Today I rose during committee stage debates for Bill 10, Income Tax Amendment Act, 2019 to explore how government could possibly suggest that LNG Canada’s facility in Kitimat would be the cleanest in the world and so exempt from increases in the carbon tax above $30/tonne. As I have mentioned numerous times in the past, LNG Canada have no intention of using electricity in the compression of natural gas. They will burn natural gas, thereby emitting vast quantities of CO₂ in the process.

Yet Freeport LNG in Texas is already using GE electric compressors thereby eliminating greenhouse emissions in that phase of LNG production. It is unclear to me how it will be possible for LNG Canada to claim that they are the cleanest facility in the world. The responses I received from the minister were entirely unhelpful in shedding light on this issue.

I reproduce the text and video of our exchange below.

Text of Exchange

A. Weaver: Thank you to the member for Langley East for those questions.

I have a number of questions to build on this theme. I, too, am having a very difficult time understanding how LNG Canada could make a set investment decision with the uncertainty in terms of what is, in fact, the cleanest LNG in the world. My first question to the minister is: is she aware of Freeport LNG in the United States?

Hon. C. James: I know the member will have had many of these conversations, I’m sure, with the Minister of Environment, as well, as he looks at developing the specifics. The specifics aren’t developed as yet, but obviously, the Freeport LNG and the coal-fired electricity that they utilize will be part of the range of plants that will be looked at and the indicators that will be developed by the minister.

A. Weaver: Again, so we’re going to define an LNG plant as an LNG plant. We’re not defining an LNG plant as some hypothetical production upstream where someone gets electricity from or not, because there are a multitude of ways. You can go on the spot market, and you can buy wind power at 2½ cents a kilowatt hour. You can go on the spot market, and you can by coal power at night pretty cheap. You could buy natural gas from Alberta and avoid the carbon tax.

The relevant question in defining “cleanest LNG in the world” is the facility, and as we know, Freeport LNG uses General Electric compressors, electric compressors, to compress the natural gas.

We know, under the B.C. Liberals, that they initially signed an agreement with LNG Canada. I believe it was 8.2 cents a kilowatt hour to get electricity if they moved forward, and there was the industrial rate if they actually used electricity in the compression. We also know that the B.C. NDP basically exempted LNG Canada from the requirement of using electricity in the compression and gave them the same 5.4 cents a kilowatt hour, I think it is, industrial rate.

We know that we could not, today, deliver into that industrial rate for the requirement of LNG Canada unless two things are done: either (1) we call upon the Columbia River entitlement, or (2) we build enhanced capacity. This government has chosen to build that enhanced capacity through the building of Site C, as opposed to distributed renewable at a fraction of the cost. So we know that the ratepayer is going to end up paying ten to 15 cents a kilowatt hour for the electricity produced at Site C to sell it to LNG Canada for its other operations at 5.4 cents a kilowatt hour. It’s pretty crazy economics.

Even with that, LNG Canada will be using natural gas in the compression — not electricity, natural gas. That natural gas has been given to them for free, in essence, because of the royalty structure in place, again, by the B.C. Liberals at the time to incentivize deep wells, which were difficult and were risky back it must be almost 20 years ago, 18 years ago. But now it’s applied to 99 percent of wells, including all shallow wells.

So we give them the natural gas essentially royalty free — 3 percent or something ridiculous — to actually use in compression, a Crown resource being given away to this company to use in the compression. Now we’re hearing that we’re going to actually exempt them for carbon tax increases above $30, and we are hearing that LNG Canada have actually made a final investment decision. Yet they’re doing so under this cloud of uncertainty, which is also….

I come back to the first question here. How is it that the minister can now suggest at all that LNG Canada have any hope to have access to $30 a tonne, in light of the fact that they are not using electric compression? Because there is no way you can weasel out of any other way but saying they are not the cleanest in the world. How can the minister, other than trying to redefine what an LNG plant is by assigning coal-fired electricity emissions hypothetically, by forgetting about the fact that a lot of the gas in the U.S. is conventional, as opposed to unconventional gas up in B.C., which has rather much larger fugitive emissions…?

How can the minister actually stand here and tell this House that LNG Canada has some certainty that they’ll make the $30 limit on carbon tax? What other agreements have they signed?

Hon. C. James: I appreciate the information that the member is providing. I know that consultations, as we’ve talked about, continue to go on. The Minister of the Environment is working on the specifics, and I know the Green caucus is part of those consultations, as industry is part of those consultations. So certainly, I know those discussions will occur.

I’m obviously not going to talk about the specifics that the minister is in the process of developing. That’s for the minister to discuss. I know there’ll be lots of opportunities for those conversations both in the consultations that will occur but also in estimates, if the member feels there are opportunities there.

To the member’s specific question around the agreement: were there additional pieces written into the agreement? The agreement is the agreement. It is in front of the members. It is in front of the public. These are the measures that we have agreed to. Again, they’re LNG Canada’s estimates, and their estimates that they believe they will fit the criteria of the program. That’s the determination they utilized.

A. Weaver: It would be a fair question to ask this: how are you defining — when I say “you,” it is the government, not the minister — what an LNG facility is for the purpose of calculating emissions? We actually have definitions in existing legislation. Are you changing those definitions? How is it possible that you could allude to electricity — which has been done — produced through the burning of coal? How could you possibly include that in a definition of what an LNG facility is?

Hon. C. James: I refer the member to page 22 — the last paragraph, which talks about LNG facilities. It says about the LNG facility: “It will include fugitive emissions, venting, natural gas combustion at the LNG facility and emissions from electricity supplied to the facility from the British Columbia electrical grid.” That’s in the agreement. But again, specifics are being developed by the minister and will be determined as that process continues.

A. Weaver: How are you going to compare this in LNG Canada, in B.C., to another facility not in B.C.? Is it also from natural gas supplied by B.C.? To what extent is there a requirement to actually use gas from B.C.? There is no requirement in the legislation. We can use gas from Alberta.

To me, there’s just nothing defined here. We’re actually being asked to take a leap of faith. We’re asked to take a leap of faith: “Trust us. We know that LNG Canada can meet the $30 a tonne exemption, because they think they can.” We’ve got no articulation of any rules at all.

We’ve got no mention of electric compression. We’ve got no mention of where the gas will come from in that calculation. Is it sourced gas from B.C., or is a fraction from Alberta? Is it fracked shale gas, or is it conventional gas? Is it Horn River gas, which is dry? Is it Montney play gas, which is wet? Is it gas from the U.S. that’s coming up? It’s just a grand leap of faith.

Like the member for Langley East, I cannot believe that LNG Canada signed on to this unless they were given specific certainty that, in fact, the only carbon tax they will pay is the first $30, and everything above that will be exempt. I cannot believe that they signed this. So I ask the minister this: has the minister at any point, or anyone in her government, assured LNG Canada that all they will pay is $30 a tonne of carbon tax, yes or no?

Hon. C. James: No.

Video of Exchange