Why LNG might not solve Canada’s long-term energy challenges

The progressive side of Canada’s fossil-fuel energy debate is pushing back against the prospect of relying on natural gas as a path to a carbon-free future.

High prices and a spike in demand, largely the result of Russia’s war in Ukraine, are giving momentum to the idea that liquified natural gas could replace coal-fuelled power around the world.

But critics call it a short-sighted and counterproductive notion that ignores economic and practical realities both in Canada and around the globe.

Nichole Dusyk, a senior policy adviser with the International Institute for Sustainable Development, says renewable energy sources like wind and solar are growing more viable every day.

Dusyk says renewables have the added advantage of not being global commodities subject to the whims of market forces.

It’s no secret Canada can’t properly export its natural gas riches, she adds _ and even if it could fix its capacity challenges, it would be too late to meet current demand.

“High prices are clouding people’s judgment about the long-term economic prospects of natural gas,” Dusyk said in an interview.

“The global outlook for natural gas is going down, not going up.”

The idea of using natural gas as an interim solution to the challenge of meeting present-day demand for energy while reducing carbon emissions has been gaining traction in recent months.

Japan, host of a global climate summit over the weekend, has come under criticism for a proposed strategy that depends heavily on LNG, ammonia and other fossil-fuel derivatives as a means of lowering emissions.

G7 environment and climate ministers meeting in Sapporo reportedly pushed back on Japanese efforts to include LNG-friendly language in a draft statement, including calls for further investment amid growing demand.

And a recent report released by the Future of Business Centre at the Canadian Chamber of Commerce proposed ramping up Canada’s export capacity of LNG and advancing it as an alternative to coal-fired energy around the globe.

“We’re at a very strange place right now,” said Dusyk, noting that global condemnation of Russia _ long an essential source of energy for Europe _ has created a compelling but short-term spike in gas prices.

“Europe is looking aggressively around the world” for alternatives, but “it is not looking for LNG in the long term.”

Dusyk’s own research has concluded there is a “fundamental mismatch” between Canada’s capacity crunch and the immediate needs of Europe and other countries once dependent on Russia.

The institute has projected that the European Union could be completely free of its dependence on Russian gas as early as 2025, far too early for Canada to solve its capacity challenges.

Canada may have natural-gas reserves in abundance, but it lacks the infrastructure capacity to export it overseas, she said. Liquification also demands a lot of clean electricity to keep emissions low, she added _ power that would otherwise be available for other applications, like charging electric vehicles.

“You can lower the emissions but by its very nature it is energy-intensive.”

At the same time, the discussions around LNG risk taking the focus off developing sustainable, renewable infrastructure systems that are growing more feasible.

“The cost of renewables, whether it’s batteries, wind or solar, has dipped massively … in many markets, renewable energy is cheapest,” Dusyk said.

The Chamber of Commerce report released earlier this month suggested that the infrastructure needed to export Canadian LNG could eventually be converted into a system for delivering hydrogen, another prominent alternative to fossil fuels.

But Dusyk said she has yet to see any analysis that would suggest such conversions would be feasible.