A Wealth-Creating Way of Reducing Global CO2 Emissions

It is Prime Minister Justin Trudeau’s contention there’s no “business case” for exporting Canada’s abundant, inexpensively produced natural gas as LNG. But Canadians might do well to politely decline management consulting advice from a former substitute drama teacher who was born into wealth and has never had to meet a payroll, balance a budget or make a sale. Bluntly stated, someone who has shown no evidence of being able to run the proverbial lemonade stand. And one whose real agenda, the evidence shows, is to strangle the nation’s most productive and wealth-generating industry. With the first LNG ship finally expected to dock at Kitimat, B.C. over the next year and load Canada’s first-ever LNG export cargo, Gwyn Morgan lays out the business and environmental cases for ramping up our LNG exports – and having them count towards Canada’s greenhouse gas reduction targets.

Pierre Poilievre’s Axe the (carbon) Tax campaign is a spectacular success. But the Conservative Party of Canada needs its own plan to reduce greenhouse gas emissions from fossil fuels. Paradoxically, it’s a fossil fuel that provides much of the answer.

Canada’s rich endowment of natural gas resources offers an immense opportunity to reduce global carbon dioxide (CO₂) emissions while also helping to rescue the Liberal-government-ravaged Canadian economy by exporting liquefied natural gas (LNG) to China, Japan, South Korea and the other coal-dependent Asia-Pacific countries. Switching from coal to natural gas for producing electricity and generating heat for buildings and industrial processes can typically reduce CO₂ emissions by 50 percent for the same unit of output, while all-but eliminating the toxic compounds and lung-clogging particulates emitted from burning coal that shorten the lives of millions living in smog-stricken Asian cities.

More natural gas is urgently needed, since countries throughout Asia – especially China and India – are currently adding even more coal-burning power plants to meet rapidly growing electricity demand. The benefits of fuel-switching are not speculation, but a proven result: the United States’ pronounced switch starting in the mid-2000s from coal to natural gas for electricity materially reduced that country’s CO₂ emissions (see accompanying graph), nearly equalling the entire European Union’s emissions cuts, as I wrote about in this previous column.

All I need is the air that I breathe: Switching from coal to natural gas for generating electricity and heat can virtually eliminate toxic air particulates – which is urgently needed in polluted Asian cities such as Anyang City, China (pictured at top left) – while cutting carbon dioxide emissions in half for the same unit of output. The U.S. track record from fuel-switching (depicted in the graph at top right) proves this point. But for now, Asian countries keep piling on coal-fired power plants. (Source of top left photo: vtpoly, licensed under CC BY-NC-ND 2.0)

A study by respected consulting firm Wood Mackenzie, released in late 2022, determined the following:

“Canada is well-positioned geographically…Western Canadian LNG is much closer to Asia relative to US Gulf Coast LNG, which needs to be shipped through the Panama Canal to get to Asia”;
“LNG from Canada would be cost-competitive for northeast Asian importers…due to its relatively low shipping and liquefaction costs”;
“LNG from Canada has lower emissions intensity than LNG coming from many other global LNG exporters”;
“Asia will not be able to produce enough natural gas domestically to meet its escalating demand, therefore Canadian LNG is a compelling alternative: With its high environmental standards and stewardship, Canada would be a great partner to fill the LNG demand gap in Asia”; and
“If Canada aggressively ramps up its LNG exports…the emissions displaced from Canadian LNG would total 5.5 [gigatons of CO₂ equivalent] from 2022 to 2050 or 181 [megatons of CO₂ equivalent] on average per year, which is equivalent to removing all Canadian cars from the road.”

These impressive benefits – not to mention the opportunity to create tens of thousands of well-paying jobs in our country and provide long-term returns to investors, among them millions of pension-dependent retirees – were recognized long ago by the energy industry, Western provincial premiers and former prime minister Stephen Harper. And for a time it indeed seemed that Canada was on the cusp of an LNG boom. By 2010, there were more than 20 LNG projects in the works in B.C., representing hundreds of billions in total investment. These included Exxon Mobil’s $25-billion West Coast Canada project, Chinese-owned CNOOC’s $36-billion Aurora project, Malaysian firm Petronas’s $36 billion Pacific NorthWest project, and the Shell-led $43 billion LNG Canada project at Kitimat.

Aside from the jobs created and the wealth generated for the participating companies, B.C.’s annual natural gas royalties are forecast to double. Benefits for First Nations include significant employment and business opportunities, such as HaiSea Marine’s 50 percent interest in a $500 million contract.

