\u201cWe are an independent energy think tank that aims to accelerate the clean energy transition with data and policy,\u201d the organization says on its website.\u00a0<\/span><\/p>\n Ember believes that the transformation of the global energy system now underway will be very fast rather than slow (OPEC) or fast (International Energy Agency).\u00a0<\/span>Those scenarios are important to this story.<\/span><\/p>\n Alberta political, oil industry, and business leaders believe fervently in OPEC\u2019s slow transition narrative. Their view of LNG\u2019s future aligns with the IEA\u2019s STEPS (current policies) scenario. For many, even STEPS is too conservative. They look longingly at the massive construction in other countries and lament that Canada appears to, once again, be passing on an opportunity.<\/span><\/p>\n The Ember report is not new modeling of Canada\u2019s LNG prospects. Rather, it is a review of existing analysis.\u00a0<\/span><\/p>\n \u201cThe IEA expects global gas demand to peak by the end of the decade in its current policies scenario (STEPS) and to already be falling by 2030 in its Net Zero Scenario (NZE),\u201d notes Ember. \u201cFor LNG specifically, consumption is anticipated to fall from 2030 onwards.\u201d<\/span><\/p>\n Natural Resources Canada lists four small LNG liquefaction facilities already in operation, with a further seven \u201cin various stages of development.\u201d Phase 1 of the $40 billion LNG Canada project will export 14 million tonnes per annum. If greenlighted by the consortium led by Shell, Phase II will double that output. The floating Ksi Lisims LNG facility, backed by the Nisg\u0331a’a Nation and having already received a final investment decision, will make 12 tonnes\u00a0 per annum. Remaining projects are small, between two and three tonnes per annum.<\/span><\/p>\n But LNG proponents like Alberta Premier Danielle Smith are lobbying for much more capacity to be built on the West Coast. They claim that electrifying liquefaction will make Canadian LNG the world\u2019s cleanest (i.e. lowest emissions-intensity), for which customers will pay a healthy premium. Boosters also argue that clean LNG will be used in Asia to displace dirty coal power plants.<\/span><\/p>\n \u201cChina and India are not switching from coal to gas. A very small percentage (3%) of their electricity is generated using gas, and it is not currently rising,\u201d says Ember, noting that Japan and Korea are shifting toward nuclear and renewables while gas demand is falling rapidly in Europe because of an accelerated decarbonization strategy caused by Russia\u2019s 2022 invasion of Ukraine.<\/span><\/p>\n Ember also questions whether Canadian LNG is competitive:\u00a0<\/span>\u201cAccording to a senior vice president from ST Energy, speaking at a recent Canada Gas conference, a US Gulf Coast offshore project has costs of $700 per tonne compared to LNG Canada at $3,400 per tonne and Woodfibre LNG at $2,400 per tonne.\u201d<\/span><\/p>\n Then there is the domestic impact of expanding gas exports. \u201cThe US Energy Information Administration has determined that higher LNG exports result in increased domestic gas prices,\u201d says Ember.\u00a0<\/span><\/p>\n What about all the electricity needed to power the LNG plants?\u00a0<\/span>\u201c…they would increase the province\u2019s annual electricity consumption by around 43 TWh,\u201d says Ember\u2019s report. \u201cThis is equivalent to more than eight Site C dams and over two-thirds (69%) of B.C.\u2019s entire 2022 electricity demand. Importing just one Site C\u2019s (1.1 GW, 5.1 TWh) worth of electricity could cost around $600 million annually.\u201d<\/span><\/p>\n Fugitive methane emissions are a contentious issue. Measurement has been poor, with studies suggesting estimates of 1.5 to 2 times the official data are more accurate. Ember notes that significantly increasing gas production will likely endanger BC\u2019s ambitious climate targets. The federal government is trying to raise 2030 methane emissions targets from 45 per cent to 75 per cent, which is being vigorously resisted by Alberta.<\/span><\/p>\n \u201cResearch from the Energy and Emissions Lab at Carleton University suggests that the methane intensity of B.C.\u2019s gas is 0.4%,\u201d says the report. \u201cWhile this is lower than the extremely high methane intensities of Saskatchewan (2.6%) and Alberta (1.8%), it is still double the limits being set by the EU and US.\u201d<\/span><\/p>\n To sum up, Ember identifies four significant risks associated with Canadian LNG: falling global demand after 2030; high, uncompetitive costs; electricity demand that BC cannot meet or which will raise prices for consumers; and increased greenhouse gas emissions.<\/span><\/p>\n An oft-repeated phrase from LNG boosters is \u201clet private investment bear the risk and cost of stranded assets.\u201d If only that were possible.<\/span><\/p>\n Except in extreme cases, security is not taken at the beginning of an asset\u2019s life. Canadian oil and gas liability regimes are based on the assumption that companies will be around to reclaim wells, pipelines, plants, and infrastructure at the end of their productive lives. Despite plenty of booms and healthy profits over the decades, the Canadian industry has a terrible track record when it comes to cleaning up after itself. The estimate for Alberta\u2019s unfunded liabilities alone is in the neighbourhood of $300 billion.<\/span><\/p>\n Under OPEC\u2019s slow energy transition scenario, Canadian companies have decades to keep producing and, hypothetically anyway, fund the reclamation of all their unproductive assets, including LNG plants and gas pipelines.\u00a0<\/span><\/p>\n But under the fast transition scenario, the risk calculation becomes much dicier. The principal clean energy technologies (wind, solar, batteries, EVs) are past their inflection point on the adoption S-curve. They are now competitive with existing energy technologies. The IEA\u2019s STEPS scenario is looking very unlikely.\u00a0<\/span><\/p>\n My bet is on the APS scenario, with an outside change that 2050 gas\/LNG demand will settle between APS and NZE. There is no chance the future will look like STEPS. <\/span><\/p>\n But even under STEPS everything would have to break just right for Canada. Asian economies will start displacing coal with gas for power generation. Costs for BC facilities will somehow be lowered. Emissions will be extremely low and buyers will pay a significant premium for \u201cclean LNG.\u201d\u00a0<\/span><\/p>\n The graphic below showing changes to the IEA\u2019s LNG gas forecast demands over the past five years is a startling reminder of how quickly the global energy system is being transformed.\u00a0<\/span><\/p>\n Canadian LNG is at best a risky gamble. Considering the worst case scenario, as Ember does, is the responsible thing for Canada to do.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"Global demand looks bleak after 2030<\/h3>\n
![\"\"](\"https:\/\/energi.media\/wp-content\/uploads\/2023\/06\/LNG-scenarios-IEA-WEO-2023-e1721064187513.png\")
Domestic risks<\/h3>\n
An additional risk<\/b><\/h3>\n
![\"\"](\"https:\/\/energi.media\/wp-content\/uploads\/2024\/07\/Gas-demand-forecasts-IEA-WEO--e1721064593122.png\")