Why Canada ought to get carbon credit for LNG exports

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It stands to purpose that Canada ought to get carbon credit for changing soiled coal-fired power sources in Asia with our cleaner pure fuel, stopping the discharge of many megatonnes of greenhouse fuel emissions. However as the difficulty at the moment stands, we received’t.

Nonetheless, there’s hope for purpose.

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A latest paper I wrote for the Macdonald-Laurier Institute sheds gentle on the confusion surrounding this matter. Based mostly on the 2015 Paris Settlement, particularly Article 6, and the subsequently developed pointers for the sharing of carbon discount credit, liquid pure fuel exports must be eligible to generate such credit for Canada — simply not in a approach envisioned by provincial leaders.

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Former B.C. premier Christy Clark and successive premiers have argued since 2013 that LNG exports alone must be counted towards carbon credit for Canada and its provinces. Researchers estimate that if Asian international locations change coal with pure fuel of their energy crops, emissions would fall by 34 to 62 per cent.

Nonetheless, every time this argument resurfaces, it faces criticism from numerous quarters.

The confusion over sharing carbon credit arises from the disconnect between the thought’s simplicity and its advanced implementation.

Carbon credit score eligibility relies on the precept that solely emission discount initiatives that might not have proceeded with out entry to carbon credit meet a so-called “additionality” criterion. Whereas there are different standards, the additionality criterion is the center of credit sharing regime.

An easy LNG export contract with an Asian utility that substitutes fuel for coal would in all probability not be eligible to generate any carbon credit for the Canadian aspect. Whereas the deal does decrease GHG emissions, these reductions aren’t “extra” and the deal would go forward with or with out the supply of emissions credit.

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Nonetheless, there’s one other state of affairs that might doubtless qualify to obtain carbon credit. On this state of affairs, along with promoting LNG, the Canadian firm helps the Asian utility convert its coal-fuelled plant to a pure fuel plant. On this case, the utility’s motivation is to keep away from prematurely shuttering its energy plant and shedding its funding attributable to stricter emission requirements.

On the Canadian aspect, assist could contain offering technical providers, financing or different help. Whereas extra pricey for Canada, these additional bills might be greater than offset by the worth of carbon credit transferred by the Asian aspect. Canada would win by accruing income from the sale of LNG, offering extra Canadian-based providers, and receiving beneficial carbon credit to assist meet our emissions targets. This deal is “extra” – its feasibility is contingent on its eligibility for carbon credit.

Critics warn that promoting LNG overseas will “lock in” fossil gasoline use and delay the transition to renewables. The fact is that the typical age of Asian coal-fuelled energy crops is barely 13 years (with a lifespan of as much as 40 years) and that over 1,000 new coal crops have been introduced, permitted or are at the moment underneath building.

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These are the details, whether or not we like them or not. This jogs my memory of the quote typically attributed to John Maynard Keynes, “Because the details change, I modify my thoughts. What do you do, sir?” What we can do is help in switching a few of these crops from burning coal to LNG, which is able to considerably scale back GHG emissions over the brief and medium time period; to not point out assist power employees hold their jobs.

Critics additionally assert that producing LNG in British Columbia creates emissions which may stop the province from assembly its personal emission discount targets. But research estimate that utilizing simply over half of LNG Canada’s annual Section 1 manufacturing capability to interchange coal may scale back worldwide GHG emissions by 14 to 34 Mt whereas growing yearly emissions in B.C. by lower than two megatonnes.

Creating the infrastructure to switch carbon credit underneath the Paris Settlement is a posh and comparatively new endeavour. Incomes carbon credit can be a non-trivial process. It can require the federal authorities to provoke bilateral agreements and negotiate frequent insurance policies and practices with any partnering nation for calculating, verifying, allocating and transferring credit. Alberta and B.C. are already co-operating.

Producing carbon credit from LNG exports is doubtlessly a cheap technique to scale back GHGs globally whereas serving to to satisfy our carbon discount objectives.

Jerome Gessaroli is a senior fellow on the Macdonald-Laurier Institute and leads The Sound Financial Coverage Undertaking on the British Columbia Institute of Know-how

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