Thursday, March 28, 2024

Global Energy Security and Canada:The Role of Natural Gas in a Future With Less Carbon

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The Canadian Chamber of Commerce is dedicated to making it possible for businesses to succeed in the future. The Canadian Chamber Future of Business Centre serves as our forum for bringing forward forward-looking public policy issues for public discussion.

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Independent of the Canadian Chamber’s consensus-based policy committee process, the Centre’s reports are produced by outside fellows. The individual’s opinions are reflected in this paper.

The world of today is based on energy. Societies tend to use more energy when they are richer. Beginning around 1990, worldwide flammable gas utilization has practically multiplied, yet environmental change is pushing the world to reevaluate the kind of energy it consumes and delivers.

In numerous ways, Canada is an energy superpower. It has a lot of natural gas, oil, hydropower, nuclear power, renewables, and essential minerals, but it has argued a lot about what to do with them over the past two decades.

Of all the laid out energy choices, gaseous petrol is by a long shot the cleanest, radiating a portion of the carbon into the environment as coal. Global emissions would decrease by more than Canada’s annual emissions if only 20% of Asia’s coal-fired power plants switched to natural gas. To put it another way, converting a small portion of Asia’s power infrastructure would “save a Canada” in terms of emissions.

Additionally, natural gas fundamentally enables energy systems with significant amounts of renewable energy. It is dependable when it comes to providing the baseload capacity that is required to even out the generation of intermittent power from sources like wind and solar. Canadian makers supply, for instance, 33% of the flammable gas utilized by renewables-centered California.

Worldwide, Canada is the fifth biggest petroleum gas maker, and has monstrous undiscovered stores. However, there are significant disconnects between the infrastructure required to bring these resources to market and their location. In addition, over a dozen projects for liquefied natural gas (LNG) export terminals have been proposed over the course of the last two decades. The majority of these projects failed to materialize and cost billions of dollars in lost economic activity.

The effective progression of the $40-billion LNG Canada project remains as a distinct difference to these past endeavors. When it is finished in the coming months, it will become Canada’s first LNG export terminal and will be on the Haisla people’s land near Kitimat, B.C. Importantly, the Coastal GasLink pipeline connects it to the Montney Play, one of North America’s largest natural gas deposits. Canada will finally be able to export natural gas to Asia, the global region with the fastest-growing demand, thanks to this infrastructure.

Flammable gas likewise offers valuable open doors for First Countries to lead activities and create financial wellbeing. For instance, the Haisla people have proposed developing their very own floating gas export terminal across the Douglas Channel from LNG Canada that would cost $3 billion. It would be Canada’s largest infrastructure project owned by First Nations if it is approved. The economic aspects of reconciliation would benefit greatly from these and other projects.

The fact that Canadian natural gas is produced under a carbon price is one important factor that sets it apart from the majority of rivals. Carbon prices are only implemented by two of the ten largest natural gas producers worldwide: Norway and Canada

Canada made significant changes to the regulatory procedure for approving energy projects in 2019. The Canadian Energy Regulator intends to collaborate with community stakeholders and First Nations more effectively, among other things. However, it is too early to predict how these reforms will affect energy project social license questions.

There has been a lot of discussion about how to finance projects using fossil fuels. Considerably decreasing outflows implies changing over high-discharge energy sources to bring down emanation choices. As a result of the conflict between Russia and Ukraine, Europe has restarted or expanded its coal-fired power infrastructure, while China and other parts of Asia continue to add capacity for coal-fired power generation. As a means of achieving a cleaner world, Canada ought to work toward financing and converting coal-powered infrastructure to run on Canadian natural gas.

The position of the United States in the energy market has changed over the past 15 years when compared to Canadian rivals and export markets. It was tied for the top gas exporter in 2022 and is now the world’s largest natural gas producer. Pipelines have historically carried all of Canada’s natural gas exports to the United States. The United States appears structurally poised to import less natural gas in the future, despite the fact that Canada continues to supply some exporters along the Gulf Coast and certain end-users elsewhere. Therefore, Canada must develop LNG export infrastructure in order to transport its natural gas to markets with rising demand.

This report makes a few key proposals, including:

1. Recognize natural gas as an essential component of a lower carbon energy mix.
2. Advance the idea that natural gas produced under a carbon price is a superior and more
marketable product.
3. Promote the understanding of the engineering and economics around an eventual transition from natural gas infrastructure to hydrogen.
4. Build infrastructure to transport Canadian gas across Canada and to global markets.
5. Align and develop more efficient regulatory processes to increase Canadian competitiveness.
6. Work with First Nations across the country to expand their participation in natural gas projects.
7. Pursue a comprehensive initiative to support the conversion from coal- to gas-fired power plants abroad.
8. Operationalize Article 6 of the Paris Climate Agreement in a manner that will see it become a key driver of the Canadian natural gas sector’s growth.

No matter whether Canada “leaves its resources in the ground,” other nations will not reduce their energy consumption or production. By allowing for cleaner energy sources and suppliers, this could actually increase global emissions.

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