Europe, Japan, South Korea Turn to Natural Gas for Future Energy Needs, a Huge Opportunity for Canada

Europe Japan South Korea Want More Natural Gas, A Big Opportunity for Canada

Governments in Europe and Asia are now considering more investment into nuclear and gas power generation as energy supply crises continue to take their toll on nations worldwide, presenting a huge opportunity for resource-rich Canada in 2022 and beyond.

The European Commission – the executive branch of the EU responsible for proposing legislation, enforcing laws and directing administrative operations – has submitted plans to label some gas and nuclear power as green. According to reporting by the Financial Post, the commissions said Saturday that gas and nuclear could "facilitate the transition toward a predominantly renewable-based future."

Esther de Lange, a senior member of the European People's Party in the EU parliament, supports the new "green" taxonomy.

"By using gas as a bridge technology, we can achieve CO2 reductions faster by moving away from, for example, coal without having to wait for fully carbon-free technologies to be widely available," said Lange in an email. Her party also supports nuclear playing a role in the energy shift.

Meanwhile, South Korea's government has classified liquefied natural gas (LNG) as a means to lower greenhouse gas (GHG) emissions and reach net zero by 2050. Seoul's stance shows that it believes LNG will in fact be a necessary "transition" fuel as it moves away from coal-fired power generation towards cleaner electricity in the decades to come.

statista top global LNG importersTop Global LNG Importers 2020 - Statista

South Korea's action plans to achieve carbon neutrality were announced jointly by 10 related government agencies late last year.

"A total of 24 ageing coal-fired power plants will be fully retired by 2034 and operation of the other coal power plants will be restricted, which will lead to no coal-based electricity generation by 2050," the joint statement said.

Today, South Korea is a top-three global importer of LNG with approximately 55.3 billion cubic meters (bcm) of imports in 2020. European nations such as Spain, France and the United Kingdom are also some of the largest LNG importers globally with 20.9 bcm, 19.6 bcm and 18.6 bcm of imports in 2020, respectively.

Japan, a top-five consumer of natural gas and leading importer of LNG, has also put the breaks on moving away from fossil fuel power generation. Not even a month after the UN's COP26 Climate Change Conference, Japanese officials have quietly urged refiners, trading houses and utilities to slow down their move away from fossil fuels while encouraging new investments in oil and gas projects.

Heavily dependent on energy imports, the island nation wants to avoid a potential shortage of fuel this winter and prevent any in the future after an energy supply deficit in 2021 sparked fears of nationwide blackouts.

A strategic energy plan approved by Prime Minister Fumio Kishida's cabinet late last year said that "…no compromise is acceptable to ensure energy security, and it is the obligation of a nation to continue securing necessary resources."

Europe, South Korea and Japan today are all top global LNG importers. Given the way things are going now, these governments will seemingly be importing a lot more natural gas before transitioning away from the fuel at some point in the distant future.

Canada Lagging Behind the U.S.

Top Global natural gas exporters 2020, by type

Canada is currently the fourth-largest producer and sixth-largest exporter of natural gas globally. But with just one customer for its natural gas – the United States – Canadian gas typically sells at a steep discount compared to the Henry Hub benchmark price in Louisiana. This, of course, is reminiscent of the WCS vs. WTI oil price discount that sees Canada lose tens of billions of dollars in revenues each year.

The problem with Canada's "one customer" business model is that the US doesn't need as much of our gas, not ever since new tech helped it tap into its shale gas reserves about a decade ago.

Maria van der Hoeven, former Executive Director of the International Energy Agency (IEA), put Canada's dire natural gas export problem into context on an ARC podcast from 2019.

"It's important that LNG Canada gets built because in a few years, the United States, Canada's only current customer, will become completely self-sufficient in gas. So, Canada must find new outlets for its natural gas," she said.

Map of Canada and US LNG projects 2021

Today, the US is miles ahead of Canada in developing its LNG industry and is expected to become the world's largest exporter in 2022.

Australia is also a decade ahead of Canada, having spent $300 billion on LNG projects over the past 15 years, while Qatar plans to boost its production from 77 up to 110 million tonnes per annum (mtpa) by 2025.

Meanwhile, just one of 18 proposed LNG projects in Canada is under construction, set to ship its first cargo by 2025. In addition, three more Indigenous-backed projects are proposed on Canada's west coast that, if built, are expected to produce some of the least carbon-intensive LNG in the world.

Canada's Clean LNG Opportunity

LNG Canada emissions profile better than the rest

Canada's LNG sector offers a unique opportunity for global buyers looking to gas as a transition fuel in the decades to come.

Canadian LNG projects in British Columbia are promising to export some of the least carbon-intensive footprint LNG produced globally, as shown by the following facts:

> When compared with coal, Canadian LNG to China for power and heat generation could accomplish a 34-62% reduction in CO2 emissions per unit of electricity generated

> LNG Canada, the only terminal under construction in BC, is designed to have an emissions profile that undercuts the current best-performing LNG plants in the world by 32%

> LNG Canada, at full capacity, could displace up to 40 coal-fired power plants in Asia, equivalent to removing 80% of emissions from all cars on Canada's roads each year

> Woodfibre LNG, when compared with using coal for power generation in Asia, will help reduce GHG emissions by 45%

> Ksi Lisims LNG, a newly proposed export facility by Nisga'a Nation & partners, has pledged to accomplish net-zero emissions within three years of commencing operations

> A 2018 Delphi Group study found the GHG intensity performance of 19 LNG facilities globally ranged from roughly 0.15 (for the LNG Canada plant) to 0.44, with one outlier reaching about 0.70 tCO2e (tonnes of CO2 equivalent)

> Newly proposed LNG projects such as Cedar LNG and Ksi Lisims LNG are initiatives by First Nations looking for own-source revenues and economic independence from Canadian governments

> Canadian LNG projects on the west coast utilize renewable energy for liquefaction and other power-intensive processes at the terminals, reducing emissions dramatically. British Columbia currently gets nearly 95% of its electricity needs from renewables.

> A healthy LNG sector on Canada's west coast to generate $11 billion in total investment between 2020 to 2064, totalling more than $500 billion over the specified period

> A healthy LNG sector could create nearly 97,000 jobs and $6 billion in wages annually in Canada each year

Canada's ESG Advantage

Canada ESG leader among world's top natural gas exporters

Canada's world-class performance among global natural gas exporters on Environmental, Social and Governance (ESG) metrics is another reason why Canadian LNG should be preferred on global energy markets.

Of the world's top 10 natural gas exporters, for example, Canada is a leader on the following ESG-related indices:

Canada's responsible natural gas sector is more transparent and has stronger protections for human rights and the environment when compared to many of the world's other major gas exporters. Therefore, it only makes sense to support Canada's up-and-coming role as an LNG exporter and stand behind proposed projects with low carbon footprints like Cedar, Ksi Lisims and Woodfibre.

More Canadian LNG Please!

global LNG demand projected to grow 50% by 2030 - Morgan Stanley

Responsible produced Canadian LNG can help provide the world with the natural gas it needs tomorrow. With global demand for natural gas projected to skyrocket over the coming decades, it only makes sense that we look to the most sustainable producers for supply, and that means Canada!

Let's support the hundreds of thousands of Canadian families who work hard to provide us and the world with the energy we need day in and day out! After all, more Canadian natural gas on global markets is good for Canada and the global environment!

Learn more about Canada's LNG opportunity by joining us on Twitter, Instagram and Facebook today. Hope to see you there!

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