Oil giant Shell recently let it slip that it is prepared to build the second phase of LNG Canada, Canada’s largest LNG terminal in Kitimat, B.C., as a gas-fired plant. If the project is built, the province might as well say goodbye to any chance of meeting its climate targets.
There are two ways to liquify natural gas: either by using gas-powered turbines or by using e-drives, which use electricity to compress the gas. Burning gas to power compressors is extremely emissions-intensive. In fact, when the gas-fired Phase 1 of LNG Canada comes online in 2025, it will become the largest single source of climate pollution in B.C.
Since 2018, when the decision to build the first phase of the terminal was made, provincial policymakers have been tying themselves in knots to try to make those emissions fit into B.C.’s climate plan. According to the province’s most recent Climate Accountability Report, they are still coming up just short and will miss B.C.'s 2025 target by 15 per cent and its 2030 target by three per cent.
However, if LNG Canada’s Phase 2 doubles those emissions targets, which have been a key political objective of the NDP since coming to office, any climate targets will become completely unattainable. A fact that Shell is well aware of because its chief B.C. lobbyist, Skye McConnell, serves on the province’s Climate Solutions Council, which advises the government on climate policy.
So if LNG Canada’s Phase 2 emissions will destroy B.C.'s climate targets and it’s a political imperative for David Eby’s government to meet those, something has to give. This is why I believe Shell’s true intentions are to use this leverage to extract an enormous package of fossil fuel subsidies from provincial taxpayers in exchange for electrifying their project, including a multibillion-dollar transmission line and discounted electricity prices.
How can I be so sure this is what Shell is up to? Because it has done this before. In 2018 when the investment decision for Phase 1 of LNG Canada was being made, Shell extracted a package of special tax breaks and fossil fuel subsidies from both the provincial and federal governments by threatening to cancel the project if newly elected premier John Horgan didn’t use public money to help guarantee the project was profitable.
They knew Horgan, who was governing with a razor-thin minority government after the 2017 election that basically ended in a tie, badly wanted to be seen to be a good manager of the economy. If Shell packed up and left Kitimat, the B.C. Liberals would label the new premier a job killer and that would likely cost him his re-election.
Shell leveraged this into a generous package of tax breaks from the province. On top of that, the federal government kicked in another $275 million to cover the cost of higher-efficiency gas turbines.
So Shell, which incidentally just reported record profits in 2022, is trying again to put the screws to a newly elected premier to get the public to help cover the ballooning costs of this project.
However, the economics of this project has always been marginal at best. As a new report from the Institute for Energy Economics and Financial Analysis reminds us, the costs of building LNG infrastructure in B.C. is much higher than in competing jurisdictions.
To connect LNG Canada to fracked gas from northeastern B.C., the 670-kilometre-long Coastal GasLink pipeline must cross two mountain ranges and 625 streams, creeks, rivers and lakes. Workers for both the pipeline and the LNG terminal must be flown in and housed in work camps, which leads to higher labour costs.
Compare that to competing projects on the U.S. Gulf Coast, which has easy access to a vast network of existing gas infrastructure and a large pool of local skilled workers. A fact that was underlined by Coastal GasLink’s recent announcement that the cost of the pipeline had risen to $14 billion, more than double the original $6.2-billion price tag.
If LNG Canada is not even competitive with other LNG terminals, why is Shell still trying to build it? Shell is counting on politicians to offer the company enough fossil fuel subsidies to make its business profitable.
But without public money, no version of this project will be built. It's Premier Eby who has the leverage in this situation. By signalling that his government is done subsidizing fossil fuels and telling Shell that if it decides to build Phase 2 then it will have to pay their fair share of taxes, he can force Shell to put its record profits where its mouth is.
Sven Biggs is the Canadian oil and gas program director at Stand.earth, an international non-profit environmental organization with offices in Canada and the United States.
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A key thing in the politics
A key thing in the politics of this is the media. If most of the media took climate change seriously and did not get a stack of revenue from fossil fuel company advertising, then portrayals of the situation in the media would point out that the plant should never be built and was for various reasons a terrible idea, costing public money that could be better spent elsewhere, dependent on a supply of fracked gas which poisons groundwater, and of course blowing climate plans out of the water. If the media generally portrayed the situation that way, then the people in danger of losing elections would be anybody who backed such an ill-advised project, not the people unwilling to subsidize it.
The media puts serious limits on what is politically possible, and I am very pleased to shell out my bucks to subscribe to the National Observer, which is not beholden to fossil fuel interests and so can print, you know, the truth. I think a ban on fossil fuel advertising would do good things for the political climate.
It's not just the media's
It's not just the media's position that is troubling. The fact that a major player in the fossil fuel industry is part of a BC government advisory body on -- wishing italics and bolded characters were possible here -- climate change is even more troubling. What gets reported to the media is likely only a fraction of what actually gets discussed behind the thick oak doors of the BC legislature.
As for the NO, it could be better if it really tried. There are some very good writers with exemplary research skills and fact checking abilities that make the subscription worth it to a fair degree. But there are editorial practices, like flying nearly a dozen journos and editors to an overseas COP conference gab party that burst through the credibility portal. There are some writers who issue opinions about scientific policy that are not based on science, or whose topics are poorly researched, almost like creating a filler piece.
There are great opportunities to diversify more deeply into digital media and develop a cutting edge in international reporting under contract or agreement with overseas journos (e.g. COP event reportage) without sending a single kilogram of jet fuel emissions up to the stratosphere for the next century, or defying the principles of the majority of subscribers. There is video journalism, YouTube channel availability, a vast range of affordable graphic and video media endeavours to be explored. The NO seems stuck in a 1990s time warp on media technology buy comparison, and can't seem to escape the clutches of the print mindset and even have a digital upgrade to allow comment editing.
I pay more than twice as much for a Globe and Mail subscription and feel I get my money's worth whenever a deeply investigative series is published by luminaries like Doug Saunders or a far deeper exploration of renewable energy by Adam Radwanski that we'd get in the NO. There are, of course, columnists and op-ed writers who I rarely agree with in the Globe (and again that many more in Postmedia) but I have the patience to read their views and offer counterpoint. I would be willing to pay more for the NO if it delivered better quality more often and wasn't afraid to explore issues far more deeply, such as the engineering, design, planning and science behind urban climate adaptation measures, and sought greater editorial maturity than reporting on every protest by every youth without digging deeper into root causes and solutions.
Anyway, enough said.
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