New First Nations partnership wants in on LNG

Four First Nations sign an MOU on LNG, framing it as a climate change initiative

Eva Clayton, seated, president of the Nisga'a Lisims Government, John Helin, mayor of the Lax Kw;alaams, and Haisla Chief Crystal Smith sign MOU. | Nelson Bennet Photo

Four First Nations in northwest B.C. are planning to get in on the liquefied natural gas industry, and they are framing their effort as a climate change initiative.

The Nisga’a, Haisla and two Coast Tsimshian bands – the Lax Kw’alaams and Metlakatla – have partnered in an initiative called the Northwest First Nations Collaborative Climate Change Initiative (FNCCI).

They signed a memorandum of understanding Wednesday, October 9 in Vancouver to cooperate in the “planning, management, construction and ownership” of new LNG projects.

First Nations that are already participating in LNG and associated pipeline projects see the industry as a way out of poverty.

"In my community on the north coast, we have the biggest fishing fleet in B.C. that can't make a living anymore," said Lax Kw'alaams Mayor John Helin. "So we have to look at opportunities, and look after the climate."

The Haisla are already benefitting from the $40 billion LNG Canada project in Kitimat, said Haisla Chief Crystal Smith.

"We can see the changes and the benefits (for) our people," she said. "As First Nations leaders, it's our responsibility, for not only protecting our environment...but it's also our responsibility for the social aspect of our people."

Helin said there is no particular LNG project proposed as of yet that the new partnership would participate in. They are merely setting the stage to participate as partners in any future LNG proposals.

“With uncertainty in the province, we’re not going to have anything happen,” Helin said.“Not just First Nations, but industry and government want certainty. There still is a lot of interest out there on LNG, but there’s nothing concrete right now. We don’t have any projects that are for sure going ahead.”

The new partnership appears to be similar to the First Nations Limited Partnership, which is a $500 million partnership of 16 B.C. First Nations that acts as collective bargaining and investment group involved in the Pacific Trails natural gas pipeline – the pipeline that would supply gas to the Kitimat LNG project.

While environmentalists and the Green Party are framing LNG as a fossil fuel that will make it difficult for B.C. to meet its greenhouse gas reduction targets, the FNCCI partnership is framing it as a net benefit, as LNG exported to Asia would displace coal power.

Used to produce power, natural gas produces about half of the CO2 produced by burning coal.

Partly because B.C.’s upstream natural gas sector is being electrified, and partly because natural gas produced in the Montney formation in northeastern B.C. has a lower carbon content than gas produced in other regions – the Horne River, for example – LNG produced in B.C. is being marketed as being the lowest in the world in terms of its emissions intensity.

Natural gas produced in B.C. also is said to have lower methane emissions than natural gas produced in some other jurisdictions, due to regulations and best practices, such as green completions, which captures methane that would otherwise be vented or flared when new gas wells are fracked.

B.C.'s LNG carbon footprint would be even lower still if new LNG projects opt for electric drive for the LNG chilling process – something the partners behind the Kitimat LNG project have already committed to.

FNCCI consultant Alex Gyzbowski, principal of Pacific Resolutions, said it is estimated that using LNG to displace coal power could result in a reduction of 60 million to 90 million tonnes of CO2 per year.

That estimate comes from E3Merge Consulting, which estimated that for every tonne of CO2 produced in B.C. from the LNG Canada project, GHGs would go down by a factor of 10, if it displaces coal power in Asia.

B.C.’s total GHG output in 2017 was 64.5 million tonnes. So, if the E3Merge accounting is correct, exports from a single LNG plant in B.C. – LNG Canada – could conceivably cancel out B.C.’s entire annual greenhouse gas production.

But the way carbon accounting works under the Paris Agreement, GHG reductions achieved outside of a country don’t count.

The LNG Canada project would add an estimated 3.5 million tonnes of CO2 to B.C.’s carbon budget annually – an increase of about 5.5% of what B.C. produced in 2017.

Under current Paris Agreement accounting, B.C. can only count GHG increases from the LNG produced here – it can’t claim any reductions that might occur outside of Canada.

There is a mechanism under Article 6 in the Paris Agreement that allows for Internationally Transferable Mitigation Outcomes (ITMO) that could conceivably be used to claim those reductions in B.C.

It’s something Conservative Leader Andrew Scheer has talked about in his campaign platform, and federal Natural Resources Minister Amarjeet Sohi has also talked about the possibility of negotiating a kind of carbon swap using ITMOs.

But getting those credits could be difficult to negotiate. China and Japan, after all, are also signatories to the Paris Agreement, so any GHG reductions resulting from a switch from coal to gas is something they would want to claim for themselves.

Convincing Asian governments or industries to surrender at least some of their GHG reductions to B.C. might require some fairly high-level country-to-country negotiations.

However, it is something the Government of Canada is exploring. Acquiring ITMOs is one of the objectives in the Pan-Canadian Framework on Clean Growth and Climate Change.