Economy
The Cost to Western Canada if Steven Guilbeault Copies Biden’s Assault on LNG
From EnergyNow.ca
By Jim Warren
” if all of the gas exported by Canada to the US from 2014 to 2021, the years encompassing the price depression, had instead been exported to Europe at average European prices, Canadian natural gas revenues would have been US $100.7 billion higher “
What would it cost western Canada’s natural gas producers if the federal government does to them what it did to tidewater export opportunities for petroleum?
This question became topical last week when the Biden Democrats announced they would block construction of new LNG export facilities in the US. It makes sense to get a handle on the size of revenues at stake if future development of LNG export capacity in Canada is similarly at risk. Indeed, it seems quite reasonable to worry that Steven Guilbeault will take inspiration from the Biden decision and try to do something similarly silly in Canada.
Getting pipelines to tidewater is something Canada’s petroleum industry has been counting on to improve export revenues. This was a particularly urgent hope during the eight-year oil price depression that lasted from Fall 2014 until early Winter 2022. It was, and still is, assumed exporting Canadian diluted bitumen (dilbit) into new non-US markets will allow producers to avoid the costly differential charges assessed by American buyers and refiners.
What if scenarios floated during the eight-year price slump showed that had the Northern Gateway and Trans Mountain pipelines been completed, Canadian producers could have earned billions in additional revenues. Estimates of lost revenues ranged from a Fraser Institute estimate of $15.8 billion for 2018 alone to my own low-ball estimate for losses of $7 billion to $9 billion for that same year. Numerous back of the napkin “what if” calculations for lost revenues produced in coffee shops across the prairies helped fuel frustration and anger at federal government environmental policies intended to limit global warming by cancelling pipelines.
Fast forward to 2024 and we can see that similar conditions apply to western Canada’s natural gas sector. The US is virtually the sole export market for Canadian natural gas. Looking back at the period from 2010-2019 we find that the prices paid by US importers for Canadian natural gas were less than half what Europeans were paying. The price spread became exponentially wider beginning in 2016. It peaked in 2022 when the European price was six times higher than the US price. The European gas price will be five times higher than US prices for 2024.
All else being equal, if all of the gas exported by Canada to the US from 2014 to 2021, the years encompassing the price depression, had instead been exported to Europe at average European prices, Canadian natural gas revenues would have been US $100.7 billion higher than what they actually were.
Of course “all else” is far from being equal. The $100.7 billion figure does not account for the cost of converting natural gas to LNG or the added costs of ocean transportation. In addition, the estimate assumes enough Canadian pipelines and tidewater terminals could be built to accommodate all of the gas currently flowing to the US.
The yawning chasm between US and EU prices today is of course largely the result of Russia’s invasion of Ukraine in late February 2022. EU sanctions aimed at Russian energy exports and the destruction of the Nord Stream pipelines has put Europe firmly on track for developing new sources of natural gas.
Notwithstanding the bland platitudes and unreachable targets emanating from the most recent COP conference in the UAE, there are policy makers in many countries who recognize the important role natural gas can play in reducing global GHG emissions. For example, in December 2021 the European Commission made changes to its GHG emissions law. It now allows both nuclear energy and natural gas to be considered suitable transition fuels during the period while renewable options become more viable.
Lately, there has been a popular backlash in Europe and the UK over excessively zealous green transition initiatives. It turns out a lot of people are unwilling to accept additional increases to their cost of living even when told it is necessary to “save the planet.” People won’t stand for a prohibitively expensive green transition. And they never will be willing to freeze in the dark; especially when an acceptable option like natural gas is available.
Biden’s bizarre decision to block the expansion of US LNG export facilities was probably not motivated by a desperate desire or useful effort to curb GHG emissions. It is more likely a ham-handed attempt to staunch the Democrats’ loss of support among the young and the woke. Regardless of Biden’s motivation, we might reasonably worry that Canada’s environment minister will want to copy him. You might think the collapse in support for Canada’s Liberals and common sense would militate against the imposition of any additional half-baked environmental policy. But when has common sense ever intervened in the creation of environmentally virtuous policy on the part of the Liberals in Ottawa?
I have provided my data sources and relevant tables below
Hypothetical question: What if the exports to the US had been exported to Europe?
