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Why Canada should get carbon credits for LNG exports

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6 minute read

From the MacDonald Laurier Institute

By Jerome Gessaroli

Generating carbon credits from LNG exports is potentially a cost-effective way to reduce GHGs globally while helping to meet our carbon reduction goals

It stands to reason that Canada should get carbon credits for replacing dirty coal-fired energy sources in Asia with our cleaner natural gas, preventing the release of many megatonnes of greenhouse gas emissions. But as the issue currently stands, we won’t.

However, there’s hope for reason.

recent paper I wrote for the Macdonald-Laurier Institute sheds light on the confusion surrounding this matter. Based on the 2015 Paris Agreement, specifically Article 6, and the subsequently developed guidelines for the sharing of carbon reduction credits, liquid natural gas exports should be eligible to generate such credits for Canada — just not in a way envisioned by provincial leaders.

Former B.C. premier Christy Clark and successive premiers have argued since 2013 that LNG exports alone should be counted toward carbon credits for Canada and its provinces. Researchers estimate that if Asian countries replace coal with natural gas in their power plants, emissions would fall by 34 to 62 per cent.

However, each time this argument resurfaces, it faces criticism from various quarters.

The confusion over sharing carbon credits arises from the disconnect between the idea’s simplicity and its complex implementation.

Carbon credit eligibility is based on the principle that only emission reduction projects that would not have proceeded without access to carbon credits meet a so-called “additionality” criterion. While there are other criteria, the additionality criterion is the heart of credits sharing regime.

A straightforward LNG export contract with an Asian utility that substitutes gas for coal would probably not be eligible to generate any carbon credits for the Canadian side. While the deal does lower GHG emissions, those reductions are not “additional” and the deal would go ahead with or without the availability of emissions credits.

However, there is another scenario that would likely qualify to receive carbon credits. In this scenario, in addition to selling LNG, the Canadian company helps the Asian utility convert its coal-fuelled plant to a natural gas plant. In this case, the utility’s motivation is to avoid prematurely shuttering its power plant and losing its investment due to stricter emission standards.

On the Canadian side, support may involve providing technical services, financing or other assistance. While more costly for Canada, those extra expenses could be more than offset by the value of carbon credits transferred by the Asian side. Canada would win by accruing revenue from the sale of LNG, providing additional Canadian-based services, and receiving valuable carbon credits to help meet our emissions targets. This deal is “additional” – its feasibility is contingent on its eligibility for carbon credits.

Critics warn that selling LNG abroad will “lock in” fossil fuel use and delay the transition to renewables. The reality is that the average age of Asian coal-fuelled power plants is only 13 years (with a lifespan of up to 40 years) and that over 1,000 new coal plants have been announced, permitted or are currently under construction.

These are the facts, whether we like them or not. This reminds me of the quote often attributed to John Maynard Keynes, “As the facts change, I change my mind. What do you do, sir?” What we can do is assist in switching some of these plants from burning coal to LNG, which will substantially reduce GHG emissions over the short and medium term; not to mention help energy workers keep their jobs.

Critics also assert that producing LNG in British Columbia creates emissions which could prevent the province from meeting its own emission reduction targets. Yet studies estimate that using just over half of LNG Canada’s annual Phase 1 production capacity to replace coal could reduce international GHG emissions by 14 to 34 Mt while increasing yearly emissions in B.C. by less than two megatonnes.

Creating the infrastructure to transfer carbon credits under the Paris Agreement is a complex and relatively new endeavour. Earning carbon credits is also a non-trivial task. It will require the federal government to initiate bilateral agreements and negotiate common policies and practices with any partnering country for calculating, verifying, allocating and transferring credits. Alberta and B.C. are already co-operating.

Generating carbon credits from LNG exports is potentially a cost-effective way to reduce GHGs globally while helping to meet our carbon reduction goals.

