BC's focus on liquefied natural gas makes no sense for climate or economy

July 17, 2012

In 2009, British Gas, a leader in the global liquefied natural gas (LNG) trade, submitted a voluminous environmental assessment report for a massive new gas processing plant and export terminal in Australia’s Queensland state.

The plant, now under construction and scheduled to open in 2014, will produce just slightly more gas than two proposed LNG projects that have passed environmental reviews and been granted approvals to export processed gas from the Kitimat area on British Columbia’s central north coast.

Since we are now, according to BC’s Minister of Energy and Mines Rich Coleman, in a “foot race” with Australia to ship our natural gas to Asian markets, we might want to reconsider the wisdom of doing so in light of two disturbing facts in that report from Down Under.

When British Gas released details on its Queensland plant three years ago, there were no fewer than 17 LNG plant proposals under consideration in Australia. In BC there are currently about half a dozen.

To grease the wheels of LNG developments here in BC, Premier Christy Clark recently announced that her government would amend its Clean Energy Act so that natural gas qualifies as a “clean” fuel when it is used to power up LNG plants. She was notably silent on what this means for the government’s legislated greenhouse gas emissions reduction targets.

It’s no surprise why.

When the Queensland LNG plant is in full production, the combustion of natural gas in its state-of-the-art combined cycle turbines, the venting of CO2 from the feed gas entering the facility, and the flaring of gas at the facility will result in 2.8 million tonnes of additional greenhouse gas emissions per year.

Such emissions should give British Columbians pause. The National Energy Board has granted two LNG projects proposed for the Kitimat area — BC LNG Export Cooperative and Kitimat LNG — the rights to export virtually the same volume of gas as the plant in Queensland. In addition, Shell has recently announced that it is considering constructing what could be a third LNG plant in Kitimat that would produce another 12 million tonnes of LNG.

Were all three BC plants to materialize and be powered by natural gas turbines as Premier Clark has given them the green light to do, the increase in BC’s greenhouse gas emissions would be enormous — potentially another 5.7 million tonnes, based on the projected performance in Queensland.

Such an increase would push BC’s overall emissions as of 2010 up another 9.1 per cent. That’s precisely the opposite of what we need to do. By 2020, BC is by law supposed to have reduced its overall emissions to 33 per cent below 2007 levels. Worse, the emissions associated with getting all of the natural gas out of the ground to run through those LNG plants will be even higher.

Clark and Coleman ignore such troubling details, arguing that natural gas is “clean” when burned to liquefy gas that is then sold to China, Korea and Japan and allegedly displaces the burning of coal. In this, they may have company. NDP energy critic John Horgan has mused that he’s untroubled by “burning a little gas” here if it displaces the burning of allegedly dirtier fuels somewhere else.

BC politicians may wish this “displacement” to happen, but in truth there is little evidence to suggest that it will. A more plausible outcome, based on the fact that greenhouse gas emissions in China, Japan and Korea continue to rise and that there is no global commitment to cap such emissions, is that those countries and others will end up burning more gas and more coal.

As disquieting as it is to see our government apparently abandoning BC’s climate change commitments, equally alarming is that their boosterish stance on LNG exports also ignores some troubling economic realities.

In its Queensland LNG report, British Gas noted that there was only a narrow window of opportunity to get its new plant into operation. That’s because the supply of natural gas from Australia alone could flood export markets and send prices spiraling down.

“It is unlikely that all but a few projects will proceed,” the company reported, adding that it was critical to the company’s financial bottom line to win the so-called foot race and have its Queensland operation in operation by no later than 2014-2015.

In the global race to supply Asia with LNG, it looks like Queensland is well ahead. Which begs the question. Why do BC’s elected leaders persist in entering a race that looks more and more like a climatic and economic race to the bottom?

Ben Parfitt is a resource policy analyst with the Canadian Centre for Policy Alternatives and the author of Fracking Up Our Water, Hydro Power and Climate: BC’s Reckless Pursuit of Shale Gas.