilities like Burrard Thermal, which has similar capacity to Site C, couldn’t even be considered as an intermittent source of power for times when electricity demand peaks.

With a price tag of $7.9 billion, Site C is the most expensive infrastructure project on the books in Canada — and could be the largest public expenditure in B.C. for the next 20 years. Meantime, the lower impact, more affordable alternative of geothermal power hasn’t been placed on the table by BC Hydro due only to the province’s “failure to pursue research over the last 30 years,” according to the panel.

If the province approves Site C this fall and it actually gets built, the project is expected to chalk up $800 million in losses in the first four years due to a lack of market for its power — and it’s BC Hydro customers (pssst … that’s you and me) who will be on the hook for covering the loss.

While British Columbians are picking up the tab for that, the LNG industry will be enjoying a free pass to pollute.

It’s high time for Clark to force the LNG industry to play by the same rules as the rest of us — and, for her own sake, she’d better do that before British Columbians cotton on to the fact she’s trying to sneak an oilsands-sized pollution problem below the radar while sticking British Columbians with a pricy and impractical megadam.

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Major oil and gas companies like Chevron Corp., Apache, and ExxonMobil Corp., are eyeing British Columbia’s northwest coast as a potential export hub for the continent’s ample natural gas. The proposed export terminals are slated to transform natural gas, much of it from frack fields in both Canada and the US, into liqueified natural gas or LNG for sale in Asia.

But according to a new report from the Norwegian-based International Gas Union (IGU) “project costs in Canada far exceed counterpart projects in the United States where the natural gas market is much more liquid.” The IGU has more than 120 members that collectively make up 95 percent of the world’s gas market.

The high costs associated with transporting gas up to BC’s remote coast makes the benefits of fetching a higher price overseas “difficult to financially justify,” according to the IGU.

“The distance between the proposed export facilities and the North American gas pipeline grid is large, and connections are small in both capacity and number,” the report states.

Connecting the current gas infrastructure to export facilities on BC’s rugged coast, along with costs associated with drilling programs would cost billions, the IGU said, preventing North American producers from meeting discount demands from Asian customers.

Chevron, the company behind the five-million-tonne-per-year LNG export facility, proposed for Kitimat, BC, says the massive costs associated with developing export facilities makes the prospect of discounted gas prices untenable.

As the Financial Times reports, “the disagreement [over prices] has prompted delays reaching a final investment decision, as the company seeks buyers willing to sign long-term contracts based on the price of oil.” But the US benchmark price is volatile, says the IGU.

“This is a problem because Western Canada shale gas will likely be more expensive than the marginal acreage that sets Henry-Hub [gas] prices,” IGU said in the report.

Projects in the US, says the IGU, are much better positioned to take advantage of preexisting gas infrastructure.

The IGU report demonstrates just how unattractive BC’s remote coast is for the burgeoning LNG export market. And British Columbia might do well to leave its high ambitions for becoming a world exporter of LNG behind.

As DeSmog Canada revealed in May, BC’s proposed strategy for LNG will make it impossible for the province to achieve its legislated goal of a 33 percent reduction in emissions by 2020 under the BC Climate Action Plan.

As Stephen Leahy reported,

There are as many as 17 LNG export terminal proposals floating around but only three are likely to be built by 2020… Those three would likely double BC's natural gas output, mainly from shale gas from hydraulic fracturing operations which have higher reported levels of methane leaks.

Although the Province reported only 2.2 million tonnes (Mt) of CO2e (carbon dioxide equivalent) of methane emissions in 2010, the actual amount was likely between 15.5 to 77.5 Mt of CO2e, depending the Global Warming Potential (GWP) used. Doubling gas production means that in 2020 these emissions would be 46.5 Mt (using GWP of 33) to 155 Mt (GWP of 105) a year.

In 2010 the entire province's carbon footprint was 62 Mt. By 2020 it is supposed to shrink to 45 Mt.

Setting aside methane leaks for a moment, fracking, processing and pumping natural gas over long distances consumes large amounts of energy. LNG facilities are also highly energy intensive. One LNG facility would emit 2 Mt of CO2e from burning natural gas to power the operation.

In BC's LNG Strategy then Minister of Energy and Mines Rich Coleman committed to having the province’s first LNG plant up and running by 2015, with a total of three by 2020. Growing dissatisfaction with BC's remoteness, however, may prevent the corporate investment necessary to realize such development.

On a provincial website advertising BC’s Liquid Natural Gas Strategy BC Premier Christy Clark wrote “the advantages of an LNG industry in BC are clear. We have lower shipping costs thanks to our proximity to growing markets with a demand for energy resources. We also have a vast supply of natural gas to meet these demands.”

“We are on the verge of making our province a world-leader in natural gas production and supply,” she said.

BC's LNG website lists 5 major LNG projects currently proposed or undergoing construction on BC’s coast:

1.     Prince Rupert LNG – (BG Group and Spectra Energy Natural Gas Transportation System)

2.     Pacific Northwest LNG (PETRONAS & Progress)

3.     Kitimat LNG (Apache Canada Ltd. & Chevron Canada)

4.     LNG Canada – (Shell Canada Ltd., PetroChina Company Limited, Korea Gas Corp, Mitsubishi Corporation (KOGAS))

5.     Douglas Channel Energy Project – (BC LNG Export Co-operative LLC: LNG Partners (Texas) and Haisla Nation)

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