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The Progressive Economics Forum

BC’s Big Favour? LNG Exports and GHG Emissions

The hype on LNG has grown to staggering proportions. I have not had much time to debunk all of the government’s grotesque exaggerations and outright falsehoods. But Christy Clark’s claim that BC is “doing the world a favour” by exporting LNG to Asia made me write this oped, which got picked up in today’s Vancouver Sun:

Is LNG B.C.’s big favour? It’s unlikely exports will reduce global greenhouse gas emissions

Is British Columbia “doing the world a favour,” as Premier Christy Clark put it, by developing a liquefied natural gas export industry? Or is this just wishful thinking from a government that has abandoned its law on reducing carbon emissions to pursue LNG riches?

Natural gas is a cleaner burning fossil fuel than coal, in terms of carbon pollution as well as other emissions that lead to smog and acid rain. In the United States, substitution of gas for coal in electricity generation has led to declining carbon emissions in recent years. So it is plausible the same could be true for Asia, enabling essentially unlimited LNG exports in the name of climate action.

For B.C.’s LNG exports to lower global emissions, they would need to be part of a deliberate effort to use natural gas as a transition fuel, linked to displacement of coal use in countries such as China, along with a strong regulatory framework to minimize leaks and source renewable power for operations. This is far from the Wild West mentality currently in place on the North Coast.

First, will LNG be a substitute for coal at all? A number of independent projections show a growing appetite in China for all energy sources, including renewables, nuclear and fossil fuels. A new international treaty to constrain carbon emissions, now under negotiation, could change this dynamic in 15-20 years. For now, LNG is anticipated to pile on top of China’s growing coal consumption, rather than displace it.

The transition to natural gas in the U.S. came as a result of record low gas prices in North America. But at the much higher price the B.C. government and the industry expect Asia to pay, coal is way cheaper than LNG. That is, if LNG is to displace coal based on economics, B.C. will need to accept much lower prices and abandon its fantasy of a $100-billion prosperity fund.

Another challenge to the premier’s argument is that LNG may displace other sources of power, in particular nuclear power in Japan. As evident in the 2011 Fukushima disaster, nuclear has major risks. On the other hand, nuclear’s carbon footprint is negligible, so if Japan decides to shift its nuclear capacity to LNG, global carbon emissions would rise.

Leakages also undermine the case for LNG as a transition fuel. Natural gas is primarily methane, a greenhouse gas 86 times more heat-trapping than carbon dioxide over a 20-year period. Leakages of only 1.2 per cent are enough to erase claims of having an advantage over coal.

Typically, from wellhead to final combustion, including processing and transportation, leaks of about two to four per cent are standard. Those leaks can be much higher for fracking operations, the technology that will be used to supply B.C.’s LNG industry.

Strong regulations could reduce the amount of leakage, and allow B.C. to produce the “cleanest LNG in the world,” an aspiration of the B.C. government. If LNG proceeds, such regulations must be part of the deal, even if they impose additional costs on the industry. But B.C. cannot regulate LNG once it leaves port, so leakages will likely erase natural gas’s carbon advantage.

The big picture is that global warming is primarily caused by extracting carbon from underground and putting it into the atmosphere. The government’s LNG ambitions would double or triple the amount of gas extracted in B.C., the equivalent to adding tens of millions of cars to the roads of the world.

B.C.’s estimated marketable gas reserves, if combusted, would be equivalent to 10.6 billion tonnes of carbon dioxide, or about one-third of worldwide annual emissions from burning fossil fuels. It is hard to square LNG with the pressing need to constrain carbon on a global basis.

Pursuing an LNG industry amounts to doubling down on fossil fuels, precisely at the moment when extreme weather events are starting to have significant financial impacts. In our era of climate change, global energy supply must ultimately look beyond fossil fuels, and into renewables and conservation.

A government with its eyes on the future would be leading us down that path. If B.C. really wants to do the world a favour, it must leave most of that natural gas in the ground. Instead, B.C. should drive new investment into low-carbon technologies and infrastructure, and in doing so would create more jobs and leave a sustainable legacy for our grandchildren.

