Is B.C.’s $6 billion commitment to Coastal GasLink and LNG Canada still economically viable?

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Thursday, November 24, 2022

By Matt Simmons (Local Journalism Initiative Reporter) In 2018, First Nations leaders, B.C.’s then-premier John Horgan and Prime Minister Justin Trudeau gathered in Vancouver to announce what they deemed at the time to be the single largest private sector investment in Canadian history. LNG Canada, a consortium of some of the world’s largest fossil fuel companies, was investing $40 billion to create a liquefied natural gas project in northern B.C. “I can’t tell you how proud I am. I can’t stop smiling,” Horgan said at the news conference.  B.C.’s support for LNG Canada — and the contentious Coastal GasLink pipeline project needed to get the gas across the province — is based largely on an economic argument: major projects support jobs and boost the economy.  In 2018 and again in 2019, B.C. estimated it would receive around $23 billion in government revenues over the 40-year lifespan of LNG Canada. According to 2019 forecasts, those estimates include upstream revenues such as taxes, royalties and hydro payments. The province also predicted the projects would create 10,000 construction jobs and up to 950 permanent jobs at the liquefaction and export facility.  Get The Narwhal in your inbox! People always tell us they love our newsletter. Find out yourself with a weekly dose of our ad‑free, independent journalism. Get The Narwhal in your inbox! People always tell us they love our newsletter. Find out yourself with a weekly dose of our ad‑free, independent journalism. Construction is well underway. The Coastal GasLink pipeline is about 75 per cent complete, with 400 kilometres of pipe in the ground on its 670-kilometre route, according to the company. TC Energy, the pipeline operator, predicts it will complete construction by the end of 2023, with the pipeline being ready for operation the following year. Meanwhile, the LNG Canada project, including its liquefaction and export facility currently under construction in Kitimat, is 70 per cent complete and aims to have the first phase of its operations up and running in 2025. But as construction continues, costs continue to rise. In the summer of 2022, TC Energy announced the cost of the Coastal GasLink pipeline project had ballooned from an original estimate of $6.2 billion to an updated estimate of $11.2 billion. Now, the Alberta-based company says it could cost even more. “Current market conditions, including inflationary impacts on labour costs, could result in final project costs that are higher than this new estimate,” the company noted in its third quarter financial report, released earlier this month.  Climate implications aside, as the project budget continues to grow and the global demand for liquefied natural gas fluctuates, is there still a financial case for the project and the province’s support of it? Here’s what you need to know. B.C. subsidies and investments in Coastal GasLink and LNG Canada more than $6 billion B.C. has contributed more than $5.4 billion to the LNG Canada project. But it’s not as though B.C. wrote the corporations a cheque. That money is in the form of financial breaks and incentives — tax reprieves, tax exemptions and cheaper electricity rates. In other words, it’s money that would have otherwise ended up in public coffers.  That $5.4 billion includes $82 million for a “load interconnection” project, according to B.C.’s recent budget and fiscal plan. That’s hydro-speak for a power line: the province is footing the bill to connect the plant to the grid. In addition, to get Indigenous support for the pipeline, Christy Clark’s Liberal government agreed to pay more than $39 million to 16 First Nations governments, plus an additional $10 million per year once the gas starts flowing in the Coastal GasLink pipeline. In return, the agreements protect B.C. from litigation if the project infringes on any charter rights. The agreements were negotiated by former minister of Aboriginal relations John Rustad (who was recently ousted from the Liberal caucus after promoting climate change denial).  The province also committed more than $113 million to coastal First Nations through agreements related to LNG Canada and other potential export facilities, plus $4.68 million annually. Those agreements require the nations to support the LNG industry at large, not oppose specific LNG projects “in any manner whatsoever” and work with the province to resolve a situation if one of its members does or says anything in opposition.  When you add all of this up, the province has committed more than $6 billion to help get gas out of the ground and exported to overseas markets. This doesn’t factor in the cost of the Site C dam, which many analysts and critics connect directly to the fossil fuel industry, noting corporate and government narratives claim B.C. is building and operating the “cleanest liquefied natural gas facilities in the world.” Those claims depend largely on extraction, transport and liquefaction being powered by electricity. The current projected price tag of the beleaguered hydro project is $16 billion. Many critics of Site C connect the $16 billion hydroelectric project to the fossil fuel industry. Photo: BC Hydro There are also federal subsidies. Canadian taxpayers have covered $275 million for a direct investment in the liquefaction facility and are on the hook for up to $500 million in loans to the pipeline company. To date, taxpayers across the country have also footed the bill for more than $25 million in policing costs on Wet’suwet’en territory. A special unit of the RCMP maintains a constant presence in northern B.C., enforcing a court injunction against anyone acting in opposition to the pipeline.  And more government spending may be in the works. Skye McConnell, a public affairs manager with Shell Canada, the company with the biggest stake in LNG Canada, recently lobbied the provincial government on climate issues, including the “creation of opportunities to incentivize electrification.” Shell also recently lobbied Stephen Guillbeault, the federal minister of Environment and Climate Change Canada. Shell did not reply to The Narwhal’s questions prior to publication. LNG Canada told The Narwhal it is setting the wheels in motion for its approved second phase, an expansion that would double production at the Kitimat facility. “A final investment decision will take into account a number of factors; these include competitiveness, affordability, pace, future [greenhouse gas] emissions and stakeholder needs. Government collaboration and support will be essential for the success of LNG Canada expansion.” The spokesperson said the LNG export project, as it is currently being built, has the lowest carbon intensity of any similar scale facility in the world. “But if we can improve on that design, we will. That’s why we’re examining options to introduce additional electrification along the value chain in Phase 2, including at the plant site in Kitimat, which is already designed to take electricity from BC Hydro for certain power requirements.”  The team looking into those options “will discuss with various parties, including governments and public agencies,” the spokesperson added. When will B.C. start making money from LNG Canada and Coastal GasLink? To date, beyond job creation, the B.C. hasn’t seen economic gains from the projects. And while northern B.C. has certainly been busier since construction started, about two-thirds of the pipeline jobs are filled by out-of-province workers, according to a project status report released in June.   When the gas starts flowing and the liquefaction facility opens its doors, the province is set to start receiving tax revenue and BC Hydro will be paid for the electricity it sells.  But B.C.’s estimated $23 billion in government revenue over 40 years works out to $575 million per year. That means it will take more than 10 years for the province to cover the total costs of its subsidies and agreements with First Nations. Neither B.C.’s Ministry of Finance nor the Ministry of Energy, Mines and Low Carbon Innovation responded to The Narwhal’s questions about the current financial viability of the project prior to publication.   “In addition to other revenue streams from these projects, B.C. would start receiving revenue through royalties paid by natural gas producing companies for gas that is exported by the project,” a spokesperson for the Energy Ministry wrote in an emailed statement. According to reports filed with B.C.’s environmental assessment office, about two-thirds of construction jobs on the Coastal GasLink pipeline are filled by out-of-province workers. Photo: Matt Simmons / The Narwhal Will there still be demand 10 years after LNG Canada starts up? High natural gas prices, in part fuelled by Russia’s invasion of Ukraine and the resulting European energy crisis, means there’s incentive to complete Coastal GasLink and LNG Canada as quickly as possible. “As world events continue to demonstrate, a reliable supply of responsibly produced energy should never be taken for granted,” the LNG Canada spokesperson said. “Our project will provide security of supply for global markets that rely on Canada’s natural gas reserves to fuel their economies, reduce global [greenhouse gas] emissions as natural gas replaces the use of coal and bring significant economic growth and stability to northern British Columbia communities and all of Canada.” But those high prices may not hold, according to the International Energy Agency. In its most recent report, the intergovernmental data-driven organization says the crisis is making countries take a hard look at whether gas is the right fit in an unstable political climate. “The traditional arguments in favour of natural gas have focused on its role as a reliable partner for the clean energy transition and its ability to step in to fill the gap left by declining coal and oil,” the report noted. “These are currently being tested by the global repercussions of Russia’s actions in Europe. In the midst of a global energy crisis, fundamental questions are now being asked about natural gas: how can supply be assured, now and in the future, and at what price?” “If LNG Canada were to come in service today, they’d be making money,” Clark Williams-Derry, an energy economics analyst with the Institute for Energy Economics and Financial Analysis, told The Narwhal in an interview. “But when it comes into service in 2025-26, will they actually be able to make money? That is an increasingly uncertain proposition.” In modelling scenarios the International Energy Agency used to forecast demand, based on stated policies, announced pledges and net-zero commitments, demand for the fossil fuel over the next few years either rises by less than five per cent before levelling off in 2030 or plummets to 20 per cent below current demand. If countries follow through on net-zero commitments, the demand is projected to be 75 per cent lower by 2050. The Coastal GasLink pipeline is being built to connect gas sources in B.C.’s northeast to overseas markets via the LNG Canada facility. According to the International Energy Agency, global demand is set to start decreasing over the next decade. Map: Shawn Parkinson / The Narwhal What all this means for Coastal GasLink and LNG Canada is not immediately clear. If the International Energy Agency scenarios prove accurate, the twin projects might have a few good years after coming online in the mid-2020s before prices start dropping, according to Williams-Derry. “From a long-term economics perspective, the rising cost and increasing uncertainty on supply for LNG Canada sort of casts a pall on the LNG industry for Western Canada in my mind,” he said.  The LNG Canada consortium remains confident. “A long-life asset with a 40-year export license, LNG Canada is advantaged by: access to abundant, low-cost natural gas from Western Canada; its location in an ice-free harbour and its shipping distance to North Asia, which is about 50 per cent shorter than from the U.S. Gulf of Mexico and avoids the Panama Canal,” the spokesperson wrote. According to Williams-Derry, the B.C.-based projects don’t make a lot of sense, financially. Getting gas from B.C.’s reserves to export facilities on the Gulf of Mexico costs less than half the cost of shipping it via Kitimat, he said. As an example, he noted a Tourmaline Oil project that would use existing TC Energy pipelines to get gas to Asian markets. But, he added, that may not matter to the corporations invested in the projects. As well as sunk costs in getting the pipeline and liquefaction facility this close to completion, there’s a big-picture economic argument at play for Shell, Petronas, Mitsubishi, PetroChina and Korea Gas, the companies that make up the LNG Canada consortium. “The whole purpose of LNG Canada was to monetize the reserves that these companies had on their books but they couldn’t get to market,” Williams-Derry explained. “It was a sort of an exercise in reserves engineering, or financial engineering at their reserves.” In essence, the companies had two options: write those reserves off the books, which means each company gets smaller and is therefore less profitable overall, or find a way to give them value. Williams-Derry said major oil companies stay financially successful by either replacing reserves they deplete while extracting or by buying more reserves.  “The reserves were what gave the company long-term value,” he said. “So you create the LNG Canada project to say, ‘Okay, this is how we’re going to get the stuff to market and monetize it, this is how we’re going to turn it from something that it’s in the ground to something that has extractable economic value and that we treat as a legitimate reserve.’ ” In other words, even if the projects themselves are significantly less profitable than other pipelines, gas sources and liquefaction facilities, corporations can still make money by ensuring those reserves are counted as assets. TC Energy seemingly distancing itself from the contentious Coastal GasLink pipeline The company appears to be distancing itself from the Coastal GasLink pipeline. TC Energy became a minority shareholder in 2019 after selling off 65 per cent of the project to U.S.-based KKR investments and the Alberta Investment Management Corporation (AIMCo), a Crown corporation that manages $160 billion of the province’s public pension, endowment and government funds. In March, TC Energy further reduced its future shares in the company by signing equity agreements with 16 B.C. First Nations. These agreements will provide the communities with a shared 10 per cent ownership stake in the pipeline — if the project is completed.  “Ownership in our projects and assets means that Indigenous communities can share in Canada’s resource economy where we have the opportunity to learn, grow and change the way energy is developed in Canada,” TC Energy CEO François Poirier said in a public statement in November. To pay for construction of Coastal GasLink, which includes navigating steep mountainous terrain and crossing more than 700 watercourses, the pipeline project is borrowing money from its operator, TC Energy. According to its latest quarterly report, TC Energy has to cough up another $1.9 billion, payable over just seven months. This doesn’t change the company’s 35 per cent ownership stake — it’s a reflection of the ballooning costs.   It noted its commitment to the financing “has been and will continue to be stepped down over time.”  Construction costs of the Coastal GasLink pipeline have ballooned to an estimated $11.2 billion. Photo: Amber Bracken / The Narwhal After announcing it is facing those new costs, TC Energy also announced this quarter it will sell more than $5 billion in assets next year, to free up cash and fund new projects. The Narwhal asked the company if the sell-off was related to the increased costs of the Coastal GasLink pipeline but did not receive a response prior to publication. Shareholders have undoubtedly had fears about the pipeline, given the project’s thorny past and tense present. Even before construction began in 2019, Coastal GasLink was a focal point for conflict and a jumping-off point for wider discussion about Indigenous Rights and reconciliation. The project is opposed by Wet’suwet’en Hereditary Chiefs and their supporters, who note the project did not receive Free, Prior and Informed Consent. The province and the pipeline company instead signed agreements with 20 elected First Nations governments, including five of six Wet’suwet’en band councils. Over three years, dozens of Indigenous land defenders have been arrested during raids by heavily armed tactical units of the RCMP. The conflict spilled across the country in early 2020, when widespread solidarity movements erupted, shutting down ports and rail lines. The company hasn’t specifically blamed this opposition for increased costs, but alludes to it in its latest quarterly report, noting the revised estimate “reflects an increase from the original project cost estimate due to scope increases and the impacts of COVID-19, weather and other events outside of [the company’s] control.” Though TC Energy’s actions suggest a distancing from the project, it continues to push forward with construction. “We continue to believe the project remains economically viable and, subject to a final investment decision, we anticipate a potential second phase of Coastal GasLink could enhance TC Energy’s project returns,” TC Energy CEO Poirier said in a July statement. TC Energy did not respond to The Narwhal’s questions about the long-term financial viability of the project.

