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Pacific NorthWest LNG may face further delays

by Mark Sabourin
EcoLog, 3/18/2016 1:44:00 PM

It seems likely that a decision on the fate of the Pacific NorthWest LNG project will be further delayed. On March 12, 2016, the Canadian Environmental Assessment Agency (CEAA) reported that it was finalizing its findings and recommendations to federal Environment Minister Catherine McKenna. If those findings include significant harm to the environment, as the Draft Environmental Assessment Report did, the decision will have to be referred to Cabinet, and Cabinet is under no deadline to come to a conclusion.

Matt Horne, Associate B.C. Director of the Pembina Institute, told EcoLog News that he believes a referral to Cabinet is likely. In a letter to the CEAA, he argues that the massive LNG project will make it almost impossible for B.C. to meet its legislated greenhouse gas reduction commitment and will put at risk the federal promises so proudly made at the Paris climate meetings in December 2015 and at the Vancouver First Ministers’ meeting on March 3, 2016.

The project would account for between 29% and 35% of B.C.’s total allowable emissions for 2030, says Horne. As to the 2050 target, the province can kiss that one goodbye, as Pacific NorthWest LNG will account for between 75% and 88% of allowable emissions.

B.C. has hitched its economic wagon to a horse called LNG. It has erected an entire legislative and regulatory regime around the industry, offering tax incentives, investment protection and a separate set of environmental standards. According to the provincial government, there are still 20 LNG projects on the table in B.C. However, in the face of weakening global markets, only Pacific NorthWest LNG has any prospect of continuing forward right now, and the last hurdle it must clear before its proponents can put a shovel into the ground appears to be federal Cabinet approval. With Horne’s letter, that hurdle may have become much higher.

Horne argues that CEAA’s Draft Environmental Assessment Report very likely underestimates upstream methane emissions. If the project were assessed using the methane emissions rate adopted by the U.S. Environmental Protection Agency, the total greenhouse gas emissions from Pacific NorthWest LNG would double. This estimate was made before Prime Minister Justin Trudeau’s March 10, 2016 announcement of new methane standards. Horne concedes that the impact of those standards on the project is still unknown, but he doesn’t believe they will be sufficient to alter his conclusion that the project will put provincial targets out of reach.

Horne also takes issue with B.C.’s often-lauded climate policy, saying it is poorly suited to the LNG industry. The province’s carbon tax applies to fossil fuels when combusted. Methane emissions and vented CO2 are untouched. Industry has no incentive to reduce them. And the carbon tax, at $30 per tonne, hasn’t moved since 2013.

Looming above all of this, and likely to be on Cabinet’s mind when the LNG project’s fate is before Cabinet, is what’s being referred to as the Vancouver Declaration on clean growth and climate change — the March 3, 2016 statement by the First Ministers.

“[W]e are moving toward a pan-Canadian framework for clean growth and climate change that will meet or exceed Canada's international emissions targets,” it said.

Cabinet will have three choices, says Horne. Reject Pacific NorthWest LNG outright, accept it with conditions, or accept it as proposed. Accepting it as proposed would represent a complete failure of the Trudeau government to respect the principles of the Vancouver Declaration, he says.

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