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Comments

Comment from Paul Tulloch
Time: January 31, 2014, 4:30 pm

Sorry Marc, I have to disagree with you on this one. I have been reseaching China for sometime, and I am no expert yet- but I will say this they are under great pressure to make changes off coal and if the option is not there then how can they actually do it? We are talking short run substitutes as a transitional energy. I would have hoped you could see through that given the state of China’s pollution problems. Never before in the history of any variety of capitalism have we seen such concentrated areas of such massive areas of industrial development in such a short space of time. So yes China is burning through coal- just as we once did in our industrial development- and it has created a lot of poverty relief for hundreds of millions of workers- but sadly it has come with risks. It is not by any stretch of the imagination an equitable or even development within China- however- it is occurring whether we like it or not, and another large component of 700 million people living in rural in China will want to join in on these nodes of wealth and rising living standards. It will occur- and just as we talk about transitional fuels and have in the west have problems with low carbon energy sources- how can we expect a country that is classified as developing to make these quantum leaps. I would have thought it would be the developed nations that made the leap first and then opened up the space for developing countries. Instead we have failed in our democracies to raise such changes and instead have the like of Harper and his oil-state tar sands project of totalitarian energy development. Sadly last week when Neil young raising a massive debate on the whole energy development issue and our first nation brothers and sisters- I did not hear a single peep from the NDP, a labour leader, celebrity or other influential person step up and show support. Instead Neil was put through the McCarthyism ringer of the harper machine and Neil hatred raged across the land.

I have never been so disgraced and upset at leaders in this country in my entire life. It was disappointing to say the least. We indeed have our own problems in changing this climate change beast and I do for one actually feel LNG for China is a good thing for the planet- at least in a transitional sense. China also happens to lead in solar and other alternatives and I do expect, given the concentrations of development and the amount of people involved- we will see coal reliance dramatically curtailed, much faster than thought but the capacity for change must be there and LNG I would argue that givens it 43% lower carbon rating than coal and the question is the transitional aspects of this saving. Yes it would be great if China could jump over coal altogether and get to newer options, but is that a realistic goal given their needs and what is actually existing in terms of options.

Comment from Paul Tulloch
Time: January 31, 2014, 4:44 pm

add on- leakage and transportation is a problem for LNG but to make the claim that it cancels the derived benefit of coal is misleading on several accounts. For example in China, it is actually the other pollutants coming from coal that are creating the localized problems- acid rain from the sulfur and other contaminants in the air and water. So do we deny hundreds of millions of people the chance to have a cleaner local environment and the net positive difference in carbon dioxide calculus of LNG vs Coal I think these outcomes for LNG would actually help the planet and many Chinese people struggling to make it out of poverty and we are talking several hundred million.

Despite the problems- China has moved forward-and it is still early on in this experiment of some evolving form of communist version of capitalism.

Comment from Paul Tulloch
Time: February 1, 2014, 11:36 pm

Not sure of the research you are quoting on coal and LNG, but getting China off dirty coal should be a global priority. Just considering the CO2 reduction of LNG should be enough but also we must consider that coal will destroy its water ways, farmland, and urban populations and we are talking millions of people here. Natural gas as a transitional fuel has got to be a high priority for all.

Comment from fjf
Time: February 2, 2014, 11:35 am

With regard to LNG vs coal – recent studies have determined that US LNG production and associated methane leakage results in LNG having a greater GHG impact than coal. If I can find the link I will post it.

One needs to contemplate the fact that this figure is based on the current range of production and distribution facilities. These would have to be greatly expanded were LNG to be widely adopted as a transport fuel. Leakage rates would therefore also increase.

What is being overlooked by almost everyone is that the recent price hike in LNG is due to increased demand from the Japanese as all their nuclear plant is offline subsequent to Fukushima. Once they put their nukes back on-line global demand will moderate. (Japan is close to 25% of the current global market)

Another critical issue is the need for long term customer contracts to justify the extremely high capital costs associated with NG production, liquefaction and transport. No BC investment will proceed without long term customer contracts. As Japan puts its nukes back on-line the global LNG market will return to being a buyers market and the negotiated price will drop. Both Australia and UAE have significant export capacity and Australia will likely have a price advantage due to lower transport costs.

My view is that the Premier of BC is advancing a ptomekin industry as it solves a great many present day problems (unemployment, budget shortfall), and makes her look ‘visionary’ and “proactive” and business friendly. But the real reason for promoting this chimera is that the rubes are too dumb to figure out that they are being had. She may be right on that last item.

Comment from fjf
Time: February 2, 2014, 11:49 am

Sticking It to the Rubes Part II

With regard to Paul’s comments on Chinese coal use.

Up till today Obama has obstructed the Keystone project ostensibly on environment grounds.

What is not reported is that just as Keystone was beginning to make waves and put on hold while the administration undertook an environmental review Obama approved a multi-million (tonnage and dollars) export of coal from the Powder River basin to China.

