GLOBAL ENERGY TRADE IN CANADA
Examining the Opportunity Cost of Prioritizing Environmental Concerns Over Global
Energy Trade in Canada
Sevryn T. Robinson
University of Alberta
Word Count: 1229
1
GLOBAL ENERGY TRADE IN CANADA
2
Examining the Opportunity Cost of Prioritizing Environmental Concerns
Over Global Energy Trade in Canada
As Canada strives to balance its environmental objectives with economic prosperity,
exporting Liquified Natural Gas presents a promising opportunity to achieve both goals. Canada
would be making a costly mistake by putting environmental concerns ahead of becoming a major
player in the global energy market. Given the current state of affairs, Canada should act swiftly
and with level-headedness. While Canada’s environmental priorities are important, becoming a
major global energy supplier by exporting LNG can bring significant economic benefits, support
ecological goals, and provide ethical energy consumption.
Energizing the Economy
As the Canadian economy is facing a recessionary period, boosting energy exports would
bring significant economic gains to Canada. One energy sector, Liquified Natural Gas (LNG),
surged in demand following economic sanctions on the Russian oil and gas industry (IEA, 2022,
para. 8). As a result of the reduced reliance on Russian energy, Europe has ramped up their LNG
imports by a substantial 60% in the past year (Shell, 2023). Shell reports that global LNG trade
increased 6.0% in 2021 (2022) and 4.5% in 2022 (2023), with prices reaching all-time highs
(2023). Canada should capitalize upon this shift in trade flows to reap the economic benefits.
Furthermore, LNG demand continues to increase with global decarbonization commitments
(Canadian Energy Center, 2022, p. 3). Since 2000, the LNG trade has grown from 100 million
tonnes to 397 million tonnes (GECF, n.d., para. 3). Demand is expected to exceed 700 million
tonnes by 2040 (Canadian Energy Center, 2023, p.1). LNG suppliers must fulfill this increasing
GLOBAL ENERGY TRADE IN CANADA
3
demand for LNG in the short and long run. Canada should take steps to compete in this growing
industry.
Exporting LNG to meet this rising demand would grow the Canadian economy
substantially and create new job opportunities. Critical developments in liquified natural gas
exportation are underway, with an estimated investment of $500 billion from 2020 to 2064 (The
Conference Board of Canada, 2020, p.1). These LNG projects require capable and experienced
construction workforces (Blyschak, 2016, p.32). Thus, the LNG sector has the potential to add
“96,550 direct, indirect and induced jobs annually” in Canada over this period, according to the
Conference Board of Canada (Canadian Energy Centre, 2022, para. 1). Greenlighting the LNG
industry can lead to over $108 billion in provincial revenue over the next 41 years (The
Conference Board of Canada, 2020, p.1). The federal government would receive an added $64
billion (Canadian Energy Centre, 2022, para. 1). Passing on the opportunity to grow the
economy, create jobs, and fund government services would be a noticeable mistake.
Aspirations for a Greener Future
However, as Canada shifts toward total emissions reduction, development in an energy
sector that is not net zero may be a cause for concern. With Canada bound by the Paris
Agreement, in which “countries adopted a target for stabilizing climate change” (Sadai &
Spector & DeConto & Gomez, 2022, p.1), environmental policy has become increasingly
ambitious. The Canadian government outlines plans to reduce emissions “40 percent below 2005
levels by 2030 and net-zero emissions by 2050” (Government of Canada, 2022). Developing the
GLOBAL ENERGY TRADE IN CANADA
4
LNG sector to become a major global energy supplier seems counterproductive to Canada’s
environmental ambitions. However, selling these resources to countries with no other alternatives
can help fund Canada’s plans for “a healthy environment and a strong economy” (Government of
Canada, 2022). Market fluctuations during the war in Ukraine have caused a temporary rise in
coal consumption (NRDC, 2022, para. 9). In the past two years, coal use in India rose by
approximately 10%, while China increased coal consumption by over 200 megatonnes (Shell,
2023, p. 17). Coal is one of the most pollutive energy sources (Green Peace, n.d, p. 1). In 2022,
greenhouse gas emissions rose by 5.5% in India, 1.9% in China, and 2.2% globally (Shell, 2023,
p. 17). This change is suspected to be due to the resurgence of coal in Asian countries.
