Construction activities at the LNG Canada site in Kitimat, B.C.LNG Canada
A newly formed coalition backed by Canada’s natural gas industry is urging the federal government to obtain emission credits for exporting the fuel in liquid form.
Energy for a Secure Future, also known as ESF, is pressing for global collaboration to create a system of credits that would recognize reductions to greenhouse-gas emissions across political borders.
The LNG Canada project in Kitimat, B.C., is the only export terminal under construction in the country for shipping liquefied natural gas (LNG) to overseas markets. Other LNG projects in British Columbia are hoping to gain traction to build export terminals.
ESF, which launched in February, released a new report on Monday titled Canada’s LNG Opportunity. It concludes that the time is ripe for Ottawa to work with “Europe and Asia to recognize and credit Canada for the environmental benefits of Canadian LNG displacing higher-emitting energy sources in international markets.”
The coalition’s advisory council, which includes representatives from business, labour and Indigenous groups, argues that LNG is ideal for displacing higher-emitting coal being burned at power plants generating electricity in Asia.
Ben Brunnen, founder of Verum Consulting, prepared the 30-page report. He is a senior fellow at the C.D. Howe Institute and a former vice-president at the Canadian Association of Petroleum Producers.
Mr. Brunnen’s report is released just weeks after two groups, the David Suzuki Foundation and the Pembina Institute, published separate studies in May that criticized LNG. They say Canada’s focus should be on renewable energy, not on fossil fuels such as LNG.
“The claim that B.C. LNG projects could earn credits for global emissions reductions is flimsy,” said the Suzuki Foundation’s study titled Burning Bridge: Debunking LNG as a Climate Solution. “If Asian countries fail to shift to renewables and continue to rely on gas, switching to B.C. LNG would only displace Russian gas, not coal,” according to the environmental group’s study.
The Pembina Institute, a clean energy think tank, said producing and exporting LNG is an emissions-intensive process, so LNG should not be viewed as a “bridge fuel” in the transition toward renewables and away from coal.
But ESF’s report said B.C. LNG could help countries that still rely heavily on coal as part of their energy mix, including China and India.
Under the 2015 Paris climate agreement to which Ottawa is a signatory, a section called Article 6 has been touted as a road map for bilateral side deals that would mean Canada gains credits toward meeting its targets for decreasing emissions of greenhouse gases such as carbon dioxide.
The federal government has said that it held talks about Article 6 with a couple of Canada’s allies that are prospective LNG buyers, but cautioned that the issue of carbon credits is complex and time-consuming.
“We have to move toward a global mindset, beyond the national targets looked at in the Paris agreement,” Rio Tinto chair Dominic Barton, who sits on ESF’s advisory council, said in the new report. “Canada has a bigger role to play in terms of global emissions reduction, and international frameworks need to recognize and enable this.”
Mr. Barton is Canada’s former ambassador to China and a former global managing partner at McKinsey & Co. He also co-wrote the report’s introduction with Sean Strickland, executive director of Canada’s Building Trades Unions. “The real choice in front of us is whether we want to provide an alternative to coal, and an alternative to Russia,” they said.
Switzerland announced bilateral deals last November with Ghana and Vanuatu in the nascent carbon-trading market. But within Article 6′s “nationally determined contributions” to fight climate change, a subsection labelled Article 6.2 hasn’t translated yet into widespread use of internationally transferred mitigation outcomes, which involve voluntary co-operation arrangements between two countries.
The 27th Conference of the Parties, also known as the COP27 climate summit, was held in Egypt last November and ended with unresolved issues related to the mitigation outcomes.
Another member of ESF’s advisory council is Crystal Smith, the elected chief councillor of the Haisla Nation. She has been an outspoken supporter of LNG Canada, which is aiming to begin exports to Asia in 2025.
Ms. Smith also backs Cedar LNG, a Haisla-led project. “What happens in Asia or Europe affects us,” she said in the report. “Projects like Cedar LNG can offer a global emissions reduction solution. This will create positive benefits for the world and for our communities.”
Ms. Smith will be one of the speakers at an international LNG conference to be held from July 10 through 13 in Vancouver.
The conference, which is normally held once every three years, had been awarded in 2016 to St. Petersburg, Russia, to play host in the spring of 2022. But after Russia invaded Ukraine in February, 2022, the venue was changed to Vancouver and the timing of the gathering delayed by more than a year.
If most of the B.C. LNG projects eventually get built, there would be huge economic benefits, including generating $10.2-billion in annual gross domestic product, according to ESF’s report, which incorporates data from the Conference Board of Canada.
“We want to help frame the conversation,” ESF chair Shannon Joseph said in an interview. “We think the report offers a perspective that Canada needs to be thinking about, before we welcome the world to talk about LNG.”
Five proposals for exports using tankers remain active in British Columbia, including potential expansions at LNG Canada in Kitimat and FortisBC’s Tilbury LNG domestic plant in Delta. The other projects are Cedar LNG and Ksi Lisims LNG on B.C.’s north coast and Woodfibre LNG near Squamish.
The contentious Coastal GasLink pipeline, to be operated by TC Energy Corp., would transport natural gas from northeast B.C. to LNG Canada and Cedar LNG.
The Pembina Institute warns that LNG projects on the West Coast would strain BC Hydro’s grid over the long term. “The scale of proposed LNG development in B.C. presents a challenge for the province as it seeks to meet its climate targets and build new electricity infrastructure to do so,” the think tank said in its study titled Squaring the Circle.