Quebec Premier François Legault had barely been elected when, in 2018, he upset Albertans by telling them Quebeckers did not want their “dirty energy” despite accepting $13-billion a year in federal equalization payments funded, in part, out of tax revenues from the oil sands.
Then-Alberta New Democratic premier Rachel Notley told Mr. Legault to “get off his high horse.” Her newly installed Quebec counterpart, Ms. Notley insisted, “needs to understand that not only is our product not dirty, but that it actually funds the schools, the hospitals, the roads and potentially even some of the hydroelectricity infrastructure in Quebec.”
Mr. Legault extended an olive branch a few months later by saying that, while a new oil pipeline running through Quebec was out of the question, his government was willing to get behind a pipeline to carry Alberta natural gas through the province to supply a proposed liquefied natural gas, or LNG, terminal on the Saguenay River. The Coalition Avenir Québec Premier even touted the $14-billion GNL Québec project as an environmentally friendly initiative that could help reduce oil and coal use in Europe.
“We are open to a gas pipeline from Alberta,” Mr. Legault said in early 2019, about 18 months after TransCanada had pulled the plug on its proposed Energy East oil pipeline. “But for now, all the parties are unanimous. There is no social acceptability for an additional oil pipeline.”
Last week, however, Mr. Legault’s government withdrew its support for GNL Québec. Environment Minister Benoit Charette concluded that an LNG project and the construction of an accompanying gas pipeline from the Ontario border carried “more disadvantages than advantages.” The midsummer move was a stunning change of heart for the CAQ government, whose ministers had previously spoken enthusiastically about what would have been the largest private investment in Quebec’s history.
But the announcement signalled that the argument of LNG promoters – that their projects will help reduce global greenhouse gas, or GHG, emissions by displacing oil and coal consumption – is no longer enough for even pro-business governments such as Mr. Legault’s to risk backing them. Despite Mr. Legault’s overall popularity, he appears unwilling to spend political capital on a project denounced by Quebec’s powerful environmental movement barely a year before the next election.
GNL Québec’s main promoters, U.S. private-equity executives Jim Illich and James Breyer, had banked on Quebec’s approval to attract new investors after Warren Buffett’s Berkshire Hathaway Inc. walked away from a potential $4-billion equity investment in the project in early 2020.
It was not to be.
In March, Quebec’s environmental assessment agency, le Bureau d’audiences publiques sur l’environnement, or BAPE, countered that GNL Québec’s Énergie Saguenay project would “lock in the energy choices of client countries and, consequently, the GHG emissions from burning the natural gas it supplied.” The project, it added, would “contribute to maintaining, or even growing, the oil and gas sector in North America and in Western Canada, in particular.”
In June, a Fisheries and Oceans Canada report warned that noise pollution from the additional LNG tanker traffic on the Saguenay River and in the St. Lawrence River estuary would threaten the beluga whale population in the region. And in early July, the Innu communities of Mashteuiatsh, Pessamit and Essipit threatened legal action to stop the GNL Québec project.
The Quebec government’s decision to turn its back on GNL Québec disappointed local mayors in the Saguenay region, whose economy depends mainly on the forest and aluminum smelting industries. GNL Québec promised the creation of more than 6,000 jobs during its four-year construction phase and about 300 permanent jobs at the LNG terminal.
Luckily, the region is not without economic development alternatives. Last month, a partnership formed by Alcoa Inc. and Rio Tinto PLC began construction on the first commercial-scale prototype cells using a carbon-free smelting technology called Elysis. The technology has the potential to eliminate all GHG emissions from aluminum smelting, giving Canadian producers an even wider environmental advantage over Chinese and U.S. smelters dependent on electricity from fossil fuels. The Quebec and federal governments have each invested in the Elysis project.
While GNL Québec’s promoters have not yet officially pulled the plug on the project, the prospects for its construction have all but been snuffed out by Mr. Legault’s decision to withdraw the olive branch he once extended to Alberta. The move will not go unnoticed in Edmonton.
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