The Business Case for Clean LNG in B.C.

resources | BCBusiness
The W.A.C. Bennett Dam produces 24 per cent of B.C. Hydro’s electricity

Yes, B.C. can deliver the cleanest LNG in the world, but only if the industry uses carbon-free electricity

Unprecedented private sector investment and economic development, obliteration of the provincial debt, thousands upon thousands of jobs and all to help the global fight against climate change. Premier Christy Clark promised British Columbians and would-be LNG buyers that from B.C. the world will receive “the cleanest LNG in the world.” But can it be done?
This week, proponents, First Nations, government officials and thousands of delegates from all over the world are meeting in Vancouver at the second annual B.C. International LNG in B.C. conference to discuss this very question. Project proponents are here kicking tires and engaging with First Nations, governments and communities, while keeping a close eye on world markets. More than a dozen greenfield mega projects are proposed in the province and to date no final investment decisions have been made.
To me, the “cleanest LNG in the world” means maximizing the use of the province’s vast clean and renewable electricity resources over the entire LNG process. From drilling and processing to transportation and liquefaction, the LNG industry is an energy-intensive one. Typically, natural gas is burned for the industry’s energy needs. But that does not need to be case in B.C., where clean and renewable electricity, a carbon-free substitute for natural gas, is plentiful. In fact, using clean electricity to build the provincial economy is the B.C. way, and if used in the LNG process, is a major advantage for the B.C. LNG projects.
B.C. has an abundance of natural resources and a proud history of economic development using its clean electricity, from the mega dams on the Columbia and Peace Rivers built decades ago, to small hydro-electric generating facilities in remote communities, to large wind parks today using the latest technology. Much of the province’s growth in the past half-century was made possible by this abundance of clean and renewable energy
While many of us want to see maximum use of clean electricity in the B.C. LNG industry for our health and well-being, for the LNG proponents, B.C.’s clean electricity provides an opportunity for significant reduction of project risk. Specifically, I am referring to carbon risk. Oil and gas companies, including the B.C. LNG proponents, have a carbon problem and they know it. Many are now including a soft price on carbon into their business plans, preparing a carbon-regulated future.
Major insurance companies are now pricing climate change risk, and the credit-rating agencies are watching. Bottom line, the carbon business is a risky business, and in B.C. that can be easily and significantly reduced.
The B.C. LNG industry is unique in the world. First, it must be built from scratch, and most LNG-related infrastructure will be new construction. That means there’s room for incorporating electricity infrastructure into LNG project planning.
Second, it will be built adjacent to a reliable electricity grid. With some new transmission lines and upgrades to existing ones, B.C.’s gas fields in the northeast and the cooling facilities on the coast can be easily served by the B.C. Hydro electricity grid, where 93 per cent of the electrons are from clean or renewable resources. In partnership with First Nations, the B.C. renewable energy sector is poised for investments that can build new generating facilities and transmission lines to serve the LNG industry.
The third unique feature of B.C.’s LNG industry is a jurisdiction that taxes carbon at a current rate of $30 a tonne. Based on the B.C. Environmental Assessment Certificate application for a large LNG plant proposing to use natural gas in the liquefaction process, the estimated carbon tax bill is $140 million a year, more if you add the carbon tax on the natural gas used for drilling, compression and transportation. For LNG projects expected to last 20-25 years, those numbers are staggering. As you can see, there is a business case for reducing your carbon use in favour of B.C. electricity.
B.C. has an abundance of untapped carbon-free renewable energy resources that match perfectly with the B.C. LNG industry. Reducing carbon project risk is B.C.’s advantage in a carbon regulated world. To be able to call it the cleanest LNG in the world it is imperative that the maximum amount of electricity be used.


Warren Brazier is an energy lawyer at Clark Wilson LLP in Vancouver. Follow him on Twitter @warrenbrazier.