Study raises questions over extent to which LNG exports would benefit environment

A new study is raising questions about the degree to which exports of Canadian liquefied natural gas would help reduce carbon emissions abroad — a core justification for developing such an industry.

The C.D. Howe Institute released a report Wednesday that concluded that Canada's LNG exports could reduce carbon emissions in parts of Asia, but would likely increase emissions in the majority of other potential markets.

The development of LNG exports requires power to cool it into a liquid, as well as energy for the tankers that would ship it overseas so that it can be used in gas-fired power plants.

LNG exports would still reduce overall emissions if they replace coal and oil-fired power production in China, India, Japan and Taiwan, study authors James Coleman and Sarah Jordaan said. But they found that emissions would likely go up in Canada's nine other likely export markets because those countries have greater supplies of renewable and lower-emission power sources.

It is "far from certain" that Canadian LNG exports would reduce global greenhouse gas emissions, Coleman and Jordaan concluded.

The study raises doubts about one of the British Columbia government's selling points for an LNG sector. But Rich Coleman, B.C.'s minister of natural gas development, said in a statement that the province is focused on exporting to countries where LNG would reduce emissions.

"British Columbia's efforts are focused on the four countries the report indicates would benefit from lower emissions using B.C. LNG," said Coleman. "Our analysis indicates that B.C.'s liquefied natural gas could lower China's coal-fuelled power emissions by as much as 20 per cent."

But even as the province touts the environmental benefits of its LNG abroad, the biggest and most high-profile project on the table has come under fire for its potential emissions at home.

The Pacific Northwest LNG project, led by Malaysian energy giant Petronas, has an estimated cost of $36 billion. It is awaiting a final decision from the federal government expected by the end of September following a final report from the Canadian Environmental Assessment Agency.

The development has faced criticism for both direct environmental impacts on fish habitat, as well as its potential to increase domestic greenhouse gas emissions.

The Pembina Institute figures that the Pacific Northwest could become the largest source of carbon pollution in Canada — when the associated emissions in supplying it with natural gas are factored in — releasing upwards of 14 megatonnes of carbon dioxide equivalent a year.

The authors of the C.D. Howe study recommend that federal and provincial governments focus on reducing emissions domestically and encourage similar policies elsewhere, rather than banking on the prospect of LNG exports bringing down emissions abroad, because final markets for Canadian LNG, and what sources of power it would replace, are too difficult to determine.

"Regulators should not focus on how LNG exports will impact GHG emissions overseas," they wrote.

"The full impact of an individual facility on global emissions is nearly impossible to estimate unless regulators know where the LNG will be sent when they approve a project."

They said particular attention should be paid to reducing methane leakage during transportation and greenhouse gases vented during the processing of natural gas, and the need for a better understanding of how much gas escapes along the whole supply chain.

The B.C. government has taken some action on methane, committing in its climate plan released last week to reduce methane emissions from oil and gas production by 45 per cent by 2025, and introducing additional incentives for the LNG industry to use cleaner technology.

The plan also called for increased electrification of natural gas production fields to reduce emissions. But rather than firm commitments of funding, B.C. said it was discussing with the federal government the possibility of helping pay for the expensive infrastructure required to make that happen.