By Matt Simmons (Local Journalism Initiative Reporter) B.C. estimates it will earn $23 billion over 40 years once LNG Canada gets going, but net-zero pledges raise questions about whether global demand for gas will hold up over the project’s lifespan

Fossil fuel executives laugh and shake hands with former B.C. premier John Horgan and Prime Minister Justin Trudeau looking on

In 2018, First Nations leaders, B.C.’s then-premier John Horgan and Prime Minister Justin Trudeau gathered in Vancouver to announce what they deemed at the time to be the single largest private sector investment in Canadian history. LNG Canada, a consortium of some of the world’s largest fossil fuel companies, was investing $40 billion to create a liquefied natural gas project in northern B.C.

“I can’t tell you how proud I am. I can’t stop smiling,” Horgan said at the news conference. 

B.C.’s support for LNG Canada — and the contentious Coastal GasLink pipeline project needed to get the gas across the province — is based largely on an economic argument: major projects support jobs and boost the economy. 

In 2018 and again in 2019, B.C. estimated it would receive around $23 billion in government revenues over the 40-year lifespan of LNG Canada. According to 2019 forecasts, those estimates include upstream revenues such as taxes, royalties and hydro payments. The province also predicted the projects would create 10,000 construction jobs and up to 950 permanent jobs at the liquefaction and export facility. 

Get The Narwhal in your inbox!
People always tell us they love our newsletter. Find out yourself with a weekly dose of our ad‑free, independent journalism.
Get The Narwhal in your inbox!
People always tell us they love our newsletter. Find out yourself with a weekly dose of our ad‑free, independent journalism.

Construction is well underway. The Coastal GasLink pipeline is about 75 per cent complete, with 400 kilometres of pipe in the ground on its 670-kilometre route, according to the company. TC Energy, the pipeline operator, predicts it will complete construction by the end of 2023, with the pipeline being ready for operation the following year. Meanwhile, the LNG Canada project, including its liquefaction and export facility currently under construction in Kitimat, is 70 per cent complete and aims to have the first phase of its operations up and running in 2025.

But as construction continues, costs continue to rise.

In the summer of 2022, TC Energy announced the cost of the Coastal GasLink pipeline project had ballooned from an original estimate of $6.2 billion to an updated estimate of $11.2 billion. Now, the Alberta-based company says it could cost even more.

“Current market conditions, including inflationary impacts on labour costs, could result in final project costs that are higher than this new estimate,” the company noted in its third quarter financial report, released earlier this month. 

Climate implications aside, as the project budget continues to grow and the global demand for liquefied natural gas fluctuates, is there still a financial case for the project and the province’s support of it?

Here’s what you need to know.

B.C. subsidies and investments in Coastal GasLink and LNG Canada more than $6 billion

B.C. has contributed more than $5.4 billion to the LNG Canada project. But it’s not as though B.C. wrote the corporations a cheque. That money is in the form of financial breaks and incentives — tax reprieves, tax exemptions and cheaper electricity rates. In other words, it’s money that would have otherwise ended up in public coffers. 

That $5.4 billion includes $82 million for a “load interconnection” project, according to B.C.’s recent budget and fiscal plan. That’s hydro-speak for a power line: the province is footing the bill to connect the plant to the grid.

In addition, to get Indigenous support for the pipeline, Christy Clark’s Liberal government agreed to pay more than $39 million to 16 First Nations governments, plus an additional $10 million per year once the gas starts flowing in the Coastal GasLink pipeline. In return, the agreements protect B.C. from litigation if the project infringes on any charter rights. The agreements were negotiated by former minister of Aboriginal relations John Rustad (who was recently ousted from the Liberal caucus after promoting climate change denial). 

