Comply, Offset or Pay: BC To Regulate LNG Export Facilities on CO2 Emissions


Today, the BC Government introduced new legislation aimed to help BC meet its greenhouse gas emission targets by imposing environmental standards on liquefied natural gas (LNG) export facilities operating within the province.

Under the Greenhouse Gas Industrial Reporting and Control Act, natural gas cooling facilities must meet a benchmark of 0.16 carbon dioxide equivalent (CO2e) tonnes per tonne of LNG produced. Per the BC Government background statement,  leading global LNG facilities have emissions intensities between 0.18 and 0.27 tonnes of CO2e per tonne of LNG produced.

The new legislation is aimed to encourage LNG proponents to design their facilities by improving efficiency or using clean electricity. However, if facility design improvements or use of clean electricity do not meet the 0.16 benchmark, proponents will have to option to either purchase BC-based carbon offsets at market prices, or contribute to a technology fund at a rate of $25/tonne of CO2e.

As a point of reference, in 2011 British Columbia’s carbon offset inventory was approximately 1,600,000 tonnes. In 2013, the BC public sector purchased 696,295 offset tonnes at $25/tonne in support of the carbon neutral BC public sector. The current BC offset inventory is unknown.

The BC Government’s plans for the LNG technology fund include investments into strategies or technologies which include low-or-no venting equipment, electrification, cogeneration and waste heat recovery, natural gas vehicles, and exploring carbon capture and storage or reuse.

The new emissions standards for LNG export facilities follow the BC Government’s promise of “Cleanest LNG in the World”. However, cooling the natural gas for export is only part of the nascent LNG sector.  Much of the life-cycle emissions from the LNG industry is in the gas fields, the “upstream”.  To date, BC has not tabled emissions reductions regulations for any upstream or midstream natural gas operations.

Of course, purchasing offsets or paying into a technology fund will not reduce CO2 emissions from the LNG industry. But hopefully the new legislation will sufficiently incentivize LNG proponents to use the latest technology available and wherever possible, plug-in to the nearby BC Hydro transmission grid, where 93% of the electrons come from CO2 emissions free clean or renewable resources.