Energy
US LNG uncertainty is a reminder of lost Canadian opportunities
From Resource Works
Canada has missed opportunities to supply Europe with LNG due to political missteps and regulatory barriers, despite having the resources and potential.
For almost three years now, Europe has not been able to figure out how it will replace the cheap, plentiful supply of Russian gas it once enjoyed. Since Russia invaded Ukraine, the EU member states have made drastic moves to curtail their reliance on Russian energy, specifically Russian gas.
In an ideal world, the diversification of the EU’s energy supply would have been Canada’s golden opportunity to use its vast LNG capabilities to fill the gap.
Canada has all the right resources at its disposal to become one of the EU’s premier energy sources, with enormous natural gas reserves lying in the ground and shores upon three of the world’s four oceans. The problem is that Canada lacks both the right infrastructure and the necessary political will to get it built.
The fact that Canada is not a favored supplier of LNG to Europe is the consequence of political missteps and a lack of vision at the highest levels of government. It was reported by the Financial Times that outgoing United States President Joe Biden’s freeze on new LNG export permits and clashes with activists have created uncertainty over future supply growth.
Missteps and onerous regulatory barriers have kept Canada shackled and unable to reach its full potential, leaving us on the sidelines as other countries take the place that should have been Canada’s as an energy supplier for the democratic world.
To this day, European leaders like Greek Prime Minister Kyriakos Mitsotakis, German Chancellor Olaf Scholz, and Polish President Andrzej Duda have indicated their openness to adding Canadian LNG to their domestic supply.
However, no plans for supplying Canadian LNG to Europe have come to fruition. The absence of any commitment from the federal government to take those possibilities seriously is the result of decisions that now look like major mistakes in hindsight.
Two of these are cancelled energy projects on the Atlantic coast: the Energy East oil pipeline and the proposed expansion of an LNG terminal in New Brunswick.
Canada’s Pacific coast is now a hub of LNG development, with three planned facilities well underway, and there are hungry markets in Asia ready to receive their products. It is a shame that the Atlantic coast is being left behind during Canada’s burgeoning LNG renaissance. The economic situation in the Maritimes has long been challenging, leading to emigration to the Western provinces and stagnation back at home.
LNG projects in British Columbia have proven to be job machines and drivers of economic revitalization in formerly impoverished regions that were gutted when fishing, mining, and forestry went downhill in the 1980s.
The potential to both help Atlantic Canada level back up economically while becoming the bridge for energy exports to Europe was halted by the cancellation of the Energy East pipeline and a proposed LNG terminal in Saint John, New Brunswick.
Proposed by TransCanada (since renamed to TC Energy) to the National Energy Board in 2014, Energy East would have been a 4,600-kilometer pipeline with the capacity to transport over a million barrels of crude oil from Alberta to refineries in New Brunswick and Quebec. While it is true that Europe is more interested in LNG than crude oil, the completion of one great project encourages more and could have gotten the ball rolling on further energy infrastructure.
Had Energy East been constructed, it would have served as a symbol to investors and energy industry players that Canada was serious about west-to-east projects. Unfortunately, in 2017, TransCanada withdrew from the project due to regulatory disagreements and uncertainty.
In 2019, the federal government passed Bill C-69, AKA the “no more pipelines” law, leading to even more complex and restrictive regulations for new energy projects. When there should have been momentum on energy infrastructure building, there came only more cascading bad news.
A proposed expansion of Repsol’s LNG terminal in Saint John, New Brunswick, another potential gateway for Canadian energy to get through to Europe, was abandoned due to the projected high costs and poor business case.
The idea of LNG on the East Coast making for a poor business case has been repeated by the federal government many times. However, in documents accessed by The Logic, it was revealed that Global Affairs Canada has, in fact, stated the opposite, and that there was great potential to increase rail and pipeline networks on the Atlantic.
Furthermore, Canada is capable of shipping LNG from the Western provinces to the East Coast because of our access to the vast pipeline networks of the United States.
