Canada’s energy industry is reacting with dismay to U.S. President Joe Biden’s decision to suspend approval of new liquefied natural gas export terminals in that country.
The Canadian Association of Petroleum Producers has said it sees LNG as a safe, low-emissions energy source that can help countries transition away from coal.
“LNG facilities on the U.S. Gulf Coast also provide Canadian producers with the opportunity to export their natural gas globally,” CAPP President and CEO Lisa Baiton said in a statement Friday. sent by email.
“Given the highly integrated nature of the North American energy market, CAPP is disappointed with the White House’s decision.”
Canadian pipeline giant Enbridge Inc. also expressed displeasure with the decision. The company currently supplies natural gas to five operating LNG export facilities on the US Gulf Coast and has previously stated that it is interested in expanding its export strategy through new acquisitions in the region.
“Our immediate view is that any delay in the development of liquefied natural gas in the United States is a loss for the United States, for our allies, for American jobs, and for efforts to reduce emissions around the world ” Enbridge spokesperson Gina Sutherland said in an email.
Biden’s election-year decision comes as U.S. gas shipments to Europe and Asia have soared since Russia’s invasion of Ukraine. Having had no LNG export facilities a decade ago, the United States has become the world’s largest LNG exporter, averaging 20.4 billion cubic feet per day in the first half of 2023.
But a White House statement Friday cited climate risk as a reason for suspending new LNG approvals, adding that the current process used by the Department of Energy to evaluate LNG projects does not adequately consider the impact of greenhouse gas emissions.
Deeply concerning: Business Council of Canada
Canada does not yet have its own LNG export capacity. The country’s first LNG export facility, under construction near Kitimat, British Columbia, is not expected to become operational until the end of this year.
But Heather Exner-Pirot, special advisor to the Business Council of Canada, said Friday’s decision by the U.S. president is deeply concerning for Canada’s energy sector.
“Your first instinct might be that maybe this is good for Canadian LNG, you know, because our main competitor is having its wings clipped,” she said.
“But Canadian natural gas companies are so integrated into the North American market that there’s no real separation. If it’s bad for American energy, it’s bad for Canadian natural gas producers and intermediary companies.”
This pause is not expected to immediately affect U.S. supplies to Europe or Asia, as seven LNG terminals are currently operating, with several more expected to come online in the coming years.
But Exner-Pirot said she thought Europe, in particular, was likely very concerned about Friday’s announcement because it was now dependent on the United States as a replacement source for Russian energy.
She added that Canadian natural gas companies should also be concerned about how this decision presents their product as an environmental “bogeyman.”
“There’s obviously a corner of the environmental activism world in the United States that doesn’t like natural gas, doesn’t like fossil fuels, and doesn’t see it as a bridge to replacing coal. And so these groups are very happy today,” she said.
LNG proponents have long argued that replacing the world’s use of coal with cleaner-burning natural gas will help the world in its fight against climate change.
LNG Canada vice-president of corporate relations Teresa Waddington said Friday that greenhouse gas emissions from the Kitimat operation are expected to be lower than any other operating facility of similar size in the world today.
“Canada’s low-carbon LNG will provide security of supply to global markets that can rely on our country’s natural gas reserves to advance their economies and reduce global GHG emissions,” Waddington said in a statement. e-mail.
But critics say LNG is problematic for the climate in many ways.
“If you just look at emissions at the burner tip, then yes, natural gas is about half the emissions of coal,” said David Hughes, president of Global Sustainability Research Inc.
“But if you look at the full life cycle emissions of LNG, you have the emissions from transporting it from British Columbia to Asia, you have the emissions from the liquefaction process, you have the emissions from drilling, flaring and methane leaks across the entire value chain.”
Hughes said building additional LNG capacity was now essentially “locking in” long-term greenhouse gas emissions and would prevent countries from meeting their climate commitments in the future.
“It’s already a horror show from an environmental point of view because all these existing projects were built with a lifespan of 30 or 40 years,” he said.
Julia Levin, associate director of Environmental Defense, said countries agreed at the recent United Nations climate summit in Dubai on the need to move away from fossil fuels. She said increasing LNG capacity does not fit that vision.
“At COP28, countries sent a clear message: we are at the end of the fossil fuel era,” Levin said.
“President Biden’s decision drives the point home even further. Canada should follow.”