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Finlayson: With Victoria’s commitment to develop a global LNG industry, should B.C. revise its greenhouse gas reduction targets? (Business in Vancouver)

When the B.C. government decided, in 2007, to make climate change a central focus of its legislative agenda, the world looked different than it does today. 

There had been no global recession, no financial crisis, no disheartening spike in unemployment rates. At the same time, the public was becoming more worried about climate change and support seemed to be building for action to reduce the greenhouse gas (GHG) emissions that most scientists believe contribute to global warming. 

Against this backdrop, over 2007-08 former premier Gordon Campbell embraced the idea that B.C., like California, should aspire to be an “early mover” on climate change policy. To this end, his government implemented a suite of initiatives to put British Columbia on a path to a lower carbon future. These initiatives included a legislated target to cut the province’s GHG emissions by one-third between 2007 and 2020 – the most aggressive reduction target adopted by any Canadian province or American state. 

Fast forward to 2013. Worldwide GHG emissions have continued to rise, almost solely because of growing energy demand and ongoing industrial development in China and other emerging economies. Canada’s emissions have increased relative to the oft-cited baseline year of 1990, but they have actually fallen since 2005. 

Here in British Columbia, GHG emissions have inched lower, declining by 5% between 2007 and 2011. Sales of gasoline, natural gas and diesel have decreased, in part owing to B.C.’s gradually escalating carbon tax – the only one of its kind in North America – which has raised fuel costs and thus dampened consumption. But the prospect of reaching the province’s 33% GHG reduction goal in 2020 is remote. For one thing, economic growth and an expanding population promise to increase energy demand. But other factors are also at play. As the Ministry of Environment noted in its 2012 climate action update, “continued emissions growth from the natural gas sector, new industrial projects, off-road diesel and forest degradation will [all] add to B.C.’s emissions levels…” 

The emerging opportunity to develop a world-scale liquefied natural gas (LNG) industry in B.C. makes the current legislated GHG targets even more problematic. Building several LNG facilities and expanding the production of upstream natural gas to feed the LNG industry will boost the province’s greenhouse gas emissions in a material way. This is so even if options are found to offset some of the carbon emissions associated with LNG and if electricity from renewable sources is used to power a portion of the LNG production. 

However, a myopic focus on B.C.’s direct emissions isn’t the right way to approach what constitutes a global challenge. Every credible study published in the past five years has identified greater use of natural gas as a critical step on the path to a less carbon-intensive world. As the least GHG-intensive fossil fuel, natural gas has desirable environmental properties when compared with oil and thermal coal. The shale gas revolution in North America has led to both a dramatic jump in natural gas supplies and slumping domestic prices, including here in B.C. This makes it economically attractive to sell our natural gas in Asia, where prices are much higher. But doing so requires that the gas be converted to LNG for shipment to offshore end-use markets. 

If LNG from British Columbia ends up being exported to Asia, arguably this will involve some displacement of other types of fossil fuel energy now being consumed there, and thus have a positive net impact on the global environment. This broader picture needs to be kept in mind when thinking about LNG in the local context. 

In any case, assuming that China, Japan, Korea and other Asian countries do ramp up their use of natural gas, they’ll certainly be getting the commodity from somewhere – the U.S., Australia, Qatar and Africa are among the alternative sources of supply. Neither B.C. nor the world will be better off if our province forgoes the LNG opportunity and cedes the growing global market for natural gas to competitors. This suggests the time is right to revisit and revise the government’s 2007 GHG target.

By Jock Finlayson, Executive Vice President and Chief Policy Officer, Business Council of British Columbia

As published online by Business in Vancouver at http://www.biv.com/article/20131210/BIV0108/312109915/0/BIV0102/jock-finlayson-with-victoria-8217-s-commitment-to-develop-a-global