Canada's Liquefied Natural Gas Export Opportunity is Still Here. Will We Take It?

The Promising Outlook for Canadian LNG Exports

Canada has without a doubt had a more challenging time developing its liquefied natural gas (LNG) export industry than Qatar, Australia and the U.S. have over the years. To date, several multi-billion-dollar export facilities have been proposed in Canada only to be cancelled later on, with just one major facility successfully navigating the lengthy and difficult regulatory process our country is infamous for when it comes to new natural resource projects.

Recently added to the list of cancelled projects are now Énergie Saguenay in Quebec and Goldboro in Nova Scotia. Both developments proposed to ship sustainably produced LNG across the Atlantic to robust markets in Europe and possibly elsewhere.

Énergie Saguenay was projected to have a GHG emission profile that was 84% lower than similar-sized producers in Asia and the United States. Goldboro was planning on building a carbon capture facility and clean power project that would have helped to dispose of up to 100 million tons of GHGs over 30 years and add 7.9 billion kilowatts of renewable energy production to the electricity grid.

It’s a shame really. Canada is already at least a decade behind the world’s top three exporters mentioned above and several other countries in the development of its LNG industry. Canada’s official list of projects – most of which are cancelled – shows just how much our country has missed out on the chance to be a major LNG supplier for global buyers all the while reaping the massive economic benefits that would have come with such trade.

But the good news is that Canada’s LNG export opportunity is not lost! There is still an incredible opportunity for Canadian projects, especially Indigenous-led ones like Cedar LNG and Ksi Lisims LNG, to move forward in providing global markets with some of the least carbon-intensive gas in the world while benefitting communities like the Haisla and Nisga'a Nations on the West Coast!

Here are a few facts that show a promising outlook for Canada’s LNG export industry in the years ahead that also help to dispel some of the common misunderstandings currently out there about the future of LNG in our country.

Global Demand for LNG is Strong

LNG Canada - It Takes 10 Days to Move LNG from West Coast of Canada vs US Gulf Coast

Whoever says future demand growth for natural gas or LNG is “modest” clearly hasn’t done their research.

According to Shell’s LNG Outlook 2021, global LNG demand is expected to nearly double from 360 million tonnes in 2020 up to 700 million tonnes by 2040. McKinsey’s Global Gas Outlook to 2050 projects total global demand for natural gas to grow by 0.9% annually from 2020 to 2035, peaking in 2037.

Shell also expects LNG to account for 65% of total demand growth for natural gas through 2040.

China, Japan, South Korea and other fast-growing Asian economies have been and will continue to be the major drivers for a growing world market for natural gas and LNG. China, for example, the world’s largest LNG importer, could very well see its total demand more than double by 2035. The country is planning on building 34 coastal LNG receiving terminals, with an annual import capacity of 247 million tonnes by 2035 which will effectively triple its current capacity.

India is yet another major driver of the global increase in demand for natural gas. Indian companies are already investing billions of dollars to strengthen natural gas infrastructure, including laying tens of thousands of kilometres of new pipelines to provide cleaner-burning fuels to households and businesses. Prime Minister Narendra Modi has set a target to increase the share of natural gas in the country’s energy mix to 15% by 2030 from the current 6.3% to cut its carbon emissions; several new LNG import terminals will be needed to accomplish that target.

As long as global demand for LNG exists, Canada should be doing everything it can to account for as much global market share as possible via its world-class export facilities that are largely powered by renewable energy. LNG Canada, for example, is projected to run with an emissions profile that is 35% lower than the world’s best-performing facilities and 60% lower than the global weighted average, making it one of the least carbon-intensive liquefaction plants on the planet.

A November 2019 report goes deeper into why extensive electrification offers green LNG projects in Canada an extensive advantage in the global pursuit of clean growth. Canada, one of the most sustainable natural gas producers on the planet, should be doing everything it can to supply the world with responsibly produced LNG while reaping the economic benefits for communities such as the Nisga'a and Haisla Nations.

LNG Can Help the World Transition to a Low-Carbon Future

LNG Canada - displace up to 40 coal-fired power plants in Asia

Opponents of Canadian oil and gas suggest that any LNG produced in Canada may not be used to replace coal-fired power generation in Asia, but instead prolong the burning of fossil fuels for several years into the future.

