The NDP and Green Party should recognize the benefits of LNG development in B.C.
Last week, B.C. Green Party Leader Andrew Weaver (pictured above, left) said his party will no longer support the ruling NDP and the government will lose its ability to govern if it continues to pursue the development of the province's liquefied natural gas (LNG) industry.
Despite support from local politicians and First Nations groups, Weaver appears to be digging in his heels against LNG development. His rhetoric, if taken seriously by Premier John Horgan (above right), may hamper economic and job opportunities for British Columbians.
So, how do political and regulatory setbacks impact LNG development in the province?
In a Fraser Institute study from 2015, we estimated how much continued delays in developing British Columbia’s LNG export capability would cost British Columbians, and it’s not a trivial amount. Using conservative estimates of how much LNG B.C. could sell into Asia-Pacific markets, we estimated that foregone government revenue would be significant, starting at $22.55 billion in 2020, and rising to $24.8 billion in 2025. As previously discussed, the estimated revenue lost in 2020 would have equated to between 2 per cent and 9.5 per cent of B.C.’s GDP in 2014, depending on assumption of exports volume and prices.
Although strong environmental and other protections are necessary, regulatory delays have hindered B.C.’s ability to grow its economy, create jobs and generate billions of dollars in new tax revenue. In addition, the LNG industry would have helped wean B.C. from dependence on a single market, the United States. With the emergence and dramatic expansion of U.S. shale gas production, and Canada’s subsequent lower market share in the U.S., growing new international export markets is becoming increasingly necessary.
The B.C. LNG industry could also benefit the environment on a global scale.
As predicted by the International Energy Agency, global demand for natural gas will rise by 50 per cent by 2040 as countries look for more environmentally-friendly fuels to cut pollution and reduce greenhouse gas emissions. B.C.’s abundant reserves of natural gas can help meet this demand. For example, exporting natural gas to China, Japan and other countries would cut down on coal use and reduce overall global greenhouse gas emissions.
After years of market, regulatory and political setbacks, strong leadership is required to ensure the remaining LNG projects are built. Based on the economic and global environmental benefits associated with B.C.’s LNG industry, Premier Horgan should step up and play hardball with Weaver.
LNG projects in B.C. will boost the province’s economy and help meet environmental aspirations. If policymakers continue to get tripped-up by rhetoric, and companies continue to be bogged down by excessive regulatory processes, British Columbians will see the economic benefits of LNG exports find their way to other countries such as the U.S. and Australia.