For part four of this series, click here: Focus on Fuel Part IV.
This is Part V in a five-part Martlet investigative series exploring the economic, socio-political, and environmental impacts of the B.C. government’s decision to pursue Liquid Natural Gas initiatives. This instalment is a cursory summary of the previous four instalments and a look at the potential future of the B.C. LNG industry.
British Columbia has reached a precipice. It has been a long and tumultuous journey to finally arrive here, a journey spanning nearly a decade and as replete with setbacks and triumphs as one would expect of any political odyssey of this magnitude, but we have arrived nonetheless, and more or less in one piece to boot. So here we stand, tottering on the crag of reason, peeking out over the edge to better appraise the new year ahead of us and the prospects it contains. British Columbia has many positive events to look forward to in the coming year, this much is certain. Yet there are several ethically ambiguous challenges ‘coming down the pipe,’ so to speak, and the British Columbian pursuit of a share in the rapidly emerging global Liquified Natural Gas market has been relegated to this category.
The Clark government’s push for a BC LNG industry is usually described with myriad colorful adjectives, although ‘obvious’, ‘straightforward’ and ‘unequivocal’ are rarely included among them. The prospective BC LNG industry, which at this point is more accurately labeled as ‘impending’ following the approval of several multi-decade export licenses, has the potential to establish itself as a trillion dollar industry, to eliminate provincial debt and provide thousands of job years for British Columbian citizens through infrastructure construction and facility management. Yet as with most things, Clark’s objet petit a exists in a dualistic structure. Despite these grandiose promises, the BC LNG industry also threatens to levy a massive environmental toll in Northeastern B.C., requiring the deforestation of land nearly three times the square-mileage of metro Vancouver and the squandering of astronomical amounts of fresh water, in addition to infringing on the rights of aboriginal communities.
The Clark government is touting the LNG industry as B.C.’s economic second-coming, heralding this trillion dollar industry as the end to provincial debt and a viable temporary patch for underemployment. Yet many activists, such as award-winning journalist Andrew Nikiforuk and MLA Andrew Weaver, remain skeptical about these grandiose assertions, citing the uncertainty of the market and the ministry’s inability to expeditiously create a tax regime for the nascent LNG industry as possible impediments to the realization of these promises. In response to these allegations, the B.C. ministry is doing everything in its power to ensure the economic viability of the planned LNG projects, including sending Christy Clark on her fourth trade “Jobs and Trade” mission to Asia, which lasted thirteen days and spanned the three countries most vital to the success of B.C.’s LNG development plans.
Clark’s ‘Travels in the Land of Kubilai Kahn’
Whilst recently touring Korea, Japan and China, Christy Clark and International Trade Minister Teresa Wat participated in LNG forums in Seoul, Tokyo and Guangzhou, all of which were attended by top industry representatives, First Nations reps and miscellaneous government officials responsible for navigating trade agreements on both sides of the Pacific. Clark sounded hopeful when she returned from her grand tour of Asia on Dec. 4, noting that “Asian investors and governments now clearly understand that B.C. businesses and labour, First Nations and communities are united and working together to be a long-term stable supplier of British Columbia’s clean natural gas.” Yet how much truth resides in this statement is a matter of debate, given the resistance of certain sectors of the aboriginal population, industry skepticism and outrage from the ecologically-minded crowds.
To date, the Canadian National Energy Board (NEB) has issued three export licenses to proponents of various LNG projects, two of which grant 20-year export licenses for the projects and the third guarantees LNG Canada a 25-year license to export. Additionally, the recent Nov. 29 application by Aurora LNG marks six pending export licenses, a participation rate which is deceptive in terms of what it actually represents in economic promise. Despite the proliferation of LNG export applications, many companies are delaying the actual development of infrastructure until B.C. unveils its long awaited LNG tax regime, a contingency which will ultimately determine the number of participants in B.C.’s LNG industry. B.C.’s legislature has sat idle this autumn after Clark made the decision not to call a fall session while the ministry deliberates on the LNG tax regime. Originally the LNG tax structure was scheduled to be released no later than the end of November, although judging by its conspicuous absence and a failure on the part of the ministry to specify a new release date, this deadline has been indefinitely extended.