Jerome Gessaroli is a senior fellow at the Macdonald-Laurier Institute and leads The Sound Economic Policy Project at the British Columbia Institute of Technology

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Trump’s Energy Secretary Issues Dire Warning To Globalists About Green Energy Lunacy

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From the Daily Caller News Foundation

By David Blackmon

During a 12-minute video appearance at the 2025 Alliance for Responsible Citizenship (ARC) Conference held in London, Secretary of Energy Chris Wright told the audience that “Net zero by 2050 “is a sinister goal.”

That is a bold statement, especially given that it was delivered to an audience sitting in the United Kingdom, where both major political parties that have traditionally governed the country – the Conservative “Tories” and the far-left Labour Party – have spent the past decade pushing their country to meet its net zero goals as if it were a matter of religious faith. Regardless of the obvious negative economic and social consequences that have been heaped upon UK citizens, and equally obvious futility of the entire effort, leaders of both parties have kept the country on this ruinous path.

As Wright went on to point out, net zero by 2050 is “both unachievable by any practical means, but the aggressive pursuit of it…has not delivered any benefits, but it’s delivered tremendous costs.” This is objectively true, the most painful example being the rapid deindustrialization of the formerly strong British economy and the accompanying rapacious condemnation of thousands of acres of arable lands to become home to huge wind and solar installations.

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As Wright points out, “no one’s going to make an energy-intensive product in the United Kingdom anymore.” A clear object lesson in that reality came in September when venerable steelmaker Tata Steel shut down the last existing steelmaking plant in the UK.

Climate zealots in both major parties celebrated that event, but we must ask what there really is to celebrate? Sure, the Labour politicos get to virtue signal about the elimination of X tons of carbon dioxide emissions, but in a global sense, that’s meaningless. The UK still needs steel – the only difference now is that the steel that used to be made by highly-paid workers in domestic mills will now be imported steel made by poverty waged workers in Pakistan, China and other mainly Asian countries.

Meanwhile, the emissions created by making the steel in those other countries with lower environmental regulations will be far larger than from steel that used to be made in the UK. As Wright pointed out at the ARC conference, “This is not energy transition. This is lunacy.”

He isn’t wrong.

On Feb. 13, the Center for Research on Energy and Clean Air (CREA) published a report showing that construction of new coal-fired power plants in China reached a ten-year high in 2024. CREA finds that “China approved 66.7 gigawatts (GW) of new coal-fired power capacity in 2024, with approvals picking up in the second half after a slower start to the year.” It all belies the favored narrative on the political left that China is leading the world in converting its power systems to renewables. In reality, the expansion of its coal sector may actually be accelerating again.

That renewed Chinese focus on expanding its coal power fleet is driven in large part by the zealous focus by globalist leaders in the UK and other western countries – Germany is another great example – on deindustrializing their own economies to satisfy their obsession over atmospheric plant food.

The making of steel and other heavy industrial processes requires reliable, affordable power generation that runs 24 hours every day, 7 days every week. Whether politicians like it or not, coal is the fuel that most reliably and consistently meets all those tests.

Thus, if China and other Asian nations are destined to inherit all the heavy industries being killed off by virtue signaling Western nations, they will need many more coal power plants to power them. This really isn’t complicated.

Meanwhile, the UK can no longer manufacture its own steel or myriad other industrial products that are essential to modern human existence. If the Labour government continues its policy of condemning vast swaths of British farmland to house more and more wind and solar sites, the kingdom will soon no longer be able to even feed its people.

All to satisfy this odd religious dogma based on an obsession over plant food. Lunacy, indeed.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

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Energy

Federal Government Suddenly Reverses on Critical Minerals – Over Three Years Too Late – MP Greg McLean

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From Energy Now

By Calgary MP Greg McLean

Government in Full Reverse

Canada-U.S. Trade Relations is obviously the most pressing issue facing Canadians today.

It’s important to remember how we arrived at this point, but also to question the sincerity of the Liberal Ministers and leadership contenders who are now posing solutions, such as:

  • We need to diversify our resource trade
  • We need to build pipelines and infrastructure to get our exports to tidewater
  • We need to streamline our regulatory burden that stands in the way of development
  • We need to halt the escalating carbon tax
  • We need to reverse the capital gains tax increase

The Liberals are turning themselves inside out on the policy choices they have made over nine years, and put Canada in a precarious economic position vis-à-vis our trade position.

