By Marla Orenstein
Published in the Hill Times

December 2, 2019

The LNG industry has barely launched in Canada, but it has already become the poster child for a dilemma: how to appropriately account for our greenhouse gas (GHG) emissions.

Is LNG—which will be produced more cleanly in Canada than anywhere else in the world—an “environmental saviour”? Or is it a “carbon bomb that will blow up B.C.’s climate goals”? Both perspectives have been publicly reported. Perhaps not surprisingly, neither is completely accurate. More importantly, the polarity of these dissenting viewpoints underscores that we have a larger problem: the way we count and report our GHG emissions is sometimes at odds with actually reducing those emissions.

Liquified natural gas (LNG) is in high demand around the globe, particularly in Asia and Europe. It is used as a cleaner alternative to coal or oil for electricity generation, residential heating and industrial power. Although the emissions profile of natural gas is not as good as renewables such as wind, hydro or solar, the International Energy Agency credits natural gas with having helped China avoid 60 megatonnes of GHG emissions in 2018 alone. In addition, LNG has played a large role in reducing smog in cities across Asia.

Right now, the leaders in world supply of LNG are Qatar, Australia, Malaysia, the U.S., Nigeria and Russia. But Canada is about to bust into that set in a big way.

In Kitimat, B.C., the LNG Canada project has started construction. It is the largest ever private-sector energy investment in Canada, with a total cost estimated at upwards of $40-billion. When fully operational, it will export 26 million tonnes of gas per year, equivalent to 19 per cent of Canada’s total production in 2018.

Other LNG projects are set to follow: Woodfibre LNG, located near Squamish, an all-electric facility near Kitimat, a project proposed for Goldboro, Nova Scotia, and one in Saguenay, Que.

When built, the Canadian LNG projects will have by far the lowest GHG emissions in the world. The plants will use hydro-powered electricity for all (Woodfibre, Kitimat) or most (LNG Canada) of the power needs of the facility. Even when the full lifecycle of natural gas is taken into account—including upstream production—Canadian LNG will be substantially lower-emitting than coal, although not as low as nuclear, hydro, geothermal or other renewables.

So if there is demand, the product is cleaner and we have supply, why is there a controversy?

The controversy centres on two questions—one factual, and one values-based.

The first question—the factual one—is whether the LNG plants will cause a net increase or a net decrease in global GHG emissions.

The answer isn’t simple. Optimistic estimates suggest that Canadian LNG could displace GHG emissions from coal by a factor of 10. In other words, the 4-8 Mt of emissions from the LNG Canada project would result in a global GHG reduction of 60-90 Mt annually. But tempering this optimistic view is the fact that coal use is not only decreasing, but is actually increasing across Asia—particularly in China itself as well as countries it is financially assisting.

The second question—the values-based one—revolves around whether we are willing to tolerate an increase in GHGs on our own balance sheet in order to produce LNG for global consumption.

In 2018, as part of the Climate Change Accountability Act, the British Columbia government set a target of reducing GHGs by 40 per cent by 2030 (compared to 2007 levels) and 80 per cent by 2050. It took a territorially based approach, which is consistent with what Canada committed to under the Paris Agreement. Under this approach, an imaginary fence has been drawn around the province. All the emissions inside that fence are counted at a particular point (2007) and a target is set of producing less in the future (2030 or 2050).

But although the British Columbia LNG projects may result in a global decrease in GHG emissions, they will also cause an increase in local GHG emissionsand could cause the province of British Columbia to miss its climate change targets.

Is this outcome acceptable—or even more, desirable? The answer depends on whether Canadians think LNG is likely to displace more highly emitting sources; but also on whether we feel it is more important to show that we are making a difference, or to actually make that difference.

GHG emissions are a global problem and the “best” climate plan is one that produces the maximum global reduction in emissions. And sometimes—as in the case of British Columbia’s nascent LNG industry—this can be at odds with the territorial accounting approach.

The LNG issue is the most high-profile example of a carbon counting problem that Canada is going to face time and again over the next decade.

We have to realize that our choices have both local effects and global ones, both on GHG emissions and other things Canadians value. And we also need to figure out a way to reconcile actions that make global improvements with ones that make us look good at home.

Marla Orenstein is the director of the Natural Resources Centre at the Canada West Foundation.