Will the Farm Bill be the next big climate package? It depends on the midterm elections

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Monday, October 3, 2022

This year’s midterm elections will decide the direction of a massive legislative package meant to tackle the nation’s agricultural problems. Republican Senate and House members are already vowing they won’t pack it with climate “buzzwords.” Roughly every five years, lawmakers pass The Farm Bill, a spending bill that addresses the agriculture industry, food systems, nutrition programs, and more. This legislation is up for reauthorization next year. The political fighting comes on the heels of both the recently passed Inflation Reduction Act and Bipartisan Infrastructure Law including billions of dollars for climate provisions. John Boozman, a Republican Senator from Arkansas who is a high-ranking member of the Senate Committee on Agriculture, Nutrition, and Forestry, is among a growing number of Republicans who have said they will not allow additional climate provisions into the upcoming Farm Bill. If Republicans win back the House this November, which is still a possible outcome despite tightening Democratic races across the country, GOP members will be in control of drafting next year’s Farm Bill.  “In their zeal to pass their reckless tax-and-spend agenda, they (Democrats) have undermined one of the last successful bipartisan processes in the Senate,” said Boozman in a Senate floor hearing this past August. Boozman said the passage of the Inflation Reduction Act without bipartisan support threatens the future of the Farm Bill, a generally bipartisan omnibus bill. The next bill needs to be authorized before September 2023. Over a dozen members of the House Agriculture Committee, which steers the Farm Bill draft process, are up for reelection this November. For example, Abigail Spanberger, a Virginia Congresswoman whose district is near the nation’s capital, and a committee member and subcommittee chair, currently faces a contested election in her state, with inflation’s impact on farming communities a key point in the race. Glenn Thompson, a Congressman who represents a western Pennsylvania district, is slated to be the Chair of the House Agriculture Committee if Republicans win the House. After the passage of the historic climate bill this August, the Pennsylvania Republican said the Inflation Reduction Act “only complicates the pathway to a Farm Bill and creates even greater uncertainty for farmers, ranchers, and rural communities.” Thompson has expressed interest in conservation efforts in the past, but in a September hearing, he said he won’t allow unnecessary climate items into next year’s bill. “I will not sit idly by as we let decades of real bipartisan progress be turned on its head to satisfy people that at their core think agriculture is a blight on the landscape,” Thompson said in the hearing. “I have been leaning into the climate discussion, but I will not have us suddenly incorporate buzzwords like regenerative agriculture into the Farm Bill or overemphasize climate.” Ahead of the November elections, House Republicans have already released insight into their priorities for this upcoming legislation. The Republican Study Committee, whose members make up 80 percent of all Republican members of Congress, released its draft budget in July. This draft document outlines a plan that completely defunds federal programs that support conservation efforts, as well as slashes federal food stamp and crop insurance programs. The draft document heralds the preliminary budget as “ undeniably pro-farmer.” As Farm Bill debates continue, a group of over 150 progressive, agriculture, and environmental groups, from the nation’s largest federation of labor unions to the Sierra Club environmental group, have urged President Joe Biden to add climate reforms in the upcoming legislative package. In a letter to Biden, organizations urged the President to pass a Farm Bill that would help mend economic and racial divides in the industry, increase access to nutrition, support fair labor conditions in farming communities labor conditions, as well as tackle the climate crisis with a focus on agriculture.  