Unfortunately for these naysayers, many countries are already looking at doing exactly that – switching to LNG-fed power plants to reduce emissions and take action on climate change as a result.

Do they know that the combustion of natural gas emits anywhere from 40% to 55% less carbon dioxide emissions than coal for each unit of energy output? According to the IEA, coal-to-gas switching has saved around 500 million tonnes of CO2 from being released into the atmosphere since 2010 – the equivalent of putting an extra 200 million EVs running on zero-carbon electricity on the road over the same time frame.

It seems that switching from coal to gas-fired power generation in the transition to a lower-carbon future makes sense. The results are clearly tangible.

South Korea, for example, aims to reduce its dependence on fossil fuels by increasing the share of natural gas and renewables in its energy mix. According to Shell, the nation is looking to switch 24-coal-fired power plants to LNG by 2034 while simultaneously increasing its renewable generation capacity by 300%.

Vietnam is another nation with plans to transition away from coal-fired power generation towards gas and renewables. With dwindling domestic sources of supply for natural gas, analysts expect the country to become an LNG importer as early as 2021.

Meanwhile, China has no plans to stop its addiction to coal as it is building hundreds of new coal-fired plants at home and abroad. In 2019, it accounted for nearly 60% of China’s energy use; analysts expect the world’s most populous country to continue using the fossil fuel for most of its electricity generation for many years yet.

A July 2020 collaborative study performed by research groups from Stanford University, the University of British Columbia and 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.

Responsible for 30% of total global emissions, China’s preference for coal-fired power generation must change if there is ever a chance of the world reaching net zero by 2050. And with just 10 days shipping time between B.C. and China versus 24 days from the U.S. Gulf Coast, Canada is well-positioned to be an LNG supplier of choice for the world's second-largest economy.

Canadian LNG Sector's Economic Potential

LNG Canada - Capable of removing the equivalent of 15% of Canada's total GHG emissions by coal-to-gas switching

A July 2020 report details a promising outlook for the developing LNG industry in Western Canada. It found that by developing 56 mtpa of LNG export capacity between 2020 and 2064, total annual investment could average over $11 billion, creating more than $500 billion of economic activity for Canadian communities over the specified period.

For some perspective, the LNG Canada project in B.C. is designed to export 14 mtpa at full capacity.

Other findings include:

> $8 billion in added gross domestic product (GDP) to British Columbia annually

> $1.6 billion in added GDP to Alberta annually

> $1 billion in added GDP to Ontario annually

> 71,000 more jobs a year and over $4.6 billion in wages for British Columbia

> 96,550 more jobs a year and over $6 billion in wages for Canada as a whole

> $90 billion in government revenue generated, with $78 billion of that in B.C.

> $2 billion in annual provincial taxes and royalties, potentially becoming one of the largest revenue generators in B.C.

> $64 billion in federal government revenues over the given period

A successful LNG industry in Western Canada could generate investment, growth, employment, taxes and royalties not just for British Columbia, but also for other provinces and territories as well as the federal government for decades to come.

Support Canadian-Made LNG Projects

LNG Canada - 35% Lower GHG emissions world's best facilities Jan 2021

Canada, with its exemplary performance on Environmental, Social and Governance indicators, has a grand opportunity to provide the world with the LNG it needs tomorrow by taking action today.

Strong global demand forecasts for LNG combined with a proven ability to help reduce emissions via the switch from coal-to-gas generation means we should be doing everything we can to get proposed projects like Woodfibre, Ksi Lisims and Cedar up and running.

Supportive government policies and an improved regulatory framework for new LNG projects in Canada could help propel our country into being a supplier of choice for global nations looking to make the switch from coal-to-gas and help to reduce global emissions associated with power generation. Tens of billions of dollars of economic activity could also be generated in Canada by a healthy LNG sector, creating prosperity for many rural Indigenous and Canadian communities who often overwhelmingly rely on natural resources for jobs and revenues.

Let's not miss out on any more opportunities to develop our abundant natural resources, shall we? The outlook for Canada's LNG industry looks promising, and building new export facilities with world-class emission profiles would be good for both Canadians and the global environment after all.

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