"Implications of a Positive LNG Canada Final Investment Decision,” ran the header on a slide-show background briefing by government officials after the green light.
There are a lot of them.
The briefing was an effort by the government to explain how the NDP’s pronounced skepticism over seven years converted this year to an enthusiastic and successful effort to close the deal on a liquefied natural gas project.
Much weight was put on the new framework the NDP developed soon after taking office. It had all the usual goals, but the key one looks to have been “establishing cost-competitive conditions for the industry.”
Meaning all the B.C. Liberal efforts to set the table for LNG still weren’t attractive enough. The government had to offer more breaks.
It was up to the politicians outside the room to thrash out who deserves the most credit. They were fairly generous in sharing it around.
Inside the briefing room, reporters were told that LNG Canada simply wouldn’t have committed without the further enticements offered by the NDP.
The rationale for offering them was exactly the same script the Liberals read from for years. High-wage jobs, new tax revenue, First Nations opportunities, rejuvenation of northern B.C., etc.
So all the previous NDP rhetoric about giving away too much fell by the wayside.
The NDP cut the electricity rate it would charge the industry and exempted the sales tax for construction (it is expected — at this point — to be recouped over the long haul).
The new government eliminated the LNG income tax and retained a tax credit and made other incentives available.
All in, the new basket of breaks amount to $5.34 billion in forgone revenue over the next generation. That’s down from the $6-billion estimate costed out in March when it was announced.
So the good news is: B.C. stands to benefit to the tune of $23 billion in net direct government revenue.
The bad news is: It’s not $28 billion.
From an economic perspective, it’s a no-brainer in terms of whether the breaks are worth it.
It’s the greenhouse-gas-emissions arithmetic where the pros and cons of the LNG industry are a lot closer.
The government’s latest estimate is that LNG Canada’s overall proposal, from the northeast gas fields through the pipeline to the Kitimat plant, would produce 3.45 megatonnes a year in emissions.
That qualifies it for the title of “cleanest LNG in the world,” which is a point the industry and government will be dwelling on for years to come.
The problem is that adds to a total provincial output that is supposed to be going down, not up.
B.C.’s emissions are currently about 60 megatonnes a year. The government is committed — on its own and through the Paris Climate Accord — to driving them down to 40 megatonnes in the next 11 years.
So a new plant puts B.C. further behind.
The briefing document said various NDP moves since last fall (such as the carbon tax hike) can remove about seven megatonnes by 2030. It estimates 17 more megatonnes are required.
The moves to accomplish that will be announced later this fall. They’ll be a lot more dramatic than anything that’s come before, and they’ll have to go further than they would have, to make room for the LNG plant.
Even while welcoming the announcement, Premier John Horgan noted a significant challenge is coming.
One sidelight in the briefing was the impact in Asia, where all the gas is headed. Jurisdictions can’t claim credit for emission reductions elsewhere. But the NDP is borrowing the Liberal theme by noting that B.C. gas will replace coal elsewhere, so will net out as a reduction.
It will “help the world reduce GHG emissions,” said the briefing. “The international dimension should be noted.”
The bar graphs and timelines suggest there isn’t a lot of emission room for an LNG Canada expansion (the project is referred to in briefings as “Phase One”) or a second plant. Unless it’s cleaner than clean.
The briefing officials also said the Site C dam is not being built with the LNG industry in mind. But all that power and much more will be needed for the massive electrification needed to reach the 2030 target.
