Energy
Trudeau government doubles down on unaffordability – Carbon Tax set to increase April 1st
From Canadians for Affordable Energy
Written By Dan McTeague
The Trudeau government’s Net Zero carbon tax is set to increase once again on April 1st. This increase of 23% will, of course, mean higher fuel prices. Canadians can expect on average to pay an additional 3.5 cents per litre in gasoline and 4.5 cents per litre in diesel. So Canadians will spend on average almost 20 cents per litre more every time we fill up our family vans, work trucks, or commuter cars, all because of the carbon tax. Moreover, this increase will also be felt across-the-board, in all of life’s necessities, from food prices to heating costs.
According to CEA President Dan McTeague, “despite multiple pleas from premiers across the country to at least push back the increase, the Trudeau government continues to double down on this punitive and costly tax.” He added, “They are so beholden to their Net Zero green ideology that they are blinded to the struggles of everyday Canadians.”
CEA conducts daily gas price predictions for major centres across Canada. According to our predictions on Saturday, gas prices will go from $1.56.9 to $1.62.9 on Monday, April 1st in Toronto as a result of this carbon tax hike.
Other areas will see prices that will jump as a result of the carbon tax hike on April 1st:
Ottawa $1.56.9 to $1.62.9
Winnipeg $1.39.9 to $1.43.9
Regina $1.54.9 to $1.58.9
Vancouver $2.01.9 to $2.07.9
Alberta will be hit even harder with the reintroduction of the provincial gas tax on April 1st. Calgary will go from $1.54.9 to $162.9 and Edmonton from $1.51.9 to $1.59.9.
The carbon tax will continue to increase every year until it hits $170 a ton by 2030. That is more than double the current rate. “This tax is trying to fundamentally alter the way Canadians live. It is designed to punish them for carrying out everyday activities like driving to work and heating their homes. It’s unconscionable for this government to continue hurting Canadians in this way. It’s time to axe the carbon tax and scrap Net Zero.”
Keeping energy services affordable must be an ongoing public policy priority for all levels of government. Founded in 2016, Canadians for Affordable Energy is a not-for-profit organization committed to speaking out on this issue so there is an informed debate, and the interests of all Canadians are heard.
Alberta
Official statement from Premier Danielle Smith and Energy Minister Brian Jean on the start-up of the Trans Mountain Pipeline
Canadian Energy Centre
North America LNG project cost competitiveness
Construction workers look on at the FortisBC Tilbury LNG expansion project in Delta, B.C., Monday, Nov. 16, 2015. CP Images photo
From the Canadian Energy Centre
Lower costs for natural gas, shipping and liquefaction give Canada an edge in the emerging global LNG market
Worldwide concerns about energy security have put a renewed focus on the international liquefied natural gas (LNG) industry. The global demand for LNG is expected to increase over the next few decades.
Global demand growth will be driven primarily by Asian markets where the need for LNG is expected to increase from 277 million tonnes (MT) in 2025 to 509 MT by 2050 (see Figure 1). By 2050 the demand for LNG in Europe will be 83 MT and in Africa 20 MT. In South America too, demand will increase – from 13 MT in 2025 to 31 MT in 2050.
Source: Derived from Rystad Energy, Gas and LNG Markets Solution.
In North America (Canada, Mexico, and United States) a number of LNG projects that are either under construction or in the planning stages will benefit from the rise in global LNG demand.
North American LNG production is expected to grow from 112 MT in 2025 to over 255 MT by 2050 (see Figure 2). In Canada, the LNG projects under construction or in the planning stages include LNG Canada Phases 1 & 2, Woodfibre LNG, Cedar LNG, the Tilbury LNG expansion, and Ksi Lisims LNG. Canada’s LNG production is expected to grow from just 2 MT in 2025 to over 43 MT by 2050. In the United States production is projected to increase from 108 MT in 2025 to 210 MT in 2050.
Source: Derived from Rystad Energy, Gas and LNG Markets Solution.
This CEC Fact Sheet uses Rystad Energy’s Gas and LNG Markets Solution¹ to benchmark the cost competitiveness of LNG projects that are under construction and proposed in Canada compared to other LNG projects under construction and planned elsewhere in North America. (Note that the content of this report does not represent the views of Rystad Energy.)
The LNG cost competitiveness benchmarking analysis used the following performance metrics:
- LNG plant free-on-board (FOB) cost break-even;
- Total LNG plant cost (for delivery into Asia and Europe).
