British Columbia mandates world's lowest emissions for new LNG terminals

10/21/2014

By CHRISTOPHER DONVILLE and REBECCA PENTY
Bloomberg

British Columbia will require that proponents of liquefied natural gas terminals from Royal Dutch Shell to Petronas keep their carbon emissions at the lowest level in the world.

The government of Canada’s westernmost province, led by Premier Christy Clark’s Liberals, will require that facilities not exceed the equivalent of 0.16 metric ton of carbon dioxide per ton of LNG, the provincial Environment Ministry said.

Developers unable to meet the standard will be able to offset emissions by buying credits and paying into a technology fund.

“The centerpiece of the plan is a greenhouse-gas emissions intensity benchmark that is lower than any other LNG facility in the world,” Environment Minister Mary Polak, who announced the policy before legislators in Victoria, said in a statement.

Clark is seeking to live up to pledges that British Columbia’s nascent LNG industry would be the world’s cleanest, while facing pressure to offer attractive financial terms for developers. The 18 proposals to ship LNG from British Columbia to meet Asian demand are competing with projects in Mozambique, Australia and the US.

The carbon intensity target would comprise all emissions from a facility, including combustion, electricity generation, and gas venting and leaks. Global LNG facility emissions range from 0.18 to 0.27 tons per ton of the fuel, according to government statements citing studies and analysis.

Technology Incentives

The policy will encourage developers to use technology to curb emissions by offering incentives, the government said, without explaining the incentives. To qualify for benefits, LNG terminals will be required to keep emissions below 0.23 tons of carbon per ton of LNG.

LNG facilities with emissions lower than the benchmark can sell performance credits to other shipping terminals.

Developers can offset emissions above the benchmark by investing in pollution reduction projects based in British Columbia or contributing to a technology fund at a rate of C$25 ($22) per ton of carbon.

The lower carbon stipulation for LNG plants would add to an existing levy on greenhouse gases in the province, which has a target to reduce emissions a third below 2007 levels by 2020.

Legislation regarding an LNG-specific tax is scheduled to be announced tomorrow.

With a majority in the provincial legislature, the Liberals are able to pass legislation regardless of the opposition’s stance.