The province also committed more than $113 million to coastal First Nations through agreements related to LNG Canada and other potential export facilities, plus $4.68 million annually. Those agreements require the nations to support the LNG industry at large, not oppose specific LNG projects “in any manner whatsoever” and work with the province to resolve a situation if one of its members does or says anything in opposition. 

When you add all of this up, the province has committed more than $6 billion to help get gas out of the ground and exported to overseas markets.

This doesn’t factor in the cost of the Site C dam, which many analysts and critics connect directly to the fossil fuel industry, noting corporate and government narratives claim B.C. is building and operating the “cleanest liquefied natural gas facilities in the world.” Those claims depend largely on extraction, transport and liquefaction being powered by electricity. The current projected price tag of the beleaguered hydro project is $16 billion.

Many critics of Site C connect the $16 billion hydroelectric project to the fossil fuel industry. Photo: BC Hydro

There are also federal subsidies. Canadian taxpayers have covered $275 million for a direct investment in the liquefaction facility and are on the hook for up to $500 million in loans to the pipeline company. To date, taxpayers across the country have also footed the bill for more than $25 million in policing costs on Wet’suwet’en territory. A special unit of the RCMP maintains a constant presence in northern B.C., enforcing a court injunction against anyone acting in opposition to the pipeline. 

And more government spending may be in the works. Skye McConnell, a public affairs manager with Shell Canada, the company with the biggest stake in LNG Canada, recently lobbied the provincial government on climate issues, including the “creation of opportunities to incentivize electrification.” Shell also recently lobbied Stephen Guillbeault, the federal minister of Environment and Climate Change Canada.

Shell did not reply to The Narwhal’s questions prior to publication.

LNG Canada told The Narwhal it is setting the wheels in motion for its approved second phase, an expansion that would double production at the Kitimat facility.

“A final investment decision will take into account a number of factors; these include competitiveness, affordability, pace, future [greenhouse gas] emissions and stakeholder needs. Government collaboration and support will be essential for the success of LNG Canada expansion.”

The spokesperson said the LNG export project, as it is currently being built, has the lowest carbon intensity of any similar scale facility in the world.

“But if we can improve on that design, we will. That’s why we’re examining options to introduce additional electrification along the value chain in Phase 2, including at the plant site in Kitimat, which is already designed to take electricity from BC Hydro for certain power requirements.” 

The team looking into those options “will discuss with various parties, including governments and public agencies,” the spokesperson added.

When will B.C. start making money from LNG Canada and Coastal GasLink?

To date, beyond job creation, the B.C. hasn’t seen economic gains from the projects. And while northern B.C. has certainly been busier since construction started, about two-thirds of the pipeline jobs are filled by out-of-province workers, according to a project status report released in June.  

When the gas starts flowing and the liquefaction facility opens its doors, the province is set to start receiving tax revenue and BC Hydro will be paid for the electricity it sells. 

But B.C.’s estimated $23 billion in government revenue over 40 years works out to $575 million per year. That means it will take more than 10 years for the province to cover the total costs of its subsidies and agreements with First Nations.

Neither B.C.’s Ministry of Finance nor the Ministry of Energy, Mines and Low Carbon Innovation responded to The Narwhal’s questions about the current financial viability of the project prior to publication.  

“In addition to other revenue streams from these projects, B.C. would start receiving revenue through royalties paid by natural gas producing companies for gas that is exported by the project,” a spokesperson for the Energy Ministry wrote in an emailed statement.

Coastal GasLink construction site
According to reports filed with B.C.’s environmental assessment office, about two-thirds of construction jobs on the Coastal GasLink pipeline are filled by out-of-province workers. Photo: Matt Simmons / The Narwhal

Will there still be demand 10 years after LNG Canada starts up?

High natural gas prices, in part fuelled by Russia’s invasion of Ukraine and the resulting European energy crisis, means there’s incentive to complete Coastal GasLink and LNG Canada as quickly as possible.

“As world events continue to demonstrate, a reliable supply of responsibly produced energy should never be taken for granted,” the LNG Canada spokesperson said. “Our project will provide security of supply for global markets that rely on Canada’s natural gas reserves to fuel their economies, reduce global [greenhouse gas] emissions as natural gas replaces the use of coal and bring significant economic growth and stability to northern British Columbia communities and all of Canada.”

But those high prices may not hold, according to the International Energy Agency. In its most recent report, the intergovernmental data-driven organization says the crisis is making countries take a hard look at whether gas is the right fit in an unstable political climate.

“The traditional arguments in favour of natural gas have focused on its role as a reliable partner for the clean energy transition and its ability to step in to fill the gap left by declining coal and oil,” the report noted. “These are currently being tested by the global repercussions of Russia’s actions in Europe. In the midst of a global energy crisis, fundamental questions are now being asked about natural gas: how can supply be assured, now and in the future, and at what price?”

“If LNG Canada were to come in service today, they’d be making money,” Clark Williams-Derry, an energy economics analyst with the Institute for Energy Economics and Financial Analysis, told The Narwhal in an interview. “But when it comes into service in 2025-26, will they actually be able to make money? That is an increasingly uncertain proposition.”

In modelling scenarios the International Energy Agency used to forecast demand, based on stated policies, announced pledges and net-zero commitments, demand for the fossil fuel over the next few years either rises by less than five per cent before levelling off in 2030 or plummets to 20 per cent below current demand. If countries follow through on net-zero commitments, the demand is projected to be 75 per cent lower by 2050.

Map of TC Energy's Coastal GasLink pipeline route, and LNG Canada project marker.
The Coastal GasLink pipeline is being built to connect gas sources in B.C.’s northeast to overseas markets via the LNG Canada facility. According to the International Energy Agency, global demand is set to start decreasing over the next decade. Map: Shawn Parkinson / The Narwhal

What all this means for Coastal GasLink and LNG Canada is not immediately clear. If the International Energy Agency scenarios prove accurate, the twin projects might have a few good years after coming online in the mid-2020s before prices start dropping, according to Williams-Derry.

