Canadian Natural Gas Has a Vital Role to Play in Reducing Global Emissions: REPORT

Key Points

• Canada’s emissions reductions are easily offset by larger emitters elsewhere; a global view in deleveraging the global environmental balance sheet is necessary

• India faces significant energy challenges, which it is overcoming through the rapid build-out of new coal power plants

• Displacing coal-fired power generation with natural gas in India could avoid anywhere from two to four times Canada’s emissions profile over the forecast period

• The business and environmental cases exist for exporting responsibly produced Canadian liquefied natural gas (LNG) to displace more GHG-intensive forms of energy generation abroad


Canadian natural gas has vital role to play in reducing global emissions REPORT


A report by the National Bank of Canada's financial division has found that our country has a compelling case to help the planet by exporting its responsibly produced natural gas. By displacing coal-fired power in India with Canadian LNG, the world could avoid anywhere from two to four times Canada’s total emissions from entering the atmosphere over the study’s period.

In other words, displacing coal power in India would have a more significant effect on climate change than a complete shutdown of Canada’s entire economy.

Canada’s current stance is to look inward on reducing its own greenhouse gases (GHGs). But the world would have much to gain if Canadians were to take on a global perspective and help reduce emissions from large emitters like India via displacing coal-fired power generation with LNG says the report.

With a rapidly growing economy and population, India is turning to coal as the most affordable means of expanding its power sector to accommodate such vigorous growth. The country has said it intends to double coal production by 2030 while adding 88 gigawatts (GW) of new thermal coal capacity (+40%) by 2030.

India’s policy to build all forms of energy to supplement its rapidly growing needs has largely relied on coal – a cheap and abundant form of power that has proven difficult to wean off. Today, coal remains the mainstay of power generation and the backbone of India’s economy, accounting for up to 70 to 75% of power supply over the past decade.

Therefore, Canada has a significant and vital role to play in helping the world attain its emission reduction goals via the displacement of more GHG-intensive energy production. The National Bank of Canada concludes that there remains a strong environmental and business case for exporting Canadian-made LNG to help reduce global emissions.

Report Highlights: Summary

• Canada accounts for less than 1.5% of global emissions; focusing only on its own emissions could become futile in “deleveraging” the global environmental balance sheet due to the fact that other emitters, like India, are increasing their own share of emissions by orders of magnitude more.

• India plans to increase its coal-fired power generation by 40% by 2030, resulting in an increase of its power sector emissions by 44% - roughly equivalent to Canada’s 2021 GHG emissions profile (85%)

• Displacing coal-fired power generation with natural gas could avoid anywhere from 2 to 4 times Canada’s emissions profile. In other words, this would have a more profound impact on preventing global warming than a complete shutdown of Canada’s entire economy (0.7 billion megatonnes of CO2 equivalent).

• Water consumption is an overlooked aspect of coal power; India’s thermal coal plant water use is estimated to range from 20 to 25 billion cubic metres annually, accounting for more than half of the country’s water requirements

• India has less than 5% of the world’s water supply, but is home to 18% of its population; thus, another benefit of displacing India’s coal power with natural gas is alleviating water stress, as 50% of the country’s existing coal fleet is located in water-scarce regions

• Water scarcity has allowed India’s government to suspend the construction of several coal-fired power since 2010

• Canada remains a top global natural gas producer with one of the most environmentally friendly records on gas-flaring

• Canada’s inaction in helping provide the world with the natural gas it needs not only harms allies but also exacerbates climate action

Canadian LNG to India: Climate Action

The National Bank of Canada’s analysis highlights the role that Canadian LNG could play in reducing India’s power sector emissions through the following scenarios:

Scenario 1: 88 GW of coal-fired power generation capacity comes online through 2032, as announced by India

> Reduce global emissions by the equivalent of 2.4x Canada’s 2021 GHG emissions profile, or 1.6 billion tonnes of CO2 equivalent on a cumulative basis through 2032

> After 2032, 50% of Canada’s emissions profile would be avoided on a run-rate basis every year

> Natural gas supply required for displacement in this scenario would equate to 10-15 billion cubic feet per day (bcf/d), or 66% of Canada’s current production

Scenario 2: Assumes that the doubling of coal production leads to a doubling of coal-fired generating capacity by 2030

> Reduce global emissions by the equivalent of 3.5x Canada’s 2021 GHG emissions profile, or 2.5 billion tonnes of CO2 equivalent on a cumulative basis through 2030

> After 2030, 1x Canada’s emissions profile would be avoided on a run-rate basis after 2030

> Natural gas supply required for displacement in this scenario would equate to 25-30 billion cubic feet per day (bcf/d), or 1.5x of Canada’s current production

Canada’s World-Class Flaring Record

The National Bank of Canada revisits Canada’s exceptional gas flaring record, highlighting how it has one of the lowest gas flaring volumes of natural gas producers in the world. Reasons for its outstanding performance include relatively modern and efficient facilities, and the geological location of its reserves to name a few.

  • The volume of gas flared globally is equivalent to 75% of Canada’s natural gas production annually
  • Since 2015, Canada’s natural gas production has grown by 15 to 20%, while its volume of gas flared dropped 50%

Recent estimates suggest that gas flaring accounts for anywhere from 10 to 15% of GHGs from the global energy sector. Therefore, proper monitoring of leaks and flaring/venting regulations are essential to limit the growth of methane emissions.

The World Needs Canadian LNG

If all proposed Canadian LNG facilities were to be built – equivalent to about 6 bcf/d of supply – Canada could have an outsized impact on displacing more carbon-intensive fuels in the Asia-Pacific market, helping to reduce global emissions.

More Canadian LNG on global markets means:

  • Advancing economic reconciliation with First Nations LNG proponents
  • Underpinning a strong and healthy economy for Canadians
  • Supporting the energy security of our closest allies and trade partners
  • Taking part in climate action by displacing more GHG-intensive fuels abroad
  • Reducing our reliance on autocratic regimes for the resources we need

With growing natural gas demand for decades to come, Canada’s low-emission LNG is ideally positioned to emerge as a global supplier of choice.

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As long as the world needs natural gas – and it will for decades to come – those supplies should come from the most responsible and reliable producers, like Canada. The world is better off with more sustainably produced Canadian natural gas on global markets – there is no ifs, ands or buts about it. 

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