Sarah Carden, policy advocate for Farm Action, a progressive agriculture advocacy nonprofit that signed the letter, said that no farmer will deny the industry has been plagued by increased extreme weather events and the Farm Bill needs to address climate change as much as it does other problems in the industry. She said the organization has urged federal agencies to push more funding into programs that help conservation efforts, promote soil health, and mandate the use of climate-smart solutions, instead of contributing to a band-aid funding cycle. “Farmers who are receiving federal support in the wake of increased extreme weather events and disasters should be practicing practices that contribute to resiliency,” Carden told Grist. Carden said that the United States Department of Agriculture, or USDA, has created more climate-focused solutions in recent years, such as the recently announced Partnerships for Climate-Smart Commodities which directs $3 billion to small growers into the supply chain, but it’s important that sustainable solutions are written into the Farm Bill this upcoming cycle as administration changes could upend individual agency efforts. Since its creation in the 1930s, the Farm Bill has provided direct, federal funding to farmers to address the evolving agricultural industry, from land management to economic development. What was created as a way to infuse cash into an industry decimated by the Great Depression and the Dust Bowl, by 1973 the farm bill turned into a massive set of legislation that addresses everything from soil erosion to federal food stamp programs. Farmers and growers need to address the changing climate, said Margaret Krome, the policy program director for Wisconsin and Midwest agriculture nonprofit research group Michael Fields Agricultural Institute. Krome said the industry is running out of time to address ongoing problems. “We have got climate change at our doorstep,” she said. Krome, who works with state and federal officials on legislation about agriculture, said the Farm Bill has always been a way to have farmers focus on their current needs. As discussions and draft legislation begin, she said three issues are likely to be at the top of the debates; climate change, the future of farming and addressing historic racial injustices in the industry, and the intersection of nutrition and agriculture.  With increasing polarization in politics and the upcoming midterm elections, she said it is important for those working on the bill to remember that farming touches everyone in the country and should, hopefully, remain bipartisan. Despite political differences at the state level across the country, a nonpartisan coalition of state agriculture department officials recently issued a letter declaring their desire for the Farm Bill to include increased disaster relief, nutrition programs, and subsidies for regional food production. As farming adapts to warming crops and increased droughts, federal agencies are increasing funding and focusing on addressing the industry’s role in spurring a warming world. According to the USDA, the nation’s agriculture sector accounted for 11 percent of the country’s carbon emissions in 2020.  Congressman David Scott of Georgia, center, speaks at a press conference in 2009. Scott is currently seeking re-election and is the Chair of the House Committee on Agriculture. Chip Somodevilla / Getty Images The Farm Bill already includes language outlining two top USDA environmentally focused programs, the Environmental Quality Incentives Program, or EQIP, and the Conservation Stewardship Program. Both of these programs are normally funded through the Farm Bill, but the Inflation Reduction Act added billions of funding to them, with $8.45 billion for EQIP and $3.25 billion for the conservation program. The infusion was praised by environmental groups and Democrats who hope the increased funding will help farmers implement climate-smart solutions like cover crops to help to increase crop resiliency or create wildlife habitats on farmland. Key agricultural leaders on Capitol Hill also predict that, alongside the addition of climate provisions, fights over Supplemental Nutrition Assistance Program, or SNAP, will stall next year’s Farm Bill. In both 2014 and 2018, efforts from House GOP members to cut SNAP funding slowed the bill’s passage. Earlier this year, Georgia Democratic Congressman David Scott, who is currently seeking re-election and is the Chair of the House Committee on Agriculture and represents a district just outside of Atlanta, warned that fights over SNAP could derail Farm Bill conservations. Given the Biden administration’s recent announcement of plans to end hunger by 2030, debates over nutrition funding are likely to flare up.   The fight will boil down to the program’s funding as from 2024 to 2028, SNAP is estimated to cost roughly $531 billion, an increase caused by droves of new users coming to the program due to the COVID-19 pandemic. In comparison, all nutritional programs, not just SNAP, were estimated to cost $326 billion in the 2018 Farm Bill. Recently passed landmark climate legislation may also interfere with what makes it into the Farm Bill, as Conservative House and Senate members have said funding from the Inflation Reduction Act could decrease the budget for climate proposals inside the Farm Bill. This story was originally published by Grist with the headline Will the Farm Bill be the next big climate package? It depends on the midterm elections on Oct 3, 2022.

