Energy
Why Canada should get carbon credits for LNG exports
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.
A 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
Piapot First Nation near Regina, Saskatchewan. Photo courtesy Piapot First Nation/Facebook
From the Canadian Energy Centre
By Cody Ciona and Deborah Jaremko
“Come to my nation and see how my people are living, and the struggles that they have day to day out here because of the high cost of energy, of electric heat and propane.”
Indigenous communities across Canada need access to natural gas to reduce energy poverty, says a new report by Energy for a Secure Future (ESF).
It’s a serious issue that needs to be addressed, say Indigenous community and business leaders in Saskatchewan.
“We’re here today to implore upon the federal government that we need the installation of natural gas and access to natural gas so that we can have safe and reliable service,” said Guy Lonechild, CEO of the Regina-based First Nations Power Authority, on a March 11 ESF webinar.
Last year, 20 Saskatchewan communities moved a resolution at the Assembly of First Nations’ annual general assembly calling on the federal government to “immediately enhance” First Nations financial supports for “more desirable energy security measures such as natural gas for home heating.”
“We’ve been calling it heat poverty because that’s what it really is…our families are finding that they have to either choose between buying groceries or heating their home,” Chief Christine Longjohn of Sturgeon Lake First Nation said in the ESF report.
“We should be able to live comfortably within our homes. We want to be just like every other homeowner that has that choice to be able to use natural gas.”
At least 333 First Nations communities across Canada are not connected to natural gas utilities, according to the Canada Energy Regulator (CER).
ESF says that while there are many federal programs that help cover the upfront costs of accessing electricity, primarily from renewable sources, there are no comparable ones to support natural gas access.
“Most Canadian and Indigenous communities support actions to address climate change. However, the policy priority of reducing fossil fuel use has had unintended consequences,” the ESF report said.
“Recent funding support has been directed not at improving reliability or affordability of the energy, but rather at sustainability.”
Natural gas costs less than half — or even a quarter — of electricity prices in Alberta, British Columbia, Ontario, Manitoba and Saskatchewan, according to CER data.
“Natural gas is something NRCan [Natural Resources Canada] will not fund. It’s not considered a renewable for them,” said Chief Mark Fox of the Piapot First Nation, located about 50 kilometres northeast of Regina.
“Come to my nation and see how my people are living, and the struggles that they have day to day out here because of the high cost of energy, of electric heat and propane.”
According to ESF, some Indigenous communities compare the challenge of natural gas access to the multiyear effort to raise awareness and, ultimately funding, to address poor water quality and access on reserve.
“Natural gas is the new water,” Lonechild said.
2025 Federal Election
MORE OF THE SAME: Mark Carney Admits He Will Not Repeal the Liberal’s Bill C-69 – The ‘No Pipelines’ Bill
From EnergyNow.Ca
Mark Carney on Tuesday explicitly stated the Liberals will not repeal their controversial Bill C-69, legislation that prevents new pipelines being built.
Carney has been campaigning on boosting the economy and the “need to act forcefully” against President Donald Trump and his tariffs by harvesting Canada’s wealth of natural resources — until it all fell flat around him when he admitted he actually had no intention to build pipelines at all.
When a reporter asked Carney how he plans to maintain Bill C-69 while simultaneously building infrastructure in Canada, Carney replied, “we do not plan to repeal Bill C-69.”
“What we have said, formally at a First Ministers meeting, is that we will move for projects of national interest, to remove duplication in terms of environmental assessments and other approvals, and we will follow the principle of ‘one project, one approval,’ to move forward from that.”
“What’s essential is to work at this time of crisis, to come together as a nation, all levels of government, to focus on those projects that are going to make material differences to our country, to Canadian workers, to our future.”
“The federal government is looking to lead with that, by saying we will accept provincial environmental assessments, for example clean energy projects or conventional energy projects, there’s many others that could be there.”
“We will always ensure these projects move forward in partnership with First Nations.”
Tory leader Pierre Poilievre was quick to respond to Carney’s admission that he has no intention to build new pipelines. “This Liberal law blocked BILLIONS of dollars of investment in oil & gas projects, pipelines, LNG plants, mines, and so much more — all of which would create powerful paychecks for our people,” wrote Poilievre on X.
“A fourth Liberal term will block even more and keep us reliant on the US,” he wrote, urging people to vote Conservative.
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