The federal Liberal government faces the first big test of its high-ambition climate pledge as it readies a decision on whether to approve the Pacific NorthWest LNG project – which would rank as one of the largest single sources of greenhouse gas emissions in the country.

Environmentalists are urging Ottawa to reject the liquefied natural gas project – led by Malaysia's state-owned energy giant Petronas – on the grounds that it is inconsistent with Prime Minister Justin Trudeau's promise of climate leadership.

B.C. Premier Christy Clark is a strong proponent of building an LNG export industry to boost the provincial economy and revive the struggling natural gas sector in northeast British Columbia. Her government and the project's proponents say natural gas from Canada could displace coal and diesel in Asia's electricity system, and therefore help address the global climate challenge.

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Pacific NorthWest is just one of several proposed LNG projects on the B.C. coast awaiting final investment decisions. Royal Dutch Shell PLC-led LNG Canada secured its environmental approvals from the former Conservative government last summer, while the smaller Woodfibre LNG is also anticipating a federal decision on its environmental impact. Petronas and its partners would make a $36-billion investment on the PNW plant, as well as the production and transmission of gas needed to support it.

The Liberals have pledged to be world leaders in reducing climate change, even as they talk about the importance of building new infrastructure to get Canada's crude oil and natural gas to overseas markets and lessen industry's dependence on one customer, the United States. During a high-profile visit to New York on Thursday, Mr. Trudeau said Canada will play a leadership role on climate change, despite the challenges such an effort will entail.

In a draft review released last month, the Canadian Environmental Assessment Agency noted that the proposed LNG plant in Prince Rupert, B.C., would be the third-largest GHG emitter in Canada's oil and gas industry. The plant itself would emit 5.8 megatonnes a year, while upstream emissions associated with extraction of natural gas to feed the plant would be between 6.5 and 8.7 megatonnes. Together, that represents nearly 20 per cent of the province's total GHG emissions in 2013.

The Pacific NorthWest decision is "a highly important" one, said Matt Horne, associate director of the Pembina Institute in B.C. "If they were to approve it as proposed, it would really undermine the credibility of those [federal Liberal] claims and ambitions."

The construction of LNG plants and production of natural gas to feed them would make it increasingly difficult for Canada to meet its 2030 emissions targets agreed to by Ottawa and the provinces, he said. Despite those concerns, Ottawa is likely to approve the plant, EurasiaGroup, a consultancy in New York, said Thursday.

Environment Minister Catherine McKenna is expected to refer the issue to cabinet after a draft environmental assessment released last month concluded the project would have a significant adverse impact due to its greenhouse gas emissions – as well as its effect on harbour porpoises. The final environmental assessment report is due next week, and a decision will follow shortly.

In an interview, B.C. Environment Minister Mary Polak acknowledged the province will have trouble keeping a rein on GHG emissions as it looks to build an LNG export sector. Despite its groundbreaking carbon tax, British Columbia will not meet its own legislated greenhouse gas emissions target for 2020. Environment Canada forecasts it will see the second-largest provincial growth in GHGs between 2005 and 2030 – far below Alberta – unless it takes dramatic action.

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Ms. Polak noted that British Columbia has legislation that requires LNG facilities to be the least GHG-intensive of any such plants in the world, while the province will also work with Alberta and the federal government to reduce fugitive methane emissions from producing fields to cut GHGs associated with the project. At the same time, the gas from Canada would play an important role in reducing emissions in Asia, she said.

"Here's the big puzzle: How do you ensure countries like China – and they're not the only ones – have natural gas to make the switch [from coal] at a time renewables are not viable for their entire energy diet, and at the same time not penalize countries that are producing [the gas] for them?" she said.