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U.S. halt on LNG exports presents new opportunity for Canada


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From the Fraser Institute

By Julio Mejía and Elmira Aliakbari

The Biden administration recently paused the approval of permits for liquefied natural gas (LNG) exports, which will force U.S. allies to explore alternative sources of LNG, opening the door for Canada. In fact, if Canadian policymakers remove certain regulatory hurdles, they can help position Canada as a leading global provider of clean and reliable natural gas while also helping create jobs and prosperity in British Columbia, Alberta and beyond.

Following Putin’s invasion of Ukraine, President Biden committed to supplying steady LNG to the European Union, aiming to reduce reliance on Russian gas. By 2023, the United States had become the world’s top LNG exporter, with several European countries importing more than half of America’s LNG exports. However, President Biden also pledged to transition the U.S. away from fossil fuels so he’s paused LNG exports to appease his environmentalist constituency ahead of the upcoming U.S. presidential election.

But this pause comes at a crucial time for European countries grappling with energy shortages and rising prices. Last year, energy-intensive industries in Europe scaled back or halted production amid soaring energy prices, and Germany, Europe’s largest economy, narrowly avoided a recession caused by energy supply shortages. To keep the lights on, European countries have been forced to revert to coal-fired power plants, an energy source that contributes more CO2 emissions than natural gas.

Following the U.S. decision, European and Asian countries (including China) are exploring alternative LNG suppliers, again creating a potential void that Canada could fill. Japan and Germany have already turned to Canada.

Canada’s vast natural resources hold the potential to make a significant positive impact on global energy security, reliability, and emissions reduction by reducing reliance on coal. Despite possessing “the most prolific and lower-cost North American gas resources,” as emphasized by McKinsey’s recent report, development in Canada has encountered challenges largely due to government regulatory barriers. Presently, Canada lacks any operational LNG export terminals, unlike the U.S., which has 27 such facilities. The LNG Canada development in B.C. is slated to become Canada’s first operational facility, expected to begin exporting by 2025.

The absence of LNG export infrastructure in Canada has led domestic natural gas producers to depend on U.S. LNG facilities for exporting. However, with the recent halt on approving new LNG projects south of the border, there’s an urgent need for Canada to establish its own infrastructure if we’re going to seize this opportunity to be a global LNG supplier.

Forecasts indicate steady and growing global demand for LNG. McKinsey’s recent report anticipates an annual increase in global LNG demand of 1.5 per cent to 3 per cent to 2035. And according to the latest report by the International Energy Agency (IEA), limited new LNG production means supply will remain tight.

Despite promising opportunities, various government initiatives including CleanBC (the B.C. government’s plan to reduce greenhouse gas emissions,) the Trudeau government’s emissions caps on the oil and gas sector, and federal Bill C-69 (which added more red tape and complexity to the assessment process for major energy projects) have created uncertainty and deterred, if not outright prohibited, investment in the sector.

Canada has an opportunity to provide clean and reliable natural gas to our allies, help improve the world’s energy security and reduce global greenhouse gas emissions. The federal and provincial governments must remove regulatory barriers to allow for the needed infrastructure and investment in the LNG sector, which will also provide jobs and prosperity here at home.

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Federal government remains intransigent on emissions cap despite dire warnings of harm

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From the Fraser Institute

By Kenneth P. Green

In the face of heavy opposition from Canada’s premiers to Prime Minister Trudeau’s carbon tax, one might have hoped that the prime minister would moderate some of his government’s extreme climate policies. But alas, on a recent swing through Alberta, he threw cold water on any hope of moderation.

When asked in a meeting with a who’s who of Alberta’s energy sector if he might drop the forthcoming cap on greenhouse gas emissions specific to the oil and gas industry, Trudeau reportedly replied “not a chance.” That’s a shame, because it was an opportunity for Canada (and Alberta) to dodge another bullet aimed at its economic heart, and an opportunity to reduce some of the rancor between the West and Ottawa.

And in fact, there are many good reasons to drop the GHG cap.

In a recent report, the Conference Board of Canada estimated oil and gas production cuts due to the cap would lead to a permanent decline in Canada’s real GDP of between 0.9 per cent (the report’s most likely outcome) to 1.6 per cent (its least likely outcome) relative to the baseline in 2030. Which means a loss of $22.8 billion to $40.4 billion in 2012 dollars. In Alberta, real GDP by between 3.8 per cent and 6.7 per cent (or $16.3 billion to $28.5 billion). These are devastating impacts, hand-waved away by the prime minister.

Moreover, the report estimates total employment declines nationally by between 82,000 and 151,000 in 2030. A large part of this unemployment will land in Alberta where the report estimates total employment in the province would decline by between 54,000 and 91,500 jobs. And between 2030 and 2040, employment in Alberta will be between 66,300 and 102,600 lower per year (on average). Again, these are huge economic damages disregarded by the prime minister.