“Proponents have asked for more time to review the current tax proposal and we have granted them this time,” said a spokeswoman for the Ministry. “The Province is planning to introduce legislation in 2014, once the complex process of drafting is complete.”
Although the uncertainty surrounding BC’s LNG tax regime has kept many potential investors in fiscal holding patterns, once the tax structure is unveiled, it can be assumed that it will be largely to the benefit of industry.
“We have reviewed the tax and royalty regimes of key competitor jurisdictions, and will ensure that B.C. continues to be a highly competitive, attractive jurisdiction for this new investment,” said the Ministry spokeswoman.
Maintaining British Columbia’s image as an “attractive jurisdiction for this new investment” is clearly the foremost priority for the Clark administration, as evidenced by its focus on the economic benefits of LNG production, nearly to the total exclusion of external economic, environmental and aboriginal concerns. In the first instance, there is a large concern, on behalf of people such as Nikiforuk, who argue that the economic viability of LNG, which is almost entirely dependent on inflated natural gas prices in Asian markets resulting from the costly nature of the extraction/liquifaciton process, will have disappeared by the time British Columbia is actually producing LNG for export.
“There is no guarantee you’re going to get higher prices by shipping [LNG] to Asia,” said Nikiforuk while speaking at the recent PowerShift conference in Victoria. “The price differential will be gone by the time [these facilities] are producing gas.”
Qatar currently produces the most LNG on the planet with an export potential of nearly 80 million tons per annum (mta). Additionally, Australia and the United States are also aggressively vying for a cut of the burgeoning Asian energy market, which is expected to account for 42 per cent of the global energy demand by 2035, up from 33 per cent in 2007. In total, the world energy demand is expected to increase from current consumption levels of around 11.1 billion tons of oil equivalent (btoe) to 16.9-btoe by 2035, and Asian markets will account for 61 per cent of this increase, reflecting their astronomical rates of economic growth.
LNG: How Dirty Fossil Fuels Get Clean
Yet the Clark administration does not allow these bleak energy forecasts (in terms of their implicit ecological callousness) to damper their LNG development plans. According to Clark, the development of LNG, often oxymoronically heralded as the ‘cleanest fossil fuel’, is actually sustainable progress in the energy sector by virtue of the fact that it will supposedly replace more ecologically detrimental sources of energy in Asia. While this is indeed true if B.C.’s LNG exports are put to use in Asian markets as a viable replacement for other sources of energy (such as crude oil), this is by no means a guarantee. As noted in a study conducted by the World Nuclear Association, Natural Gas releases roughly two-thirds the number of greenhouse gasses (GHG) released by equivalent oil use, yet up to twenty times as many GHG emissions as alternative energy sources, such as nuclear power.
Thus, it is evident that Clark’s claims that shipping LNG to Asia will lower GHG emissions globally is entirely contingent on whether this energy is used as a replacement or mere supplement to more ecologically destructive sources of energy. The latter seems increasingly likely, as evidenced by the region’s rapid economic growth (manifest in China’s 7.8 per cent GDP growth in 2012), which would be an unfortunate turn of events for everyone except for those involved in the collusion between the Clark administration and LNG firms. What is more, in nations like Japan and Korea, both of which generate over 20% of their power from renewable energy sources (largely nuclear and hydroelectric), the replacement of these sources of energy by LNG would actually result in a net increase in global GHG emissions. Whether or not such a state of affairs would actually materialize is subject to debate, although it seems likely to occur in Japan, which currently faces an energy crisis in the wake of the Fukushima meltdown, an instance where LNG would almost certainly be replacing nuclear energy as a power source.
What is more, a study conducted by SkeenaWild Conservation Trust, an environmental organization located in northwestern B.C., was published on Nov. 21 which condemned the eco-friendliness of the emerging BC LNG industry as a delusional fantasy at best should development stay its course without making fundamental methodological changes. According to the study, the first three LNG plants to be functioning in the Kitimat area will collectively burn 2.5 times the amount of natural gas combusted in Metro Vancouver each year.
