Premier Horgan on LNG, Climate Change and the Year’s Highlights

B.C. Premier John Horgan is at the centre of what many see as the contradiction of our times.

On one hand, the government is setting aggressive climate change goals that would see a sharp drop in greenhouse gas emissions by 2050.

On the other, it is doing what it can to attract new fossil fuel investment.

The contradiction was on full display in recent weeks.

At the end of November, as the fall legislative session closed, Horgan highlighted LNG Canada’s announcement that it would go ahead with a project in Kitimat as a major success for his government. “Something that shines very brightly for me of course is the decision by Shell and their partners to invest $40 billion in British Columbia and in Canada,” he said.

He called it a “significant investment unparalleled in our history” that would bring long overdue prosperity to the province’s north. “It will mean jobs and economic activity, some $23 billion will come back to the treasury that we can put into the good services that the public wants to see.”

A week later, Horgan was alongside Environment Minister George Heyman and Energy, Mines and Petroleum Resources Minister Michelle Mungall introducing Clean BC, the province’s new plan to reduce greenhouse gas emissions. Andrew Weaver, the Green Party leader and climate scientist who has been a consistent critic of the province’s LNG plans, also took part in the announcement.

The goal is a 40 per cent reduction in carbon emissions from 2007 levels by 2030, 60 per cent by 2040 and 80 per cent by 2050. The province has already said it will miss a previously legislated target of a 33-per-cent reduction by 2020.

The Clean BC plan identifies ways to cut 18.9 megatonnes of greenhouse gas emissions from transportation, buildings and industry. That will get the province three-quarters of the way to the 2030 goal.

Meanwhile, the LNG Canada project will add 3.45 megatonnes of carbon emissions, and that’s only accounting for two of the four processing units that the project may eventually include. And that’s not including the emissions from other LNG projects companies are still considering.

Many environmentalists, business leaders and politicians endorsed the climate plan when it came out.

But this week, Marc Lee, a senior economist in the B.C. office of the Canadian Centre for Policy Alternatives, explored the contradictions in the government’s attempt to reconcile carbon reductions with fossil fuel investment. “The vision set out in Clean BC is a compelling one as long as you squint to ignore B.C.’s projected surge in fracking and LNG exports,” he wrote.

In a 20-minute interview in his office, Horgan insisted the LNG industry can fit with the province’s climate action plan. The Greens — whose votes Horgan needs to remain in power — may not accept that, but for now the two parties have agreed to disagree, he said.

“We’re going to carry on,” he said. “On balance, I think we’re in pretty good shape. The economy’s doing well, unemployment is low, balanced budgets, and the Liberal opposition doesn’t seem to have much to complain about.”

Following is an edited version of Horgan’s interview with The Tyee.

Tyee: In your end of session remarks you said the greatest achievement of the government was LNG Canada’s final investment decision. Why do you see it that way?

Horgan: It’s hard to ignore the largest private sector investment in Canadian history as something that just happens… The LNG Canada deal involved sitting down with industry and finding a way forward that met the objectives that we wanted: environmental protection and climate action, Indigenous participation, a return to taxpayers for the access to our resource, and jobs for British Columbians. All of those were achieved, but the consequence of that was industry wanted something as well, and that’s what a negotiation’s about. They didn’t want to be taxed more than any other company, which the Liberals had imposed with their LNG income tax, they wanted to pay the same hydro bill as every other industrial customer, not more, which I thought was a reasonable fairness test, not a subsidy, quite the contrary. If a mine or a pulp mill or a forest company pays an industrial tariff for access to our grid, why wouldn’t an LNG company? They’re paying exactly the same. There’s no subsidy of any kind there.

Sometimes people, as you know, describe it differently.

But they’re wrong. They’re paying the industrial rate. Under the Liberal plan they were going to be paying more. So that was, in my opinion, a fairness question. And they wanted a concession on provincial sales tax so they could get their project constructed, but not a giveaway, it was a deferral and all provincial sales taxes on goods and services purchased that are taxable will be paid, but not at purchase, it will be paid as the project is developed. There was no “give.” In fact, we’ll get $23 billion over the life of the project in taxes that we’ll be able to use to build more housing, to provide childcare and fund education.

One government report cited $5.35 billion in incentives for LNG Canada, including sales tax and carbon tax rebates. Do you disagree there’s an incentive to get the industry happening here?