Source: derived by the author from the sources and data provided below
Natural gas prices for the US and Europe 2022 to 2024 in US$ per million British thermal units (BTUs) 2023 and 2024 figures are forecasts.*
Source: derived from Statist: Natual gas commodity prices in Europe and the United States from 1980 to 2022 with forecasts for 2023 and 2024.
https://www-statista-com.libproxy.uregina.ca/statistics/252791/natural-gas-prices/
Canadian natural gas exports in billion cubic metres (all to US)
Source: Statista. Natural gas exports by pipeline from Canada from 2010 to 2021 (in billion cubic metres).
https://www-statista-com.libproxy.uregina.ca/statistics/567703/natural-gas-exports-from-canada/
Natural gas prices for the US and Europe 2010 to 2024 in US$ per million British thermal units (BTUs) 2023 and 2024 figures are forecasts.*
Source: Statista: Natural gas commodity prices in Europe and the United States from 1980 to 2022 with forecasts for 2023 and 2024.
https://www-statista-com.libproxy.uregina.ca/statistics/252791/natural-gas-prices/
From the Fraser Institute
By Annika Segelhorst and Elmira Aliakbari
Short-term climate pledges simply chase deadlines, not results
The annual meeting of the United Nations Conference of the Parties, or COP, which is dedicated to implementing international action on climate change, is now underway in Brazil. Like other signatories to the Paris Agreement, Canada is required to provide a progress update on our pledge to reduce greenhouse gas (GHG) emissions by 40 to 45 per cent below 2005 levels by 2030. After decades of massive government spending and heavy-handed regulations aimed at decarbonizing our economy, we’re far from achieving that goal. It’s time for Canada to move past arbitrary short-term goals and deadlines, and instead focus on more effective ways to support climate objectives.
Since signing the Paris Agreement in 2015, the federal government has introduced dozens of measures intended to reduce Canada’s carbon emissions, including more than $150 billion in “green economy” spending, the national carbon tax, the arbitrary cap on emissions imposed exclusively on the oil and gas sector, stronger energy efficiency requirements for buildings and automobiles, electric vehicle mandates, and stricter methane regulations for the oil and gas industry.
Recent estimates show that achieving the federal government’s target will impose significant costs on Canadians, including 164,000 job losses and a reduction in economic output of 6.2 per cent by 2030 (compared to a scenario where we don’t have these measures in place). For Canadian workers, this means losing $6,700 (each, on average) annually by 2030.
Yet even with all these costly measures, Canada will only achieve 57 per cent of its goal for emissions reductions. Several studies have already confirmed that Canada, despite massive green spending and heavy-handed regulations to decarbonize the economy over the past decade, remains off track to meet its 2030 emission reduction target.
And even if Canada somehow met its costly and stringent emission reduction target, the impact on the Earth’s climate would be minimal. Canada accounts for less than 2 per cent of global emissions, and that share is projected to fall as developing countries consume increasing quantities of energy to support rising living standards. In 2025, according to the International Energy Agency (IEA), emerging and developing economies are driving 80 per cent of the growth in global energy demand. Further, IEA projects that fossil fuels will remain foundational to the global energy mix for decades, especially in developing economies. This means that even if Canada were to aggressively pursue short-term emission reductions and all the economic costs it would imposes on Canadians, the overall climate results would be negligible.
Rather than focusing on arbitrary deadline-contingent pledges to reduce Canadian emissions, we should shift our focus to think about how we can lower global GHG emissions. A recent study showed that doubling Canada’s production of liquefied natural gas and exporting to Asia to displace an equivalent amount of coal could lower global GHG emissions by about 1.7 per cent or about 630 million tonnes of GHG emissions. For reference, that’s the equivalent to nearly 90 per cent of Canada’s annual GHG emissions. This type of approach reflects Canada’s existing strength as an energy producer and would address the fastest-growing sources of emissions, namely developing countries.
As the 2030 deadline grows closer, even top climate advocates are starting to emphasize a more pragmatic approach to climate action. In a recent memo, Bill Gates warned that unfounded climate pessimism “is causing much of the climate community to focus too much on near-term emissions goals, and it’s diverting resources from the most effective things we should be doing to improve life in a warming world.” Even within the federal ministry of Environment and Climate Change, the tone is shifting. Despite the 2030 emissions goal having been a hallmark of Canadian climate policy in recent years, in a recent interview, Minister Julie Dabrusin declined to affirm that the 2030 targets remain feasible.
Instead of scrambling to satisfy short-term national emissions limits, governments in Canada should prioritize strategies that will reduce global emissions where they’re growing the fastest.
