Fossil fuel and LNG subsidies in B.C., and an alternate viewpoint on the issue

The International Institute for Sustainable Development (IISD) maintains an ongoing initiative, the Global Subsidies Initiative , to research fossil fuel subsidies worldwide.  Their most recent publication relating to Canada is  Locked In and Losing Out: British Columbia’s fossil fuel subsidies. The authors calculate that BC’s fossil fuel subsidies reached  $830 million Cdn.  in 2017–2018, with no end in sight. Despite B.C.’s clean energy image, the report documents the significant new support granted by the current B.C. government to encourage the liquefied natural gas (LNG) industry.  Locked In and Losing Out calls for the provincial government to create a plan to phase-out its own subsidies, and coordinate with the federal government in its current  G20 Peer Review of fossil fuel subsidies, launched in 2019 and administered by Environment and Climate Change Canada.   In August 2019, the IISD also released its Submission to Environment and Climate Change Canada’s Consultation on Non-Tax Fossil Fuel Subsidies calling for Canada to re-affirm its long-standing  G7 commitment to reform fossil fuel subsidies by 2025 and provide a detailed action plan to achieve the goal.  

new labor forumAn alternate view

Sean Sweeney of Trade Unions for Energy Democracy takes an alternate view on fossil fuel subsidies in “Weaponizing the numbers: The Hidden Agenda Behind Fossil-Fuel Subsidy Reform” appearing in the January 2020 issue of  New Labor Forum. As might be expected, Sweeney challenges the findings and assumptions of the International Monetary Fund (for example, in a 2019 working paper by David Coady ). He also takes issue with some progressive analysis – notably, he cites  Fossil Fuel to Clean Energy Subsidy Swaps: How to Pay for an Energy Revolution (2019) and Zombie Energy: Climate benefits of ending subsidies to fossil fuel production (2017)  – both published by the International Institute for Sustainable Development (IISD).  After a brief discussion of the main concepts, Sweeney concludes:

“For activists in the North, making fossil-fuel subsidies a key political target is a mistake. It buys into the IMF’s obsession with “getting energy prices right” which targets state ownership and regulation of prices. Such an approach may lead to a more judicious use of energy, but it would not address the mammoth challenges involved in transitioning away from fossil fuels, controlling and reducing unnecessary economic activity, or reducing emissions is expeditiously as possible.

The problem is fossil fuel dependency, not underpriced energy. Raising the price without alternative forms of low-carbon energy available for all will not produce the kind of emissions reductions the world needs. This does not mean that progressive unions and the left should support subsidies for fossil fuels—especially when the beneficiaries are large for-profit industrial users or billionaire Lamborghini owners cruising the strips in Riyadh or Shanghai. But there is a need to be aware of what the IMF and the subsidy reform organizations are proposing, and what these proposals might mean for workers and ordinary people, especially in the Global South.”

 

 

 

Federal government announces $275 Million subsidy to LNG Canada in B.C.

Despite the ongoing contentious development of Liquified Natural Gas (LNG) in British Columbia and commitments to end fossil fuel subsidies, on June 24 federal Finance Minister Morneau  announced that the federal government will invest $275 million into LNG Canada’s $40 billion liquefied natural gas project in Kitimat: $220 million to be spent on energy-efficient gas turbines for the project, and  $55 million spent on replacing the Haisla Bridge in Kitimat. The announcement is summarized by the CBC in “Feds announce $275M ‘largest private sector investment in Canadian history’ — Kitimat, B.C.’s LNG project”

The Narwhal maintains an ongoing archive of excellent articles which chronicle the controversy over fracking and LNG in B.C,  here .  Two recent “must read” articles from: “6 Awkward Realities behind B.C.’s big LNG Giveaway”  (April 6)  which discusses the B.C. government’s move to bundle tax exemptions and cheap electricity rates into a $5.35 billion  incentive package for  LNG Canada in March 2019, and “B.C. government quietly posts response to expert fracking report” (June 28) which discusses the government’s  response to the report of its own  independent Scientific Review of Hydraulic Fracturing in British Columbia, released in February 2019. As noted in the Narwhal article, the panel was mandated to assess the potential impacts of fracking on water quantity and quality; on seismic activity, and on  fugitive emissions – but not on public health, despite concerns raised and the known scientific evidence.  According to the government news release,  a working group has been established to address the  97 recommendations made by the expert panel.

Some recent relevant reading about LNG and the fracking associated with its production: 

RE the Emissions of LNG: The New Gas Boom , published  on July 1 by the Global Energy Monitor, an international non-governmental organization that catalogues fossil-fuel infrastructure. The report states that a growing global supply of natural gas is on a “collision course” with the Paris Agreement, and that the increase in natural gas is driven largely by the North American fracking boom- with 39% of new development  occurring in the U.S., 35% in Canada.  The GEM report is discussed from a Canadian viewpoint in  “Global boom in natural gas is undermining climate change action: reportNational Observer (July 2)  and  “’Clean’ natural gas is actually the new coal, report says: Don Pittis” at CBC  .  Previous to the Global Energy Monitor report, Marc Lee had weighed in on the high GHG emissions of fracked natural gas in  “ LNG’s Big Lie”, an article in the Canadian Centre for Policy Alternatives Policy Note ( Lee’s arguments were also published in The Georgia Straight,  (June 17) and an OpEd in The Globe and Mail . )

compendium re frackingIn the U.S.   in June 19, The sixth edition of the Compendium of Scientific, Medical, and Media Findings Demonstrating Risks and Harms of Fracking  was published by Physicians for Social Responsibility and Concerned Health Professionals of New York. Written by scientists, doctors and journalists, it is an analysis of original research studies published from 2016-2018 on the health impacts of fracking . One of the most impactful statements from the press release: “The notion that natural gas can serve as an intermediate “bridge fuel” between coal and renewable energy is fallacious and now disproven by new scientific evidence showing that methane is a more powerful greenhouse gas than formerly appreciated and escapes in larger amounts from all parts of the extraction and distribution process than previously presumed, including from inactive, long-abandoned wells. Grossly underestimating methane emissions threatens to undermine the efficacy of efforts to combat climate change.” A summary press release is here ,  or see the Common Dreams article “’We Need to Ban Fracking’: New Analysis of 1,500 Scientific Studies Details Threat to Health and Climate”   (June 19).

