As LNG Canada’s Final Investment Decision looms, a fatal error sits stubbornly at the heart of the government’s case for LNG.
THIS SPRING, the BC government told us of its innovative plan to save the planet: Burn more fossil fuels. After what Premier John Horgan openly admitted were extensive consultations with the big players in the Liquefied Natural Gas (LNG) industry, his government announced reduced carbon tax and electricity charges, kiboshing the LNG export tax, and providing a temporary exemption from provincial sales tax.
These cuts were worked out in consort—“jointly conducted,” a so-called backgrounder assured us—with the biggest still-active player, LNG Canada. The consortium is made up of wholly-owned subsidiaries of five foreign companies (Petronas, Royal Dutch Shell, PetroChina, Mitsubishi, and Korea Gas Corporation). The March 22 backgrounder added that this financial analysis “corroborated evidence and information from internationally recognized LNG analysts that BC has a competitiveness issue.”
Internationally recognized LNG analysts? Anyone from the Canadian Centre for Policy Alternatives? David Suzuki Foundation? Navius? Pembina Institute? Sierra Club? Pacific Institute for Climate Solutions? The document didn’t say. More likely a bunch of corporate carbon-heads who can’t see the future through the haze of thick forest fire smoke that now almost routinely covers large parts of the province every summer.
It isn’t hard to imagine that the “joint financial analysis” went something like this:
BC Government to LNG Industry: What do you want?
LNG Industry: We’ll take no LNG export tax, a sales tax holiday, reduced carbon tax, and hydro at half what the hoi polloi pay!
BC Government: Done! And thanks for the insightful analysis!
What the March 22 government release called a “new framework for natural gas development [that] puts [the] focus on economic and climate targets,” BC Green Leader Andrew Weaver referred to as giving away BC’s Crown-owned natural gas. “There’s no doubt in my mind that the BC NDP will do anything the industry wants to get LNG here,” commented Weaver in an interview. “They have taken ‘sellout’ to a whole new level.”
An “Update and Technical Briefing” on the framework presented March 22 by Don Wright, Premier John Horgan’s deputy minister, claimed that economic development, climate action and First Nations reconciliation are “parallel and mutually dependent priorities.” The thrust of the presentation was that economic development necessitates creating huge carbon-intensive LNG plants.
The rule of thumb for government briefing notes is to provide three options. The first is the status quo: Do nothing. The second and third list possible actions to deal with the situation at hand. There are few issues for which there is only one active option.
But Wright’s 35-page PowerPoint briefing offered just two choices. Slightly paraphrased, they were:
1. Don’t give away the climate farm to a group of multinational fossil fuel companies. But, as a result, accept that First Nations reconciliation will stall, BC’s climate action will become inaction, and we’ll all be in the poorhouse.
2. Turn over taxpayers’ fossil resources to foreigners for next to nothing, so we can make nice with First Nations, get really, really tough on climate change, and start rolling in money.
Concluded the presentation: “After extensive analysis and deliberation, government has elected to proceed with Option 2.”
One doesn’t have to look far to spot the false dichotomy in Wright’s presentation. Lynda Gagné is a University of Victoria economist with a longstanding interest in the environment. Economic development should not be about producing and consuming more resource- and energy-intensive goods and services, said Gagné, who teaches in the School of Public Administration.
“Our economic system already draws far more out of the Earth than it can sustain,” she said in an emailed response to questions, “and more business-as-usual development can only worsen the situation and eventually lead to a crash.”
Meaningful climate action is widely regarded as incompatible with a large LNG facility. Marc Lee, senior economist with the Canadian Centre for Policy Alternatives, pointed out that the facility will make it far more difficult for BC to meet its emission targets. In an August 2, 2018 submission to the BC Government’s Climate Solutions and Clean Growth Advisory Council, Lee estimated that LNG Canada’s emissions from fracking, processing, transportation and liquefaction for the Kitimat project will add from 9 to 12 megatonnes (Mt) of CO2 annually to BC’s emissions (in 2015, 63 Mt).
An LNG plant in Australia
The government claims the facility, when it’s finally built out with four units, called “trains,” will emit 8.14 Mt. Yet in 2015, BC’s existing oil and natural gas industry emitted 12 Mt (mostly from natural gas-related activities).
Here’s the problem: The Province’s renewed climate targets are for 13 Mt of total emissions in 2050, just when LNG Canada would be humming along at full tilt, in all its 8+ Mt CO2/year glory. That 13 Mt target is for everything: heating, transportation, industry, mining, deforestation, cattle burping, human breathing—the works. Yet 8 + 12 = 20, therefore the emissions from natural gas production and the one LNG facility alone are 54 percent above the 13 Mt target for everything.
Concluded Lee: “Any way you slice it the rest of BC’s economy would have to fully decarbonize very quickly in order to accommodate emissions from LNG Canada and stay within the new legislated targets.”
