Japan and South Korea seen as key allies for LNG export plans in B.C.

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Plans to export liquefied natural gas from British Columbia could get a lift from buyers in Japan and South Korea seeking energy security, says a study commissioned by an Indigenous group in Canada.

“Canada is well-positioned as an energy supplier to Japan and Korea in particular,” according to the new report by Robert Johnston, who conducted the study for the First Nations Climate Initiative (FNCI).

“Unlike China, neither Korea nor Japan are likely to double down on coal nor are they looking for new opportunities to acquire Russian gas at a discount, as China may do,” said Dr. Johnston, executive director of the Center on Global Energy Policy at Columbia University in New York.

But Canada’s nascent LNG industry faces competition in Asia from Qatar and the United States, which have the advantage of massive scale and lower costs, he said in his report titled “Western Canadian gas exports: Opportunities and risks in a low-carbon world.”

Dr. Johnston, who holds a doctorate in international relations from American University in Washington, said LNG exports have been criticized by certain groups while praised by others.

The David Suzuki Foundation and the Pembina Institute, an environmental research organization, released separate studies in May that issued climate warnings about looming LNG exports from B.C. They say Canada needs to concentrate on renewable energy, not on fossil fuels such as LNG.

Dr. Johnston noted that the Institute of Energy Economics Japan and London-based Shell PLC are more bullish about long-term demand for LNG in Asia than the International Energy Agency.

“Long-term gas forecasts are highly uncertain given the wide range of possible pathways and rates of change in the energy mix related to climate policy,” he cautioned. “These climate-related uncertainties have elevated fears about over-investment in LNG.”

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Climate activists have warned about methane leaks from the production of natural gas through fracking.

Dr. Johnston said methane intensity in Canadian production of natural gas is lower than most global peers, but much more can be done. “More rigorous methane mitigation and methane accounting will help B.C. LNG projects comply with provincial and federal guidelines,” he said.

The prospect of B.C. LNG displacing thermal coal to generate electricity at plants in parts of Asia seems promising, but expectations should be tempered because LNG is higher priced than coal, he added.

Japan and South Korea are also interested in importing hydrogen in the form of ammonia as the energy carrier.

In 2019, the elected Indigenous leaders of the Haisla, Nisga’a, Lax Kw’alaams and Metlakatla created FNCI as a B.C.-based think tank, which argues that exporting LNG is compatible with supporting climate action.

The Lax Kw’alaams, however, subsequently suspended their participation in FNCI. The Halfway River First Nation became a signatory to FNCI last year.

The Shell-led LNG Canada joint venture in Kitimat, B.C., is 88 per cent completed, according to Fluor Corp., which along with JGC Corp. serves as the project’s prime contractor.

But dreams in B.C. to become a major LNG player globally have faded. Ten years ago, there were more than 20 proposals in B.C. to export LNG.

Today, despite much hype, only four other B.C. projects are active in seeking to ship LNG in tankers to markets in Asia: Cedar LNG in Kitimat; Ksi Lisims LNG on Pearse Island; Woodfibre LNG near Squamish; and FortisBC’s expansion plans at its domestic Tilbury LNG site in Delta.

The Haisla support LNG Canada and are the majority owners in Cedar LNG.

The Nisga’a back Ksi Lisims, saying it’s important for economic reconciliation. “Our people do need this particular LNG investment and the stable employment,” Eva Clayton, elected president of the Nisga’a Lisims government, told the B.C. Environmental Assessment Office recently.

But the Lax Kw’alaams oppose Ksi Lisims, expressing doubts that the project could meet its goal of net-zero emissions.

Under the 2015 Paris climate agreement, 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.

Dr. Johnston said he views Article 6 as a difficult avenue for the Canadian government to pursue to obtain carbon credits, but there could be progress outside the Paris accord with the potential creation of “climate clubs,” in which Canada would co-operate with other participating countries on decarbonization strategies.