International Energy Agency report, LNG Market Trends and their Implications   (June 20) provides statistical analysis of the changing Asian markets for LNG.

Federal Government approves Pacific NorthWest LNG project in B.C.

Is there a pattern  emerging in the federal government’s leanings regarding controversial energy projects?  After its approval of the Site C dam in B.C. in August 2016,  the Minister of Environment and Climate Change announced, late on the evening of September 27, approval with 190 conditions  for the Pacific North West LNG project, to be built near Lelu Island, north of Prince Rupert, B.C. . See the Government of Canada press release and the full text of the Decision Statement, including conditions, released by Canada Environment Assessment Agency.  For summaries, read the the Globe and Mail (Sept. 28)  or  the Vancouver Province (Sept. 28) or the National Observer   .  CBC offers a brief analysis at “Trudeau government at pains to explain Pacific West LNG” at the CBC.

More reaction is sure to pour in as environmentalists analyse the Decision and conditions, but an article in The Tyee (Sept. 28) summarizes initial reactions by major environmental groups.  The Pembina Institute’s Matt Horne been writing about the climate change implications for a long time, as recently September 27  in IRPP’s Policy Options,  “Cabinet should not allow BC’s and Petronas’ mistakes in Pacific NorthWest to be locked in for the next 30-plus years”. For Pembina’s initial reaction, plus links to many earlier critiques, see “Pacific NorthWest LNG approval is step backward for climate action in Canada” .

B.C. also awaits a federal decision about the proposed expansion of the Trans Mountain pipeline from Alberta to Burnaby, B.C., due in mid-December.

ECONOMIC IMPACTS OF B.C. LNG DEVELOPMENT

A May 2015 report from the Canadian Centre for Policy Alternatives considers six possible scenarios for liquefied natural gas export development in B.C., ranging in the number of export terminals from zero to five (the current government estimate). A Clear Look at BC LNG: Energy Security, Environmental Implications and Economic Potential  states that government claims of available gas supplies for export are greatly exaggerated, and that production would involved massive disruption, given that most wells would be fracked wells. Further, author David Hughes argues that is unlikely that anything close to the revenue projected by the BC government will ever be realized. And beyond the environmental dangers to the citizens of B.C., LNG will not reduce global GHG emissions: “From wellhead to final combustion, there are substantial leakages of methane, a much more potent greenhouse gas than CO2. Given this, liquefied fracked gas from BC actually has GHG emission rates similar to coal.”   Researchers who wish to pursue these concerns will welcome a new interactive planning tool, called the B.C. Shale Scenario Tool , available online at the Pembina Institute website. It allows users “ to quantify the potential impacts of shale gas and liquefied natural gas (LNG) development in northeast B.C. in terms of carbon pollution, land disturbance, water use and wastewater.”

B.C. LNG Setor: New Legislation and a New Report

In the week of October 20, British Columbia introduced the Greenhouse Gas Industrial Reporting and Control Act and the Liquefied Natural Gas Income Tax Act. The former requires liquefied natural gas plants to purchase carbon offsets and punishes those who fail to limit their carbon emissions to 0.16 tonnes per tonne of LNG – the strictest standards in the world, according to B.C. Environment Minister Mary Polak.

However, Merran Smith of Clean Energy Canada criticized the Act for focussing exclusively on port facilities, at the end of the supply chain. Matt Horne of the Pembina Institute asserted that 70% of the industry’s emissions would be released before reaching the ports. See “B.C.’s New LNG Emissions Regulations A Good Start, But Not Enough” from Desmog Canada at: http://www.desmog.ca/2014/10/22/bc-new-lng-emissions-regulations-good-start-but-not-enough, and Pembina’s comments at: http://www.pembina.org/media-release/pembina-reacts-to-tabling-of-bc-lng-carbon-pollution-legislation.

The new tax legislation imposes a 3.5% rate on operating income, half the amount B.C. had initially planned. Read the government press release at: http://www.newsroom.gov.bc.ca/2014/10/bc-to-have-worlds-cleanest-lng-facilities.html, and for details on the Act, see the government’s website at: http://www2.gov.bc.ca/gov/topic.page?id=75BD4BF2B6B5493FB8A36DB05EBA764D. Jack Mintz, from the University of Calgary, states: “the B.C. shale gas royalty is one of the most distortionary systems developed in industrialized countries”.

For his financial and policy critique, see “Jack M. Mintz: Why B.C.’s LNG tax policy sets a bad precedent” in the Financial Post at: http://business.financialpost.com/2014/10/22/jack-m-mintz-why-b-c-s-lng-tax-policy-helps-neither-the-province-nor-the-industry/. For a broader view, see Marc Lee’s reaction in “A B.C. Framework for LNG, part 2: The LNG income tax” at Rabble.ca at: http://rabble.ca/blogs/bloggers/policynote/2014/10/bc-framework-lng-part-2-lng-income-tax.

And the last word: Pembina will release a new report on October 27th, LNG and Climate Change: The Global Context.