If you believe what they are saying now, these Liberal Ministers and leadership contenders are saying that Canada needs EXACTLY THE OPPOSITE of what they have delivered over these past nine years.

I can’t comment on whether these NEW Liberal policy positions completely lack sincerity, or whether they are the result of a ‘deathbed conversion’, but nine years of moving in the exact opposite direction to their new words has led Canada to where it is today – and that is nine lost years for Canadians, our prosperity, and our role in a complex world.

Below is another example of a specific morphing of a Liberal policy – to the one I helped put forth – 3 ½ years ago – regarding Canada’s policy on critical minerals.


Minister Late to Critical Mineral Strategy

Here’s a gem of wisdom from December’s Fall Economic Statement:

Canada will work with the United States and other likeminded partners to address the impacts of non-market policies and practices that unduly distort critical mineral prices.  This includes ensuring that market participants recognize the value of critical minerals produced responsibly, with due regard for high environmental standards and labour practices.

Then, on January 16th, the following from Canada’s Natural Resource Minister, Jonathan Wilkinson:

During a panel discussion in Washington on Wednesday, Natural Resources Minister Jonathan Wilkinson proposed that enforcing a floor on metals prices could be “one of the centerpieces of the conversations we would then be having at the G7” summit later this year.

Western nations have long warned that China’s dominance in everything from nickel to lithium has let the country’s producers flood the market with supply, thereby keeping prices artificially low for competitors. Wilkinson has touted price floors as a way to combat that market control.

What a great idea!

Here’s the relevant excerpt from June, 2021, from a dissenting report on the Natural Resources Committee, when I served as my party’s critic, in contrast to the government’s critical minerals approach at that time:

Recommendation 4: Coordinate with our allies to establish a dedicated supply stock of critical minerals, possibly through a physical storage and floor pricing mechanism for visibility and pricing purposes.

Excerpt: Canada is too small of a market to undertake this effort on its own, but it can play a key role with its longstanding leadership as the mining jurisdiction of choice in the world. Canada’s pre-eminent role as a financing jurisdiction for international mining is well understood. Although we are at the early stages of losing this historical leadership to Australia, acting quickly to solidify Canada’s leadership will be a strong signal. Australia and Europe have already established critical mineral strategies to offset the dominance of the market that China has exerted. At the very least, Canada’s coordination needs to include the United States, and probably Mexico (through CUSMA), as the ongoing funding of a critical mineral supply may require backstopping developments with a price amelioration mechanism. In essence, a floor price to ensure the protection of critical mineral developments from manipulating price volatility – and which has held back developments, or caused the insolvency of several of these developments, due to non-transparent world market pricing mechanisms. … Establishing a steady supply of these critical minerals will lead to more value-added opportunities, in conjunction with our trade partners.

FULL REPORT

Conservative Dissenting Recommendations

My question to the Minister:  ‘What took you so long?’

This approach was presented three and a half years ago – and the Government chose to ignore it then.  

No surprise now, perhaps, as we’ve seen this Minister flip-flop on so many of the nonsense policies he’s put forth or acquiesced in at Cabinet:

  • The Clean Electricity Regulations (still opaque)
  • Canada’ role in shipping hydrocarbons to the world
  • Building energy infrastructure

To say nothing of the various Cabinet decisions he has been a part of that have led to Canada’s current weak negotiating position with our allies.  We effectively have not had a Minister of Natural Resources under his tenure.

Nothing topped it off more succinctly than his speech at the World Petroleum Show, held in Calgary in September 2023, when his remarks on behalf of the Government of Canada left industry participants around the world questioning whether the Minister was ‘tone-deaf’ or if, in fact, he knew anything about natural resources.

It seems his move to the position I promoted – three and a half years ago – shows that he’s finally listening and learning (or un-learning his previous narratives, perhaps)– but it’s quite late in the day.  Time and our future have been wasted.

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