“From a long-term economics perspective, the rising cost and increasing uncertainty on supply for LNG Canada sort of casts a pall on the LNG industry for Western Canada in my mind,” he said. 

The LNG Canada consortium remains confident.

“A long-life asset with a 40-year export license, LNG Canada is advantaged by: access to abundant, low-cost natural gas from Western Canada; its location in an ice-free harbour and its shipping distance to North Asia, which is about 50 per cent shorter than from the U.S. Gulf of Mexico and avoids the Panama Canal,” the spokesperson wrote.

According to Williams-Derry, the B.C.-based projects don’t make a lot of sense, financially. Getting gas from B.C.’s reserves to export facilities on the Gulf of Mexico costs less than half the cost of shipping it via Kitimat, he said. As an example, he noted a Tourmaline Oil project that would use existing TC Energy pipelines to get gas to Asian markets.

But, he added, that may not matter to the corporations invested in the projects.

As well as sunk costs in getting the pipeline and liquefaction facility this close to completion, there’s a big-picture economic argument at play for Shell, Petronas, Mitsubishi, PetroChina and Korea Gas, the companies that make up the LNG Canada consortium.

“The whole purpose of LNG Canada was to monetize the reserves that these companies had on their books but they couldn’t get to market,” Williams-Derry explained. “It was a sort of an exercise in reserves engineering, or financial engineering at their reserves.”

In essence, the companies had two options: write those reserves off the books, which means each company gets smaller and is therefore less profitable overall, or find a way to give them value.

Williams-Derry said major oil companies stay financially successful by either replacing reserves they deplete while extracting or by buying more reserves. 

“The reserves were what gave the company long-term value,” he said. “So you create the LNG Canada project to say, ‘Okay, this is how we’re going to get the stuff to market and monetize it, this is how we’re going to turn it from something that it’s in the ground to something that has extractable economic value and that we treat as a legitimate reserve.’ ”

In other words, even if the projects themselves are significantly less profitable than other pipelines, gas sources and liquefaction facilities, corporations can still make money by ensuring those reserves are counted as assets.

TC Energy seemingly distancing itself from the contentious Coastal GasLink pipeline

The company appears to be distancing itself from the Coastal GasLink pipeline. TC Energy became a minority shareholder in 2019 after selling off 65 per cent of the project to U.S.-based KKR investments and the Alberta Investment Management Corporation (AIMCo), a Crown corporation that manages $160 billion of the province’s public pension, endowment and government funds.

In March, TC Energy further reduced its future shares in the company by signing equity agreements with 16 B.C. First Nations. These agreements will provide the communities with a shared 10 per cent ownership stake in the pipeline — if the project is completed. 

“Ownership in our projects and assets means that Indigenous communities can share in Canada’s resource economy where we have the opportunity to learn, grow and change the way energy is developed in Canada,” TC Energy CEO François Poirier said in a public statement in November.

To pay for construction of Coastal GasLink, which includes navigating steep mountainous terrain and crossing more than 700 watercourses, the pipeline project is borrowing money from its operator, TC Energy. According to its latest quarterly report, TC Energy has to cough up another $1.9 billion, payable over just seven months. This doesn’t change the company’s 35 per cent ownership stake — it’s a reflection of the ballooning costs.  

It noted its commitment to the financing “has been and will continue to be stepped down over time.” 

Coastal GasLink pipeline, environmental infractions
Construction costs of the Coastal GasLink pipeline have ballooned to an estimated $11.2 billion. Photo: Amber Bracken / The Narwhal

After announcing it is facing those new costs, TC Energy also announced this quarter it will sell more than $5 billion in assets next year, to free up cash and fund new projects. The Narwhal asked the company if the sell-off was related to the increased costs of the Coastal GasLink pipeline but did not receive a response prior to publication.

Shareholders have undoubtedly had fears about the pipeline, given the project’s thorny past and tense present. Even before construction began in 2019, Coastal GasLink was a focal point for conflict and a jumping-off point for wider discussion about Indigenous Rights and reconciliation.

The project is opposed by Wet’suwet’en Hereditary Chiefs and their supporters, who note the project did not receive Free, Prior and Informed Consent. The province and the pipeline company instead signed agreements with 20 elected First Nations governments, including five of six Wet’suwet’en band councils. Over three years, dozens of Indigenous land defenders have been arrested during raids by heavily armed tactical units of the RCMP. The conflict spilled across the country in early 2020, when widespread solidarity movements erupted, shutting down ports and rail lines.

The company hasn’t specifically blamed this opposition for increased costs, but alludes to it in its latest quarterly report, noting the revised estimate “reflects an increase from the original project cost estimate due to scope increases and the impacts of COVID-19, weather and other events outside of [the company’s] control.”

Though TC Energy’s actions suggest a distancing from the project, it continues to push forward with construction.

“We continue to believe the project remains economically viable and, subject to a final investment decision, we anticipate a potential second phase of Coastal GasLink could enhance TC Energy’s project returns,” TC Energy CEO Poirier said in a July statement.

TC Energy did not respond to The Narwhal’s questions about the long-term financial viability of the project.

Read the full story here.
Photos courtesy of

‘I use it because it’s better’: why chefs are embracing the electric stove

As evidence mounts that gas stoves are bad for human health, a growing number of professional chefs say electric even makes for a better cooking experienceThe evidence that gas stoves are bad for human health has grown so staggering over the last few years that the US Consumer Product Safety Commission recently announced that it would consider banning the appliances. Though a conservative backlash prompted the White House to rule out the possibility of a nationwide ban, and some states have passed pre-emptive laws that prohibit cities from ever passing gas bans, other cities including Berkeley, New York and San Francisco have already moved to bar new gas hookups due to health and environmental concerns.One study from earlier this month found that one in eight cases of childhood asthma in the US is caused by gas stove pollution. According to the lead author on the study, Talor Gruenwald, a research associate at the non-profit Rewiring America, that means that living in a home with a gas stove is comparable to living in a home with a smoker. Gas stoves release pollutants so harmful that the air pollution they create would be illegal if it were outdoors, and that’s not just true when you’re actively cooking – gas stoves continue to emit harmful compounds like methane even when turned off. Beyond the adverse health impacts, those emissions are greenhouse gasses that also contribute to the climate crisis. Continue reading...