Nor is it received truth that First Nations reconciliation and fossil fuels are inextricably linked. While a number of First Nations support TransCanada’s Coastal GasLink pipeline, needed to ship gas to LNG Canada’s facility, several Wet’suwet’en hereditary chiefs, in contrast to the elected Wet’suwet’en band, oppose the route. Unist’ot’en protesters plan to block the pipeline construction at their camp, which their website refers to as indigenous re-occupation of Wet’suwet’en land.
UVic’s Gagné questions the government’s connecting First Nations reconciliation with more carbon-intensive development: “Reconciliation and addressing climate change can only be done by recognizing the limits we face.”
A new report by a 16-strong international team of experts bolsters Gagné’s concerns. “Trajectories of the Earth System in the Anthropocene,” published August 9 in the Proceedings of the National Academy of Sciences, pulled together ten climate change processes—such as the reduction of northern hemisphere spring snow cover that amplifies regional warming, and CO2 release from boreal forest dieback, including through forest fires. The researchers suggested that when such positive feedback loops are considered together, the longstanding glacial-interglacial cycle might be replaced with a runaway “hothouse earth” beyond human control. To avoid this, said the researchers, we may need to act on multiple fronts, including decarbonizing the global economy.
SO WHY DID THE NDP make such generous concessions, ones that boost the risk of an uninhabitable planet?
One reason might be the current seat distribution. The NDP’s presence in the legislature is concentrated in the Lower Mainland and Vancouver Island: It holds just four seats outside BC’s southwest corner. The NDP-Green government’s 44 seats versus the Liberals’ 42 means we are just a few heartbeats away from a different government. The Liberals could even add to their seat count following this fall’s municipal election, in which New Democrat MLA Leonard Krog is expected to win the October 20 Nanaimo mayoralty election. Krog would then resign his legislature seat, prompting a by-election. Though the Nanaimo riding has been traditionally NDP-safe, the Greens have promised to run a strong candidate, possibly splitting the non-Liberal vote. A Liberal win in Nanaimo would put the NDP-Green alliance and the Liberals in a 43-43 dead heat. Depending on how independent Speaker Darryl Plecas rules, there is a real threat to the NDP-Green government in the months ahead.
Horgan’s solution? Continue to impress Islanders and Lower Mainlanders with vehement opposition to the unpopular Kinder Morgan project, while simultaneously regaling the pro-resource-development Hinterlanders with cries of “Jobs ahead! Damn the GHGs!” And because the Liberals will likely vote in support of LNG development, the NDP doesn’t have to worry about the Greens being opposed.
To hear the NDP government tell it, the proposed LNG Canada facility at Kitimat will have as many as 10,000 construction jobs in 2021. (Though permanent jobs would be only “up to 950.”) And LNG Canada has agreed that local residents will have first dibs at that work, promised Deputy Minister Wright.
But some of those 10,000 jobs may already be disappearing.
David Seaton, the chairman and CEO of Texas-based Fluor Corporation, one of the two main contractors, has boasted to investors that his company has cut on-site jobs for the LNG Canada contract by more than one-third: “[W]orking with the client, we were able to leverage our supply chain and fabrication capabilities, allowing us to reduce needed on-site [labour] by over 35 percent, which is probably the largest risk on that project,” Seaton told an August 2 investors conference call, according to a company-edited transcript. Seaton added later that the LNG Canada contract was a “big win” for his company.
Veteran Earth scientist David Hughes is the author of Canada’s Energy Outlook, a 180-page report recently published by the Canadian Centre for Policy Alternatives. He has also analyzed in detail BC’s prospects for LNG. Asked which of the two estimates of LNG Canada construction jobs is more credible, Hughes replied: “I would tend to believe Fluor.”
In Lee’s submission, he pointed out that greening the economy can be job-intensive. For instance, a 10-year, $2.2 billion program to make homes—especially older homes—more energy-efficient would support 12,000 direct jobs. The Greens’ Weaver dreams of a new BC economy that could even involve a Tesla Gigafactory in Kitimat, rather than an LNG plant. He adds that he has already spoken to the company about the prospect.
“It’s not about saying ‘no’ to LNG,” said Weaver. “It’s about saying ‘yes’ to the new economy.”
As well as the likely mayoralty win by Krog, several other events this fall may alter LNG’s political landscape. LNG Canada said it is anticipating making a “final investment decision” in the next few months. About the same time, the government will release an updated BC climate plan. How the two work together—or don’t—could shake things up as well.
Should the foreign-owned LNG Canada facility actually go ahead, us locally-owned British Columbians had better start eliminating our emissions. And take only very small breaths.
Formerly a political columnist and reporter, Russ recently returned to the fold after a stint as a BC government analyst. During his 10 years with the government, he worked in strategic policy, legislation,’ and performance management for a number of ministries.
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