Global Benefits Possible if Canadian Resources Get to Markets

Canada can achieve significant economic benefits at home and make substantial contributions to the global emissions challenge if it can get its oil and natural gas resources to world markets, the Canadian Association of Petroleum Producers (Capp) says in a new study released March 14.

In the report, entitled Leveraging Opportunities: Diversifying Canada’s Oil and Natural Gas Markets, Capp says a lack of pipelines and insufficient infrastructure are crippling Canada’s ability to compete for global market share.

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That inability, the association – which represents Canada’s biggest oil and gas producers – is particularly evident on the natural gas and LNG side of the equation.

“Global markets for liquefied natural gas (LNG) are expected to expand substantially by the mid-2020s, yet Canada is not moving quickly enough to capitalise on this growing demand,” the report says. “In addition, failure to reach these high-growth markets means we are missing an opportunity to help reduce net global greenhouse gas emissions (GHGs). Coal-fired electricity generation in China, India, Southeast Asia and Europe could be displaced using Canadian LNG, which has lower life-cycle emissions than LNG from other countries.”

Capp says current estimates suggest some 1,500mn metric tons of CO₂ equivalent (mtCO₂e) emissions could be eliminated every year if new power plants in China, India and Southeast Asia are fueled with natural gas instead of coal. The reductions would depend on about 375mn mt/yr of LNG displacing coal for power generation.

Canada, because of its “uniquely low” LNG emissions intensity – between 0.035 and 0.13 mt of CO₂e/mt of LNG for electrified LNG facilities – could make a substantial contribution to those reductions, the report says: on the order of 100mn mtCO₂e/year for each Canadian LNG facility built. Non-electrified LNG facilities typically emit between 0.255 and 0.398 mt CO₂e/mt of LNG.

Although more than 20 LNG projects have been proposed for Canada, only six can still be considered active: LNG Canada’s 14mn mt/yr terminal at Kitimat, on BC’s northern coast; the joint Woodside Energy/Chevron Kitimat LNG project, also near Kitimat; Woodfibre LNG’s 2.1mn mt/yr facility near Squamish, just north of Vancouver; Energie Saquenay’s 11mn mt/yr proposed facility in Quebec; and two projects in Nova Scotia – the 8mn mt/yr Bear Head LNG facility at Point Tupper and Pieridae Energy’s 10mn mt/yr Goldboro LNG plant.

But the global emission reduction benefits from any of these plants, