Some elephants in the LNG-room.
DOUBTLESS INSPIRED BY GRETA THUNBERG'S electrifying September 23 United Nations speech, Premier John Horgan sprung into action. Before you could say “Climate crisis? What climate crisis?” on October 3, a mere 11 days later, the premier left the country. In Seattle, Horgan and Washington Governor Jay Inslee announced—wait for it!—a “Clean Grid” summit in 2020. No time, date or place mentioned.
In case some ill-mannered cynics questioned the value of the October meeting, the pair also “reaffirmed” their commitment to collaborate on the economy, environmental protection, and transportation. It’s a little like a long-married couple reaffirming their marriage vows: A pleasant gesture, but having no legal or practical impact whatsoever.
BC Premier John Horgan chats with Washington Governor Jay Inslee
The meeting was billed as part of the Pacific Coast Collaborative (PCC), an initiative launched in 2008 under Premier Gordon Campbell, linking BC with Washington State, Oregon and California—along with the cities of San Francisco, Seattle, Los Angeles, Portland, Oakland and Vancouver. The goal is to work together on the climate crisis.
Besides some cute graphics of electric cars and wind turbines, PCC’s website currently boasts that since 2008, the region’s greenhouse gas (GHG) emissions have fallen by 6 percent. While that’s better than two kicks in the bum, it’s hardly enough to start fixing the planet by the Intergovernmental Panel on Climate Change’s deadline of the end of 2020. But that decrease is for the entire region. And guess what happened to BC’s emissions in the same period? According to the most recent GHG inventory, our emissions have recently been growing. In fact, though they did drop marginally over the nine-year period from 2008 to 2017, BC’s 2017 GHG emissions, at 64.5 megatonnes (Mt) of CO2 equivalent, were higher than in any year since that baseline year of 2008. BC spewed out 4.3 percent more GHGs in 2017 than in 2009, our carbon tax notwithstanding. Meanwhile, California and Oregon managed to cut their 2017 emissions by 13.0 percent and 5.5 percent respectively from 2008. (Washington has yet to report its 2016 or 2017 GHGs, though, like BC’s, they grew in recent years.) No wonder BC loves the PCC: Thanks mostly to California, the region’s overall emissions are headed in the right direction. BC, meanwhile, is that nasty cousin the others wish would fall into line or disappear.
The PCC’s US members are going to have to do even better in the near future if they are to counter the highly toxic levels of GHGs that will result from LNG Canada’s operations, estimated to begin in 2025. For example, at the October meeting, Inslee and Horgan each trotted out what they’d been up to recently. In Horgan’s case, it was CleanBC, the December 2018 plan to reduce BC’s GHG emissions. Even if fully implemented as proposed, CleanBC would reduce the province’s annual emissions by a mere 18.9 Mt, with an additional 6.5 Mt reduction yet to come via unspecified methods. Using the BC government’s own figures, GHG emissions from the plant alone will be 4.2 Mt, annually. Then there are the so-called upstream and midstream emissions, amounting to 2.7 Mt, for a total of 6.9 Mt of GHG emissions annually in BC as a result of LNG Canada. So to reach CleanBC's goals, BC will have to find an additional 13.4 Mt per year of GHG reductions from unknown sources, rather than just 6.5 Mt. Not an easy task, given that the province's emissions have been trending upwards. And these BC government estimates have been widely criticized as being far too low.
Governor Inslee parts ways with Horgan in several notable respects. For one, Washington has legislated a state-wide ban on fracking for oil and gas—the method currently used to produce virtually all of BC’s natural gas, and the way that the extra gas to supply LNG Canada will be extracted. For another, in May 2019, Inslee announced he is opposed to a small Tacoma LNG plant, proposed by Puget Sound Energy. The project is tiny: It is intended only to supply trucks and boats, as well as provide extra natural gas supply during periods of peak demand. Not a drop for export. But Inslee, quite rightly, rejects the silly claims that LNG is a preferred replacement for other fossil fuels.
