VICTORIA - Environment Minister Mary Polak today introduced legislation that ensures British Columbia will have the cleanest liquefied natural gas facilities in the world.
Having the world’s cleanest LNG facilities means protecting the air and water in B.C., which is why Premier Christy Clark made this a priority for the minister’s mandate and why meeting this commitment today is so important.
The centrepiece of the plan is a greenhouse gas emissions intensity benchmark that is lower than any other LNG facility in the world. As well, companies will have flexible options to reach this world-leading benchmark, including purchasing offsets and contributing to a technology fund.
“British Columbia is taking another step in global environmental leadership - the cleanest LNG facilities in the world will help the largest GHG-emitting nations reduce their emissions, and improve their air and water quality,” said Polak. “The export of B.C. LNG is both an economic and an environmental opportunity for the province. As the cleanest-burning fossil fuel, natural gas is part of a global climate solution.”
B.C.’s Liquefied Natural Gas Strategy outlines the Province's goals in maintaining its leadership in clean energy and climate action. B.C. consulted with industry on the best way to achieve these goals and concluded:
- An emissions benchmark with flexible options - including purchasing offsets and a technology fund - will be the most effective at meeting the Province’s goals while maintaining LNG industry competitiveness.
- The benchmark and its compliance costs must be viewed in the context of total B.C. operating costs to ensure the province remains a competitive place to invest.
- A program will be included to provide a pro-rated incentive to companies for achieving the benchmark based on the LNG industry’s compliance costs, which will ensure the competitive investment environment continues. By encouraging investment in advanced technology and rewarding achievement of world-leading performance, the program will help ensure the development of the cleanest LNG facilities in the world.
Based on a review of leading jurisdictions, B.C. is also implementing new interim ambient air quality objectives for nitrogen dioxide and sulphur dioxide for all new and expanding industrial facilities that are consistent with the benchmarks in the Kitimat Airshed Assessment. These objectives establish levels for emissions to the air to protect human health provincewide.
“There is no point in establishing an LNG industry in B.C. if we can’t protect the environment - we want to enable safe development with great environmental standards,” said Polak. “We have a proud heritage of developing the oil and gas industry in this province to world-leading standards. This pride and commitment to the environment guides us as we take this next, big step with LNG.”
These actions and incentives alone do not end the need for climate action. To that end, government is committed to working with industry to reduce emissions in the upstream.
New measures in every sector are going to help B.C. reach its long-term climate change goals in tandem with the build-out of the LNG industry. The Province will be releasing its plans to achieve this in the coming months.
For more information about LNG in B.C., visit: www.lnginbc.ca
The full Kitimat Airshed Assessment report can be found at: http://www.bcairquality.ca/airsheds/kitimat-airshed-assessment.html
Two backgrounders follow.
Ministry of Environment
Emissions benchmark with flexible options
British Columbia has established a greenhouse gas emissions intensity benchmark of 0.16 carbon dioxide equivalent (CO2e) tonnes per tonne of LNG produced. This will include all facility GHG emissions (i.e., combustion, electricity generation, venting and fugitives) from the point when gas enters a facility to where it is loaded onto a ship or rail car to go to market.
The 0.16 benchmark sets a new, recognized global standard for LNG facilities. Through independent studies and government analysis, it was determined that leading global facilities had emissions intensities of between 0.18 and 0.27 tonnes of CO2e per tonne of LNG produced. The benchmark will also ensure that B.C.’s LNG sector maintains its competitiveness in the global marketplace.
LNG proponents will have the flexibility to meet the benchmark through the design of their facility by improving energy efficiency or increasing the use of clean electricity. If a proponent determines that reducing facility emissions is not immediately economically favourable, they also have the option to invest in B.C.-based emissions reduction projects (i.e., offsets) at market prices or to contribute to a technology fund at a rate of $25 per tonne of CO2e.
Investments from both offsets and the technology fund will be used to further reduce GHG emissions in the natural gas and other sectors in B.C.
Creating incentives through offsets and the technology fund will address these challenges by directing investments in strategies and technologies proven to drive carbon emissions down across the lifecycle of LNG production. This includes low- or no- venting equipment, electrification, cogeneration and waste heat recovery, natural gas vehicles, and exploring carbon capture and storage or reuse.
LNG Environmental Incentive Program
Partnership has been the hallmark of attracting and supporting LNG investment. Government does not want the greenhouse gas emissions intensity benchmark to be an impediment to investment, and is working with industry to ensure it can be met.
The LNG industry is concerned that costs for their operations in meeting the 0.16 tonnes CO2e per tonne of LNG produced benchmark will affect their overall competitiveness.
Providing an incentive for LNG facilities to achieve a lower intensity of GHG emissions will encourage the industry to place a greater emphasis on incorporating lower emitting technology into their plants.
LNG facilities that perform below the 0.16 benchmark will be eligible to receive performance credits, which can be sold to other facilities.
The LNG Environmental Incentive Program will reward facilities investing in cleaner technology by providing an escalating incentive based on their compliance costs between 0.23 and 0.16 tonnes CO2e per tonne of LNG produced.
Government will need to commit new spending dollars to offer the incentive program, but believes the program will help ensure that B.C. will have the cleanest LNG facilities in the world. The cost of the program will be more than made up by the establishment of a thriving B.C. LNG industry, and the taxes and royalties collected from it. This program is an investment in the province’s future prosperity, and no money will be spent until British Columbians see tangible benefits in terms of investment, jobs, royalties and taxes paid in B.C.
The Ministry of Environment will administer the incentive program in addition to the benchmark, offset program and technology fund.
Facilities that have achieved annual performance below 0.23 tonnes CO2e per tonne of LNG produced are eligible to participate in the LNG Environmental Incentive Program:
- Performance below 0.23 and above 0.16 will receive a pro-rated incentive based on their actual compliance costs.
- Performance below 0.16 will earn the facility a performance credit that can be sold to other LNG facilities.