B.C. to LNG producers: comply, offset or pay

LNG emissions | BCBusiness
Liquid Natural Gas Crewman makes a safety check on the LNG unloading during a night-time operation.

New legislation will allow B.C. to regulate LNG export facilities on CO₂ emissions

Today, the provincial government introduced new legislation aimed to help B.C. meet its greenhouse gas emission targets by imposing environmental standards on liquefied natural gas (LNG) export facilities operating within the province.

Under the Greenhouse Gas Industrial Reporting and Control Act, natural gas cooling facilities must meet a benchmark of 0.16 carbon dioxide equivalent (CO₂e) tonnes per tonne of LNG produced. That’s lower than other leading global LNG facilities, according to the government, which have emissions intensities ranging between 0.18 and 0.27 tonnes of CO₂e per tonne of LNG produced.

The new legislation is aimed to encourage LNG proponents to design their facilities by improving efficiency or using clean electricity. However, if facility design improvements or use of clean electricity do not meet the 0.16 benchmark, proponents will have to option to either purchase B.C.-based carbon offsets at market prices, or contribute to a technology fund at a rate of $25 per tonne of CO₂e.

As a point of reference, in 2011 B.C.’s carbon offset inventory was approximately 1.6 million tonnes. In 2013, the B.C. public sector purchased 696,295 offset tonnes at $25 per tonne in support of the carbon neutral B.C. public sector. The current B.C. offset inventory is unknown.

The B.C. government’s plans for the LNG technology fund include investments into strategies or technologies that include low-or-no venting equipment, electrification, cogeneration and waste heat recovery, natural gas vehicles, and exploring carbon capture and storage or reuse.

The new emissions standards for LNG export facilities follow the government’s promise to be the “Cleanest LNG in the World.” However, cooling the natural gas for export is only part of the nascent LNG sector. Much of the life-cycle emissions from the LNG industry is in the gas fields, the “upstream.” To date, B.C. has not tabled emissions reductions regulations for any upstream or midstream natural gas operations.

Of course, purchasing offsets or paying into a technology fund will not reduce CO₂ emissions from the LNG industry. But hopefully the new legislation will sufficiently incentivize LNG proponents to use the latest technology available and wherever possible, plug-in to the nearby BC Hydro transmission grid, where 93 per cent of the electricity comes from CO₂ emissions-free or renewable resources.

Originally posted on B.C. Energy Blog

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