And rightfully so.
But sometime in the next few weeks, the federal Liberals will announce their verdict on whether the massive Pacific Northwest LNG export terminal can go ahead or not.
(In fact, given that the environment assessment has been wrapped up and submitted by the Canadian Environmental Assessment Agency, cabinet may already have met and made their decision.)
And this verdict will be a very real window into how seriously the federal government is going to take climate change, its 2030 greenhouse gas emissions targets and Paris Agreement obligations. It’s a very big deal.
Here are a few things you need to know about liquified natural gas and the proposed Pacific Northwest LNG export terminal to give the announcement some context.
What the heck is LNG?
So you happen to have a bunch of natural gas. As the name suggests, it’s fairly gaseous and thus difficult to transport.
To get around that problem, you “liquify” it by removing pollutants, water and mercury, and cool it to a chilly -160°C. That reduces the volume of the gas by over 600 times. It’s then “regasified” on the other end.
The whole process is very complex and energy-intensive, consuming the equivalent of about 20 per cent of the gas along the way.
— DeSmog Canada (@DeSmogCanada) September 23, 2016
What are the economics of LNG?
David Hughes — a geoscientist and expert on unconventional fuels — estimates the liquefaction, shipping, storage and regasification process costs between $5 and $6 per thousand cubic feet of natural gas (also known as Mcf).
Actual production of the shale gas from northeast British Columbia costs between $3 and $4 per Mcf.
But there’s a global oversupply of natural gas given the massive scale-up of shale gas production in the United States, Russia and Australia over the past few years. The price of LNG in China is now in the neighbourhood of $8 per Mcf, meaning Canadian exporters would be taking a loss of around $2 per Mcf.
As a result, not a single LNG company has made a final investment decision in B.C. AltaGas permanently shelved its project. LNG Canada has put its project on hold. Chevron’s Kitimat LNG project has been repeatedly pushed back.
How has the government responded?
Despite that, since 2013 B.C. Premier Christy Clark has repeatedly pledged to facilitate the construction of a massive LNG export sector, mythically leading to 100,000 jobs and a $100 billion prosperity fund.
Prices and demand have continued to plummet since then.
To help the shoddy investment climate, the government created a controversial 25-year deal in the summer of 2015 that locked in low tax rates, carbon tax and the legislation controlling LNG-related emissions; if the province broke that agreement it would have to compensate affected companies.
This legislation followed a 2012 decision to omit LNG facilities and associated emissions from the province’s Clean Energy Act’s energy requirements, and federal tax breaks announced by Stephen Harper in early 2015.
A pledge was also made in the province’s recently released Climate Leadership Plan to help subsidize the electrification of upstream natural gas facilities, presumably to help reduce emissions from increased LNG exports.
Where would the gas come from?
Largely from fracking in the Montney and Horn River shale gas plays of northeast British Columbia, with the other 15 or so per cent coming from conventional sources.
Why care about Pacific Northwest LNG specifically?
After all, Woodfibre LNG received a federal approval in March, and the proposed LNG Canada facility near Kitimat is fully permitted. Another 17 export terminals of various sizes are currently proposed.
Ultimately, the $36-billion project matters because of its potential climate impacts and catastrophic impacts on wild salmon populations in the watershed of the Skeena River.
It’s such a hot-button issue that the federal government delayed a decision for three months in order to obtain more info.
Plus, due to Pacific Northwest LNG being owned by Petronas — which itself is wholly owned by the government of Malaysia and has a questionable human rights record — the actual motivations may be slightly different, possibly pertaining to energy security and diversifying supplies as well as potential profit.
This could mean that Pacific Northwest LNG has a greater chance of being built than privately owned companies, like LNG Canada (a joint venture led by Shell).
What would be the climate impacts of Pacific Northwest LNG?
Just enormous. As in one of the largest single sources of emissions in the country.
If built, Pacific Northwest would account for between 75 and 80 per cent of total allowable emissions under B.C.’s 2050 climate target of reducing emissions 80 per cent below 2007 levels.
