Gas producers need Canada to preach the clean benefits of LNG
Petroleum producers and the province are pushing hard for more LNG plants in the country, hoping to create new export opportunities for Canada’s massive supplies of natural gas.
They also want to see the federal government promote the same goal, and push for international recognition on how liquefied natural gas from Canada can lower global emissions elsewhere by supplanting higher-emitting sources of energy.
It’s become one of the industry’s core messages: Canada can assist other countries by replacing coal used in electricity generation, while creating jobs and business at home by producing more gas.
But lukewarm comments from Canada’s new environment minister, Jonathan Wilkinson, seem to undercut the notion Ottawa will seek such recognition at the international climate change conference now taking place in Madrid.
For gas producers — and the Alberta government — it’s a serious concern.
“There is certainly a lot of politics around (the comments) but in reality, I think it is a net benefit to Canada and the world” to develop Canadian LNG facilities, said Andy Mah, CEO of Advantage Oil & Gas, one of several producers that have joined forces to promote a proposed export terminal in the country.
“People don’t want to sit back and look at the facts, and the facts are other countries are going to replace (existing) energy with coal ... If we are here to help others and the world, that’s the place Canada can be.”
The country has one LNG export terminal under construction — the LNG Canada facility near Kitimat — although several other projects have been pitched for both the east and west coast, as well as in Quebec.
If built, these facilities would create new markets for Canadian gas producers as their existing market share in the United
States is expected to shrink.
On Friday, Wilkinson spoke to reporters about Canada’s position heading into the COP25 conference in Madrid, but he created more questions in Alberta than he answered.
Under the Paris climate agreement, Canada has committed to lower its GHG emissions by 30 per cent below 2005 levels by the year 2030.
The Madrid conference will discuss Article 6 of the accord, which would allow for international trading. Countries with lower emissions could sell carbon credit allowances to higher emitters, and this should “establish a policy foundation for an emissions trading system, which could help lead to a global price on carbon,” according to the International Chamber of Commerce.
Wilkinson said he would push Canada’s negotiators to ensure Article 6 is transparent and doesn’t allow for double-counting of credits for lowering emissions in one country.
While there are “all kinds of different trades that could happen under Article 6 … it is certainly possible that LNG could fit into that but at this stage, I think we are much more focused on getting the rules right,” he said.
“We are not counting on emissions reductions through trading.”
That doesn’t answer a key question for Alberta or the industry. If the country generates more emissions to produce and export supercooled LNG from Canada, will it get any credit for lowering global emissions by displacing higher-emitting coal used in power generation?
Wilkinson wasn’t clear, and didn’t provide any clarity when talking to the Globe and Mail. “I think we’ve got to be very careful about the LNG argument,” he said, according to the newspaper.
Those comments caught the attention of Premier Jason Kenney.
Speaking in Ottawa, Kenney said he was disappointed with the response, pointing out various governments in different provinces — from British Columbia and Alberta to Quebec — have backed LNG development.
“This is the single biggest thing that Canada could do to reduce global greenhouse gas emissions. We should not make the mistake of looking at Canada as though we live under a sealed biodome,” the premier told reporters.
A world energy outlook report issued last month by the Paris-based International Energy Agency said coal-to-gas switching can offer “quick wins” for reducing global emissions.
Natural gas generates onethird fewer emissions than coal, on average, for each unit of heat used across industry and in the building sector, and about half of the emissions per unit of electricity that’s generated, the report states.
The president of the Canadian Association of Petroleum Producers said Wilkinson’s comments were “really making the point it didn’t seem to be his intent to enable Canadian gas.”
“There’s no chance Canada will meet its Paris commitment unless we enable Article 6, and that then leaves some very bad outcomes for Canada as a whole,” Tim Mcmillan said in an interview from Madrid.
“Either we don’t live up to what we have committed to ... or we start making dramatic policy decisions that could hamper investment for those projects.”
Environmental organizations say the new minister is simply acknowledging reality and that sharing emission reductions will be part of difficult international negotiations.
Isabelle Turcotte, director of federal policy at the Pembina Institute, said she was happy to see the minister’s cautious approach.
Letting two countries claim credit for emissions reductions might make progress on paper, “but in reality, we’re actually emitting more than we were initially,” said Turcotte, who is also at the conference.
But the industry and provincial government aren’t about to give up on this point.
Mah pointed out many countries are trying to move out of energy poverty and Canada has a part to play in meeting their needs, while generating jobs and revenue in this country to help with the ongoing energy transition.
“Overall gas demand ... is going up immensely in the next 10 years,” he added.
“So do we want to be part of that in Canada, and also part of helping global emissions?”
It’s a question the federal minister will have to have to answer clearly in the next week.