As a result of these regrettable decisions, Canadians can only watch as lost opportunities to provide LNG to the democratic world are filled by other countries. Every downturn or disruption in the energy exports of other countries is a sore reminder of Canada’s lost opportunities.
Canada needs more vision, certainty, and drive when it comes to building the future of Canadian energy. In the words of Newfoundland and Labrador Premier Andrew Furey, “We will be all in on oil and gas for decades and decades to come…because the world needs us to be.”
Canada’s wealth is based on its success as a trading nation. Canada is blessed with immense resources spread across a vast country. It has succeeded as a small, open economy with an enviable standard of living that has been able to provide what the world needs.
Canada has been stuck in a situation where it cannot complete nation‑building projects like the Canadian Pacific Railway that was completed in 1885, or the Trans Canada Highway that was completed in the 1960s. With the uncertainty of U.S. tariffs looming over our country and province, Canada needs to take bold action to revitalize the productivity and competitiveness of its economy – going east to west and not always relying on north-south trade. There’s no better time than right now to politically de-risk these projects.
A lack of leadership from the federal government has led to the following:
- Inadequate federal funding for trade infrastructure.
- A lack of investment is stifling the infrastructure capacity we need to diversify our exports. This is despite federally commissioned reports like the 2022 report by the National Supply Chain Task Force indicating the investment need will be trillions over the next 50 years.
- Federal red tape, like the Impact Assessment Act.
- Burdensome regulation has added major costs and significant delays to projects, like the Roberts Bank Terminal 2 project, a proposed container facility at Vancouver, which spent more than a decade under federal review.
- Opaque funding programs, like the National Trade Corridors Fund (NTCF).
- Which offers a pattern of unclear criteria for decisions and lack of response. This program has not funded any provincial highway projects in Alberta, despite the many applications put forward by the Government of Alberta. In fact, we’ve gone nearly 3 years without decisions on some project applications.
- Ineffective policies that limit economic activity.
- Measures that pit environmental and economic objectives in stark opposition to one another instead of seeking innovative win-win solutions hinder Canada’s overall productivity and investment climate. One example is the moratorium on shipping crude through northern B.C. waters, which effectively ended Enbridge’s Northern Gateway proposal and has limited Alberta’s ability to ship its oil to Asian markets.
In a federal leadership vacuum, Alberta has worked to advance economic corridors across Canada. In April 2023, Alberta, Saskatchewan and Manitoba signed an agreement to collaborate on joint infrastructure networks meant to boost trade and economic growth across the Prairies. Alberta also signed a similar economic corridor agreement with the Northwest Territories in July 2024. Additionally, Alberta would like to see an agreement among all 7 western provinces and territories, and eventually the entire country, to collaborate on economic corridors.
Through our collaboration with neighbouring jurisdictions, we will spur the development of economic corridors by reducing regulatory delays and attracting investment. We recognize the importance of working with Indigenous communities on the development of major infrastructure projects, which will be key to our success in these endeavours.
However, provinces and territories cannot do this alone. The federal government must play its part to advance our country’s economic corridors that we need from coast to coast to coast to support our economic future. It is time for immediate action.
Alberta recommends the federal government take the following steps to strengthen Canada’s economic corridors and supply chains by:
- Creating an Economic Corridor Agency to identify and maintain economic corridors across provincial boundaries, with meaningful consultation with both Indigenous groups and industry.
- Increasing federal funding for trade-enabling infrastructure, such as roads, rail, ports, in-land ports, airports and more.
- Streamlining regulations regarding trade-related infrastructure and interprovincial trade, especially within economic corridors. This would include repealing or amending the Impact Assessment Act and other legislation to remove the uncertainty and ensure regulatory provisions are proportionate to the specific risk of the project.
- Adjusting the policy levers that that support productivity and competitiveness. This would include revisiting how the federal government supports airports, especially in the less-populated regions of Canada.
