Canadian LNG: A low-emitting solution
Natural gas on average emits only about half the CO2 emissions as coal to produce the same amount of energy. World demand for liquefied natural gas (LNG) is rising as countries look for reliable, lower-emitting energy options. LNG projects on Canada's west coast can also help ease Europe's energy crisis, according to Wood Mackenzie. Canadian LNG exports to Asia can divert other world shipments to Europe in a domino effect that benefits the world.
Our advantage? We have a colder climate, which makes the LNG production process easier. We have shorter shipping distances to key markets in Asia and Europe. We are able to use hydroelectricity to power much of our production. And we have made significant strides in reducing methane emissions: while most countries’ methane emissions are rising, Canada’s are falling.
A reliable energy supply for Europe
Prior to the invasion of Ukraine, Europe relied on Russia for about 40% of its natural gas supply. Now the European Commission is working to reduce its use of Russian gas by two-thirds this year and eliminate it entirely before 2030.
Canada has the potential to supply Europe with natural gas, in the form of LNG. The business case is clear.
Some countries are turning back to coal to meet their energy needs. Global electricity from coal this year is expected to be the highest ever in history. So it’s up to countries like Canada, with abundant natural gas reserves and world-leading development practices, to step up and supply LNG to international markets.
A replacement for coal in Asia
In much of Asia, coal is still by far the top source of power generation. In China, an estimated 63% of electricity comes from its 1,100+ coal plants, with 96 more under construction. In India, an estimated 72% of electricity comes from 285 coal plants, with an additional 23 under construction.
A key way to reduce these countries’ dependence on coal is to supply a cleaner, reliable alternative. Natural gas, on average, emits only about half the CO2 as coal to produce the same amount of energy. And natural gas from Canada can do even better. Researchers estimate that Canadian LNG can reduce emissions by 62% compared to coal in China.
World LNG demand is expected to double by 2040, driven by Asian countries with growing populations as they look to reduce their reliance on coal. Canada, with its abundant supply of natural gas, and its emerging LNG industry, should be a major supplier to these markets.
A boon for Indigenous communities
For a decade, Indigenous communities in Canada have been working to grow their participation in LNG development. These projects benefit from Indigenous traditional knowledge. And they give Indigenous communities the chance to earn a greater share of prosperity.
One example is the LNG Canada project, being built on the traditional lands of the Haisla Nation in northern British Columbia. The project has created many employment opportunities and training programs. It has allowed the community to invest in social programming, as well as a new apartment complex and a new health centre.
The Haisla Nation is also 50% owner of the proposed Cedar LNG terminal, which if built would be the largest Indigenous-owned major industrial project in Canada.
Another example is the Coastal GasLink Pipeline, which will connect to the LNG Canada terminal. Sixteen Indigenous communities along the pipeline’s route in B.C. will jointly own a 10% stake of the project once it is running. All 20 elected First Nations governments along the route have signed benefit agreements. And so far, the project has spent more than $1.4 billion with Indigenous-owned and local businesses.
There is a long-term business case for Canadian LNG
World LNG demand is rising and expected to double by 2040. Even before Russia’s invasion of Ukraine, energy analysts forecast a global LNG shortage by the middle of this decade. The U.S. LNG industry is meeting the increasing demand. The question is whether Canada will pursue this opportunity as well.
Canada is well positioned, with significant natural gas reserves, low LNG project emissions, and shorter shipping routes to Asia and Europe. Canada has the potential to help ease Europe’s energy crisis by directly supplying LNG, or by freeing up shipments that would have otherwise gone to Asian countries in a domino effect that benefits the world, according to Wood Mackenzie.
Long term, the Conference Board of Canada estimates that growing Canada’s LNG industry could generate over $90 billion in government revenue through 2064. And a thriving LNG sector could add 96,550 jobs annually across the country.
By the Numbers
Estimated potential reduction in emissions by replacing coal power in China with Canadian LNG
World LNG demand by 2040 is expected to be 700 megatonnes - nearly double what it is today.
Ownership stake of Indigenous communities in the Coastal GasLink pipeline when it is completed.
Estimated government revenue for Canada by 2064 if we maximize our LNG market potential.