As evidence mounts that gas stoves are bad for human health, a growing number of professional chefs say electric even makes for a better cooking experienceThe evidence that gas stoves are bad for human health has grown so staggering over the last few years that the US Consumer Product Safety Commission recently announced that it would consider banning the appliances. Though a conservative backlash prompted the White House to rule out the possibility of a nationwide ban, and some states have passed pre-emptive laws that prohibit cities from ever passing gas bans, other cities including Berkeley, New York and San Francisco have already moved to bar new gas hookups due to health and environmental concerns.One study from earlier this month found that one in eight cases of childhood asthma in the US is caused by gas stove pollution. According to the lead author on the study, Talor Gruenwald, a research associate at the non-profit Rewiring America, that means that living in a home with a gas stove is comparable to living in a home with a smoker. Gas stoves release pollutants so harmful that the air pollution they create would be illegal if it were outdoors, and that’s not just true when you’re actively cooking – gas stoves continue to emit harmful compounds like methane even when turned off. Beyond the adverse health impacts, those emissions are greenhouse gasses that also contribute to the climate crisis. Continue reading...

What to Know About the Risks of Gas Stoves and Appliances

This story was originally published by ProPublica. As a climate reporter, I was well aware of the growing concern about the gas stoves in people’s homes leaking dangerous pollutants, like methane, a potent greenhouse gas and explosive hazard; nitrogen dioxide, which worsens asthma; and benzene, which causes cancer. But I was a renter who had no […]