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But through a decade of trying to navigate Canada’s increasingly obstructive and Byzantine regulatory process, project proponents dropped out one by one. Today LNG Canada is the only one of those major projects left standing. (Two much smaller LNG projects, Woodfibre LNG in Howe Sound at Squamish, and Cedar LNG just a few kilometres from the LNG Canada project, are also proceeding, and one other large project proposed by the Nisga’a First Nation is making regulatory progress.) LNG Canada succeeded only because South African project leader Andy Calitz, backed by the enthusiasm of the Haisla Nation which saw the immense potential to create a self-sustaining, wealth-generating economy for its people, refused to give up.

After five years of construction, the LNG Canada liquefaction facility and loading terminal are nearing completion, with the first LNG ship scheduled to sail to China in 2025 (possibly even this year). The Kitimat plant itself is just one component of Canada’s first LNG export project. TC Energy Corp.’s (formerly TransCanada Pipelines) $15 billion, recently completed Coastal GasLink pipeline will carry the required natural gas from the northeastern B.C. gas fields to the Kitimat terminal. And additional billions of dollars have been invested in drilling natural gas wells, proving up the immense reserves needed to feed the LNG facility for decades to come, and constructing field production systems.

Among numerous large liquefied natural gas (LNG) projects that were once proposed for Canada, only the LNG Canada facility at Kitimat, B.C. (top) has survived the Byzantine regulatory process and the Government of Canada’s increasing hostility to LNG; it is currently nearing completion and may load its first ship by year-end. At bottom, the Coastal GasLink pipeline will supply natural gas from northeast B.C.’s producing fields. (Sources of photos: (top) LNG Canada; (bottom) Coastal GasLink)

The economic benefits are myriad. Aside from the jobs created and the wealth generated for the participating companies, B.C.’s annual natural gas royalties are forecast to double from $700 million in 2024 to $1.4 billion in 2027. Benefits for First Nations include significant employment and business opportunities, such as HaiSea Marine’s 50 percent interest in a $500 million contract.

And that’s just LNG Canada’s Phase 1, which will produce 14 million tonnes per annum (mtpa) of LNG, or approximately 1.8 billion cubic feet (bcf) per day. With that one project coming on-stream, about 10 percent of Canada’s total natural gas production will be exported to international markets, earning premium prices. Construction of Phase 2 is scheduled to begin in 2026 and will double the facility’s output, with first delivery scheduled for 2032. A report from Canada Action estimates that completion of both phases will reduce CO₂emissions in Asian countries as much as would removing 18 million cars from Canadian roads. That is a far more efficient and realistic way of reducing emissions than the Trudeau government’s current scheme to force everyone into electric vehicles within a decade.

Efficient and realistic: The completion of LNG Canada’s Phase 1 and Phase 2 by 2032 is expected to reduce greenhouse gas emissions in Asia by the same amount as removing 18 million gasoline-powered cars from Canadian roads – but without the staggering cost and disruption of forcing Canadians into electric vehicles. (Source of photo: James D. Schwartz, licensed under CC BY-ND 2.0)

A major barrier for LNG project sponsors has been Canadian regulators’ fixation on a project’s domestic emissions – which come mainly from producing the energy needed to operate the liquefaction and storage process and loading facility. These emissions are miniscule compared to the enormous emissions reductions when natural gas is used instead of coal in consuming countries. But in their zeal to force Canada to “net zero” emissions, government authorities initially tried to veto LNG Canada generating its electricity and compression power using some of the natural gas that will be already piped to the site, insisting instead upon hydroelectric power. This seriously delayed the project due to the need for B.C. Hydro to first build a new dam to supply the required power, along with a new, $3 billion transmission line that has not even begun its environmental review process.

Regulators finally waived their objection so the project could be finished, and it will initially use natural gas for power. But the same objection is now being raised with respect to another major LNG venture proposed in the same region. The Ksi Lisims LNG project would utilize a floating liquefaction and loading facility docked at lands owned by the Nisga’a First Nation north of Prince Rupert. Its natural gas would be supplied through an already-approved but never-built pipeline planned for one of the cancelled LNG projects. The $10 billion venture would have approximately two-thirds the capacity of LNG Canada Phase 1. The facility would be powered by hydroelectricity.