This was not widely reported. There were no environmental protests.

The other significant irony has to do with the fact that all of that pollution in China is an American export due to the US relocating its industrial production to China.

Comment from Paul Tulloch
Time: February 3, 2014, 7:07 pm

Fjf- did not know about the coal export agreement however it is widely known that coal deposits in the North America are tops in the world by a good amount.

http://www.worldcoal.org/coal/where-is-coal-found/

The question I think I am making is not about coal vs LNG

The point is more about the local and regional pollution affects of coal given the extensive use of it.
http://www.thecuttingedgenews.com/index.php?article=51980

I would still like to see a gas versus coal debate for China as I am not sure 45% of the CO2 difference between coal and gas is lost in transport as that would have to be a whole lot of gas burned and lost to point that I am sure would make it cost restrictive.

Comment from Ken Howe
Time: February 4, 2014, 10:14 pm

The Cornell University study reported in Le Devoir in 2011 concluded that life-cycle carbon-equivalent emissions from shale gas production were higher than for coal production. Their findings have been disputed, and perhaps they exaggerated. But although switching to LNG would certainly have local benefits in China, I see no reason why we in Canada would want to exchange a few short-term benefits there in return for permanently rendering the entire planet uninhabitable (China included). Carbon equivalents in the atmosphere are for all intents and purposes there for good.

Comment from Marc Lee
Time: February 5, 2014, 5:41 pm

Point well taken on other air pollution. This is a major issue in the big cities. I’ve heard China is considering coal gasification to reduce it. I was in China in 1996 and it was the most polluted place I’ve ever been.

But the BC gov’t argument is about GHG emissions, and on that count I stand by the piece. I articulated a scenario up front where this could be true.

But the gov’t claim is false because:
(1) even if this enterprise gets off the ground, coal consumption in China is still predicted to increase;
(2) leakages
(3) pulling 10 billion tonnes of CO2 equivalent out of the ground and putting it into the atmosphere is not helpful; we need to leapfrog to renewables.

Comment from Paul Tulloch
Time: February 6, 2014, 4:48 pm

Response back to Ken-

“But although switching to LNG would certainly have local benefits in China, I see no reason why we in Canada would want to exchange a few short-term benefits there”

Those short term benefits are peoples lives, disease, and suffering for millions of people in China. Not sure why you would make such a claim that we as Canadians would not have a reason to help- it is precisely my whole point- I as a Canadian see how we can help with LNG.

To Marc-

1) Yes Coal will undoubtedly increase- especially if there is no substitute that is accessible like LNG.

2) there are indeed leakage with NG- mainly line leakage and venting problems at the start up and ongoing well leaks. The question is still up for debate on rates of leakage- and I still have a hard time believing it would make up for the difference in CO2 emission. Yes I do undertand that methane is 4 times as bad as CO2, but still it seems to need a lot more study given the reduction in Co2 when burned combined with the local and regional affects are much less on local populations.

3) I do agree I would be great to leapfrog to renewables- and I would say that China is most likely do more to develop the solar industry than any country on the planet. However instead of getting cooperation and help they get charged with anti-dumping trade barriers for their solar producers and the like by developed economies.

The fact is they are growing at a rate that in unprecedented and that economic growth has lifted several hundred million out of extreme poverty and energy is at the core of there productive capacity and therefore you will not see it stop. So we are faced with a reality- solutions are needed now or coal burning will climb much higher. Sadly with cost considerations and availability coal is there current low cost solution and that is reality- they will not solve there energy problems without help and cooperation on many energy solutions. I do think developing the solar panel industry is there long term solution which is indeed optimistic- 30-40 years from now and if they develop it on such a scale to solve their energy problems it will indeed sweep the world into the solar revolution- which is potentially why they were slapped with dumping fines and trade barriers- which is a whole other kettle of fish.

Comment from Ken Howe
Time: February 7, 2014, 11:20 pm

Paul: Perhaps I haven’t been entirely clear when I ask “Why should we as Canadians?” I’m assuming that the Cornell researchers had it right. So natural gas is worse than coal. That means there is a benefit to this transition fuel locally, in China, but globally it makes things worse. It’s a meaningful benefit certainly, and I’d like to save all those lives, but it doesn’t help on climate change. For that, we’d be better off pushing tar sands oil as a transitional fuel. It too would lead to lower local particulate emissions and save lives.

