Olaf Scholz, the Chancellor of Germany, visited Canada in August to negotiate access to Canadian energy exports.
“Canada is our partner of choice,” he said. “We hope Canadian LNG [Liquid Natural Gas] will play a major role in … Germany increasing LNG imports.”
Prime Minister Trudeau’s position was unaccommodating, “there never has been a strong business case [for Atlantic LNG].”
At the same time, Deputy PM Chrystia Freeland and Foreign Minister Melanie Jolie have been supporting the development of LNG in Canada to assist Germany.
Ambiguity is not an appropriate federal position.
Premier Blaine Higgs of New Brunswick wants to see the conversion of an LNG import terminal to an export terminal. Kevin Krausert, the CEO of Avatar Innovations, believes it could be done quickly.
He contends that there is a lot of gas on the East Coast, and a lucrative arbitrage. He concludes, “That seems like a pretty compelling business case ….”
Similarly, Mario Levesque, the CEO of Quebec-based Utica Resources, recently stated, “The business case for Quebec gas is crystal clear.”
The long-term viability of the gas industry is solid.
The International Energy Agency projects global demand for natural gas will be 30% higher in 2050 than in 2020. The Canada Energy Regulator’s data reveals that natural gas production will remain relatively steady in Canada to 2040, partly due to exports of LNG, and then slowly declines to 2050.
So why is Trudeau so cool to LNG?
First, it seems, he is concerned about resistance in Eastern Canada to fossil fuels and pipelines.
Quebec, in April, banned the exploration and production of fossil fuels, and New Brunswick and Nova Scotia continue to ban fracking. So, the gas reserves are there, but the production is not.
And pipelines from the West are a hard sell in the East. Second, Trudeau is surely concerned about meeting commitments to cut Greenhouse Gases (GHG).
Both concerns are misplaced.
Edward Greenspon, the President and CEO of the Public Policy Forum, in a new report, writes Canada is a high-ESG (Environmental, Social and Governance) energy exporter.
He observes, “Geology has blessed Canada with some of the lowest carbon gas coming out of the ground”, and that good governance and regulation increase that advantage.
The Business Council Of BC, in a 2020 study, provide data that shows the GHG intensity of BC natural gas is 21 per cent to 32 per cent below our competitors.
As well, emissions of new Canadian LNG plants, says Greenspon, will be 90 per cent lower than the other plants in the world.
He argues that transitional energy sources are essential to help move us from high emission fuels to zero emission fuels, so we can avoid the errors made in Europe.
The European Commission, it seems, has accepted this. In early 2022, it classified natural gas as a transitional fuel.
So, demand for gas will continue to exist for decades.
If we don’t fill it, Greenspon advises, lower ESG suppliers, like Russia, will.
The impact of replacing coal generated electricity with gas generated electricity is massive. Alberta has closed one coal plant and is in the process of converting four to natural gas.
By so doing, Alberta will reduce GHG by 25 million tons annually. That is the equivalent of switching every vehicle in BC, Alberta and Saskatchewan to electrical power, Greenspon informs.
While the federal government waffles on Germany’s requests for Canadian LNG, Germany is restarting closed coal-fired plants.
China constructs dozens of coal-fired plants per year.
In May of 2022, it had 1110 such plants. India had 285.
GHG emissions figures are so large they are incomprehensible.
Envision the substantial impact Canada can leverage with the additional production and export of Canadian LNG.
It will enable gas-fired electrical generation to help replace coal-fired generation abroad in the short to medium term, will contribute significantly to lower global GHG levels, and will enable us to fulfill our obligations to our European allies and grow our economy. (A relatively small bump to domestic GHG levels will occur from the low emission production and liquefaction of Canadian gas.)
Governments in Canada, both provincial and federal, should unequivocally support the provision of Atlantic and/or Western gas to the East coast, and the development of LNG facilities on both coasts.
It is a clear choice, and a clean choice.
Bruce W Uzelman is a political columnist living in the Okanagan.