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

Related Topics:#CarbonReduction #GreenhouseGasEmissions #JeromeGessaroli #LNGCarbonCredits #MacdonaldLaurierInstitute

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The Canadian Energy Centre’s biggest stories of 2025

Published on December 30, 2025

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From the Canadian Energy Centre

Canada’s energy landscape changed significantly in 2025, with mounting U.S. economic pressures reinforcing the central role oil and gas can play in safeguarding the country’s independence.

Here are the Canadian Energy Centre’s top five most-viewed stories of the year.

5. Alberta’s massive oil and gas reserves keep growing – here’s why

The Northern Lights, aurora borealis, make an appearance over pumpjacks near Cremona, Alta., Thursday, Oct. 10, 2024. CP Images photo

Analysis commissioned this spring by the Alberta Energy Regulator increased the province’s natural gas reserves by more than 400 per cent, bumping Canada into the global top 10.

Even with record production, Alberta’s oil reserves – already fourth in the world – also increased by seven billion barrels.

According to McDaniel & Associates, which conducted the report, these reserves are likely to become increasingly important as global demand continues to rise and there is limited production growth from other sources, including the United States.

4. Canada’s pipeline builders ready to get to work

Photo courtesy Coastal GasLink

Canada could be on the cusp of a “golden age” for building major energy projects, said Kevin O’Donnell, executive director of the Mississauga, Ont.-based Pipe Line Contractors Association of Canada.

That eagerness is shared by the Edmonton-based Progressive Contractors Association of Canada (PCA), which launched a “Let’s Get Building” advocacy campaign urging all Canadian politicians to focus on getting major projects built.

“The sooner these nation-building projects get underway, the sooner Canadians reap the rewards through new trading partnerships, good jobs and a more stable economy,” said PCA chief executive Paul de Jong.

3. New Canadian oil and gas pipelines a $38 billion missed opportunity, says Montreal Economic Institute

Steel pipe in storage for the Trans Mountain Pipeline expansion in 2022. Photo courtesy Trans Mountain Corporation

In March, a report by the Montreal Economic Institute (MEI) underscored the economic opportunity of Canada building new pipeline export capacity.

MEI found that if the proposed Energy East and Gazoduq/GNL Quebec projects had been built, Canada would have been able to export $38 billion worth of oil and gas to non-U.S. destinations in 2024.

“We would be able to have more prosperity for Canada, more revenue for governments because they collect royalties that go to government programs,” said MEI senior policy analyst Gabriel Giguère.

“I believe everybody’s winning with these kinds of infrastructure projects.”

2. Keyera ‘Canadianizes’ natural gas liquids with $5.15 billion acquisition

Keyera Corp.’s natural gas liquids facilities in Fort Saskatchewan, Alta. Photo courtesy Keyera Corp.

In June, Keyera Corp. announced a $5.15 billion deal to acquire the majority of Plains American Pipelines LLP’s Canadian natural gas liquids (NGL) business, creating a cross-Canada NGL corridor that includes a storage hub in Sarnia, Ontario.

The acquisition will connect NGLs from the growing Montney and Duvernay plays in Alberta and B.C. to markets in central Canada and the eastern U.S. seaboard.

“Having a Canadian source for natural gas would be our preference,” said Sarnia mayor Mike Bradley.

“We see Keyera’s acquisition as strengthening our region as an energy hub.”

1. Explained: Why Canadian oil is so important to the United States

Enbridge’s Cheecham Terminal near Fort McMurray, Alberta is a key oil storage hub that moves light and heavy crude along the Enbridge network. Photo courtesy Enbridge

The United States has become the world’s largest oil producer, but its reliance on oil imports from Canada has never been higher.

Many refineries in the United States are specifically designed to process heavy oil, primarily in the U.S. Midwest and U.S. Gulf Coast.

According to the Alberta Petroleum Marketing Commission, the top five U.S. refineries running the most Alberta crude are:

Marathon Petroleum, Robinson, Illinois (100% Alberta crude)
Exxon Mobil, Joliet, Illinois (96% Alberta crude)
CHS Inc., Laurel, Montana (95% Alberta crude)
Phillips 66, Billings, Montana (92% Alberta crude)
Citgo, Lemont, Illinois (78% Alberta crude)

Energy

Rulings could affect energy prices everywhere: Climate activists v. the energy industry in 2026

Published on December 29, 2025

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From The Center Square

By Andrew Rice

Anti-oil and gas advocates across the country have pursued litigation in recent years attempting to force the fossil fuel industry to pay for decades of financial damages the advocates claim were caused by climate change.

Several cases have been dismissed while others advanced through court systems, with some being considered before the U.S. Supreme Court in 2026. Critics of the litigation call it “woke lawfare” and an attempt to force progressive political policies via the judicial system.

Critics also argue the lawsuits threaten U.S. energy independence and, depending on outcomes, will have sweeping impacts on every American.

Here are some of those cases.

Chevron USA Inc. v. Plaquemines Parish, Louisiana

On Jan. 12, 2026, the U.S. Supreme Court will hear oral arguments in Plaquemines Parish, Louisiana, vs. Chevron USA Inc. The case questions to what extent a state court can litigate against an oil company for its production of oil even if it obtained federal permits to produce the oil.

