The economic risks of B.C.’s LNG expansion in a changing energy market

Turning Tides: The economic risks of B.C.’s LNG expansion in a changing energy market, published by UK-based financial think tank Carbon Tracker, and commissioned by the Pembina Institute and David Suzuki Foundation, provides an overview of the modelled breakeven costs of all currently proposed LNG projects globally that have yet to reach final investment decision. It concludes that the four LNG terminals still awaiting final investment decision in B.C. are likely to lose out to competition from producers in Qatar, the US and Mozambique – where significant volumes is set to be available at lower prices.

Meanwhile, based on expected operational dates and current development timelines, B.C.’s industry will ramp up just as global LNG demand is expected to plateau, making it a late entrant to a market dominated by established incumbents with potentially better opportunities for economies of scale.

These assessments are based on underlying data that shows the global LNG market is likely to be oversupplied by the end of this decade, as a glut of new production comes online. Carbon Tracker finds that, according to data from Rystad Energy and the International Energy Agency’s 2023 World Energy Outlook, there is already enough existing global LNG infrastructure to meet the level of demand that is likely to be in place by 2040 – even in a slower energy transition scenario.