This story was originally published by ProPublica. As a climate reporter, I was well aware of the growing concern about the gas stoves in people’s homes leaking dangerous pollutants, like methane, a potent greenhouse gas and explosive hazard; nitrogen dioxide, which worsens asthma; and benzene, which causes cancer. But I was a renter who had no control over my appliances. So I mostly ignored it — until one day last fall when I smelled the rotten-egg odor of leaking natural gas while baking focaccia. I borrowed a $30 gas leak detector from a friend (a fellow climate reporter, of course). When I turned on the oven in my New York City apartment, the lights for a “significant” leak lit up. My kitchen was filling up with methane. According to the user manual, that meant I should “VENTILATE THE AREA IMMEDIATELY and move to a safe location” in case of an explosion. I opened the windows and ignored the evacuation advice (don’t follow my example), too intent on taking a video of the leak as proof for my landlord before turning off the oven. Then I vented my frustration by panic-texting friends and eating too much focaccia — after cutting it into pieces and baking it in my toaster oven. Luckily, my landlord replaced my faulty stove within days. I made sure to check the new stove (still gas, alas) for leaks after it was installed. “People still don’t recognize that there are health downsides to cooking with gas in your home,” said Regina LaRocque, a Harvard Medical School professor who does research on medicine and public health. “This is the 21st century, and we have better ways of cooking than over a fire.” The issue has caught national attention in recent weeks, as the U.S. Consumer Product Safety Commission considers regulating gas stoves. Public health experts and environmentalists have long warned of the risks of gas ranges. One study found that indoor gas stoves were responsible for roughly 13% of childhood asthma cases in the U.S. The American Public Health Association and American Medical Association have urged consumers to transition away from gas. LaRocque uses a traditional electric coil stove at home. But she and other experts advocated for induction stoves, which use electromagnets to heat up food. These stoves are growing in popularity as consumers choose them for climate, health and safety reasons, though they can cost more than twice as much as a gas range. The federal Inflation Reduction Act will provide rebates to upgrade to electric or induction home appliances (here’s a Wirecutter guide on that program). Some states, including Massachusetts, offer their own rebates as well. Induction stoves are much more common in Europe, LaRocque said. That cultural shift has yet to occur in the United States, where more than a third of households use gas stoves. As Mother Jones reported, the gas industry embraced the term “cooking with gas” in the 1930s; an executive even made sure to get it worked into Bob Hope’s comedy routines. More recently, the industry has opposed electrification efforts with lobbying and social media influencers who tout gas as a “super cool way” to cook. I consulted multiple experts on the hazards of gas stoves and what people can do about them. Their advice boiled down to this: homeowners who can afford it should switch to an induction or electric stove. For renters and others who can’t replace their appliances, the experts provided tips on lowering the health risks. Methane is a greenhouse gas. The gas that’s piped into your house is virtually all methane. When you burn methane to cook food, it turns into carbon dioxide. But unburned methane trickles out from loose fittings and faulty stovetop igniters. Every pound of methane released into the air is 30 to 86 times more effective at warming the planet than a pound of carbon dioxide. When researchers analyzed 53 homes in California last year, they found methane leaking from almost every stove. More than three-quarters of that methane came from stoves that were turned off. The act of igniting a burner or oven released additional puffs of methane. If these leaks are consistent across the nation, then annual methane emissions from U.S. gas stoves would equal the greenhouse gas emissions of half a million cars. These leaks are “pretty much universal,” said Robert Jackson, a Stanford University professor and a study co-author. Jackson, who’s spent more than a decade studying methane leaks from gas wells, pipelines and other fossil fuel infrastructure, said it can be hard to predict where the leak is coming from. Based on the description of the leak in my kitchen, he told me it likely was caused by ignition problems with the oven. Jackson’s research has inspired him to ditch his gas stove, furnace and hot water heater in favor of induction and electric appliances. “I did not expect to see the high levels of indoor air pollution we saw consistently,” he said. “It strongly motivated me to replace my own stove.” Large methane leaks can cause explosions. If you smell gas in your home, leave the building and call your gas company. The distinctive rotten-egg odor comes from chemicals that gas companies add to the methane to make it easier to detect, since the gas is naturally odorless. Some people are much more sensitive to the smell than others, so it’s not a foolproof warning for explosive risk. Eric Lebel, lead author of the methane study Jackson worked on, recalled smelling gas in some of the homes where he did the testing, even though the homeowners couldn’t smell anything. Lebel is a senior scientist at PSE Healthy Energy, a nonprofit science and policy research institute. Burning natural gas releases nitrogen dioxide, a respiratory irritant. Nitrogen dioxide exacerbates asthma and impairs lung function. The Environmental Protection Agency regulates these emissions from cars and power plants with national air quality standards, but those regulations don’t apply to indoor air. The Lebel and Jackson study measured nitrogen dioxide and a related compound. They found steadily rising emissions after turning on burners and ovens. “Simply having a combustion stove in your home is a health risk,” LaRocque said. In poorly ventilated kitchens, nitrogen dioxide levels could exceed outdoor air standards. “It would be like standing behind an idling car, or standing in a smoke-filled room,” she added. “I think if my child had asthma, I would definitely want to intervene.” Gas stoves leak benzene, a carcinogen that can cause leukemia. In a separate study published last fall, Lebel and his colleagues analyzed gas samples from residential kitchens. Out of 160 samples, all but one contained benzene. “If there’s a leak from that appliance, it likely contains benzene,” Lebel said. “It’s a rather unavoidable cost of owning a gas appliance.” Raw natural gas contains a mix of methane and toxic chemicals like benzene, toluene or formaldehyde. Gas companies strip out the impurities before piping the processed gas to homes, but they don’t eliminate all the toxins. Lebel’s team modeled the benzene concentrations from the leaking stoves and found a handful that failed to meet California’s benzene safety guidelines. They also found traces of other harmful compounds, including toluene, ethyl benzene and xylene, which can cause dizziness, nausea and liver damage. A separate study of gas appliances in the Greater Boston area found benzene in 95% of samples, though at lower levels than Lebel’s study. Turn on the range hood above your stove. Paul Francisco, associate director of building science at the University of Illinois Urbana, Champaign, suggests cooking on the back burners and using the hood whenever you turn on the stove or the oven. The fans improve ventilation and will pull benzene, methane and nitrogen dioxide outdoors. However, this only works if the hood connects to the outside of your house. Follow the piping on the hood: If the top of the device goes through the ceiling or the wall, then it should help with air quality. Another type of range hood, called a “ductless” hood, simply recirculates indoor air. If your hood has grilles or vents on the front, then it’s likely, but not guaranteed, to be ductless, Francisco said. These fans won’t cut down on harmful gases, but they might be able to reduce particulate matter — tiny particles created during cooking, which can cause or exacerbate respiratory illness. A 2014 study found that cooking on induction stoves produced far fewer particles than cooking on gas or electric stoves. Open a window to improve ventilation. At a minimum, an open window will dilute toxic gases. If your kitchen is in the upper half of a building, opening the window should draw the contaminants outside as long as there’s no wind and it’s warmer inside than outside, Francisco said. If you live in the lower half of a building, opening a window in the winter won’t be as effective, he said, though any ventilation is better than none. Get an induction hot plate. If you can’t replace your stove, experts said the next best thing is to buy an induction burner. Here are some consumer guides with reviews of portable hot plates. During last summer’s heat waves, when I couldn’t fathom lighting a fire inside my kitchen, I did almost all my cooking using an induction hot plate, an Instant Pot and an electric toaster oven. Excessive heat is another reason why some chefs advocate for induction burners. What about air purifiers? These devices have become more popular as a way to improve air quality and reduce the risk of COVID-19 infections. Most air purifiers won’t have any effect on toxic gases, though they do remove particulate matter, Francisco said. Some specialty models filter out volatile organic compounds, a class of chemicals that includes benzene. Should I buy a gas detector? There are a number of methane monitors that are designed for consumers, priced from roughly $30 to $200. Some will tell you about the presence of a leak. Others are sensitive enough to detect specific concentrations of methane. You can also find indoor monitors that detect particulate matter for $200 to $300. It’s much harder to monitor for benzene or nitrogen dioxide. The types of instruments used by Lebel and Jackson cost tens of thousands of dollars and require users to undergo extensive training.   The South Coast Air Quality Management District, a regulatory agency in California, maintains a list of “low-cost” air quality sensors (less than $2,000) that can be used by citizen scientists and advocacy groups. These sensors can be used to detect particulate matter, nitrogen dioxide and volatile organic compounds.   Lebel said it shouldn’t be up to individuals to solve a systemic issue. It seems problematic, he said, “to be asking citizens to be scientists and try and discover if their stove is leaking.”

Fossil-Fuel Power Plants May Be on Their Last Legs

This story was originally published by Inside Climate News and is reproduced here as part of the Climate Desk collaboration. The global energy transition has reached a pivot point, in which fossil fuels have likely peaked in their use for producing electricity and are about to enter a period of decline. This is the idea at the heart of a […]

