Will BC’s Natural Gas Help Reduce Emissions Globally?
This question occupies the time of many, particularly those who would like to see Canada leave our oil and gas in the ground despite growing global demand for energy. Energy is the “oxygen” of both modern and developing economies; it is no exaggeration to say that our civilization was built on harnessing energy. Only 15% of global winds have speeds suitable for large-scale commercial electricity generation. Solar energy reaching the earth’s surface is only half the solar flux in space. There are few suitable large hydroelectric sites left for development, and like fossil fuel projects, hydro projects tend to attract significant opposition. The technology to harness ocean-type energy sources is nascent and very costly. Existing nuclear energy facilities are being shuttered in some countries, removing reliable baseload electricity generation sources. The densities of renewable energy sources range from 500 to 10,000 times less than fossil fuels, meaning more of them are needed to deliver the same amount of energy — typically with orders of magnitude greater spatial, social, and environmental impacts than many people seem to realize.[1]
Increasingly, energy demand is being driven by the fast-evolving digital economy, which has technology-based energy needs that are higher than traditional industries because of cooling requirements— in 2010, about 2% of global electricity was used for the tiniest “machinery” we depend on, but the figure is rising steadily.[2] According to leading forecasters, by 2040 global primary energy demand will be at least 30% greater than today, owing to population growth and related increases in industrial and other economic activity. Fossil fuels will continue to meet most of the world’s demand for energy, even as non-carbon sources expand steadily.[3] Finally, the global energy system is interdependent and integrated — countries with extensive carbon energy endowments, like Canada, are critical suppliers to a world that’s still hungry for all forms of energy. Among other things, Canada is the world’s third largest producer of natural gas and is home to vast reserves of this energy source.
What does this mean? For the foreseeable future, fossil fuels will remain the dominant part of the global energy system. And natural gas, notably in the form of LNG, will increase its share of carbon fuels supplied and traded globally. It is an attractive, flexible, transition fuel. Importantly, on a life-cycle basis, when used for heating homes or for industrial purposes, natural gas releases 25-30% less CO2 than oil, and 40-50% less than coal, per unit of energy produced. When used to generate electricity, natural gas releases about 60% less CO2 than coal for every kWh produced. Indeed, emissions from coal are between 109% and 163% greater on a life-cycle basis than natural gas, depending on whether it displaces new build or older more efficient coal generating facilities. Globally, coal is used primarily in electricity generation.[4]
Figure 1: CO2 Emissions by Fuel Type, lbs/BTU
Source: US Energy Information Agency.
Canadian LNG, if produced, will be among the least GHG-intensive fossil fuel energy sources in the world, even if average emissions from the natural processing segment (i.e., processing requirements of liquefaction, regasification, and pipeline transport) tend to be higher than for coal extraction. On balance, studies show that life-cycle CO2 emissions are less for LNG than for coal. Therefore, if Canadian/BC LNG displaces coal generation in Asia, there clearly will be the potential for overall emissions reductions. Actual CO2 reductions in an LNG-importing nation will depend on its use of LNG. Neither Canada nor BC can dictate this. However, being a supplier of cleaner-than-most-other-LNG is certainly an attractive attribute that cannot be dismissed.
It is also true that if Canada/BC chooses not to develop our natural gas resources to help meet future world energy demand, other suppliers will be only too happy to step in. This matters. For the most part, LNG produced elsewhere will have higher carbon intensity than LNG from Canada. Our neighbour, the United States, has already demonstrated a willingness to lead the market and capture market share by converting existing LNG import to export facilities, moving forward with multiple new LNG projects at a pace that is stunning when compared to Canada’s and BC’s glacial project review and approval processes. Allowing other suppliers to satisfy increasing world demand for LNG will do absolutely nothing to improve the global climate – but it will mean foregone wealth, diminished economic opportunities and fewer tax dollars for governments in Canada.
Canada is well on the way to gaining a reputation as a nation that almost automatically says “no” to industrial development. It is past time to reverse this trend and move forward to develop a globally competitive LNG industry in British Columbia.