A change of rules at home and the export of liquified natural gas abroad would reduce global carbon emissions and help Canada meet its climate goals, argues a Canadian think tank.The proposals were put forward in a new report by the Macdonald Laurier Institute released October 25.Under existing climate conventions, countries are primarily responsible for reducing greenhouse gas (GHG) emissions within their own borders. However, this framework presents a significant challenge for international efforts to combat climate change: countries have no incentive to attend to projects outside their borders.The United Nations Framework Convention on Climate Change dealt with this limitation in Article 6 of the Paris Agreement. The article introduced the concept of Internationally Transferable Mitigation Outcomes (ITMOs). This allows carbon credits to be transferred from the country where emission reductions occur to the country supporting the project.In this new paper, LNG exports and carbon credits: Credits where credit is due, MLI Senior Fellow Jerome Gessaroli makes the case that Canada can earn ITMOs based on exports of British Columbia-sourced liquified natural gas (LNG). Such a strategic move by Canada to harness BC’s LNG offers a transformative solution due to its potential to significantly lower global carbon emissions and displace coal power in the Asia-Pacific region.“Canada can do little more than use diplomatic channels to persuade countries in Asia and elsewhere to decommission existing coal-fired plants and halt the construction of new ones. But we can help to significantly reduce the carbon emissions generated by selling LNG as a substitute fuel for coal to power these plants,” writes Gessaroli.What’s required, Gessaroli says, is for Canada to announce its intent to use Article 6 to help meet emissions reduction targets. Then the government would work with industry to identify candidates for bilateral agreements, creating a framework under which the resulting projects would operate.“Common methodologies for measuring, tracking and verifying… outcomes would all need to be developed. A registry for tracking and transferring ITMOs would also be needed,” concludes Gessaroli.“These are complex issues, but we can learn from countries like Switzerland, Japan, and Sweden that have already established processes for managing ITMO generating projects.”Sharing emissions reductions through Article 6 is possible when liquefied LNG replaces coal in power generation. This substitution is especially important because coal-fired power plants are expected to produce large amounts of the world’s energy (and GHGs) over the next several decades, even though coal emits much more carbon than other primary fuel sources.Outside of Canada, new coal plants are still being built in significant numbers. Those new plants alone are expected to emit more than 1,415 Mt CO2e (mega tonnes of CO2 equivalent) per year, which dwarfs Canada’s national targeted reductions of approximately 310 Mt CO2e per year by 2030.Just over half of LNG Canada’s Phase 1 production capacity in British Columbia would result in approximately 1.2 Mt CO2e emissions annually. Using the same production capacity to replace coal for power generation in Asia could reduce emissions from 14.9 to 35.2 Mt CO2e per year. Use of article 6 would turn the production of LNG from a barrier to climate targets into a means of achieving them.Jerome Gessaroli is a senior fellow with the Macdonald-Laurier Institute and is the project lead for the British Columbia Institute of Technology’s Sound Economic Policy Project.