There is, certainly. We are leading the country in carbon pricing, that is a competitive disadvantage to some industries, the energy intensive, trade-exposed industries, and LNG would be one of them. Cement is another. We agreed that if there were best practices, world-leading standards, there would be a concession on carbon tax… There’s nothing ‘free’ in the world, but if you’re going to achieve multiple objectives, you have to have multiple approaches. The difference between the former government and our government is that they made grandiose promises — ‘there is going to be five, six, seven, 10 LNG plants, the streets would be paved with gold, there’d be no taxes for anybody’ — and that was just impractical and unrealistic. If you go back and refer to the many tapes you’ve got of me, I said the market would determine whether LNG would work in British Columbia, and not some whimsical hope. You need to make sure governments have a foundational approach to the economy, whether it’s gas or forestry or mining. When it comes to the land base, there is impact and you need to manage that impact and you need to make sure there’s maximum benefit and I think we’ve achieved that. Indigenous participation fits into our carbon plan and will provide revenues to the province.

So, if the market decides the Woodfibre LNG project should go ahead, and the Kwispaa LNG project near Port Alberni, is there room in the climate plan?

That’s yet to be seen. We have LNG Canada. We’ve factored the emission profile [of that project] into our plan. A final investment decision has been made there. There is no final investment decision on any other plants in British Columbia. The Woodfibre facility is a private investor so they don’t have to get a board approval... The Squamish Nation has said this is something they’d like to see happen. They have their own environmental process that they’ve gone through. But I’m focused on the one plant that has an approval, that has support from wellhead to waterline with Indigenous communities. The towns along the corridor see economic opportunity for a number of years. This is going to be net positive for all British Columbians and that’s what I’m focused on.

But how do you reconcile it with Clean BC?

It has to fit within the plan. It has to meet the criteria of Indigenous participation, of return to British Columbians, jobs for British Columbians and it has to meet our test. And our test is reducing emissions by 2030 and then by 2040 and 80 per cent by 2050.

But every time one of these projects goes ahead, doesn’t it make it that much harder to meet the targets?

They have to fit into the plan to go ahead.

OK, so we have a plan for 2030 where the government has identified 75 per cent of the reductions, so there’s still 25 per cent to go there. And then the targets for 2040 and 2050 are ambitious. How much faith should we have that we’ll hit those targets for 2040 and 2050 and have the market decide how many LNG plants we’ll have?

You’re stretching what I said. When we were in opposition and the Liberals said there are going to be 50 plants, I said, “No, the market will decide what the market can bear.” We are now government and we have decided that one plant, LNG Canada, can fit in and we’ve built our plan around that. Additions to that emission profile are going to be harder to prove, and the investors will have to make the argument to us that they can realize their economic agenda and fit into our plan. It’s not just the market... I don’t want you to think that’s the only criteria. It is a criteria, if they believe they can make money they’re going to want to invest. But they have to prove to us they can make their money and not have a negative impact on our targets... If they can fit, they proceed. If they can’t fit, they don’t proceed.

It seems to me there are at least a couple others that may well go ahead.

They’re still kicking the tires, but again, the space for them is getting smaller and smaller. If they’ve got eDrives [compressors driven by electricity rather than natural gas], if they are using best practices and their emission profiles are close to zero, then I don’t see why not. But they’re going to have to prove that to us before they proceed.

Who are we going to be holding to account in 2050?

The government of the day. These are legislated targets and until they’re changed, governments are responsible to meet them. That’s what aspirational plans are all about. It’s not just British Columbia. It’s the international community that is setting targets out to 2050. We’re not an outlier there. We’re leading the pack in Canada to be sure. If it’s aspirational for everyone else, it’s aspirational for us as well.

There were protesters in the legislature last week with banners against LNG and calling for a complete halt to fossil fuel development. What do you say to people who believe that’s necessary?

I say that we’re doing our level best to meet the national objectives that were set coming out of Paris, COP21, and we have an obligation in British Columbia to meet those targets, and we are leading the country in that regard. I was at a first ministers’ conference last week in Montreal where the province of Ontario said that, “You can’t possibly have carbon pricing and continue to grow the economy, you will kill jobs,” and the Prime Minister and I both stood together and said British Columbia has had a price on carbon for a decade and we have the most ambitious plan in the country, it’s supported by industry, it’s supported by environmental groups, it’s supported by Indigenous groups, and we have the lowest unemployment rate, the highest GDP growth and a balanced budget, so you’re making that stuff up. We can address the challenge of our time and continue to have economic activity.

Anything else you want to add that you haven’t had a chance to talk about?

For those who focus on moments in time, I say to them, judge us on the balance of our work, not the moment when you’re aggrieved. We’re trying to address poverty with a poverty reduction plan, the first one in a long, long time. We have a climate action plan. We’re working on skills development so the next generation can have the skills they need to continue to prosper in our society. We’re addressing housing. Transition housing for women fleeing violence, the first investment in 20 years. Issue after issue after issue where we had seen neglect from the previous government and we’ve seen action by this government. So those who have one issue that bothers them, even if it’s the issue of our time, I suggest to them they look at the balance of the work and make their judgments at that time. We’ve tried really hard to bring in proportional representation. That was up to the people. We’ll see what the final numbers are there but we gave it our best effort... I’m doing my best to make progress.