Canada’s first large-scale liquefied natural gas (LNG) export terminal began shipping cargoes of fuel last month. Shell, Petronas and PetroChina’s “LNG Canada” facility on the coast of Kitimat, British Columbia, unlocks the first-ever export route located entirely within Canadian borders for natural gas producers in Alberta province; the facility could ultimately reach a processing capacity of 28 million tons per year of natural gas. What is the significance of the opening of the LNG Canada export terminal in terms of Canada’s energy sovereignty? How would the further development of large-scale LNG export capacity along the Pacific coast affect Canada’s place in fossil fuel markets around the world? What are the most significant risks and challenges facing the expansion of LNG infrastructure in western Canada?

Anil Hira, professor of political science at Simon Fraser University: “LNG Canada, a project more than a decade in the making, exported its first liquefied natural gas from Prince Rupert at the end of June. The project is a consortium of Shell, Petronas (Malaysia), PetroChina, Mitsubishi and South Korea’s Kogas; it is designed to feed Asian markets. This comes at a time of shifting policy in Canada toward public support of oil and gas, in light of the U.S. trade war unleashed by President Donald Trump. Newly elected Prime Minister Mark Carney pledged to develop east-west energy corridors in order to diversify the Canadian economy from its longstanding dependence on the United States. Indeed, 96 percent of Canadian oil exports go to the United States. Canada has long been a ‘staples economy’: one dominated by the export of commodities. Oil and gas dominate the politically important province of Alberta and provides important revenue contributions. It is not surprising that in the wake of U.S. trade actions, the government would double down on its cash cow industry. Such bets come at a high long-term price for Canada—the country is already failing to meet its climate change targets. Methane emissions from natural gas are more powerful than carbon dioxide in terms of trapping heat. The long-term prospects for global LNG markets are also questionable. There are closer and cheaper producers of LNG to the Asian and European markets. Moreover, taxpayer subsidies for the project are unjustifiable, considering the growing costs of climate change to the Canadian economy. The real story, as elsewhere, is about the political power of the fossil fuel industries to shape and distort policies, ignoring market signals and eroding the potential to compete in the clean energy industries that will inevitably take hold in the next decade.”

Lisa Baiton, president and CEO of the Canadian Association of Petroleum Producers (CAPP): “The completion of the first phase of the LNG Canada project and its first shipment marks a major milestone that will allow Canadian natural gas to reach international markets. As the largest private investment in Canadian history, this project positions our country as a key global exporter of liquefied natural gas (LNG), delivering economic benefits to Indigenous communities, British Columbians and Canadians across the country. While this achievement is worth celebrating, it also underscores Canada’s untapped potential as a global energy superpower. The emerging LNG industry could transform Canada’s west coast into a significant energy export hub—one that supplies secure energy to our trading partners and fuels economic growth at home. By developing this new export sector, Canada can create thousands of jobs, foster substantial Indigenous participation and attract billions in new investment. The LNG Canada project alone is expected to generate 23 billion Canadian dollars in royalties for the British Columbia government over its 40-year lifespan. According to the Macdonald-Laurier Institute, building a facility of similar scale would contribute 4.5 billion Canadian dollars annually to national GDP during construction and create more than 35,000 jobs. With global demand for LNG projected to grow by 60 percent by 2040—driven by economic expansion in Asia, decarbonization of heavy industry and transport, and the rise of energy-intensive technologies like artificial intelligence—Canada has a critical opportunity to lead as a global supplier of choice now. More customers, more shipments and more LNG export facilities mean more jobs for Canadians, more opportunities for Indigenous partnerships and a more economically independent country. A strong energy sector is essential to addressing today’s challenges—from affordability and energy security to long-term national prosperity.”

G. Kent Fellows, assistant professor of economics at the University of Calgary: “In Canada’s federated system, provincial governments have jurisdiction over natural resources. This is important when considering how LNG trade affects different provinces. Natural gas royalties form a small but significant part of provincial government revenues in Western Canada. The operation of LNG Canada gives Western Canadian gas producers new direct access to the global markets which will lead to higher prices and more production. This is beneficial for government revenues in natural gas-rich western provinces but it also means increased costs for consumers in Western Canada and parts of Eastern Canada that rely on the western natural gas supply. On balance, Western provinces benefit while Eastern provinces may not. While Canada ranks high in terms of proven crude oil reserves (just behind the four largest OPEC members), our natural gas reserves are relatively smaller. That said, we have a reputation as a stable trading partner, which is now more significant given the Trump administration’s recent tariff-related trade aggressions. Canadian market share growth in the Asia-Pacific region, and maybe even into Europe, seems possible, particularly where importing nations are looking to diversify natural gas supply chains among multiple exporters. The biggest risk for Canadian LNG expansion is the fear of sunk capital. Long-term supply contracts are common in global LNG markets, so the success of LNG Canada, and any future developments, will depend on the Canadian industry’s ability to secure and negotiate contracts with potential import partners in order to ensure stable long-term revenues to pay off construction costs.”

Elmira Aliakbari, director of the Centre for Natural Resource Studies at the Fraser Institute: “In a recent study, we analyzed Canada’s contribution to reducing global greenhouse gas emissions by exporting its LNG and helping countries in Asia become less reliant on much more carbon-intensive fuels such as coal. We found that doubling Canadian natural gas production and exporting the additional supply to Asia in the form of LNG to replace coal-fired power could reduce global emissions by up to 630 million tons annually, which is the equivalent of removing approximately 137 million cars from the road. However, regulatory uncertainty and a range of federal and provincial barriers continue to hinder LNG development in the country. For example, the federal government’s Impact Assessment Act, introduced in 2019 with the intention of streamlining project approvals, has instead created more uncertainty and complexity in the review process. In addition, the federal government’s greenhouse gas (GHG) cap imposed on the oil and gas sector is another top policy barrier to unlocking the country’s LNG potential. At the provincial level, British Columbia’s CleanBC regulations—which place a cap on GHG emissions from the oil and gas sector and require all new LNG projects to have a plan to reach net zero by 2050 are another barrier.”

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