Republicans have already vowed to strip climate funding from the bill.

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Communities and Working with Nature the Key to Mitigating Climate Change in Africa

Farmer Ndaula Liwela, from Machita settlement in Namibia’s Zambezi province, points to the scattered flowers of a baobab tree lying on the dry ground close to her homestead. “The fruit this year will be small and few,” she says, even though the iconic tree is known for its ability to store water and thrive in […] The post Communities and Working with Nature the Key to Mitigating Climate Change in Africa appeared first on SAPeople - Worldwide South African News.

Farmer Ndaula Liwela, from Machita settlement in Namibia’s Zambezi province, points to the scattered flowers of a baobab tree lying on the dry ground close to her homestead. “The fruit this year will be small and few,” she says, even though the iconic tree is known for its ability to store water and thrive in dry conditions. It’s several weeks after she would normally have planted her crops, “but we stopped ploughing when we saw the clouds were not even starting to build”. The United Nations Framework Convention on Climate Change (UNFCCC) COP27 took place in Sharm el-Sheikh, Egypt, from 6 to 18 November 2022, where ‘the African COP’ hoped to mobilize the funds and actions needed for a climate-resilient Africa, but this means very little to Liwela, whose immediate concern is around how to feed her family in the face of an increasingly uncertain future. Image credit: Nikhil Advani, WWF-US Her home in Namibia’s northernmost province lies within the Kavango Zambezi Transfrontier Conservation Area (KAZA), the five-country transboundary park formed to protect biodiversity while supporting people who live in the landscape. It is not far from the Zambezi River, but is water-scarce. Each year, Liwela supplements her livelihood by harvesting baobab and other wild fruits, but this year, even this wild pantry looks likely to let her down. Many parts of Africa are increasingly affected by the dry season growing hotter and rainy seasons arriving later. Extreme events such as drought are increasing in frequency and severity. “Liwela’s story is not unique. Over the last year, we have interviewed farmers, fishers, grass harvesters, and many others who rely on natural resources in this region. They have noted the impacts of changing weather patterns on their ability to sustain themselves. This leaves them vulnerable, not just to climate change impacts, but also to other shocks, like the COVID-19 pandemic,” says WWF Namibia’s Sigrid Nyambe. She has been working with communities in this region to gather data on climate change impacts on communities as part of WWF’s Climate Crowd program. This information informs pilot projects to help rural communities adapt to the changes they are experiencing while reducing pressure on biodiversity. The latest IPCC Working Group II report on Impacts, Adaptation, and Vulnerability shows that many climate risks are bigger than previously anticipated, particularly for vulnerable African countries. Many nations have included nature-based solutions as part of their national climate change adaptation plans, but need financial and technical support for action at a grassroots level. Image credit: Nikhil Advani, WWF US Addressing the Forum on Finance for Nature-Based Solutions organised by the UNFCCC’s Standing Committee of Finance, UN Climate Change Deputy Executive Secretary Ovais Sarmad said: “We face a double crisis of climate change and nature. The two are inextricably linked. The mutual, intertwined destruction grows worse by the day. If nature and climate change are linked, it only stands to reason that nature-based solutions lie at the heart of addressing both.” Yet, according to Inger Andersen, Executive Director of the United Nations Environment Programme, in a recent article for the United Nations Framework Convention on Climate Change, “only about 133 billion dollars are channeled into nature-based solutions, and investments must triple by 2030 to meet the climate, the nature, and land-neutrality targets.” “In the last few years, we’ve seen two crises climate change and a global pandemic – intersect. Both impact the most vulnerable communities the hardest and affect how people interact with their natural resources,” says WWF director of climate, communities, and wildlife Nikhil Advani. For example, in Namibia, climate change and the pandemic both increased the unsustainable use of natural resources, says Advani, who also runs the African Nature-Based Tourism Platform. This project was launched in 2021 to connect funders to communities involved in nature-based tourism across 11 countries in eastern and southern Africa, helping to identify the hardest-hit communities and enterprises and their most pressing needs. Over half of Namibians interviewed in 2021-2022 for the Climate Crowd project reported direct impacts on local wildlife, including high mortality rates and wildlife migration to other areas where water and food are more abundant. Fifty-eight percent of respondents reported that crops had failed or produced very little in recent years, and 62% noted declines in livestock health. About three-quarters of respondents said that the wild fruits harvested seasonally are also declining. And as natural resources become increasingly difficult to find, more people and their livestock come into conflict with wildlife. “The data we’ve collected shows that we need to focus more on adaptation efforts that