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
From the Canadian Energy Centre
Complementary production in Canada and the U.S. boosts energy security
The United States is now the world’s largest oil producer, but its reliance on oil imports from Canada has never been higher.
Through a vast handshake of pipelines and refineries, Canadian oil and U.S. oil complement each other, strengthening North American energy security.
Here’s why.
Decades in the making
Twenty years ago, the North American energy market looked a lot different than it does today.
In the early 2000s, U.S. oil production had been declining for more than 20 years. By 2005, it dropped to its lowest level since 1949, according to the U.S. Energy Information Administration (EIA).
America’s imports of oil from foreign nations were on the rise.
But then, the first of two powerhouse North American oil plays started ramping up.
In Canada’s oil sands, a drilling technology called SAGD – steam-assisted gravity drainage – unlocked enormous resources that could not be economically produced by the established surface mining processes. And the first new mines in nearly 25 years started coming online.
In about 2010, the second massive play – U.S. light, tight oil – emerged on the scene, thanks to hydraulic fracturing technology.
Oil sands production jumped from about one million barrels per day in 2005 to 2.5 million barrels per day in 2015, reaching an average 3.5 million barrels per day last year, according to the Canada Energy Regulator.
Meanwhile, U.S. oil production skyrocketed from 5.5 million barrels per day in 2005 to 9.4 million barrels per day in 2015 and 13.3 million barrels per day in 2024, according to the EIA.
Together the United States and Canada now produce more oil than anywhere else on earth, according to S&P Global.
As a result, overall U.S. foreign oil imports declined by 35 per cent between 2005 and 2023. But imports from Canada have steadily gone up.
In 2005, Mexico, Saudi Arabia, Venezuela and Nigeria together supplied 52 per cent of U.S. oil imports. Canada was at just 16 per cent.
In 2024, Canada supplied 62 per cent of American oil imports, with Mexico, Saudi Arabia and Venezuela together supplying just 14 per cent, according to the EIA.
“Light” and “heavy” oil
Canadian and U.S. oil production are complementary because they are different from each other in composition.
Canada’s oil exports to the U.S. are primarily “heavy” oil from the oil sands, while U.S. production is primarily “light” oil from the Permian Basin in Texas and New Mexico.
One way to think of it is that heavy oil is thick and does not flow easily, while light oil is thin and flows freely – like orange juice compared to fudge.
The components that make the oil like this require different refinery equipment to generate products including gasoline, jet fuel and base petrochemicals.
Of the oil the U.S. imported from Canada from January to October last year, 75 per cent was heavy, six per cent was light, and the remaining 19 per cent was “medium,” which basically has qualities in between the two.
Tailored for Canadian crude
Many refineries in the United States are specifically designed to process heavy oil, primarily in the U.S. Midwest and U.S. Gulf Coast.
Overall, there are about 130 operable oil refineries in the United States, according to the American Fuel and Petrochemical Manufacturers.
The Alberta Petroleum Marketing Commission (APMC) estimates that 25 consistently use oil from Alberta.
According to APMC, 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)
Since 2010, virtually 100 per cent of oil imports to the U.S. Midwest have come from Canada, according to the EIA.
In recent years, new pipeline access and crude-by-rail have allowed more Canadian oil to reach refineries on the U.S. Gulf Coast, rising from about 140,000 barrels per day in 2010 to about 450,000 barrels per day in 2024.
U.S. oil exports
The United States banned oil exports from 1975 to the end of 2015. Since, exports have surged, averaging 4.1 million barrels per day last year, according to the EIA.
That is nearly equivalent to the 4.6 million barrels per day of Canadian oil imported into the U.S. over the same time period, indicating that Canadian crude imports enable sales of U.S. oil to global markets.
Future outlook
Twenty-five years from now, the U.S. will need to import virtually exactly the same amount of oil as it does today (7.0 million barrels per day in 2050 compared to 6.98 million barrels per day in 2023), according to the EIA.
From the Daily Caller News Foundation
By Harold Hutchison
Canada should expect Tariffs starting April 1
Secretary of Commerce-designate Howard Lutnick told a Senate committee that the threat of imposing a 25% tariff was to get Canada and Mexico to “respect” the United States and stop the flow of fentanyl into the country.
President Donald Trump nominated Lutnick, who rebuilt Cantor Fitzgerald after the financial services firm suffered massive losses in the Sept. 11, 2001 attack on the World Trade Center, to serve as Secretary of Commerce Nov. 19. Lutnick told Democratic Sen. Gary Peters of Michigan during a Senate Commerce, Science and Transportation Committee hearing that the threatened tariffs were intended to “create action” on two major issues.
WATCH:
“The short-term issue is illegal migration and worse, even still, fentanyl coming into this country and killing over a hundred thousand Americans,” Lutnick said. “There’s no war we could have that would kill a hundred thousand Americans. The president is focused on ending fentanyl coming into the country. You know that the labs in Canada are run by Mexican cartels. So, this tariff model is simply to shut their borders with respect, respect America. We are your biggest trading partner, show us the respect, shut your border and end fentanyl coming into this country.”
“So it is not a tariff, per se,” Lutnick continued. “It is an action of domestic policy. Shut your border and stop allowing fentanyl into our country, killing our people. So this is a separate tariff to create action from Mexico and action from Canada, and as far as I know, they are acting swiftly and if they execute, there will be no tariff. If they don’t, then there will be.”
Drug overdoses killed 105,007 Americans in 2023, which is slightly fewer than the 107,941 who were killed in 2022, according to the Centers for Disease Control. The Drug Enforcement Agency (DEA) seized over 55 million fentanyl pills in 2023 alone, CBS News reported.
One kilogram of fentanyl can reportedly kill up to a half-million people, according to the DEA.
Almost 22,000 pounds of fentanyl were seized at the U.S. border in fiscal year 2024 with another 4,537 pounds being seized in fiscal year 2025 to date, according to statistics released by United States Customs and Border Protection. Upon taking office on Jan. 20, Trump issued several executive orders, including designating Mexican drug cartels as foreign terrorist organizations, declaring a national emergency on the southern border and setting policy on securing the border.
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