This story was originally published by Inside Climate News and is reproduced here as part of the Climate Desk collaboration. The global energy transition has reached a pivot point, in which fossil fuels have likely peaked in their use for producing electricity and are about to enter a period of decline. This is the idea at the heart of a new report from RMI (Rocky Mountain Institute), a nonprofit that does research and advocacy about the transition. The lead author, energy analyst Kingsmill Bond, makes a case that wind and solar power are going through growth that looks almost exactly like the trend lines for the early stages of transformative products and industries, across technologies and eras, like automobiles and smartphones. The growth begins slowly, with high costs, and shifts into high gear as costs shrink and efficiency rises. The optimism in this outlook is almost jarring in its clarity, and in its contrast with the pessimism I see and feel every day as the threats of climate change become clearer. The report argues that the fossil fuel demand has peaked in the electricity market in part because the annual growth in global electricity demand—about 700 terawatt-hours—is less than the electricity generated in 2022 by newly built power plants that have zero emissions, most of which were wind and solar plants. The report cites forecasts for a continuing increase in wind and solar development that will outpace the growth in electricity demand, a dynamic that will squeeze out the most expensive and dirtiest energy sources. The use of fossil fuels for electricity shifted in 2018 from a long period of growth to a plateau in which there is no clear trend up or down as measured by the amount of electricity produced. The report says the plateau is likely to continue until about 2025, followed by a long-term decline. The report acknowledges some big obstacles, like political resistance from fossil fuel industries and the challenges of running a grid that uses mostly intermittent resources. But it says the obstacles are surmountable, although I think this portion of the report feels insubstantial at points, with statements like “Innovation has solved most of the barriers to change.” (Bond acknowledged this is fair criticism, and said that the part of the report about obstacles is brief because he and his co-authors are working on a companion report that focuses on this subject in detail.) The report isn’t an academic paper, but plenty of academic researchers have used similar concepts to come to similar conclusions. For example, I wrote last year about a paper from University of Oxford economists and mathematicians about the potential for vast cost savings from a rapid transition to renewable energy. Bond, who is based in the United Kingdom, spent decades as an equity analyst and strategist for Deutsche Bank and Citibank, among others. He shifted a few years ago to focus exclusively on economic ramifications of the transition to clean energy, working for the UK-based Carbon Tracker Initiative and now RMI. I spoke with him by video from his office, with follow-up via email. Here’s our discussion, edited for length and clarity: A lot of what you’re talking about feels like techno optimism, this idea that we can all relax because progress is going to solve everything. And that’s an idea that gets a lot of criticism, especially from environmental advocates. I hear what you’re saying that maybe we are understating the difficulties that we face. There’s nothing inevitable about change. We cannot relax for a moment. This is a battle between the forces trying to protect the fossil fuel status quo and those trying to change it. We have to go out there and drive the change we need. Change the policy, deploy the renewable technology, come up with solutions in the hard-to-solve sectors. There is nothing easy about this, but we still need hope and direction. As [Paul] Romer said, it’s the difference between complacent optimism and conditional optimism, the difference between a child wanting to be given toys and a child going and building a treehouse. How has the Ukraine war affected the trajectory of the energy transition? So the Ukraine war without any question has sped up change because it increased efficiency and sped up the deployment of renewables. The International Energy Agency, for example, put out two reports at the end of 2022, and one of them said that after a number of years of slow gains in energy efficiency, efficiency has increased this year to 2 percent, which is exactly what you would expect in the face of a supply shock. And that, of course, is just the beginning. So it’s increased the efficiency of our use of energy. And of course, the other thing that it’s done is it’s massively increased the deployment of renewable energy. So the IEA, for example, increased their renewable energy deployment forecast for the next five years by 30 percent. Meanwhile, solar deployment in 2022 increased by 50 percent to 270 GW, according to BloombergNEF, and EV sales rose by 60 percent. As so often, war has sped up change. So if I’m Vladimir Putin, this is pretty counterproductive in terms of my long-term global interests. As Talleyrand said, it was worse than a crime, it was a mistake. The situation was similar in the 1970s, when OPEC tried to achieve its own geopolitical aims by cutting off oil supply, and ended up setting the scene for two decades of significantly lower oil prices, which ultimately had very profound consequences, including contributing to the collapse of the Soviet Union. This time around, we see a similar story of petrostate overreach leading to a speeding up of change. It’s not an unreasonable framework for us to be thinking about the consequences of Putin’s invasion of Ukraine, that it will actually achieve the exact opposite of what he wanted, that is to say, a speeding up of change. Back to the idea of optimism: We live in a world where there’s a lot of justified pessimism about climate change. Are you optimistic about the world that our children and grandchildren will be living in? The reason I’m very optimistic is because we can actually see right in front of our noses this pivot point where we go from constantly rising demand for fossil fuels, to a plateau, and then a decline.  Four factors underlie my optimism: learning curves, meaning the cost of renewables gets cheaper every year; exponential growth, meaning renewables get bigger every year; tipping points, because they are happening right now; and feedback loops, which make change happen faster once you get to the tipping point. That means that this is the decade of disruption, where the energy system starts its long process of change. And as the energy system changes, we can fight back against climate change.  One of the other reasons why I’m optimistic is if you look backwards 10 years, it really was incredibly bleak. And all these technologies were much more expensive. But here we are, and what will happen in another 10 years, how much more innovation and deployment can there be? So yeah, I guess that’s why I’m relatively optimistic. And I should also say I have two children who share this optimism; they’re going into this field, as engineers to build out this brave new world.

Can board games teach us about the climate crisis? Game creators say yes

Board games might be the best learning device to think creatively about impending climate disasterEurope is planting trees to offset its emissions but is swiftly hit with massive wildfires. The United States is investing in mining operations abroad to wean off its dependence on fossil fuels but harbors concerns about trading with an abusive government. Meanwhile, a coalition of countries from the global south must decide whether to accept construction loans from China or the United States.These are not conversations at another high-profile global summit, but rather scenarios envisioned by the board game Daybreak, which hits shelves this spring. Four players – the United States, China, Europe and the “Majority World”, encompassing the global south – cooperate to reach zero emissions before hitting 2 degrees of warming or putting too many communities in crisis. Continue reading...

Board games might be the best learning device to think creatively about impending climate disasterEurope is planting trees to offset its emissions but is swiftly hit with massive wildfires. The United States is investing in mining operations abroad to wean off its dependence on fossil fuels but harbors concerns about trading with an abusive government. Meanwhile, a coalition of countries from the global south must decide whether to accept construction loans from China or the United States.These are not conversations at another high-profile global summit, but rather scenarios envisioned by the board game Daybreak, which hits shelves this spring. Four players – the United States, China, Europe and the “Majority World”, encompassing the global south – cooperate to reach zero emissions before hitting 2 degrees of warming or putting too many communities in crisis. Continue reading...

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