With close neighbours disagreeing so fundamentally about the seriousness of the climate crisis, surely discussions between the two concerning LNG must have been, well, interesting. In fact, the topic did not even arise, according to Inslee’s acting communications director, Tara Lee, in an email. It didn’t? It’s not credible that neither leader knew of the other’s position. But this meeting was plainly intended as a way of deflecting us plebes from the attention paid to Thunberg and subsequent actions of those she inspires. It wouldn’t surprise me if Horgan’s Chief of Staff, Geoff Meggs (who sat beside the premier during the meeting), discussed acceptable topics in advance with Inslee’s Chief of Staff, David Postman (who likewise sat beside his boss). Perhaps inspired by Basil Fawlty, the pair may have mutually advised their respective leaders: Don’t mention LNG!
DESPITE THE APPARENTLY DELIBERATE OMISSION of the topic from the Inslee-Horgan meeting, there is no shortage of developments at LNG Canada.
The traditional way of erecting a structure is to ship all the parts to the site, where they are assembled—a method known as “stick-built.” But, as reported in the last Focus, the joint partners on the construction contract, Fluor (Texas-based) and JGC Holdings Corp (Japan-based), had a better idea: They are instead building much of LNG Canada’s Kitimat plant at a huge fabrication yard in Zhuhai, China. The yard belongs to a joint venture between Fluor and a subsidiary of China National Offshore Oil Corporation, entirely owned by the Chinese state.
Why use the yard? JGC handily summed up its motivation in a November 8, 2018 earnings release conference: “The use of modular construction for the entire facility and the use of larger modules are expected to cut the amount of on-site construction work by around 70 percent compared to conventional stick-built construction.”
In JGC’s 2018/19 annual report released October 4, 2019, the company provided more details on the supposed benefits of modular construction. Referring to the LNG Canada project, JGC Chief Operating Officer Tadashi Ishizuka said “our policy was to minimize local construction work, which we considered the greatest safeguard [against risk].”
I wonder if JGC first ran that inspired goal past Horgan, a labour-friendly politician who pushed the project in part by claiming it would create 10,000 construction jobs. Kitimat area residents would be given first dibs, followed by other British Columbians, then Canadians elsewhere. No mention of cheap Chinese labour. Must not have been room in the government’s press releases.
If Horgan didn’t want to talk about LNG in Seattle, one national leader does have something to say about the unloading of $7 billion-and-counting in BC and federal taxpayer funds on LNG Canada to create Chinese jobs. “They are just lining their pockets,” says United Steelworkers national director Ken Neumann, speaking in an interview about the owners of the fabrication yard. As for donating public money to the Chinese cause: “That’s just plain wrong.” he added. Neumann is adamant that the facility could be built here. “These products can be made in Canada, using Canadian workers and fairly-traded, market-priced steel, without jeopardizing the project’s viability.”
Sadly, Fluor’s brilliant idea to use much cheaper Chinese labour is turning out to be less than a raging success. Fluor invested vast sums in the Zhuhai fabrication yard, but now stands to lose much of it, according to an early-morning conference call with investors on September 24, 2019. During the call, Fluor’s recently-appointed Chief Financial Officer Michael Steuert warned about the yard’s problems: “A significant portion of the $355 million [US] investment in the fabrication yard is at risk due to lower than expected performance.” Oops.
Fluor’s investors might also be wondering whether LNG is such a brilliant idea after all, since the same day Fluor told them about the fabrication yard mess, the company slashed its dividend by 50 percent. When the New York Stock Exchange opened soon after the announcement, Fluor’s stock price fell 11 percent.
Washington Governor Inslee formerly supported the Tacoma LNG project, but, as noted above, he’s now dead opposed to it. Why did he change his mind? In fact, it was that much-maligned factor: evidence. “[T]he urgency of climate change and the environmental impacts of natural gas make clear the state’s efforts and future investments in energy infrastructure should focus on clean, renewable sources rather than fossil fuels,” Inslee said in a May 8, 2019 statement. “I am no longer convinced that locking in [this] multi-decadal infrastructure [project is] sufficient to accomplishing what’s necessary.”
See Mr Premier? A leader can change his mind when there is good reason. You can do it too.
Russ Francis recently adopted a five-year-old Alaskan Malamute, his fourth successive one from the SPCA. Like his predecessors, the new adoptee eats really weird stuff: Chopped-up dead animals.