The objective of this LNG cost competitiveness benchmarking is to compare the competitiveness of Canadian LNG projects against those of major competitors in the United States and Mexico. The selection of other North American LNG facilities for the benchmark comparison with Canadian LNG projects (LNG Canada, the Tilbury LNG Expansion, Woodfibre LNG, Cedar LNG, and Ksi Lisims LNG) is based on the rationale that virtually all Canadian LNG plants are under construction or in the planning stage and that they compare well with other North American LNG plants that are also under construction or are being planned between 2023 and 2050. Further, to assess the cost competitiveness of the various LNG projects more accurately, we chose only North American LNG facilities with sufficient economic data to enable such a comparison. We compared the cost competitiveness of LNG coming from these other North American projects with LNG coming from Canada that is intended to be delivered to markets in Asia and Europe.
1. Rystad Energy is an independent energy research company providing data, analytics, and consultancy services to clients around the globe. Its Gas and LNG Markets Solution provides an overview of LNG markets worldwide. The Solution covers the entire value chain associated with gas and LNG production, country and sector-level demand, and LNG trade flows, infrastructure, economics, costs, and contracts through 2050. It allows for the evaluation of the entire LNG market infrastructure, including future planned projects, as well as the benchmarking of costs for LNG projects (Rystad Energy, 2024).
Comparison of LNG project FOB cost break-even (full cycle)
Figure 3 provides a comparison of the free-on-board (FOB) cost break-even for LNG facilities under construction or being planned in North America. FOB break-even costs include upstream and midstream costs for LNG excluding transportation costs (shipping) as seen from the current year. Break-even prices assume a discount rate of 10 percent and represent the point at which the net present value for an LNG project over a 20- to 30-year period becomes positive, including the payment of capital and operating costs, inclusive of taxes.
Among the selected group of North American LNG projects are Canadian LNG projects with an FOB break-even at the lower end of the range (US$7.18 per thousand cubic feet (kcf)) to those at the higher end (US$8.64 per thousand cubic feet (kcf)).
LNG projects in the United States tend to settle in the middle of the pack, with FOB break-even between US$6.44 per kcf and US$8.37 per kcf.
Mexico LNG projects have the widest variation in costs among the selected group of projects, ranging from US$6.94 per kcf to US$9.44 per kcf (see Figure 3).
Source: Derived from Rystad Energy, Gas and LNG Markets Solution.
Total costs by project for LNG delivery to Asia and Europe
The total cost by LNG plant includes FOB cost break-even, transportation costs, and the regasification tariff. Figure 4 compares total project costs for LNG destined for Asia from selected North American LNG facilities.
Canadian LNG projects are very cost competitive, and those with Asia as their intended market tend to cluster at the lower end of the scale. The costs vary by project, but range between US$8.10 per kcf and US$9.56 per kcf, making Canadian LNG projects among the lowest cost projects in North America.
The costs for Mexico’s LNG projects with Asia as the intended destination for their product tend to cluster in the middle of the pack. Costs among U.S. LNG facilities that plan to send their product to Asia tend to sit at the higher end of the scale, at between US$8.90 and US$10.80 per kcf.
Source: Derived from Rystad Energy, Gas and LNG Markets Solution.
Figure 5 compares total project costs for LNG to be delivered to Europe from select North American LNG facilities.
Costs from U.S. LNG facilities show the widest variation for this market at between US$7.48 per kcf and US$9.42 per kcf, but the majority of U.S. LNG facilities tend to cluster at the lower end of the cost scale, between US$7.48 per kcf and US$8.61 per kcf (see Figure 5).
Canadian projects that intend to deliver LNG to Europe show a variety of costs that tend to cluster at the middle to higher end of the spectrum, ranging from US$9.60 per kcf to and US$11.06 per kcf.
The costs of Mexico’s projects that are aimed at delivering LNG to Europe tend to cluster in the middle of the spectrum (US$9.11 per kcf to US$10.61 per kcf).
Source: Derived from Rystad Energy, Gas and LNG Markets Solution.
Conclusion
LNG markets are complex. Each project is unique and presents its own challenges. The future of Canadian LNG projects depends upon the overall demand and supply in the global LNG market. As the demand for LNG increases in the next decades, the world will be searching for energy security.
The lower liquefaction and shipping costs coupled with the lower cost of the natural gas itself in Western Canada translate into lower prices for Canadian LNG, particularly that destined for Asian markets. Those advantages will help make Canadian LNG very competitive and attractive to markets worldwide.
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