British Columbia Premier Christy Clark is on the run these days in her efforts to find common ground with LNG proponents while staying ahead of a growing clamor over the potential environmental impact of an LNG export industry.
She spent a week in Toronto and Washington, D.C., selling the virtues of British Columbia as a launching pad for shipments to Asia, while fending off critics who are challenging her “commitment to have the cleanest LNG facilities in the world.”
Clark told reporters in Washington — prior to an upcoming trip to Asia — that a tax regime for LNG exports should be unveiled within two months, based on a “positive initial response” to a draft proposal from the industry.
“We’re still working through the details” of a plan to be turned into legislation in the spring, she said, but was guarded on the likely contents.
Clark said only that the formula would allow the British Columbia government to “take some of the upside, but also live with some of the downside, as prices rise and fall.”
The end result is crucial to her hopes of developing a C$100 billion “prosperity fund” from LNG tax revenues to eliminate provincial debt, which is currently about C$50 billion, and pay for education, health care and other programs.
Clark said she is well aware that overtaxing the LNG sector and driving away investment would undo those objectives.
“I have a job to do to make sure we extract every penny we can” from LNG, but “at the same time I don’t want to imperil the business case for them. We don’t want to chase the business away,” she said.
Complex tax legislationClark has conceded the new tax regime is “some of the most complex tax legislation that our drafters have ever done.”
Hanging over the government’s head is the industry’s warning that levying a special export tax could render British Columbia uncompetitive with other LNG jurisdictions.
By embracing LNG as the new underpinning of her province’s economy, Clark granted an exemption to LNG projects by ruling that the natural gas consumed at liquefaction plants would be “clean energy.”
Environment Minister Mary Polak said earlier in October that her major challenge in developing a clean environmental policy is ensuring that it doesn’t hurt the bottom line of LNG companies, but she wouldn’t say whether that would completely exempt greenhouse gas emissions from gas-powered LNG plants.
Merran Smith, director of Clean Energy Canada at Tides Canada, said Clark’s commitment to have the world’s cleanest LNG facilities does not have much credibility if it ignores emissions from the production and transportation of natural gas, even though the premier said she never intended to capture emissions produced at the upstream end of the LNG chain.
“You can’t cut virgin old-growth trees out of a forest, run them through a green sawmill and call it eco-lumber,” Smith said.
A Tides Canada report concludes that British Columbia’s proposed LNG plants will produce three times more carbon dioxide per metric ton of LNG that other leading facilities in Australia and Norway.
Study launchedTo deflect criticism on another issue, the Clark government has launched a C$650,000 study, to be completed by spring, into the impact on air quality from LNG operations at the deepwater port of Kitimat, the epicenter of the LNG sector.
The town already has an aluminum smelter and is targeted for three LNG plants, marine terminals for two or more pipelines (including Enbridge’s Northern Gateway connection from the oil sands) and an oil refinery, all of which could generate about 220 tankers per year.
The government said the study would “inform regulatory and policy development for future industrial activity in the Kitimat area ... prior to new projects being approved and in operation.”
Smith said “we know there are going to be air pollution issues related to burning gas to power the compression for LNG ... pollution that causes acid rain, smog and health problems.”
“We shouldn’t be burning gas in (the Kitimat) air shed when we could be using clean renewable electricity,” she said.