To move forward expeditiously on the items above, I propose the establishment of a federal/provincial/territorial working group. This working group would be tasked with creating a common position on addressing the economic threats facing Canada, and the need for mitigating trade and trade-enabling infrastructure. The group should identify appropriate governance to ensure these items are presented in a timely fashion by relative priority and urgency.
Alberta will continue to be proactive and tackle trade issues within its own jurisdiction. From collaborative memorandums of understanding with the Prairies and the North, to reducing interprovincial trade barriers, to fostering innovative partnerships with Indigenous groups, Alberta is working within its jurisdiction, much like its provincial and territorial colleagues.
We ask the federal government to join us in a new approach to infrastructure development that ensures Canada is productive and competitive for generations to come and generates the wealth that ensures our quality of life is second to none.
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Devin Dreeshen
Devin Dreeshen was sworn in as Minister of Transportation and Economic Corridors on October 24, 2022.
From the Fraser Institute
Mark Carney, who wants to be your next prime minister, recently released his plan for Canada’s climate policies through 2035. It’s a sprawling plan (climate plans always are), encompassing industrial and manufacturing emissions, vehicle emissions, building emissions, appliance emissions, cross-border emissions, more “green” energy, more “heat pumps” replacing HVAC, more electric vehicle (EV) subsidies, more subsidies to consumers, more subsidies to companies, and more charging stations for the EV revolution that does not seem to be happening. And while the plan seeks to eliminate the “consumer carbon tax” on “fuels, such as gasoline, natural gas, diesel, home heating oil, etc.” it’s basically Trudeau’s climate plans on steroids.
Consider this. Instead of paying the “consumer carbon tax” directly, under the Carney plan Canadians will pay more—but less visibly. The plan would “tighten” (i.e. raise) the carbon tax on “large industrial emitters” (you know, the people who make the stuff you buy) who will undoubtedly pass some or all of that cost to consumers. Second, the plan wants to force those same large emitters to somehow fund subsidy programs for consumer purchases to offset the losses to Canadians currently profiting from consumer carbon tax rebates. No doubt the costs of those subsidy programs will also be folded into the costs of the products that flow from Canada’s “large industrial emitters,” but the cause of rising prices will be less visible to the general public. And the plan wants more consumer home energy audits and retrofit programs, some of the most notoriously wasteful climate policies ever developed.
But the ironic icing on this plan’s climate cake is the desire to implement tariffs (excuse me, a “carbon border adjustment mechanism”) on U.S. products in association with “key stakeholders and international partners to ensure fairness for Canadian industries.” Yes, you read that right, the plan seeks to kick off a carbon-emission tariff war with the United States, not only for Canada’s trade, but to bring in European allies to pile on. And this, all while posturing in high dudgeon over Donald Trump’s plans to impose tariffs on Canadian products based on perceived injustices in the U.S./Canada trade relationship.
To recap, while grudgingly admitting that the “consumer carbon tax” is wildly unpopular, poorly designed and easily dispensable in Canada’s greenhouse gas reduction efforts, the Carney plan intends to double down on all of the economically damaging climate policies of the last 10 years.
But that doubling down will be more out of sight and out of mind to Canadians. Instead of directly seeing how they pay for Canada’s climate crusade, Canadians will see prices rise for goods and services as government stamps climate mandates on Canada’s largest manufacturers and producers, and those costs trickle down onto consumer pocketbooks.
In this regard, the plan is truly old school—historically, governments and bureaucrats preferred to hide their taxes inside of obscure regulations and programs invisible to the public. Canadians will also see prices rise as tariffs imposed on imported American goods (and potentially services) force American businesses to raise prices on goods that Canadians purchase.
The Carney climate plan is a return to the hidden European-style technocratic/bureaucratic/administrative mindset that has led Canada’s economy into record underperformance. Hopefully, whether Carney becomes our next prime minister or not, this plan becomes another dead letter pack of political promises.
Kenneth P. Green
Senior Fellow, Fraser Institute
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