The Ksi Lisims LNG project (pictured in the digital rendering at left), a floating facility proposed to be built north of Prince Rupert and to operate on hydroelectricity, has faced strong objections over its natural gas production process, with the B.C. Wilderness Committee (right) calling on B.C.’s NDP government to veto any further LNG development. (Source of right photo: Behda Mahichi, retrieved from Wildeness Commitee)

Ksi Lisims sounds like a great addition to Canada’s modest LNG lineup, one that British Columbians should applaud. Instead, the proponents have been assailed by objections over the greenhouse gas emissions from the facility and the natural gas production process, and concurrently the B.C. Wilderness Committee is calling on the province’s NDP government to veto any further LNG development. None of these zealots acknowledge the vastly greater reduction of greenhouse gas emissions that will be achieved as consuming countries switch to natural gas.

Prior to the December 2018 UN Climate Change Conference in Katowice, Poland, Canada’s Conservative Party urged leaders of their nation’s delegation to propose that the use of imported natural gas to displace coal and thereby reduce emissions in one country should count towards the exporting country’s emissions reduction targets. But this made far too much sense for our Prime Minister and his team of anti-fossil-fuel eco-zealots. A new federal government that encourages LNG projects might well see a return of those other big sponsors that were driven off.

And that brings us back to Pierre Poilievre and the need for a Conservative alternative to Trudeau’s carbon tax. LNG export would be not only vastly superior in reducing emissions, it would also create tens of billions of dollars in economic benefits for a beleaguered Canadian private sector. It is beyond high time. A Macdonald-Laurier Institute report, Estimating the True Size of Government in Canada, concludes that Canada’s private sector has shrunk to just 36 percent of the nation’s GDP. That’s right – Canada’s public sector now represents nearly two-thirds of the Canadian economy, if one includes in that measure the vast amounts governments spend on tax credits and other tax-related expenditures, plus the economic impacts of regulating the pricing or outputs of private industries. This is appalling.

Canadian Conservative leader Pierre Poilievre’s “Axe the Tax” campaign can be part of a much-needed conversation about how to actually reduce CO₂ emissions and boost the country’s economy; LNG export could be part of both solutions. (Source of photo: The Canadian Press/Paul Daly)

Even more incomprehensible is a research report from the Harvard Kennedy School noting that “Communist” China’s private sector generates “approximately 60% of China’s GDP, 70% of its innovative capacity, 80% of urban employment and 90% of new jobs.” By those measures, the private sector in ostensibly free and democratic Canada, with its allegedly market-based economy, has been reduced to barely half the relative size of the private sector in authoritarian China.

It is clear that for Canada, getting out of the way of privately-driven growth in LNG exports would be a vastly superior environmental alternative to Trudeau’s economically destructive and politically divisive carbon tax, while also helping to reverse the decline of what was once a proud, thriving nation into an indebted, unproductive, government-dominated basket case.

Gwyn Morgan is a retired business leader who was a director of five global corporations.

Related Topics:#C2CJournal #CanadaLNG #GwynMorgan #WealthCreatingWayOfReducingGlobalCO2Emissions feature

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Alberta

Alberta calling for federal election! Premier Smith demands feds scrap dangerous oil and gas production caps

Published on November 4, 2024

Government of Alberta

Premier Danielle Smith, Minister of Environment and Protected Areas Rebecca Schulz and Minister of Energy and Minerals Brian Jean issued the following statement on the proposed federal oil and gas production cap:

“This production cap will hurt families, hurt businesses and hurt Canada’s economy. We will defend our province, our country and our Constitutional rights.

“Make no mistake, this cap violates Canada’s constitution. Section 92A clearly gives provinces exclusive jurisdiction over non-renewable natural resource development yet this cap will require a one million barrel a day production cut by 2030.

“The evidence is overwhelming. Three reports from reputable firms have shown that these regulations will sucker-punch Canada’s economy, a million barrels cut every day according to S&P Global, $28 billion a year in lost GDP according to Deloitte, and up to 150,000 lost jobs according to the Conference Board of Canada.

“The losses to GDP mean billions a year will disappear from the economy. Billions that won’t be going towards new schools, hospitals and roads, all for a reckless ideological scheme that will not reduce global emissions.

“Ultimately, this cap will lead Alberta and our country into economic and societal decline. The average Canadian family would be left with up to $419 less for groceries, mortgage payments and utilities every month. Canadian parents and workers will suffer while Justin Trudeau outsources the duty to provide safe, affordable, reliable and responsibly produced oil and gas to dictators and less clean producers around the world. We could be the solution. Instead, Ottawa would rather sacrifice our ability to lead.

