Canada’s new prime minister has made some encouraging pronouncements recently about making Canada an energy superpower — a pledge repeated by King Charles in Tuesday’s throne speech.
Mark Carney, through the King, made the clarion call to make Canada “the world’s leading energy superpower in both clean and conventional energy.”
But how can Canada increase oil and gas production and exports while adhering to its green ambitions
of net zero by 2050?
Two reports out last week — one from the Fraser Institute, the other from the Pembina Institute — help make a case for the net environmental benefits of a Canadian LNG export industry.
The Fraser Institute’s Exporting Canadian LNG to the World cites three B.C.-specific GHG life cycle models of coal-to-gas switching to conclude that, if LNG exports from B.C. replaced coal power in China, greenhouse gas emissions there could be reduced 34% to 62%.
If Canada were to double its current natural gas production and export it to Asia, “global GHG emissions could be reduced by up to 630 million tonnes annually,” the report asserts.
Canada’s total GHG emissions in 2023 was 694 million tonnes, according to Environment Canada. So, according to the Fraser Institute’s math, the equivalent of Canada’s total GHG emissions could be almost entirely erased, simply by exporting LNG to China to displace coal.
There’s a couple of flies in this ointment, which I’ll get to shortly, but the argument that there would be net environmental benefits to Canadian LNG exports still holds up, I think.
Coal accounts for about 45% of global emissions from fuel combustion, according to the International Energy Agency (IEA).
Switching from coal to natural gas in thermal power generation can result in a 50% reduction in CO2 emissions, according to the Intergovernmental Panel on Climate Change (IPCC).
But natural gas isn’t just a cleaner fuel, it’s also a critical feed stock — for which there is no real substitute — for an array of industrial and petrochemical processes, including fertilizer production.
Like it or not, there will be a demand for natural gas for decades to come, and Canada is demonstrating that it can produce it with much lower emissions intensity than almost anyone else.
That natural gas can reduce emissions when it displaces coal is not theoretical — there’s proof.
In the U.S., a 32% decrease in CO2 emissions between 2005 and 2019 in the power sector was attributed largely to coal-to-gas fuel switching, according to the Energy Information Administration
(EIA).
“Lower CO2 emissions have largely been a result of a shift from coal to natural gas in the electricity generation mix,” the EIA concludes. Now for the flies in the ointment.
First, while there could indeed be sizable global emissions reductions if Canadian LNG displaced coal power in China, India and other parts of Asia, we couldn’t claim those reductions under the current Paris Agreement model. (Nota bene: Donald Trump is once again withdrawing the U.S. from the Paris Agreement, and the U.S. — now the world’s biggest LNG exporter — has no compunction over gobbling up as much LNG market
share as it can.)
Canada and China are both signatories to the Paris Agreement. Each country produces its own climate action plans — nationally determined contributions — and can only count emissions reductions within its own national borders.
We can’t claim Chinese emissions reductions for our own, even if it were the result of Canadian LNG
imports.
There has been talk of Internationally Transferred Mitigation Outcomes (ITMOs) that would allow Canada to be credited for emissions reduced in China from coal displacement through LNG. I don’t know why China, having achieved emissions reductions through coal-to-gas fuel switching, would surrender those reductions to Canada.
Achieving some win-win ITMO agreement would take some fancy bargaining, and perhaps Mark Carney is up to this task. He knows a thing or two about these sorts of things, having served as the UN’s special envoy on climate action and finance.
But even if ITMOs are not possible for Canadian LNG exports, there are still compelling economic and environmental arguments for Canada to act on its strengths — abundant resources, high demand for those resources, and comparatively high environmental standards.
Anti-fossil fuel activists will, of course, continue to trot out the canard that LNG is as bad, if not worse, than coal, because of the methane associated with upstream natural gas production.
It’s true that methane is the Achilles heel of natural gas and LNG. Because of its high global warming potential, even small amounts of methane — leakage rates of 2% or more — can begin to negate natural gas’s lower CO2 intensity.
Fortunately, methane leakage can be addressed through better plumbing, best practices, regulations, and better monitoring, and as the Pembina Institute points out, B.C.’s natural gas sector has leading the way here.
According to the BC Energy Regulator, measurements completed in 2021estimate the methane intensity of B.C. natural gas production at just 0.38% to 0.48%, which is well below the 1.1% to 1.8% ceiling set for methane intensity in oil and gas production.
The result of this work on methane abatement is that B.C. has met its methane reduction targets for oil and gas two years ahead of schedule, according to the Pembina Institute.
Between 2014 and 2023, B.C. natural gas production grew 67 per cent, while methane emissions from oil and gas production fell by 51 per cent, the Pembina Institute notes in its report, Raising the Bar.
“B.C.’s success offers yet more evidence that methane emissions can be tackled without impeding the oil and gas industry’s operations,” Amanda Bryant, senior analyst for Pembina Institute, says in a press release accompanying the report.
“If anything, given the number of countries now considering new import standards that will privilege low emissions energy products, stringent methane regulations – backed by transparent, best-in-class measurement data – are going to be key in bolstering the global competitiveness of our oil and gas sector.”
It must be added that, in addition to lower methane intensities, natural gas and LNG produced in B.C. also has lower CO2 intensities, thanks to electrification of the upstream and of some of the planned LNG plants.
China, India, Japan, South Korea and other Asia Pacific nations will continue to buy natural gas and LNG from someone for years to come. Shouldn’t that someone be Canada?
