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British Columbia B.C. promises world-leading emissions targets for LNG industry with new law

British Columbia Environment Minister Mary Polak.

Darryl Dyck/The Canadian Press

British Columbia can have a liquefied natural gas industry and still meet its targets to reduce greenhouse-gas emissions, Environment Minister Mary Polak said Monday as she introduced a new law that she promises will foster the "cleanest LNG facilities" in the world.

To achieve that difficult balance, the province will need to take tougher action around greenhouse-gas emissions in other sectors to compensate for the new industry. The government hopes to see five LNG plants built on the coast, which would increase the province's annual emissions by 13 million tonnes – if industry meets the ambitious benchmark.

It means GHG emissions in transportation and buildings will have to be reduced further as the province grapples with its looming targets in 2020 to reduce British Columbia's total carbon footprint to 41 million tonnes of GHG emissions.

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"Sure, it's going to be really difficult," Ms. Polak told reporters. "We are going to have to be drilling down to more and more of the everyday things that we can do to reduce greenhouse-gas emissions."

Matt Horne of the Pembina Institute said the government is ignoring the significant increase in emissions that would be produced upstream to supply those LNG plants with natural gas.

"With the level of LNG development they are targeting, I don't see how it's possible to meet the climate-change targets," he said.

The new law establishes a benchmark for allowable GHG emissions from LNG facilities that is lower than any other LNG facility in the world – an "intensity level" of 0.16 carbon dioxide equivalent tonnes for each tonne of LNG produced.

To avoid scaring off potential investors, the minister said companies will have "flexible options" to meet the benchmark, including the ability to purchase offsets or contribute to a fund that is supposed to drive innovation in cleaner technology. Facilities that perform below the benchmark will be eligible for performance credits that can be sold to other facilities.

"This is the most effective way to meet the province's climate goals," Ms. Polak told reporters.

The government is also offering an incentive program to help potential LNG facilities achieve the benchmark, after prospective LNG companies complained the benchmark was an impediment to investment. Ms. Polak could not say how much the government expects to pay toward industry incentives.

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To date, the province has more than a dozen potential LNG suitors, but no company has reached a final investment decision.

David Keane, president of the B.C. LNG Alliance, a new association representing potential investors, said the standards outlined on Monday will be costly, but the industry is waiting to see the tax package, to be released Tuesday, to understand the complete regulatory burden in B.C.

"We have been pretty clear that B.C. is a high-cost environment to do business," he said in an interview. "The benchmark is very low and it will be difficult to meet. If you are an all-electric-drive facility you could probably beat that, but it is going to be difficult for the industry and it will add to the cost to the industry to do business here."

Premier Christy Clark initially promised her government would be selling the "cleanest LNG in the world."

That commitment was later watered down to refer only to the facilities themselves. The B.C. government is not including the upstream emissions that come from getting natural gas out of the ground and transporting it to those facilities for processing. New policies to deal with those GHG emissions are still under development, the government announced on Monday.

Clean-energy advocates have advanced a solution – e-drive technology that would greatly reduce the significant carbon output generated by most LNG plants by using electricity instead of all gas in the production process (which includes cooling the gas to a liquid form so that it is a small fraction of the volume, making it easier to transport to market where it is warmed again and sold as a natural gas). But few of the proponents are considering e-drive technology.

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