Cleaner LNG one answer to climate change crisis, O’Regan tells investors

OTTAWA — Canadian LNG is the best choice for global energy investors looking for sustainable and competitive natural gas production, Natural Resources Minister Seamus O’Regan said Monday.

His speech on the opening day of the virtual Gastech 2020 conference comes just two weeks before Prime Minister Justin Trudeau is set to unveil his promised “ambitious green agenda” in a throne speech laying out his government’s COVID-19 economic recovery plan.

O’Regan hinted at some of what may come in that plan, including promises of investments in the electrical grid and energy efficiency programs, a focus on workers and investing in technology to make fossil fuels cleaner.

“We’ll get to where we need to be tomorrow by using what we have at our fingertips today,” O’Regan said.

He said the best path to a healthy, low-emission economy includes Canada making natural gas a greener product that can be sold overseas — mainly to Asian nations — to replace coal as a source of electricity. That includes developing better carbon-capture and storage technology, as well as investing in research and commercialization to come up new ways to get gas to be more sustainable.

Politically, support for LNG crosses party lines in Ottawa. A plan to sell Canadian LNG to overseas market was one of the chief climate change policies in the Conservative campaign in 2019 and was also part of new Conservative Leader Erin O’Toole’s leadership campaign platform.

NDP Leader Jagmeet Singh has also been supportive of LNG projects, particularly the LNG Canada project in northern British Columbia that is also fully backed by the provincial NDP government in B.C.

O’Regan said the International Energy Agency forecasts growth in demand for gas for decades and that “bodes well for Canada.”

The IEA’s own forecasts are a bit more complex than that. Looking at existing policies around the world, it predicted in 2019 that LNG will grow 36 per cent over the next 20 years. However under a “sustainable development scenario” that transforms the world’s energy use in line with the Paris climate change agreement goals on global warming, it expects natural gas use to peak by the end of this decade.

The IEA also warned that shipping LNG to Asia may not be as attractive as some think given dropping prices for renewables and rising prices for natural gas. Those warnings however came before the COVID-19 lockdowns curbed demand and saw gas prices plummet, a scenario the agency says will not reverse itself very quickly.

Keith Stewart, a senior energy strategist at Greenpeace Canada, said the 11 LNG project proposals in Canada which O’Regan referenced in his speech are likely to become “white elephants” that are abandoned in favour of everything from wind and solar to hydrogen.  He said many major investors have already shown reluctance if not outright refusals, to back fossil fuels any longer.

“Politicians want to tell us ‘okay we don’t have to change very much’ but we do and we have to start planning for those big changes rather than imagining we can kind of tweak our way out of this,” he said.

The IEA does say that switching from coal to gas reduced global emissions more than 500 million tonnes between 2010 and 2019, an amount equal to two-thirds of Canada’s total annual greenhouse gas emissions. It estimated that replacing coal with gas in existing power plants could save 1.2 billion tonnes of emissions, noting that may be the best case for scenario for gas.

Catherine Abreu, executive director of the Climate Action Network Canada, said initially O’Regan’s Monday speech sounded good to her, talking about investing in a transition for workers, electricity grids and energy efficiency programs.

“Then I realized it was actually a speech about LNG disguised as a speech about renewable energy and I felt really duped,” she said.

She said she is trying to remain hopeful about the throne speech but is worried it will provide “token” acknowledgments or investments for clean energy “but then continues this trend that we’ve seen of the real priority and the real investment going toward the fossil fuel sector.”

This report by The Canadian Press was first published Sept. 7, 2020.

Mia Rabson, The Canadian Press