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The Haisla Nation's Kitamaat Village along the Douglas Channel near Kitimat, B.C., on Jan. 10, 2012.DARRYL DYCK/The Canadian Press

An Indigenous-led project designed to export liquefied natural gas would increase emissions in British Columbia, but could still help in the global fight against climate change, says a draft report by the province’s environmental regulator.

Cedar LNG, led by the Haisla Nation in conjunction with co-owner Pembina Pipeline Corp., plans to operate a floating production facility in Kitimat, B.C., with the goal of starting exports of the fuel to Asia in 2027.

The B.C. Environmental Assessment Office’s study of the climate effects of Cedar’s greenhouse-gas emissions is a crucial part of the regulatory scrutiny of the project. The office is leading the wide-ranging review in collaboration with the Impact Assessment Agency of Canada.

“Cedar LNG would produce GHG emissions and therefore would not directly have a positive effect on GHG emissions for the province or Canada,” according to the B.C. regulator’s 545-page report on the energy project, in a draft dated Sept. 21.

“However, Cedar LNG could have a positive impact on GHG emissions globally, if the importing countries were to use the natural gas as a replacement for coal in power production,” said the analysis, which estimates that electricity from natural gas-fired generation could result in GHG emissions being about 40 per cent lower than those from coal-fired power plants.

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Climate activists denounced the report, saying the only LNG export terminal under construction in the country, LNG Canada, will already make it difficult for B.C. and Canada to meet climate goals in 2025, when the Shell PLC-led project opens in Kitimat.

But Haisla Chief Councillor Crystal Smith said she is proud of Cedar’s emphasis on a liquefaction process that relies on electric-drive technology to help produce LNG instead of the industry’s traditional use of turbines fired by natural gas.

“Key points are Cedar being majority Indigenous-owned and the clean power that will be utilized by the project,” Ms. Smith said in an interview. “It’s a demonstration of how Canada and B.C. can support Indigenous communities to achieve economic reconciliation.”

Cedar’s proponents have selected a site located on the western shores of Douglas Channel on traditional territory owned by the Haisla.

Once completed, the B.C. regulator’s final report is to be presented along with other information to Steven Guilbeault, the federal Minister of Environment and Climate Change Canada, and to two provincial cabinet ministers – B.C. Environment Minister George Heyman and B.C. Energy Minister Bruce Ralston.

“As outlined in the advice provided by ECCC in their GHG analysis, Cedar LNG is likely to be one of the lowest emissions intensity producers of LNG globally, largely because of its reliance on renewable electricity from the BC Hydro grid,” the B.C. regulator’s draft report said, adding that Cedar has a strategy to reach net-zero emissions by 2050, including the option to buy carbon offsets.

Cedar plans to operate at 0.08 carbon dioxide equivalent tonnes for each tonne of LNG produced, which is below British Columbia’s limit for “emissions intensity” of 0.16 CO2 equivalent tonnes.

Mr. Guilbeault will have the jurisdiction to decide whether Cedar is in the public interest federally, while Mr. Heyman and Mr. Ralston have the responsibility for making the decision on the provincial level.

“Cedar LNG would further advance reconciliation because Haisla Nation would directly own and participate in a major industrial development in their territory and would leverage resources to pursue community goals and build for future generations,” the draft report said.

The construction of LNG Canada has led to much-needed revenue for the Haisla through benefits agreements, and sparked economic development near Kitimat, notably in Kitamaat Village, the main community and seat of government of the Haisla. New buildings in Kitamaat Village include a youth centre, a health facility and an affordable housing complex with 23 units.

Haisla member Hoss Woods, who runs a catering outfit and also works at a food truck, has enjoyed a boost in business. “It’s better with more people having jobs,” said Mr. Woods, as he prepared beef quesadillas and crispy pork salad. His recent corporate clients have included LNG Canada and its prime contractor, JGC Fluor BC LNG JV, an engineering joint venture between JGC Corp. and Fluor Corp.

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If Cedar gains environmental approvals, project leaders expect to make a final investment decision in 2023 on forging ahead with contractors such as Samsung Heavy Industries Co. Ltd., a major shipbuilder based in South Korea.

Global LNG demand has surged since Russia’s invasion of Ukraine in February, with fears of fuel shortages as Europe heads into the winter heating season. The continent is seeking to reduce its dependence on natural gas from Russia.

“As we supply LNG that’s pointed at the Asian market, that increases the total supply that’s generally in the market, and that allows LNG cargoes that are available to be redirected to Europe,” Cedar chief executive officer Doug Arnell said in an interview.

Cedar is going through the provincial-led review under the federal Impact Assessment Act, which replaced the Canadian Environmental Assessment Act in 2019.

“BC Hydro will provide the electricity, and so we won’t be burning natural gas to run our process,” said Stuart Taylor, a senior vice-president at Pembina. “We think it’s good stewardship. We think it’s valuable on a global basis.”

Cedar plans to obtain natural gas through the Coastal GasLink pipeline project, which is under construction by TC Energy Corp.

The contentious pipeline route would initially transport natural gas from northeastern B.C. to LNG Canada’s Kitimat export terminal.

Cedar’s $3-billion production facility would rely on ocean-bound LNG vessels to export three million tonnes a year of the fuel to Asia. By contrast, LNG Canada’s project is much larger, with its $18-billion terminal slated to export 14 million tonnes a year to Asia.

Cedar’s focus on electric-drive technology to supercool natural gas into liquid form doesn’t impress climate activist Eoin Finn, who criticized the regulator, also known as BCEAO.

“The B.C. public expects, and deserves, a far higher standard of analysis from BCEAO,” Mr. Finn said in a submission last week to the provincial regulator.

David Hughes, writing on behalf of environmental group Douglas Channel Watch, said Cedar’s ripple effects will be far-reaching, especially upstream emissions in northeast B.C. from the production of natural gas through fracking.

Mr. Hughes said in a filing last week to the regulator that Cedar would disrupt the climate ambitions of B.C. and Canada.

“It is these greenhouse-gas emissions that are the principal concern of Douglas Channel Watch, as they would increase B.C.’s emissions significantly at a time when emissions must be radically reduced to minimize the impact of climate change and meet B.C.’s and Canada’s emissions reduction commitments,” he said.

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