Model of LNG tanker in this illustration on May 19, 2022.Dado Ruvic/Reuters
Lance Mortlock is managing partner, energy and resources at EY Canada.
As global energy markets shift dramatically, Canada is presented with a historic opportunity to shape the future. Worldwide natural gas consumption has grown substantially over the past few years, marked by a remarkable surge in demand for liquefied natural gas.
According to Evaluate Energy, a London-based consultancy, global gas consumption increased by 64 per cent from 2020 to 2022, and the LNG trade nearly doubled. A pivotal driver behind this transition toward LNG was Russia’s invasion of Ukraine, which led to a 15-per-cent decline in pipeline shipments and a corresponding growth in LNG purchases.
The rise of LNG as a key component of global energy markets is not just a fleeting trend; it’s a clarion call for Canada to act swiftly and decisively. The question is not whether Canada should join the LNG export race, but how quickly we can take the lead.
The allure of LNG is undeniable: It offers a bridge to a lower-carbon future, promises economic growth, diversifies Canada’s customers and trade flows, and positions the country as a central world energy supplier. According to the U.S. Energy Information Administration, natural gas emits almost 50 per cent less carbon dioxide than coal.
With vast natural gas reserves and a prime geographic location, Canada is well-equipped to meet growing global demand, particularly from Asia and Europe, which are seeking to diversify their energy sources. Yet, as things stand, Canada is only projected to supply a meagre 5 per cent of global natural gas demand by 2030.
The environmental concerns associated with LNG cannot be ignored. But those concerns must be weighed against the immediate need for cleaner-burning fuels. Canadian LNG, with a lower emissions profile than coal or oil, can act as a transitional energy source while the world works toward renewable solutions. This is not a step backward but a strategic move forward, reducing global reliance on higher-emission fuels and buying time for renewable technologies to mature.
Economically, the potential of LNG is staggering. There are now eight LNG export projects across Canada at various stages of development. These projects represent a potentially colossal investment, totalling over $100-billion in capital expenditure and yielding over 50 million tonnes per annum in exports if all are approved and realized.
The government of Canada estimates that this output could contribute more than $7.4-billion annually to the economy for the next three decades. Expanding the LNG industry could potentially create nearly 100,000 jobs a year in Canada and unlock more than $6-billion in wages and other economic development opportunities for Indigenous peoples.
The promise of billions in revenue and thousands of jobs is not just a projection; it’s a tangible outcome within our grasp. The volatility of the global LNG market should not deter us but, rather, motivate us to establish a strong foothold now, ensuring Canada’s role as a key energy provider in the years to come.
Regulatory hurdles, often seen as impediments, must be re-envisioned as opportunities for optimization. Streamlining the approval process for LNG projects does not mean sacrificing environmental and social standards; it means enhancing efficiency, reducing duplication and fostering a more dynamic regulatory environment that can adapt to the pace of a growing industry and innovation.
Indigenous partnerships are not just a legal requirement or moral obligation; they are a cornerstone of a successful and inclusive LNG strategy. These partnerships must be founded on mutual respect, shared benefits and co-management, ensuring that Indigenous communities are active participants in shaping the projects that affect their lands and futures.
The path forward for Canada’s LNG industry is clear: We must act now. This is not a call for reckless haste, but for strategic urgency. By increasing capacity, streamlining approvals and forging effective partnerships, Canada can secure its position as a global LNG leader. We must embrace this moment with boldness and vision, recognizing that the future of energy is not waiting for us.
Canada has the chance to not just join the race, but to lead it. Let’s seize this opportunity and affirm our commitment to progress, prosperity and the planet.