protect the people who are most vulnerable,” he said. Within KAZA, there are examples and opportunities for resilience-building through initiatives that are also climate adaptation strategies. These practical, nature-compatible pilot projects being implemented through Climate Crowd often draw on solutions shaped by a community’s own traditional, indigenous and local knowledge and practices. Beekeeping is an environmentally friendly and potentially lucrative complementary industry helping communities cope with unpredictable crop yields. Youth in these communities are frequently unemployed and lack access to income-generating activities as rain-fed agriculture declines. In Namibia, one such project involves training youths from Muyako, Omega 3, and Luitcikxom villages in Bwabwata National Park in beekeeping. David Mushavanga, a local bee farmer with over 16 years of experience, will implement the project in partnership with WWF Climate Crowd and the Ministry of Environment, Forestry, and Tourism. Other projects being implemented in Namibia will focus on increasing water security through rainwater harvesting and solar powered boreholes, climate-smart agriculture, installing clean cookstoves, and other alternative livelihoods such as craft making. Image credit: Nikhil Advani, WWF US “Climate Crowd is a bottom-up, community-driven initiative. It’s important to support projects the community feels a sense of ownership over. These projects can help them build resilience to multiple shocks and stressors. Environmental emergencies such as climate change could cause social and economic damages far larger than those caused by COVID-19,” says Advani. Through Climate Crowd and the African Nature-Based Tourism Platform, WWF works with community-based natural resource management organizations in several other eastern and southern African countries to provide funding and technical support for solutions that protect natural ecosystems and benefit people while building resilience to future shocks and stressors. For example in Malawi, a recently funded project led by African Nature-Based Tourism Platform partner KAWICCODA, supports the scaling up of conservation-friendly alternative livelihood activities within the five-kilometre belt around Kasungu National Park. “Both the climate crisis and pandemics threaten the wellbeing of people and nature, which is why we urgently need to pilot projects that make people and nature more resilient. We can learn from these grassroots-led initiatives. And then we can scale them,” says Advani. ____________________ About Climate Crowd WWF’s Climate Crowd works with partners in more than 30 countries to collect data on how vulnerable communities are affected by changes in weather and climate and how they cope with them. The data is analysed and presented back to the communities, who then work alongside WWF and partners to develop and implement on-the-ground solutions. WWF also shares the data online for researchers, educators, and conservation and development practitioners. Explore the data at wwfclimatecrowd.org. About the African Nature-Based Tourism Platform To capture the complete picture of the impacts and to help Africa’s tourism sector recover and become more resilient, WWF and a host of global, national, and regional partners created the African Nature-Based Tourism Platform. Established in 2021 with $1.9 million from the Global Environment Facility (GEF), the Platform is gathering data on the impacts on communities and SMEs from the COVID-19 crisis, facilitating learning and knowledge exchange, identifying funding opportunities, and developing funding proposals with communities and SMEs. The post Communities and Working with Nature the Key to Mitigating Climate Change in Africa appeared first on SAPeople - Worldwide South African News.

‘Point of no return’: Chris Packham leads calls for Rishi Sunak to attend Cop15

Conservationist says if world leaders do not go to the summit a strong deal to halt and reverse nature loss is at riskChris Packham is urging the British prime minister, Rishi Sunak, to attend a key nature summit to protect the planet for the sake of his great-grandchildren because we are “very close to the point of no return”.The Cop15 biodiversity summit being held in Montreal from 7-19 December is the nature equivalent of the recent Cop27 climate summit in Egypt, with governments from all over the world expected to agree targets to halt the destruction of the natural world. But world leaders are not expected to attend the once-in-a-decade meeting where the next 10 years of targets will be agreed. Continue reading...

Conservationist says if world leaders do not go to the summit a strong deal to halt and reverse nature loss is at riskChris Packham is urging the British prime minister, Rishi Sunak, to attend a key nature summit to protect the planet for the sake of his great-grandchildren because we are “very close to the point of no return”.The Cop15 biodiversity summit being held in Montreal from 7-19 December is the nature equivalent of the recent Cop27 climate summit in Egypt, with governments from all over the world expected to agree targets to halt the destruction of the natural world. But world leaders are not expected to attend the once-in-a-decade meeting where the next 10 years of targets will be agreed. Continue reading...

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

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

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.

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