The role of natural gas in reducing global GHG emissions

By Dave Collyer

A realistic approach to meaningful reductions in global greenhouse gas emissions is to gradually shift the energy mix in countries that emit a large part of the world’s carbon emissions to less GHG-intensive fuel sources.

This can be particularly effective in developing countries, whose CO2 emissions are surpassing those of developing countries and are growing at a faster rate.

Natural gas is ideally suited for this purpose: it is the cleanest-burning hydrocarbon, and it produces electricity more efficiently than coal and more reliably than intermittent energy sources such as wind and solar. For example, due to wider use of natural gas in the United States, CO2 emissions are stable or declining. China, which primarily relies on coal for electricity generation, outstripped the U.S. as the world’s largest CO2 emitter in 2007, with emissions rising an average 2.1 per cent a year, according to the U.S. EIA.

British Columbia, because of its abundant natural gas resources and proximity to Asia, is in a good position to become a supplier of responsibly produced natural gas to Asian markets. Realizing this vision requires that B.C. take a pragmatic approach to economic growth and environmental performance.

Let’s start with a global reality check.

Global demand for all forms of energy, including renewables, is growing rapidly. Hydrocarbons, however, will continue to be the dominant source of supply for the world’s energy needs. The International Energy Agency forecasts that in 2035, hydrocarbons’ share in the global energy mix will be 76 per cent, down only slightly from current levels.

That same IEA forecast projects global demand of natural gas will increase 48 per cent by 2035, driven primarily by countries such as China as their economies grow and standards of living improve. Our collective challenge, therefore, is to determine how we will help meet this global demand and, at the same time, seek to reduce greenhouse gas intensity of natural gas production, transportation and use.

Western Canada, especially B.C., has vast natural gas reserves – enough to both satisfy domestic demand and help meet growing global demand.

This is an opportunity for B.C. to provide a global net benefit from an environmental perspective by helping to displace more carbon-intensive fuel sources for power generation in rapidly growing nations in Asia.

Natural gas, used in power generation, emits about 50 per cent fewer greenhouse gases than coal and far fewer smog-causing air pollutants. China is suffering from significant air-quality issues caused in large part by the use of coal for heat and power generation.

This is why the Chinese government is trying to reduce its reliance on coal and has prioritized the use of natural gas-fired power plants. As a result, Chinese natural gas demand is increasing rapidly.

Natural gas from Canada and other sources will help China and other Asian economies reduce their reliance on coal for industrial and residential power generation, and in aggregate will lower global GHG emissions and provide air-quality benefits.

The opportunity to export natural gas to Asia exists now, as customers are trying to secure long-term contracts from reliable suppliers. To participate in the increasingly competitive global LNG market, we must be cost-competitive and ensure we develop LNG and supporting natural gas reserves responsibly.

Industry broadly agrees with the goal of competing on a GHG-intensity basis with other natural gas suppliers to the Asian market. Doing so will require industry to focus on improvements in GHG intensity across the full value chain: upstream production, transportation and downstream liquefaction.

B.C. and Alberta regulate flaring, venting and fugitive emissions from upstream facilities. For example, venting of methane from well drilling and completions is not permitted in B.C. or Alberta, and leak detection and repair programs are a regulated requirement in both provinces. These regulations serve as models for other jurisdictions as examples of how to do it right. Further electrification of upstream production facilities also has the potential to mitigate growth in GHG emissions.

In addition, industry and the governments of Alberta and B.C. are looking at the feasibility of carbon capture and storage to further reduce emissions from the sector.

We must also be pragmatic about fuel sources for B.C.’s proposed LNG facilities. Wind and solar are unlikely to have either the scale or reliability to provide base-load power for most facilities, and the availability of competitively priced electric power for facilities in northwestern B.C. is by no means assured.

For those reasons, we believe the B.C. government made the right decision when it authorized the use of natural gas for power generation for LNG facilities.

West Coast LNG facilities would also be the only LNG facilities in North America that are subject to a carbon tax. We encourage the B.C. government to invest a portion of this tax in innovation and technology development to further reduce carbon emissions in the LNG sector.

We must always keep a close eye on the overall competitiveness of the industry in B.C., including GHG emissions intensity. At the same time, we need to think beyond the borders of B.C. and recognize the opportunity to use natural gas globally to reduce GHG emissions and improve air quality.

LNG is a global industry and British Columbians should assess the economic and environmental dimensions of the LNG opportunity in a global competitiveness and environmental performance context. This will largely determine the ultimate success of the LNG industry in B.C. and is a reasonable and pragmatic approach to global leadership.

Dave Collyer is the former president and CEO of the Canadian Association of Petroleum Producers (CAPP).

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