B.C. Aims to Sell Cleaner LNG

I just ran across British Columbia's new provincial natural gas strategy, which includes a specific strategy for expanding liquefied natural gas (LNG) production as a way to mitigate global climate change. That might sound odd to those who are worried--unnecessarily--that gas might be even worse than coal, emissions-wise, but the province seems to have a good grasp of the benefits of replacing coal combustion in Asia with cleaner fuels like natural gas. They've also come up with a unique selling point for their LNG, on the basis that it would be produced using low-emissions electricity and thus have an emissions edge over other LNG sources. Whether this will confer an advantage on B.C.'s LNG by enabling it to collect a premium or capture a larger share of rapidly growing global LNG trade remains to be seen.

This story caught my eye because it fit neatly with one theme of a webinar in which I recently participated at The Energy Collective. Although most greenhouse gas emissions from fossil fuels occur at the point of combustion in a car, truck, plane, train, ship or power plant, the upstream emissions aren't insignificant and can be reduced in some cases by employing renewable energy in their production. Examples I cited in the webinar included an enhanced oil recovery demonstration project in California that employs concentrated solar power to produce some of the steam used to extract oil from an old oil field, and another project to extract geothermal energy from hot fluids brought to the surface as part of the oil production process.

The case that B.C. makes for reducing greenhouse gas emissions from LNG production by relying on the province's bountiful hydro- and wind power resources is a different application of the same principles. That's because whether the energy for cooling billions of cubic feet per day of natural gas to its liquefaction temperature of -162ºC comes from a local electricity grid or from burning some of the gas in a dedicated cogeneration facility, in most locations this adds significantly to the lifecycle emissions of the LNG. One study that I found on the California Energy Commission's site, produced by PACE Consultants, indicates that liquefaction accounts for around 10% of the lifecycle emissions of LNG converted to electricity in an efficient gas turbine power plant. Eliminating those extra emissions by powering a liquefaction plant with green electricity would bring the emissions from LNG much closer to those from pipeline natural gas and increase its advantage versus coal.

So now what B.C.'s LNG projects need is customers in Asia who will put a premium on "cleaner LNG"--presumably in countries that have committed to large greenhouse gas emission cuts that they can't achieve with indigenous fuels. Japan comes to mind, but I'm sure there are others. These customers would also have to be willing to deal with the longer voyage times from Kitimat, northern B.C. to Asia, compared to competing projects in Australia. That extra 1,000 miles or so translates into higher freight costs and a larger tanker fleet, along with somewhat higher emissions from transportation--though not enough to negate the liquefaction advantage. With so many new and expanding LNG projects around the world competing for market share, I'll be very interested to see whether B.C.'s new strategy pays off.

The Green Coast

Sunday's Washington Post reported on a decision by the Premier of British Columbia (BC) to back down on plans to build two coal-fired power plants in the province, while aligning with California to meet ambitious green energy and climate change goals. This move follows a series of state-level energy and climate initiatives within the US, putting states and regional blocs in the lead on this issue. Although much less populous, BC, with its large hydropower resources, makes an interesting partner for California and other western states wishing to pursue green electricity, but like them, it will have to reconcile these measures with the over-arching challenge of enabling continued economic growth for their expanding populations. The California example is both half full and half empty, in this regard.

California boasts some impressive statistics on energy and emissions. The state's per capita electricity consumption is among the lowest in the US, and it has remained essentially flat over a long period, with total consumption increasing at roughly the same 1% rate as population since 1990. A benevolent climate is certainly a factor, but even after including petroleum consumption--a major consideration for a state with over 30 million cars--average per capita energy consumption is a third less than the US average. Greenhouse gas (GHG) emissions have followed a similar path and compare favorably with those of other states and countries on emissions per $ of GDP. After accounting for the emissions associated with electricity imported from neighboring states, California's total GHG emissions grew by about 15% between 1990-2004, while population grew by 20%, resulting in a slight decline in per-capita emissions. However, the US as a whole did almost as well over the same period, with emissions up by 16%, and population increasing by 18%.

California has shown it can create a successful economy that is less dependent on energy inputs than the rest of the US. And although reducing GHG emissions wasn't the goal when all this was set in motion, that has been an important result of the state's consistent environmental policies since the late 1970s, which emphasized reducing stationary sources of pollution. Ahead of much of the nation, California shifted away from heavy manufacturing and toward the technology and service sectors, which use less energy and create fewer emissions of all types. BC seems to be following a similar path to California's, as its manufacturing and natural resources production decline in importance, and services grow, so they make a compatible partner in building a larger "Green Coast."

But now things get more difficult. If California’s GHGs continued to track population growth, then meeting the legislated target of restoring them to their 1990 level by 2020 would require an absolute reduction of about 40%, relative to where they would otherwise be in 13 years. That’s a tall order, particularly since most of the reductions from changing the economy are built into the statistics above. Once you've done that, it's hard to repeat, and the remaining "low-hanging fruit" becomes rarer and hangs higher. Requiring compact fluorescent light bulbs will yield another couple of percent (2/22/07), and initiatives like the Million Solar Roofs Bill will help, too, though California's electricity sector is already quite efficient, in greenhouse gas terms.

The state generates nearly half its power from low-emission sources such as hydroelectricity, other renewables and nuclear. Natural gas-fired power plants, which emit half as much as coal, account for another 47%. Because it is already so efficient, extracting further savings will likely be more difficult and expensive. The richest lode of potential reductions here is those attributable to imported power from coal, which are larger than those from the state's own generating fleet, but this, too represents a one-time opportunity.

It would be easy to look at these statistics and suggest that California--and by inference, BC--is unlikely to meet its stated goals on emissions reduction. Instead, I think they render a necessary experiment that much more challenging. If climate change is as serious a problem as it appears, the Green Coast is blazing a trail that we must all soon follow. If they succeed, it will bode well for the rest of us. If they fail, then it will imply that we must either institute more painful measures, or simply focus on adapting to a warmer world.