Transitioning these countries from coal by supplying them with LNG can improve the
environment. According to Shell, Asia will account for 70% of total LNG demand growth
through 2040 (2022). “In Asia, switching just 20% of coal-fired power to gas can potentially
save 680 (megatonnes) of CO2 emissions annually” (Shell, 2022). This reduction in carbon
emissions aligns with Canada’s environmental interests. Therefore, Canada should develop the
LNG sector to help the world move toward more practical environmental processes.
Canada’s Comparative Advantage in Clean Liquified Natural Gas Production
To forgo the opportunity of becoming a major LNG supplier would increase the
likelihood of importers funding more harmful practices. A study done by researchers Jackson,
Eiksund, and Brodal found that LNG plants in warm regions require 20-26% more energy than
processes located in cold regions (2017, p. 9). Currently, the largest LNG-exporting countries are
Australia and Qatar (Statista, 2022). Canada is a colder region, whereas Australia and Qatar are
GLOBAL ENERGY TRADE IN CANADA
5
warmer regions (Jackson & Eiksund & Brodal, 2017, p. 1). Creating LNG in Canada requires
less total energy than the largest exporters and is, in turn, easier to produce. Refrigeration
processes in warmer locations also release 20-26% more CO2 than in colder locations, making
the total CO2 footprint of the plants in warm areas 0.8-1.3% higher (Jackson & Eiksund &
Brodal, 2017, p. 9). “The present study shows that the benefits of low temperatures include:
improved energy efficiency, reduced local CO2 emissions, and a significant reduction in overall
CO2 emissions” (Jackson & Eiksund & Brodal, 2017, p. 9). Thus, LNG produced in Canada’s
cold climate would be more efficient and less pollutive than leading LNG suppliers.
Ethical Energy Transitions
February 24, 2022, was the start of the Russian invasion of Ukraine (2022 Russian
Invasion of Ukraine). According to the Centre for Research on Clean Energy and Air, “Fossil
fuel exports are a key enabler of Russia’s military buildup and brutal aggression against Ukraine”
(CREA, 2023, p. 1). The invasion was a turning point in the global economy. Around the world,
countries imposed critical sanctions against Russia. There was a “reshuffling of trade flows
around the world” (IEA, 2022, para. 1). Canada’s ability to provide ethical energy to countries
that want to wean off Russian energy should be capitalized upon. Countries using coal or oil
would benefit from Canada’s LNG, as it is less impactful to the environment (GECF, n.d., p.1).
Many countries have expressed increasing interest in Canada’s LNG. Olaf Scholz, the Chancellor
of Germany, says, “As Germany is moving away from Russian energy at warp speed, Canada is
our partner of choice (...) We hope that Canadian LNG will play a major role in this” (Reuters,
2022). Japan and South Korea have also expressed demand for LNG, viewing Canada as a
GLOBAL ENERGY TRADE IN CANADA
6
potential partner (BIV, 2023). Canada’s LNG has lower emissions than other traders, making it a
suitable energy source for transitioning away from unethical energy. Disregarding this
opportunity would contribute to damaging practices used worldwide.
In conclusion, while environmental priorities must not be overlooked, prioritizing the
export of natural gas can lead to substantial economic gains, facilitate the achievement of
environmental goals, and promote ethical energy consumption. By embracing this promising
opportunity, Canada can simultaneously achieve its economic and environmental objectives,
securing its position as a significant global energy player while remaining committed to
responsible environmental stewardship. Providing energy resources to countries weaning off
Russian oil and gas contributes to humanitarianism and strengthens Canada’s global ties. Canada
should avoid missing out on this opportunity in an expanding market.
GLOBAL ENERGY TRADE IN CANADA
7
References
BIV (2023). Korea, Japan want Canadian LNG.
https://biv.com/article/2023/02/korea-japan-want-canadian-lng-can-canada-deliver
Blyschak, P. M. (2016). LNG in Canada: value chain, project structure and risk allocation.
Journal of World Energy Law & Business, 9(1), 17–54. Retrieved from https://doi-org.log
in.ezproxy.library.ualberta.ca/10.1093/jwelb/jwv038
Canadian Energy Centre (2022, August 24). A Matter of Fact: There is a long-term business case
for Canadian LNG. Retrieved from https://www.canadianenergycentre.ca/a-matter-of-fact
-there-is-a-long-term-business-case-for-canadian-lng/#:~:text=The%20Conference%20B
oard%20of%20Canada,going%20to%20the%20federal%20governmen
Canadian Energy Centre (2022). The Role of Canadian LNG in Asia. Globe News Wire.
Retrieved from https://ml.globenewswire.com/Resource/Download/ee16cfdf-f24e-4ee
6-9472-dacf0c018227
Canadian Energy Centre (2023, February 23). ‘The world is waiting’ for Canadian LNG.