In late May, dozens of climate scientists signed an open letter to the federal government petitioning for the rejection of the project.
“We have to conclude that if built, PNW LNG will make it essentially impossible for B.C. to achieve its climate targets and that there’s an inherent disconnect between trying to build this project and being sincere about achieving our climate targets,” Pembina Institute analyst Maximilian Kniewasser said in a recent webinar on the subject.
The export terminal alone would emit about 4.9 million tonnes of emissions due to using natural gas for every operation (including liquefaction, processors, lighting and computers).
In contrast, Woodfibre would use electricity to run the plant and liquefy the gas, while the proposed LNG Canada project would use gas for liquefaction and renewable electricity for all other auxiliary demands.
The province’s Greenhouse Gas Industrial Reporting and Control Act set an emissions intensity of 0.16 tonnes of carbon dioxide per tonne of LNG produced. Both Woodfibre LNG and LNG Canada fall below the benchmark due to the aforementioned plans (0.05 and 0.15, respectively).
But Pacific Northwest LNG would feature an emissions intensity of 0.26 tonnes of CO2 per tonne of LNG, well above the benchmark (Kniewasser acknowledged that Woodfibre-like intensities would be difficult given the location and timeframe of Pacific Northwest LNG, but that significant reductions could certainly be made).
And that doesn’t even include related upstream pollution, which will account for around 60 per cent of new emissions — between 6.5 and 8.7 megatonnes per year — due to vented methane and the burning of natural gas to run compressors to move gas through the system (which, as mentioned, the province tried to sneakily address in the new climate plan).
All up, Pacific Northwest LNG would annually emit between 11.5 and 14 megatonnes, requiring every other sector in British Columbia — transportation, electricity, buildings — to emit no more than three megatonnes a year by 2050 to meet the emissions target.
In other words, a complete impossibility.
And that doesn’t even factor in the likelihood that methane leakages are likely being underestimated: while the U.S. EPA assumes a rate of 1.33 per cent, B.C. assumes between 0.24 and 0.27 per cent. Pembina has calculated that this fact alone could almost double annual emissions from 11.5 to 21.3 megatonnes.
But wouldn’t LNG exports help other jurisdictions get off coal?
That’s certainly a popular talking point from the B.C. government; developing an LNG export industry was described in its 2014 throne speech as “the greatest single step we can take to fight climate change.”
That notion was forwarded again by a recent C.D. Howe report that suggested emissions could be reduced in China and India by displacing generation by older coal plants.
It’s a proposal that Matt Horne, Pembina’s associate regional director for British Columbia, doesn’t outright reject; he notes that if the methane is properly managed and terminals use electric drives rather than gas, total emissions could be less than coal-fired power plants.
But he emphasizes the government is incorrectly propagating the premise that any LNG exports will replace coal.
“We know that’s not the case,” he says.
“You can look at many cases where it’s competing with other gas supplies, in which case you’re sort of looking at a wash. You can also look at examples where it’s competing with renewables and in those cases you’ve got an increase in emissions. It’s that overall mix that’s going to be more important than one example of a competing fuel supply.”
David Hughes has also noted that given the rise of ultra-supercritical coal plants in China, burning LNG would actually produce 27 per cent more emissions over a 20-year period and only seven per cent fewer over the course of a century (his estimation is that LNG would likely be used in addition to coal, rather than replacing it).
So, yes. There may be some instances which allow for jurisdictions to replace coal-fired power plants. But the question is if that chance is worth British Columbia plowing through its climate targets, undermining the development of renewables and energy efficiency measures and locking in LNG use for another half-century.
So what can the federal government do?
Reject the project. Or approve with strict conditions of heavily reduced emissions. It’s clear at this point that an unconditional approval would undermine any and all promises the Liberals have made about taking climate change seriously, as well as commitments to repair the country’s broken environmental assessment processes.
Photo: Province of British Columbia via Flickr
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