Copyright nationalnewswatch
While President Trump’s tariffs on Canadian energy and other goods have limited Canada’s natural gas pipeline exports, new trade opportunities are emerging in other regions. For instance, as part of its latest sanctions due to the war in Ukraine, the European Union (EU) has ordered a complete stop to Russian LNG imports, with all long-term contracts required to end by Jan. 1, 2027. Additionally, the EU's energy ministers recently approved a plan to fully eliminate pipeline gas imports from Russia by Jan. 1, 2028. Now, according to European Parliament President Roberta Metsola, the whole continent is “looking across the Atlantic” for reliable energy, hinting at Canadian LNG. Meanwhile, across the Pacific, the business case for Canada’s LNG continues to improve. Japan is exploring ways to diversify its LNG imports and reduce its reliance on Russia, and India plans to boost its import capacity by nearly one-third by 2030. And according to a recent report, Southeast Asia’s LNG demand will surge by a projected 182 per cent over the next decade as the region shifts away from coal. Clearly, Canada, with resource-rich provinces such as Alberta and British Columbia, could become a larger global supplier of LNG, but the Carney government must scrap the emission-reduction plan introduced by the Trudeau government. This plan—which includes emissions cap for the oil and gas industry and the industrial carbon tax—has two fundamental problems. First, it's based on the notion that any costs to restraining the fossil fuels sector through taxes and regulations will be offset by growth in the alternative energy industry (e.g. wind and solar). Recent estimates suggest that fully implementing Ottawa’s current emission-reduction plan would wipe out 164,000 jobs in Canada and shrink economic output by 6.2 per cent by the end of the decade, compared to a scenario without these policies. For Canadian workers, this translates to a loss of $6,700 (an average) annually by 2030. Second, the plan overestimates the impact of domestic emission cuts while overlooking the potential of natural gas exports to reduce global emissions. According to a recent estimate by economist Ross McKitrick, of the 293 million tonnes of greenhouse gas emissions Ottawa aims to cut by 2030, Ottawa’s plan would only cut 57 per cent of that target. By contrast, increasing LNG exports to replace coal-fired power generation abroad would increase domestic emissions slightly but deliver far greater global emissions reductions—without constraining a vital sector of Canada’s economy. Additionally, our recent study found that doubling Canada’s current natural gas production and exporting the surplus to Asia to displace coal could cut global emissions by up to 630 million tonnes annually—nearly as much as Canada produces in total in a year. For context, this is equivalent to removing 137 million cars from the road or eliminating 47.2 million commercial flights a year. And some estimates indicate that building a full-scale LNG export sector could add $11 billion to the Canadian economy and create 96,550 jobs annually over the life of the project. Simply put, even if domestic emissions rise from increasing LNG exports, total global emissions could drop far more while boosting our economy rather than holding it back. Unfortunately, during the last decade, Ottawa has established regulations that create insurmountable hurdles for energy projects. Take, for instance, the proposed emissions cap exclusively for the oil and gas sector, which is set to take effect next year. According to several studies, this policy will reduce oil and natural gas production, discouraging investment in both production and transport. Other regulations including federal Bill C-69 restrict energy project reviews by introducing vague criteria, such as assessing any project’s impact on the “intersection of sex and gender with other identity factors.” Consequently, the preliminary planning phase for a major infrastructure project takes 323 days (on average), with some LNG proposals taking nearly 700 days. This far exceeds the legislated 180-day limit, putting Canadian LNG projects at a competitive disadvantage and risking lost export opportunities to faster-moving global competitors. Prime Minister Carney is moving in the right direction by recognizing the LNG sector’s potential to diversify Canada’s trading partners while meeting global demand for cleaner energy. But to seize the opportunity, Ottawa must eliminate policies that frustrate Canada’s ability to capitalize on LNG. Julio Mejia and Elmira Aliakbari are analyst at the Fraser Institute.