The litigation challenges activities of the oil companies dating back to World War II in some cases. Chevron argued the lawsuit was flawed, claiming that the activities in question were permitted, legal, and often conducted under federal direction – particularly those tied to national security during World War II.

A Plaquemines Parish jury in April ordered Chevron to pay $744 million in damages for its role in the degradation of the state’s coastal wetlands. Environmental activists celebrated the verdict. It was the first of 42 lawsuits filed since 2013 by parishes across coastal Louisiana to go to trial.

The Trump administration’s Justice Department stepped in on Chevron’s side, urging the Supreme Court to move the case from state court to federal court.

Business groups and energy advocates warned the verdict will drive jobs and investment out of Louisiana. The Louisiana Association of Business and Industry called the decision “shortsighted,” saying it would “brand Louisiana as a state that will extort the most recognizable companies on earth for billions of dollars, decades later.”

O.H. Skinner, executive director of Alliance for Consumers, told the Center Square the case seeks to score large settlements from the energy industry and stop oil production.

“The case arises from a broader campaign of woke lawfare in which activists and municipal governments seek to use courtrooms to determine what companies are allowed to produce and what consumers can buy,” Skinner said.

Suncor Energy Inc. v. Boulder

The nation’s highest court is still deciding whether it will hear arguments in Suncor Energy Inc. v. Boulder; a case to decide whether state and local governments can use nuisance laws to sue energy companies for activities that may cause climate change.

The case, originating in Colorado, centers around a City of Boulder and Boulder County lawsuit in state court against Suncor Energy claiming it misled the public in its activities that the local governments claim led to climate change effects.

Lawyers for Suncor Energy argue that allowing a case like this one to play out goes against protections in the Clean Air Act that prevent lawsuits from occurring against emitters from across state lines.

“Public nuisance can’t be used for global problems. It can be used for local problems,” Skinner told The Center Square. “That’s what it’s supposed to be used for.”

However, Skinner said many organizations that are pursuing climate change litigation are seeking to bankrupt energy companies with large monetary settlements. He said litigants will likely attempt to drain energy companies of their resources and use the funds to advocate certain ideological causes.

“These are highly ideological dark-money-funded, multi-faceted legal campaigns to bankrupt an entire industry and confiscate it for ideological reasons,” Skinner said.

City and County of Honolulu v. Sunoco

Similarly, in 2020, City and County of Honolulu v. Sunoco was one of the first examples of public nuisance lawsuits pursued in a state court. The city and county of Honolulu filed a lawsuit in 2020 accusing oil and gas companies, including Sunoco, Exxon Mobil, BP, Chevron and Shell, of misleading the public for decades about the dangers of climate change induced by burning fossil fuels.

The companies asked the U.S. Supreme Court to intervene in the case, but the court, without ruling on the merits, declined to do so in January.

While the case is based in Hawaii, Skinner said litigants there hope it will have far-reaching effects across the country.

“They’re not trying to stop behavior just in those states,” Skinner said. ”The thing that really freaks me out is how people in regular, everyday, real America are going to potentially be affected.”

The People of the State of California v. Exxon Mobil Corporation

Going a step further than Boulder and Honolulu, California Democrat Attorney General Rob Bonta filed a complaint against ExxonMobil in 2024 for what he says are its contributions to “the deluge of plastic pollution” affecting the state.

Exxon countersued, alleging “Bonta and the US Proxies – the former for political gain and the latter pawns for the Foreign Interests – have engaged in a deliberate smear campaign against ExxonMobil, falsely claiming that ExxonMobil’s effective and innovative advanced recycling technology is a ‘false promise’ and ‘not based on truth.,” American Tort Reform Foundation reported.

One of the foreign interests is IEJF, an Australian nonprofit that’s connected to an Australian mining conmpany “that competes with ExxonMobil in the low carbon solutions and energy transition markets, ATRF reported.

Skinner said the litigants in this case are attempting to significantly reduce plastic use throughout the state of California and potentially beyond.

“That’ll make your average person’s life dramatically harder, and it’ll make a lot of things a lot more expensive, and it’ll make having kids, like, brutal,” Skinner said.

Leon v. Exxon Mobil Corp.

Aside from monetary settlements, petitioners in this case also are seeking wrongful death claims against energy companies for their contributions to climate change. The case stems from a woman in Washington state who said her mother died from heat-related illness due to the exacerbated effects of climate change.

She is suing energy companies for their alleged creation of conditions over a period of decades that led to increased temperatures on the day her mother died.

Skinner told The Center Square this case is one of the more blatant examples of ideology affecting the way a litigant pursues cases.

“I think they care because a death is worth a lot of money,” Skinner said. “The climate homicide cases are one of the more far-fetched legal theories I’ve ever seen, because you’re leveling this incredibly staggering charge.”

Climate cases will continue to move through the court system, with one to be heard before the U.S. Supreme Court in early 2026.

Skinner is urging the U.S. Supreme Court and lower courts to rule in favor of energy companies across the country.

“We want the energy companies to win, not because they are perfect actors, but because the alternative is that our lives are governed day in and day out by woke trial lawyers, woke [nongovernmental organizations] and local governments,” Skinner said.