The new oil and gas emissions cap is a foreboding sign for the sector, says Rob Shaw.
How do you get a polluting natural resource project through the environmentally-minded government of Premier David Eby? The answer, it turns out, is by appealing to the only thing the Eby administration considers more important than climate change: Indigenous reconciliation.
That was the takeaway today from the approval of the Cedar LNG project, a $2.4 billion floating liquefied natural gas export terminal near Kitimat.
The premier and his two cabinet ministers in charge of environment and energy announced their approval of the environmental certificate for the project at a press conference focused almost entirely on reconciliation, UNDRIP, and economic partnership with Haisla.
There was not a single word of support for B.C.’s natural gas sector, which will feed this plant, or the upstream operations of drilling, production and pipelines required to produce the product that will eventually be exported.
‘Unprecedented economic opportunity’
“This will be the first Indigenous majority-owned LNG export facility in Canada, and the largest First Nations majority-owned infrastructure project in the country,” said Eby. “It will provide unprecedented economic opportunity for both the Haisla Nation and for the region.”
“It’s a model for how LNG projects, and any project, can and should be developed in British Columbia,” he added.
The Eby government has made clear several times it doesn’t particularly care for the oil and gas sector, nor does it have any love for the conceptual idea of LNG exports.
“LNG is — let’s be frank — a fossil fuel that contributes in part to global climate change,” Eby said earlier this year.
But the premier does place an enormous emphasis on Indigenous reconciliation. When speaking to the natural resource sector earlier this year, he emphasized how no projects will gain approval unless they have explicit Indigenous consent and partnership.
The signal sent again this week with the Cedar LNG decision was: If you don’t have an Indigenous partner, for whom you are providing significant economic benefits, then your hope of approval is near-nil.
Technically, there’s another partner in the Cedar LNG venture, Pembina Pipeline Corporation, which runs oil and gas pipelines in Alberta and B.C.’s northeast. Only Haisla chief councillor Crystal Smith mentioned her nation’s non-Indigenous partner.
If Pembina had tried to build this LNG plant on its own, you get the feeling the application would be regulated to indefinite regulatory purgatory.
‘Changing the course of history’
“Today is not just about the approval of an LNG facility,” said Smith.
“Today is about changing the course of history for my nation and Indigenous peoples everywhere in history, where Indigenous people were left on the sidelines of economic development in their territory, and history where Indigenous peoples values were ignored in favour of economic gain, impacting our environment, and our way of life.”
The Cedar LNG facility will use electricity, rather than natural gas, to power its liquefaction turbines, making it “one of the lowest GHG footprints possible today,” said Smith.
Electrified LNG production is lower-polluting compared to energy generated by non-electrified LNG or coal – which many countries, including Canada and Europe, still rely on – but, internally, the B.C. government wrestled with how it could approve any major new greenhouse gas emissions within a Clean BC climate plan that is trying to reduce, not grow, pollution to hit ambitious 2030 reduction targets.
The answer came in the form of 16 binding conditions on the Cedar LNG project, including a “greenhouse gas reduction plan that addresses provincial emissions reduction targets and schedules” using new technologies and measures.
“We place a very high importance on reducing GHG emissions in the province to meet reduction targets and while concerned about the potential for Cedar LNG to affect B.C.’s 2030 oil and gas sector targets, we are of the view there is a path forward to meeting provincial targets that includes Cedar LNG,” wrote the government in its legal approval notice.
“In addition, in our role as decision makers we have considered the benefits of economic reconciliation with Haisla Nation.”
In approving Cedar LNG, the Eby government also took steps to shut the door on most other future projects that don’t fit the eco-focused, Indigenous-led, formula.
Emissions cap and net zero by 2030
It simultaneously released a new “energy action framework” that “require all proposed LNG facilities in or entering the environmental assessment process to pass an emissions test with a credible plan to be net zero by 2030.”
The NDP will also “put in place a regulatory emissions cap for the oil and gas industry to ensure B.C. meets its 2030 emission reduction target for the sector.”
The cap had no details. But it is a foreboding sign for the sector. The premier announced it alongside environmental leaders from the Pembina Institute and Clean Energy Canada. The natural resource sector was not present.
LNG Canada and Woodfibre LNG would fall under the new cap, but not the net zero 2030 requirement because they both already have environmental approval. The Kis Lisms LNG project by the Nisga’a Nation, and the Tilbury LNG phase 2 partnership between FortisBC and the Musqueam Indian Band, would fall under the net zero 2030 rule.
Cap and trade carbon credits
The new strategy dovetails with a plan by the B.C. government to develop an internal cap and trade system, where major industrial companies won’t pay the carbon tax but will instead have to purchase carbon credits if they exceed certain industry pollution benchmarks.
Those credits can be earned by First Nations and low-emission producers, who can then sell them to higher-polluting companies. On paper, B.C.’s overall emissions could remain below a certain cap level, as companies buy and sell a complicated series of credits instead. Cabinet will set the details later this year.
The new rules also create a “BC Hydro task force” to electrify the economy.
Hydro is struggling to provide electricity to major industrial players, like the Shell Canada-led LNG Canada project’, which is considering a second phase but doesn’t have access to the hydro grid.
It’s not clear whether Hydro has the current capacity to feed Cedar LNG’s needs either.
“We know we’re moving to a clean energy future and that is one where fossil fuels are not used, so that is part of our announcement around our intention to rapidly expand the ability of us to electrify our economy, to support industry in reducing their emissions,” said Eby.
It will require new electricity generating infrastructure — but whether that is a new dam, solar power, wind, geothermal or even nuclear (B.C. currently has a law preventing nuclear power) will be a complex series of decisions for the NDP government.
Eby said Hydro has to change the way it approves projects, to make power available up-front and not require companies to have reached final investment decisions before embarking on an eight to nine year building project for new transmission lines. New Hydro projects tend to hike electricity rates. Eby admitted he’ll have to keep that in mind too.
Coastal Gaslink pipeline
And then there’s the $6.6 billion Coastal Gaslink Pipeline, which has been the subject of environmental opposition in one nation on its route from Dawson Creek to Kitimat.
The Haisla Cedar LNG project needs the pipeline done, because it will get its natural gas from an 8.5 kilometre connector to the line. While all 20 elected councils along the pipeline have given consent for it to pass through their territories, some hereditary leaders of the Wet’suwet’en Nation in B.C.’s northeast oppose the project over concerns about development and lack of consent.
The government has mostly tried to stay out of the issue. By endorsing the Haisla project so vocally, the Eby administration has picked a side, and is now firmly in the camp of getting Coastal Gaslink done. So are Haisla leaders.
All of these changes come in advance of a trade trip by Eby to Asia where, ironically, he will be trying to sell B.C.’s liquefied natural gas to countries that still burn dirty coal for power (oh, and he’ll also be selling B.C. coal too).
It will be an awkward pitch. When pressed about the upcoming trade mission, Eby declined to even confirm he considers LNG a cleaner energy source than coal-fired plants, simply warning other countries that if they buy B.C. LNG, they will still have to meet their own international climate targets.
The NDP government doesn’t much like LNG, natural gas, coal, fossil fuels, or the natural resource sector in general. Significant portions of the cabinet would prefer to say no to all future projects, and focus entirely on climate change protections instead.
The compromise is evident in these new oil and gas sector rules. They position B.C. somewhere between a hard no on future LNG projects, and a reluctant maybe. The new benchmarks are very high. We’ll soon find out if anyone can meet them.