“Without design changes, these plants are going to send air pollution off the charts, with huge risks… for the people who live and work in this community,” said Greg Knox, the executive director of the SkeenaWild Conservation Trust. “Unless the LNG industry makes smarter choices right now, these plants could threaten our kids, elders, and many others in our community with a range of respiratory illnesses for years to come.”
It remains to be seen how SWCT’s results will stack up to the $650,000 study recently commissioned by the Clark administration to examine the airshed effects of the proposed LNG facilities in the Kitimat area. According to the Clark administration, the study will be completed no later than March 31, 2014.
Unis’tot’en and Beyond
A further site of ideological contention in the ongoing drama known as ‘British Columbian LNG development’ is remarkably geographically specific. It goes by the name of the Unis’tot’en camp, which is located on unceded Wet’suwet’en territory, or more specifically, the camp is located on the proposed centerline of several proposed pipeline projects running through unceded Wet’suwet’en territory, which those at Unis’tot’en feel are illegitimate based on their lack of consent in the decision making process. Unis’tot’en doesn’t look like much; it is a collection of basic wooden cabins situated in the dense Northern B.C. wilderness. Yet despite its tenuous appearance, the Unis’tot’en camp presents the most localized and promising arena for contesting the LNG projects which are forging on full steam ahead under the watch of the Clark administration. Those at the camp do not recognize agreements reached by the Indian act governing body, the Carrier Sekani Tribal Council (CSTC), which many of the camp’s supporters see as simply a colonial administrative body imposed on aboriginal communities, with LNG industry proponents.
The Clark administration is more than aware of sites of localized resistance such as Unis’tot’en and in light of the recent New Brunswick debacle, are approaching these high-tension situations with extra caution.
“We encourage resolution of issues through dialogue in all cases [of civil disobedience],” said a spokeswoman for the Ministry. “We believe negotiation, not confrontation, is the best way to resolve issues that concern asserted Aboriginal rights and title. We do not condone civil disobedience or blockades as acceptable tactics to change public policy.”
This puts many sectors of the aboriginal population in a bind, given that they do not recognize Indian Act governing bodies as legitimate, nor do they recognize the authority of the colonial government (hence the term ‘unceded’ territory). For many, such as those at the Unis’tot’en camp, this leaves very little room for protesting the proposed LNG projects on their homeland, and this desperation coupled with frustration with their supposed ‘representative’ governments is what led to the creation of the Unis’tot’en resistance camp. It is precisely for these reasons that events surrounding the Unis’tot’en camp will be worth following in the upcoming months, as pipeline plans turn into pipeline construction projects, which will inevitably result in a confrontation at civilly disobedient bulwarks such as Unis’tot’en.
Although the development of LNG on a massive scale in B.C. has passed beyond the realm of uncertainty in recent months, with the unveiling of the LNG tax regime acting as the final impediment to rapid infrastructural development in the Northeast, the trajectory (and its extensiveness) that this development will take is far from clear. Much of the future of British Columbian LNG is contingent on the complacency of indigenous and provincial communities and a LNG tax regime favorable to the industry, both of which, given historical precedents, are more than probable. Yet the battle against this ecologically callous and fiscally uncertain path to provincial economic development is far from lost; there are still plenty of opportunities for dissenters to make their voices heard, even if it is not a call for the halting of LNG development, but solely a more equitable developmental trajectory for all those implicated in the process. These are the issues that will be discussed ad-nauseam at the upcoming ‘Powering a Strong Economy: British Columbia’s LNG in the Global Market’ conference in Vancouver, scheduled to be held May 21-23 next year. This conference will be international in scope, which according to Christy Clark supposedly reflects “international interest in British Columbia’s clean natural gas [which] continues to increase as an exciting new industry takes shape in our province.”
The ideal shape of the emerging LNG industry has been haunting B.C. industry and administration as a spectre throughout its development, yet just what perverted shapes this ‘exciting new industry’ takes in reality is ultimately dependent on the (in)action of British Columbia’s constituency.