3 Reasons Why Canadian LNG is in the World’s Best Interest – Canada Action

A global energy shortage largely brought on by the pandemic and underinvestment in the oil and gas sector continues to grip nations worldwide.

Exacerbated by the war in Ukraine, European Union member states are bracing for further cuts to natural gas supplies by Russia. Meanwhile, some Asian nations are experiencing rolling 12-hour blackouts as liquefied natural gas (LNG) suppliers choose to sell to better-paying European buyers ⁽¹⁾.

The strain on energy markets could be softened if there were more natural gas supplies to go around. Canada, home to vast natural gas reserves, could contribute to global energy security and greenhouse gas (GHG) emission reductions by exporting LNG to countries in need.

There’s just one problem. Canada isn’t necessarily known for getting LNG facilities built. Of 18 proposed over the past few decades, just one is under construction on the west coast ⁽²⁾.

Sadly, Natural Resources Canada’s list of LNG projects looks more like an obituary page in the local newspaper than anything else. It’s a long list of defunct developments that – if built – could have played a huge role in providing the world with a stable and responsible source of natural gas.

But it’s not too late.

With steadfast determination and cooperation between industry and government, Canadian-made LNG can still play a substantial role in ensuring energy security for our closest allies and trade partners worldwide.

Here are a few reasons why sustainably produced Canadian LNG is in the world’s best interest.

#1 – Meaningful Climate Action

More Canadian-made LNG on global markets means more opportunities for global economies to switch from coal to natural gas for heat and electricity generation.

Natural gas is a much cleaner burning fossil fuel, producing about half as much carbon dioxide (CO2) as coal to produce the same amount of energy. It also produces far fewer pollutants that are dangerous to human health ⁽⁴⁾.

The International Energy Agency (IEA) sees natural gas as essential to the energy transition.

“Natural gas is one of the mainstays of global energy. Where it replaces more polluting fuels, it improves air quality and limits emissions of carbon dioxide,” it said in a 2019 report ⁽⁵⁾.

The same IEA analysis found that since 2010, coal-to-gas switching had saved around 500 million tonnes of CO2 from being released into the atmosphere – an effect equivalent to putting an extra 200 million EVs running on zero-carbon electricity on the road over the same period.

Meanwhile, life-cycle assessments (LCAs) done by academia have shown the benefits of switching out coal for Canadian-made LNG in places like China.

Three independent LCAs performed by research groups at Stanford University, the University of British Columbia and the University of Calgary found that Canadian LNG to China for power and heat generation, when compared with coal, could accomplish a 34-62% reduction in CO2 emissions per unit of electricity generated ⁽⁶⁾.

Clearly, more Canadian LNG on global markets would be a good thing for emission reductions. Additionally, the incredibly low GHG intensities associated with the liquefaction of natural gas in Canada would also help the global environment.

#2 – Canada is a Stable, Reliable & Democratic Energy Exporter

With state-owned enterprises now controlling a majority of oil and gas production worldwide, it has become increasingly important to consider where we get our energy supplies.

Canada is left in a unique position as one of the few remaining major global energy exporters where oil and gas production is done under democratic governance. In fact, apart from Australia and Norway, Canada is the only major energy-exporting country considered to be a “full democracy” as per the Economist Intelligence Unit’s Democracy Index 2021 ⁽³⁾.

So then, the question remains: who would you choose to source your natural gas from? Would it be from highly stable and strictly regulated nations like Canada, or state-owned producers who could turn off the taps at a whim and likely have far fewer protections for human rights and the environment?

The choice is clear if you value energy security and want to avoid future global energy shortages.

#3 – Global Natural Gas Demand is Growing

According to Shell’s latest outlook for LNG, global demand is expected to grow 90 per cent, from around 380 million tonnes per annum (mtpa) up to 700 mtpa by 2040 ⁽⁴⁾. Asia’s developing economies are expected to lead the charge, accounting for roughly 70 per cent of that demand growth.

The life-cycle analyses cited above – and the GHG emission reductions that can be accomplished – show that Canadian-made LNG is well-suited as a natural gas supplier to energy-hungry nations in Asia. China, India, Japan and South Korea are all top five global LNG importers, presenting Canadians with a once-in-a-lifetime opportunity to capture global market share and reap the economic benefits ⁽⁵⁾.

China and India are also the world’s two largest coal consumers. According to the Global Energy Monitor via Reuters, nearly 200 coal-fired power stations are under construction in Asia, with more than half accounted for by these two countries ⁽⁶⁾.

Meanwhile, Europe’s full-blown energy crisis has left dozens of EU member states looking for alternative energy supply sources as Russia slowly but surely reduces gas flows. Germany, Italy, and the Netherlands are just a few of the countries that have returned to coal-fired generation to supplement their energy needs.

East coast Canadian LNG projects are ideal to fill the gas void in the EU. Like on the west coast, they too will be some of the least-GHG-intensive facilities of their kind globally and have some of the shortest shipping distances across the Atlantic to European markets. That means fewer GHGs emitted during shipping as well on a comparative basis versus coming from the U.S. Gulf Coast, for example.

The World Needs More Canadian LNG

As one of the most sustainable energy exporters on the planet, Canada has an inherent responsibility to step up and provide the world with the oil and gas it needs. This is good for Canadian families, our governments AND the global climate.

The facts are clear: more Canadian LNG on global markets is good for energy security AND the environment. Now, if only we could jumpstart our LNG sector like the Americans have and create immense wealth and prosperity for local workers and communities, wouldn’t that be something?!

 

Sources:

1 – Bloomberg – Energy Prices in Europe are Creating Energy Shortages in Pakistan, Date Accessed: July 25^th, 2022 (https://www.bloomberg.com/news/articles/2022-06-13/energy-prices-in-europe-are-creating-power-outages-in-pakistan)

2 – Natural Resources Canada – Canadian LNG Projects, Date Accessed: July 26^th, 2022 (https://www.nrcan.gc.ca/energy/energy-sources-distribution/natural-gas/canadian-lng-projects/5683)

3 – Economist Intelligence Unit – Democracy Index 2021, Date Accessed: July 26^th, 2022 (https://www.eiu.com/n/campaigns/democracy-index-2021/)

4 – Shell – LNG Outlook 2022, Date Accessed: August 8th, 2022 (https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-outlook-2022.html)

5 – Statista, Leading importing countries of liquefied natural gas worldwide in 2021, Date Accessed: August 8th, 2022 (https://www.statista.com/statistics/274529/major-lng-importing-countries/)

6 – Reuters, COP26 aims to banish coal. Asia is building hundreds of power plants to burn it, Date Accessed: August 8th, 2022 (https://www.reuters.com/business/energy/cop26-aims-banish-coal-asia-is-building-hundreds-power-plants-burn-it-2021-10-29/)

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