BC Government Stimulates LNG/RNG Market for Marine Bunkering

| Canada, Vancouver BC

The Government of British Columbia is taking action under the Climate Leadership Plan to support investments by natural gas utilities that will increase the use of LNG and renewable natural gas in the transportation, marine and other sectors and reduce greenhouse gas (GHG) emissions.

“We’re working with utilities to stimulate the use of LNG as a marine fuel in large, ocean-going ships, and to increase the supply and use of renewable natural gas,” said Energy and Mines Minister Bill Bennett. “Building the market for B.C.’s abundant supplies of natural gas offers the opportunity to achieve significant GHG emissions reductions and supports jobs and economic opportunities in British Columbia’s natural gas sector.”

Amendments to the Greenhouse Gas Reduction Regulation (GGRR) under the Clean Energy Act will enable utilities to increase incentives provided to shipping companies for the conversion of vessels to run on LNG, invest in LNG bunkering (marine fuelling) infrastructure, and increase the supply and use of renewable natural gas (RNG).

Programs under the GGRR are funded by the utility, not the Province. The amendments are enabling only, and set the parameters for potential utility programs and investments that will reduce GHG emissions.

“We are creating market opportunities for British Columbia’s natural gas sector, offering utilities flexibility to create new incentive programs so we can continue to build a strong economy and a cleaner future,” said Deputy Premier and Minister of Natural Gas Development Rich Coleman.

Converting just one ocean-going tanker, cruise ship, or container ship to run on LNG instead of heavy fuel oil will reduce GHG emissions by about 93,500 tonnes per year, equivalent to taking over 19,800 vehicles off the road. Utility investments in LNG fuelling infrastructure will help establish B.C. as a marine bunkering centre on the west coast capable of providing LNG to an increasing number of LNG vessels and leading to global reductions in GHG emissions.

RNG is derived from biogas created when organic waste decomposes at landfills, agricultural and forestry waste sites and wastewater treatment facilities. Although conventional natural gas has 25% less carbon than diesel fuel and 25-39% less than typical marine fuels, RNG is considered carbon neutral unless forestry biomass is used. In this case, if waste or dead biomass is used, RNG has lower lifecycle emissions than conventional natural gas. Increased use of RNG could result in up to 450,000 tonnes of GHG reductions per year in B.C., and will also help build the market for biogas, providing economic opportunities for local governments and farming and forestry operations.

Amendments to the GGRR will allow utilities to double the incentives available to convert vehicles and marine vessels to natural gas when the new incentives go towards vehicles using 100% RNG, and enable utilities to recover the costs of acquiring and distributing RNG in rates.

RNG can be used interchangeably with conventional natural gas and easily injected into the natural gas system, so the demand potential for renewable gas and the related GHG emissions reductions are significant.

“The provincial government’s leadership allows FortisBC to build upon existing programs supporting the natural gas for transportation and renewable natural gas sectors,” said Michael Mulcahy, president and CEO of FortisBC. “LNG for marine vessels ensures the international marine shipping industry has a cost-effective, clean-burning fuel with which to meet international emissions standards. Encouraging the development of renewable natural gas provides additional business opportunities for local waste producers, such as farms, landfills and wastewater treatment plants. These initiatives not only benefit our customers by optimizing our natural gas system year-round, they benefit all British Columbians by lowering operating costs for businesses and by reducing carbon emissions in our air.”

The GGRR was introduced in 2012 and already allows utilities to provide incentives for compressed natural gas and LNG in the transportation and marine sectors to reduce GHG emissions. The amendments increase the allowed expenditure limits and expand coverage of the regulation to include investments related to RNG.

Increased through-put on the natural gas storage and distribution system from LNG sales means that fixed costs are shared among more customers, thereby reducing pressure on rates for all customers.

Quick Facts:

  • To date, incentive programs under the GGRR have resulted in commitments for more than 600 natural gas vehicles and vessels that have displaced 67.5 million litres of diesel fuel and reduced GHG emissions by more than 74,000 tonnes.
  • The current level of marine-generated GHG emissions from vessels including tankers, cruise ships, bulk carriers, container, general cargo, ferries and tugs calling-in to British Columbia ports is estimated at 70 million tonnes per year. This amount is higher than the whole of British Columbia’s entire GHG footprint as a province in 2013.
  • RNG is created by capturing methane that would otherwise escape into the atmosphere. Burning RNG has 25 times less greenhouse effect than releasing methane.
  • FortisBC has purchase agreements with four suppliers to provide RNG sourced and upgraded from biogas, and has received approval from the BC Utilities Commission for additional RNG purchase agreements beginning in 2017. RNG currently accounts for 0.3% of FortisBC’s supply of natural gas.

Pacific Northern Gas recently entered into a collaboration agreement with Skeena Sawmills and G4 Insights Inc. with the goal of developing a business case for an RNG project in Terrace. G4 is a B.C. company that is developing technology to produce RNG from woody biomass.

In August 2016 the B.C. government unveiled the Climate Leadership Plan outlining 21 actions leading to the creation of up to 66,000 green jobs over the next 10 years, and reducing net annual greenhouse gas emissions by up to 25 million tonnes below current forecasts by 2050.

(Source: Government of British Columbia – Ministry of Energy and Mines)

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