Lastly, as shown in a 2023 study published by the Fraser Institute, even if the proposed cap achieved the emissions reductions government predicts, the reduction would equal four-tenths of one per cent of global emissions, a reduction unlikely to have any impact on the climate in any detectable manner, and hence, to offer only equally undetectable environmental, health or safety benefits.

The Conference Board report, and other studies of the likely high costs and non-existent climate benefits of the pending cap on oil and gas emissions, would offer cover for the prime minister if he backed away from what’s clearly an ill-considered climate policy poised to wreak massive economic harms to Canada, particularly in the West. Apparently, however, he’s unwilling to acknowledge reality and change course.

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Canada Has All the Elements to be a Winner in Global Energy — Now Let’s Do It

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Mike Rose is Chair, President and CEO of Tourmaline Oil Corp.


By Mike Rose of Tourmaline Oil Corp.

There has never been a more urgent time to aggressively develop Canada’s massive resource wealth

There has never been a more urgent time to aggressively develop Canada’s massive resource wealth. An increasingly competitive world is organizing into new alliances that are threatening our traditional Western democracies.

Weaker or underperforming countries may be left behind economically and, in some cases, their sovereignty may be compromised. We cannot let either scenario happen to Canada.

Looking inward, our country has posted among the weakest economic growth of all G20 nations over the past decade — we are at real risk of delivering a materially diminished standard of living to our children and subsequent future generations.

Canada is blessed with one of the largest and most diverse natural resource endowments in the world. It’s not just oil and gas; it’s uranium, precious metals, rare earth elements, enormous renewable forests, a vast fertile agricultural land base and, of course, the single-largest freshwater reserve on the planet.

This is nothing new; Canada has been regarded as a resource-extraction economy for a long time, but over the past two decades we’ve been slowing down and finding reasons to not advance new projects. While looking ahead to an exciting new future economy is enticing, the majority of our easily accessible resource wealth remains largely untapped. Our Canadian resource sectors are the most capital-efficient, technologically advanced and environmentally responsible in the world. We’ve got the winning combination.

Canada has among the largest, lowest-cost natural gas reserves in the world — we’re already the fourth-largest producer. With consistent regulatory support, we can rapidly evolve into a leader in the growing global LNG business.

This country produces among the lowest-emission natural gas in the world and technology adaptation is widening the gap. A 10 bcf/day Canadian LNG industry targeted to displace coal-fired electrical generation in Asia would offset the vast majority of emissions from the entire domestic oil and gas industry. Contemplating a cap on the Canadian natural gas industry is actually damaging to the global environment, as growing demand will be met by jurisdictions with higher associated emissions.

As developed economies look at electrification to accelerate emissions reduction, nuclear power is becoming increasingly attractive. Canada is already one of the largest uranium producers in the world and has long possessed one of the most efficient and safest reactor designs. This is an advantage we created for ourselves several decades ago; it’s time to harvest this opportunity.

The rare earth elements required for a growing solar industry and battery requirements associated with electrification are abundant in certain regions in Canada — for example, a large new mining opportunity is emerging in Ontario. We should make that happen. One of the great outcomes of accelerating our multi-sector resource opportunity is that the economic benefits will be enjoyed across the country; all Canadians will share in it.

The Canadian agricultural industry has been long regarded as a world leader in efficiency, yield and technical innovation. Global food security and affordability are rapidly emerging issues, and Canada has a role to play here, as well. Not only could we make it more attractive for Canadian producers to grow output and explore novel new transportation corridors to feed more of the world, we have a large, well-established, globally competitive fertilizer industry.

There are many more future resource wealth opportunities we could be capitalizing on. The list is as long as the imagination of our well-educated and entrepreneurial resource sector workforce.

Enormous amounts of capital are required for these projects, and that global capital is most certainly available. These pools of capital will flow into Canada if we demonstrate a willingness to consistently support the Canadian resource sector at provincial and federal government levels.

Accelerating domestic multi-sector resource development provides solutions to many of the problems currently facing Canada. We’ll be playing to strengths that we have established and evolved over many decades. We are the most efficient and technologically advanced in the full spectrum of resource development. Adoption and innovative adaptation of the continuous march of technology advancements will only make us better.

To paraphrase: We can take advantage of what’s between our ears to do an even better job of developing what’s beneath our feet.

Mike Rose is Chair, President and CEO of Tourmaline Oil Corp.

In an ongoing monthly series presented by the Calgary Herald and Financial Post, Canadian business leaders share their thoughts on the country’s economic challenges and opportunities.

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