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Alberta Premier Danielle Smith gives a keynote address at the LNG2023 conference in Vancouver, on July 13.DARRYL DYCK/The Canadian Press

Alberta Premier Danielle Smith wants her province’s natural gas industry to be credited as a cure to global climate change, and she’s not alone. There’s a growing push in Western Canada to seek rewards on the global climate file for not just business as usual, but expanding exports of the fossil fuel.

But is it an international emissions-reduction plan, or an attempt to avoid making cuts at home?

The idea assumes a cargo of liquefied natural gas, derived from Western Canadian production, will displace more-carbon-intensive coal for generating electricity in another country. Therefore, Canada should get credits for reducing global emissions under a provision of the Paris Agreement known as Article 6.

At an international LNG conference in Vancouver on Thursday, Ms. Smith urged talks with trade partners to get credits when there is “a clear line of sight” to substituting Canadian gas for coal-fired power.

The Canadian Association of Petroleum Producers says the mechanism can help Canada meet its emission reduction commitments while expanding the natural gas and LNG sectors. Last month, Western premiers called on Ottawa to work with the provinces and territories to finalize rules under Article 6.

When allies seek Canada’s natural gas, we say ‘sorry’ – that has global consequences

On the surface it seems plausible, and Ottawa looks to be increasingly receptive to the pitch. Environmentalists say this is a plan to produce more natural gas and get credit for emissions that are not being made at home as a cheat to meeting the country’s commitment to get to net zero by 2050.

It is based on a misinterpretation of how global carbon accounting, and an Article 6 measure known as Internationally Transferred Mitigation Outcomes (ITMOs), work, according to the non-profit Canadian Climate Institute. In a blog post by senior research director Jason Dion in 2019 and subsequently updated, it points out emissions from gas production, including drilling, venting, flaring, transport and processing into LNG, are tallied in Canada’s emissions inventory. Reduced emissions through burning LNG that displaces coal are counted by the importing country.

To avoid double counting, ITMO transfers must be negotiated between exporter and importer, as no two countries can claim the same reductions. The business case for consumers relinquishing the credits is extremely weak, said Dale Beugin, the institute’s executive vice-president.

“There’s not a great case for getting credits for LNG sales for lots of reasons,” Mr. Beugin said. “The accounting doesn’t work and the incentives aren’t there. It will only happen if the buying country gives up their emission credits, and they would only do that if they were buying the LNG at a discount. It just seems implausible.”

Ms. Smith said Canada should seek to renegotiate Article 6 at the global climate summit in the United Arab Emirates later this year to make it more favourable for striking credit deals for LNG.

But another problem is the numbers. After Russia invaded Ukraine in 2022, energy security re-emerged as a priority, especially in Europe, much of which had been fuelled with Russian gas. That thrust the global LNG market into the spotlight as key to helping countries meet short-term energy needs, as renewables could not make up the difference.

Today, just one plant – LNG Canada in Kitimat, B.C. – is under construction in Canada, and its first phase could start shipments in 2025.

There are armadas of LNG shipments afloat, and few if any get emissions credits for their countries of origin. In May, the U.S. alone shipped 117 cargoes from seven plants in operation, according to S&P Global. “They’re not doing it to get credits, they’re doing it because there’s demand for LNG and they want to sell products in a market for which there’s demand,” Mr. Beugin said.

Canada would have a tough time arguing that its relatively small LNG contribution – to start, about 15 shipments a month – will make a major dent in global emissions. Asia is seen as a key market for Canadian LNG, with China being the largest economy. Canada’s contribution would be little more than a drop in the bucket in terms of net emissions reduction in that country.

According to the International Energy Agency, China led the globe last year in additions to wind and solar energy capacity, and is on track to do the same this year and next. Even so, the country is also building more coal-fired power plants than any other. In 2022, it quadrupled the number of plant approvals from the year before, a rate equal to about two new generating stations per week, the Global Energy Monitor and Centre for Research on Energy and Clean Air reported earlier this year.

If the largest renewables push can’t stop those plants from being built and arrest the increase in carbon emissions, can Canadian LNG save the day?

That’s not to say Canada shouldn’t export LNG to make get economic value out of it while it can. The question is: why try to shoehorn its production into an energy transition box where it doesn’t belong?

Gas has a role to play as Canada and the world make the shift away from higher-carbon energy, especially amid future supply shortages, even if it does not result in credits to its greenhouse gas inventory at home. Also, Canada can strike deals with other countries that result in measurable emissions reductions. For instance, those that ensure coal-fired power is shut down, and not rebuilt elsewhere, as seems to be the case in China.

With a report from Brent Jang in Vancouver

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