“Tweaks won’t work. This cap must be scrapped. Alberta’s government is actively exploring the use of every legal option, including a constitutional challenge and the use of the Alberta Sovereignty within a United Canada Act. We will not stand idly by while the federal government sacrifices our prosperity, our constitution and our quality of life for its extreme agenda.”

Energy

Ottawa’s plan to decarbonize Canada’s electricity by 2035 not feasible and would require equivalent of 23 Site C hydroelectric dams

Published on November 3, 2024

Todayville

From the Fraser Institute

By Elmira Aliakbari and Jock Finlayson

The federal government’s plan to make all electricity generation in Canada carbon-free by 2035 is impractical and highly unlikely, given physical, infrastructure, financial, and regulatory realities. So says a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Canada’s federal government has set an ambitious, and, frankly, unrealistic target of achieving complete carbon-free electricity in ten years,” said Jock Finlayson, Fraser Institute senior fellow and co-author of Implications of Decarbonizing Canada’s Electricity Grid.

The study finds that in 2023, nearly 81 per cent of Canada’s electricity came from carbon-free energy sources, including hydro, nuclear, wind and solar. But to replace the remaining 19 per cent which uses fossil fuels, in the next 10 years, would require constructing the equivalent of:

• Approximately 23 large hydroelectric dams, similar in size to BC’s Site C, or 24 comparable to Newfoundland and Labrador’s Muskrat Falls, or;

• More than four nuclear power plants similar in size to Ontario’s Darlington power station, or 2.3 large scale nuclear power plants equivalent to Ontario’s Bruce Power, or;

• Around 11,000 large wind turbines, which would not only require substantial investments in back-up power systems (since wind is intermittent) but would also require clearing 7,302 square kilometers of land—larger than the size of Prince Edward Island—excluding the additional land required for transmission infrastructure.

Currently, the process of planning and constructing major electricity generation facilities in Canada is complicated and time-consuming, often marked by delays, regulatory challenges, and significant cost overruns.

For example, BC’s Site C project took approximately 43 years from the initial planning studies in 1971 to receive environmental certification in 2014, with completion expected in 2025 at a cost of $16 billion.

What’s more, the significant energy infrastructure listed above would only meet Canada’s current electricity needs. As Canada’s population grows, the demand for electricity will increase significantly.

“It is not at all realistic that this scale of energy infrastructure can be planned, approved, financed and built in just 10 years, which is what would be required merely to decarbonize Canada’s existing electricity needs,” said Elmira Aliakbari, director natural resource studies at the Fraser Institute and study co-author.

“This doesn’t even account for the additional infrastructure needed to meet future electricity demand. Decarbonizing Canada’s electricity generation by 2035 is another case where the government has set completely unrealistic timelines without any meaningful plan to achieve it.”

This essay examines the implications of decarbonizing Canada’s electricity grid by replacing existing fossil fuel-based generation with clean energy sources.
In 2023, clean energy sources—including hydro, nuclear, and wind—produced 497.6 terawatt hours (TWh) of electricity, accounting for nearly 81% of Canada’s total supply, while fossil fuels contributed 117.7 TWh (19.1%). To replace this fossil fuel generation with hydro power alone would require about 23 large projects similar to BC’s Site C or 24 like Newfoundland & Labrador’s Muskrat Falls. Using nuclear power would necessitate building 2.3 facilities equivalent to Ontario’s Bruce Power or 4.3 similar to Darlington Nuclear Generating Station.
The process of planning and constructing electricity generation facilities in Canada is complex and time-consuming, often marked by delays, regulatory hurdles, and significant cost overruns. For example, the BC Site C project took approximately 43 years from the initial feasibility and planning studies in 1971 to receive environmental certification in 2014, with completion expected in 2025 at a cost of $16 billion.
Land requirements for new electricity generation facilities are also significant; replacing 117.7 TWh of fossil fuel-based electricity with hydro power, for instance, would need approximately 26,345 square kilometers, nearly half the size of Nova Scotia.
The slow pace of regulatory approvals, high and rising costs of major energy projects, substantial land requirements, and public opposition to project siting all cast doubt on the feasibility of achieving the necessary clean electricity infrastructure in the coming decade to fully replace fossil fuels in Canada.