UPDATE Tuesday, April 2: Canada is “not interested” in subsidizing future liquefied natural gas projects, including plans to electrify their operations, Energy and Natural Resources Minister Jonathan Wilkinson told CTV Question Period March 31.
“The government is opposed to using government money to fund inefficient fossil fuel subsidies,” Wilkinson told host Vassy Kapelos. “We’re the first country in the world to actually do that. We are not interested in investing in LNG facilities. That’s the role of the private sector. They need to assess the business case and make the investments.”
With six liquefied natural gas (LNG) projects at various stages of development, British Columbia is banking on the fossil fuel to grow its economy despite significant power demand for facilities, declining global interest in the product, and a surge in supply just as the province’s exports projects launch, a new report warns.
“The reality is that in the coming years the world may no longer need B.C.’s LNG,” says Clean Energy Canada (CEC). “Betting the province’s economy on the fossil fuel may instead deliver rising gas and electricity prices for families while worsening climate change by locking out cleaner, cheaper energy sources.”
Emerging from a push over the last 15 years—by government and industry—to develop LNG as a low-carbon coal alternative abroad and reap profits from its export, B.C.’s six planned projects will have a combined export capacity of 47.9 million tonnes of LNG per year, CEC writes. The first is set to become operational in 2025, while the others are to come online in 2027 and 2028.
The problem is that forecasts of future LNG demand “vary wildly,” which makes the future “highly uncertain,” say the report authors. “Importantly, energy trends and policy developments in some of the key export markets for B.C.’s LNG suggest a future decline in demand.” Asia is an example, where demand in countries like China and South Korea will be affected by slowing economic development, declining population growth, or reduced energy consumption. In Japan, LNG imports have “steadily declined in the past decade,” falling to their lowest level in 15 years as the country restarts its nuclear power plants and adds renewables.
Europe’s LNG consumption is also questionable, CEC warns. Though countries like Greece have expressed interest in buying Canadian LNG, other analyses indicate that long-term market trends and regulatory challenges across the continent could lead to a drop in demand by 2030.
The Institute for Energy Economics and Financial Analysis (IEEFA) specifically pushed back against Canadian calls to tap into more LNG markets after the United States hit pause on approvals for new LNG terminals, arguing that a projected global LNG supply glut would undercut potential profits.
Likewise, “B.C. has plenty of competition in the market,” Clean Energy Canada concludes. “Global LNG export capacity is anticipated to increase by 43% from today by the end of the decade, just as B.C.’s export projects are planned to come online.”
But the province continues to push LNG expansion without acknowledging these uncertainties, the report says. By doing so, officials risk weakening the economy, placing unnecessary expenses on B.C. ratepayers and taxpayers, and undermining efforts to reduce emissions.
The projects will carry substantial costs for B.C., the report adds. Electricity to run all six of them would be equivalent to 69% of the province’s total 2022 demand, and the power supply will cost taxpayers dearly—especially if it has to be imported. Meanwhile, the financing and labour needed for construction would divert those resources away from other energy sources that are actually low-carbon, unlike LNG production.
LNG generates emissions at every step along its supply chain, so the projects will undermine B.C.’s efforts to limit its carbon footprint, the report adds. The operational and upstream emissions for all six projects would be the equivalent of 40% of the province’s 2030 emissions budget.
The LNG push also threatens to “crowd out” other industries that have a better chance of supporting the economy and reducing emissions as the clean energy transition gains momentum, the authors say.
“B.C. has promising alternative economic opportunities to tap into rather than developing LNG exports amid uncertainty about future demand for this fossil fuel, a looming global oversupply, exacerbating affordability concerns for British Columbians, risking public dollar-backed stranded assets, and diverting construction workers away from housing and other projects.,” Clean Energy Canada states.
