On September 27th, 2016, the Federal Ministers of
Environment and Climate Change, Fisheries and Oceans, and Natural
Resources announced the Federal Government's decision to
approve the Pacific NorthWest (PNW) LNG project, more than three
years after the federal environmental assessment process began.
This is a milestone decision for LNG development in British
Columbia, as it comes notwithstanding predicted significant adverse
environmental effects under the federal environmental assessment
regime. The federal Cabinet deemed those effects "justified in
the circumstances", signalling that, like the BC government,
it supports sustainable LNG development.
The Minister of Environment and Climate Change, as part of the
approval, released a decision statement that imposes 190 conditions
on PNW LNG, primarily relating to environmental protection and
Aboriginal consultation. Of note, the Lax Kw'alaams and
Metlakatla First Nations will be involved in setting up the
monitoring plan required by the conditions.
PNW LNG is a proposed natural gas liquefaction and export
facility located on Lelu Island on the northwest coast of British
Columbia. The facility, owned by PETRONAS, Sinopec, JAPEX, Indian
Oil Corporation and PetroleumBRUNEI, will liquefy and export
natural gas produced by Progress Energy in northeast British
Columbia. PNW LNG represents a major potential resource investment
in both British Columbia and Canada that is expected to lead to an
overall investment of up to $36 billion dollars after accounting
for upstream natural gas developments. During construction, the
project will create an estimated 4,500 jobs, with an additional 630
direct and indirect jobs during the operation of the facility.
Unlike some other proposed LNG projects that relied on a
"substituted" environmental assessment process, whereby
the provincial process satisfies both provincial and federal
standards, PNW LNG completed "coordinated" and
"parallel" provincial and federal environmental
assessment processes. The British Columbia Environmental Assessment
Office approved the project in November 2014. The Federal review
process took significantly longer due to:
Changes in project design to respond
to both scientific and First Nations concerns about salmon habitat,
and associated requests for additional scientific studies.
The Federal Government modifying its
approval procedures through the process, most notably by extending
the legislated timeline and adding an ad-hoc ministerial panel
consultation process to assess First Nation and climate change
concerns in relation to the draft environmental assessment
The PNW LNG project has drawn considerable opposition from
environmental organizations. Of particular concern is the
facility's carbon dioxide emissions, anticipated to be over
five million tonnes per year, which would make it one of the
largest point sources for greenhouse gas emissions in Canada.
In response, as part of its approval, the Federal Government
imposed a 4.3 million tonne per year cap on the annual greenhouse
gas emissions the facility is allowed to emit, around 20% less than
originally anticipated. It not fully clear how the cap will
ultimately work with British Columbia's LNG greenhouse gas
regime, which includes a country-leading carbon tax, greenhouse gas
emissions intensity standards designed to ensure the new LNG
industry is the "cleanest in the world", and
project-specific development agreements. Of note, the Federal
Minister justified the significant adverse environmental effect
represented by this project's greenhouse gas emissions, in
part, with references to BC's carbon tax increasing in the
future as part of a pan-Canadian carbon price. More details will be
announced by the federal government on this initiative next
PNW LNG now has its last major regulatory approval in hand,
although ongoing permitting processes and consultation and
accommodation obligations to First Nations remain. The
environmental assessment process it faced included layered
regulation, long timelines, and evolving processes, but led to
major project design changes and significant stakeholder
involvement. Whether the project proceeds now largely depends upon
whether the PNW LNG consortium makes a positive final investment
decision, based on its assessment of the long-term LNG market and
its evaluation of the impact of the 190 project conditions.
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