Annika Segelhorst
Junior Economist
Elmira Aliakbari
It finally happened. Canada received a federal budget earlier this month, after more than a year without one. It’s far from a budget that’s great. It’s far from what many expected and distant from what the country needs. But it still passed.
With the budget vote drama now behind us, there may be space for some general observations beyond the details of the concerning deficits and debt. What kind of budget did Canada get?
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For a government that built its political identity on social-program expansion and moralized spending, Budget 2025 arrives wearing borrowed clothing. It speaks in the language of productivity, infrastructure, and capital formation, the diction of grown-up economics, yet keeps the full spending reflex of the Trudeau era. The result feels like a cabinet trying to change its fiscal costume without changing the character inside it. Time will tell, to be fair, but it feels like more rhetoric, and we have seen this same rhetoric before lead to nothing. So, I remain skeptical of what they say and how they say it.
The government insists it has found a new path, one where public investment leads private growth. That sounds bold. However, it is more a rebranding than a reform. It is a shift in vocabulary, not in discipline.
A comparison with past eras makes this clear.
Jean Chrétien and Paul Martin did not flirt with restraint; they executed it. Their budgets were cut deeply, restored credibility, and revived Canada’s fiscal health when it was most needed. The Chrétien years were unsentimental. Political capital was spent so financial capital could return. Ottawa shrank so the country could grow. Budget 2025 tries to invoke their spirit but not their actions. Nothing in this plan resembles the structural surgery of the mid 1990s.
Stephen Harper, by contrast, treated balanced budgets as policy and principle. Even during the global financial crisis, his government used stimulus as a bridge, not a way of life. It cut taxes widely and consistently, limited public service growth, and placed the long-term burden on restraint rather than rhetoric. Budget 2025 nods toward Harper’s focus on productivity and capital assets, yet it rejects the tax relief and spending controls that made his budgets coherent.
Then there is Justin Trudeau, the high tide of redistribution, vacuous identity politics, and deficit-as-virtue posturing. Ottawa expanded into an ideological planner for everything, including housing, climate, childcare, inclusion portfolios, and every new identity category. Much of that ideological scaffolding consisted of mere words, weakening the principle of equality under the law and encouraging the government to referee culture rather than administer policy.
Budget 2025 is the first hint of retreat from that style. The identity program fireworks are dimmer, though they have not disappeared. The social policy boosterism is quieter. Perhaps fiscal gravity has begun to whisper in the prime minister’s ear.
However, one cannot confuse tone for transformation.
Spending is still vast. Deficits grew. The new fiscal anchor, balancing only the operating budget, is weaker than the one it replaced. The budget relies on the hopeful assumption that Ottawa’s capital spending will attract private investment on a scale that economists politely describe as ambitious.
The housing file illustrates the contradiction. The budget announces new funding for the construction of purpose-built rentals and a larger federal role in modular and subsidized housing builds. These are presented as productivity measures, yet they continue the Trudeau-era instinct to centralize housing policy rather than fix the levers that matter. Permitting delays, zoning rigidity, municipal approvals, and labour shortages continue to slow actual construction. Ottawa spends, but the foundations still cure at the same pace.
Defence spending tells the same story. Budget 2025 offers incremental funding and some procurement gestures, but it avoids the core problem: Canada’s procurement system is broken. Delays stretch across decades. Projects become obsolete before contracts are signed. The system cannot buy a ship, an aircraft, or an armoured vehicle without cost overruns and missed timelines. Spending more through this machinery will waste time and money. It adds motion, not capability.
Most importantly, the structural problems remain untouched: no regulatory reform for major projects, no tax competitiveness agenda, no strategy for shrinking a federal bureaucracy that has grown faster than the economy it governs. Ottawa presides over a low-productivity country but insists that a new accounting framework will solve what decades of overregulation and policy clutter have created. More bluster.
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From an Alberta vantage, the pivot is welcome but inadequate. The economy that pays for Confederation, energy, mining, agriculture, and transportation receives more rhetorical respect in Budget 2025, yet the same regulatory thicket that blocks pipelines and mines remains intact. The government praises capital formation but still undermines the key sectors that generate it.
Budget 2025 tries to walk like Chrétien and talk like Harper while spending like Trudeau. That is not a transformation; it is a costume change. The country needed a budget that prioritized growth rooted in tangible assets and real productivity. What it got instead is a rhetorical turn without the courage to cut, streamline, or reform.
Canada does not require a new budgeting vocabulary. It requires a government willing to govern in the best interest of the country.
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