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Canada approves Petronas’ LNG project, but with a catch

New LNG project will have a hard cap placed on its CO2 emissions

PUBLISHED : Wednesday, 28 September, 2016, 1:49pm
UPDATED : Wednesday, 28 September, 2016, 1:49pm

The federal government has approved Petronas’ C$11 billion (US$8.3) Pacific NorthWest LNG project in Prince Rupert, but there’s a catch.

Petronas will need to shave 900,000 million tonnes of CO2 from the project’s emissions, and all other major industrial projects from now on will also have hard caps placed on them for greenhouse gases.

Federal Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr, and Fisheries and Oceans Minister Dominic LeBlanc announced at a press conference at the Sea Island Coast Guard station in Richmond Tuesday, September 27, that the PNW LNG was approved for an environmental certificate.

But in approving the project, McKenna also announced a hard cap on that will require the project to reduce emissions by 20 per cent.

“I’ve always said this: When you have major projects, they have to fit in with our national climate plan and part of that is addressing emissions through a price on carbon,” McKenna said.

She added the BC government’s commitment to eventually start raising its carbon tax in synch with whatever price the federal government eventually sets factored into her decision.

The project’s carbon emissions will be capped at 4.3 million tonnes of CO2. That’s 900,000 lower than what the project, as initially proposed, would produce.

It’s not clear whether that means Petronas will have to scale the project back, although Premier Christy Clark, who was on hand for Tuesday’s announcement, reiterated her province’s hope of extending hydro electricity upstream to the natural gas fields – a measure that would go some way to reducing LNG’s carbon profile.

The environmental review process for the PNW LNG project has been a protracted one. The proposed site for the LNG plant on Lelu Island has proven problematic, due to concerns over impacts on salmon habitat and opposition from First Nations in the area, notably the Lax Kw’alaams, three members of whom crashed the press conference to voice opposition to the project.

Christine Smith-Martin of the Gitwilgyoots tribe said a number of hereditary chiefs had flown to Ottawa and were scheduled to meet with federal ministers Tuesday. She said they were left stranded there when the meetings were cancelled so McKenna and her federal counterparts could fly to Richmond to announce the project’s approval.

McKenna said that Fisheries and Oceans is satisfied the plant can be built with minimal impact on fish.

“I am confident, with the 190 legally binding, scientifically determined conditions, that we will address the most important environmental impacts to enure that this project proceeds in the most sustainable manner possible,” McKenna said.

“This is an important part of a new industry for British Columbia and for Canada,” Carr said. “The Pacific NorthWest LNG project represents one of Canada’s largest resource development initiatives, with a total capital investment of up to C$36 billion (US$27 billion)when related upstream natural gas developments are included.

“Today, with this project, we move a step closer to moving Canadian natural gas to world markets.”

He said the project will create 330 direct long-term jobs, 300 local spin-off jobs, more than 4,500 construction jobs, and add $2.4 billion per year to Canada’s GDP and C$1.3 million (US$984,086)annually in royalties and taxes to various levels of government.

“We heard from union leaders and members who have told me personally how important natural resource jobs are to them and to their families,” Carr said.

Carr added LNG is not just good for the Canadian economy, but would “contribute to the fight against climate change” by displacing fuels that have higher carbon emissions in Asia.

Clark said the federal environmental certificate is the “last major requirement for this project” but pointed out that it’s still up to Petronas to decide it if will make a final investment, something that has been in some doubt, thanks to low oil and gas prices and a glut on LNG now on the market from Australia.

“That final decision will be up to market conditions and will be up to the company and that will need to take time,” Clark said. “And it will certainly take time for them to do their review.”