Retrieved from https://www.canadianenergycentre.ca/the-world-is-waiting-for-canadian
-lng-japan-south-korea-reps-say/
GLOBAL ENERGY TRADE IN CANADA
8
Centre for Research on Energy and Clean Air (2023). Financing Putins War. CREA. Retrieved
from https://energyandcleanair.org/financing-putins-war/
Gas Exporting Countries Forum (n.d.). Environment. GECF.
Retrieved from https://www.gecf.org/gas-data/environment.aspx
Gas Exporting Countries Forum (n.d.). Liquified Natural Gas. GECF.
Retrieved from https://www.gecf.org/gas-data/lnggtl.aspx
Government of Canada (2022, July 12). 2030 Emissions Reduction Plan: Clean Air, Strong
Economy. Canada. Retrieved from https://www.canada.ca/en/services/environment/weath
er/climatechange/climate-plan/climate-plan-overview/emissions-reduction-2030.html
Green Peace (n.d.). Coal. Retrieved from
https://www.greenpeace.org.uk/challenges/coal/#:~:text=Coal%20is%20the%20dirtiest%
2C%20most,coal%20also%20threatens%20our%20health
International Energy Agency (2022, October 3). Natural gas markets expected to remain tight
into 2023 as Russia further reduces supplies to Europe. IEA. Retrieved from
https://www.iea.org/news/natural-gas-markets-expected-to-remain-tight-into-2023as-russia-further-reduces-supplies-to-europe
GLOBAL ENERGY TRADE IN CANADA
9
International Energy Agency (2022). World Energy Outlook 2022. IEA. Paris. Retrieved from
https://www.iea.org/reports/world-energy-outlook-2022/the-global-energy-crisis
Natural Resources Defence Council (2022, June 1). Fossil Fuels. NRDC. Retrieved from
https://www.nrdc.org/stories/fossil-fuels-dirty-facts#sec-whatis
Reuters (2022, August 23). Germany touts possible 'major role' for Canadian LNG in shift away
from Russia. Retrieved from https://www.reuters.com/business/energy/canadian
-lng-could-play-major-role-germanys-shift-russian-gas-scholz-2022-08-23/
2022 Russian Invasion of Ukraine. In Wikipedia.
Retrieved from https://en.wikipedia.org/wiki/2022_Russian_invasion_of_Ukraine
Sadai, S., Spector, R. A., DeConto, R., & Gomez, N. (2022). The Paris Agreement and climate
justice: Inequitable impacts of sea level rise associated with temperature targets. Earth's
Future, 10, e2022EF002940. Retrieved from https://doi-org.login.ezproxy.library.ualberta
.ca/10.1029/2022EF002940
Shell (2022). LNG Outlook 2022. Retrieved from
https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-o
utlook-2022.html#iframe=L3dlYmFwcHMvTE5HX291dGxvb2tfMjAyMi8
GLOBAL ENERGY TRADE IN CANADA
10
Shell (2023). LNG Outlook 2023. Retrieved from
https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-o
utlook-2023/_jcr_content/root/main/section_599628081_co/promo_copy_copy/links/item
0.stream/1676487838925/410880176bce66136fc24a70866f941295eb70e7/lng-outlook-2
023.pdf
Shell (2023). Shell LNG Outlook 2023 Transcript.
https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-o
utlook-2023.html#iframe=L3dlYmFwcHMvTE5HX291dGxvb2tfMjAyMy8
Statista (2022). Global LNG Export Capacity By Country. Retrieved from
https://www.statista.com/statistics/1262074/global-lng-export-capacity-by-country/#:~:te
xt=As%20of%202022%2C%20Australian%20terminals,of%2073.9%20million%20metri
c%20tons
Steve Jackson, Oddmar Eiksund, and Eivind Brodal Industrial & Engineering Chemistry
Research 2017 56 (12), 3388-3398. Retrieved from https://doi-org.login.ezproxy.library.u
alberta.ca/10.1021/acs.iecr.7b00333
GLOBAL ENERGY TRADE IN CANADA
11
The Conference Board of Canada (2020, July 27). A Rising Tide: The Economic Impact of B.C.’s
Liquified Natural Gas Industry. Conference Board. Retrieved from
https://www.conferenceboard.ca/product/a-rising-tide-the-economic-impact-of-b-c-s-liqui
fied-natural-gas-industry/
*Using APA 6th ed. From The Brief Pearson Handbook*