Now if you don’t buy the Cornell study’s conclusions and believe that China’s switching to LNG would reduce GHG emissions substantially, then you’re outside the scope of what I was talking about. It’s a critical point. The Cornell study and critiques and defences of it are easy to find on Google.

Comment from Paul Tulloch
Time: February 8, 2014, 12:34 am

One study does not change the fact that it would have to be a substantive amount of leakage to make up for the NG versus Coal.

How can you go from NG to tar sands fuel is beyond me. Have you done any of the research beyond reading some Cornell Study that to me is merely scratching the surface and raising some questions on NG. We are talking about NG having to have some very substantial leakage and that study fails to take note that if proper regulation of the NG was implemented the leakage could be substantively reduced. There is no way that you can start putting NG into the tar sands- that is just garbage talk.

So you feel it is okay to point out to the Chinese that they should not try and clean up there energy supply? I am not understanding your thoughts on this- by the way USA still use per capita several times more CO2 than China. I do think this is merely an attack on developing nations that I find quite disturbing. Having the USA and several other countries clean up their acts means a whole lot less in terms measuring in lives than putting developing countries in such spaces that disadvantage them. At least the Chinese are trying to power up a solar industry – mainly due to necessity.

I do think this NG versus Coal is a massive point for needed debate and must be researched a whole lot more.

Comment from Marc Lee
Time: February 8, 2014, 5:34 pm

“Substantive amount of leakage required”? As I state above, methane is 86 times worse that CO2 in terms of warming over a 20-year period. That means over 1.2% leakage and it is worse than coal.

Leakages on lifecycle basis can be up to 9% for fracked gas. There is another NOAA study that came up with similar numbers to Howarth.

Not to mention the devastating local environmental impacts of fracking besides GHGs. Groundwater contamination, and taking fracked water completely out of the water cycle due to toxics, are huge problems.

Comment from Ken Howe
Time: February 13, 2014, 11:40 pm

Paul: Oh dear dear dear. Again I must not be expressing myself quite clearly. All I wanted to say was that I thought your disagreement with Marc (as I understood it) seemed unfocused, caught between two overlapping arguments, specifically (1) fracked natural gas can’t really so bad; and (2) there are so many other great benefits to using natural gas that we should overlook the climate change side of things.
You wrote to fjf, for example, “Not sure of the research you are quoting on coal and LNG.” So I tried to help you out by referencing a study.
But you also wrote: “Just considering the CO2 reduction of LNG should be enough but also we must consider…”
This made me wonder, “Supposing there’s no reduction in CO2 (equivalent) emissions when you switch from coal to LNG, are those things we ‘must consider’ enough?” I thought maybe not, though it’s a tougher question. But I haven’t clearly seen your answer to that one.
I thought maybe an analogy would get an answer out of you: Imagine a fuel that had no “tailpipe” emissions and could thus be used in highly polluted areas with highly beneficial effects there, but which still emitted more GHGs overall than the fuels it was replacing. Would the local benefits be enough to sell it? I used tar sands oil, since everyone hates them. I was trying to make the question clearer, but it seems to have been misconstrued as trash talking. Darn. My point was in fact quite narrow and humble.
I’m not arguing the science, because I’m not a climatologist, and haven’t done any research whatsoever. (Guilty as charged.) I’m also not qualified to evaluate the relative arguments of what little I’ve read. (that bit of Howarth et el., Cathles et al., some of Howarth et al.’s response to Cathles et al., and a few other things. Well, a guy tries to keep up.)
Nor by discussing Chinese emissions do I mean to suggest that we in the rich countries aren’t responsible for cutting down and eliminating our vastly larger per capita emissions and doing the heavy lifting on GHG reductions generally.

Comment from Paul Tulloch
Time: February 14, 2014, 12:55 am

There are many unknowns with this gas find, but one thing is clear it will require a whole lot of fracking to get it out, and that surely is a destructive method with many known and unknown risk factors.

I will also give you the point that it is indeed a lot of gas and the more we find and develop the slower we will be to get off fossil fuels. As long as it is easy the forces for change will stall and delay.

However there are serious trade offs at play- gas versus coal- health of millions in the local short term generational time- versus health of the future long term planetary time- and no matter how one slices it, that is what is the center of this debate. (that and a lot of cash for some companies of course)

Scientifically the jury is still out on natural gas versus coal but with the Fracking extraction and all the new reserves that come into play- gas now has added negatives. However I would still rather see natural gas development than coal development. Coal mining especially the new strip mining is most likely more destructive than fracking.

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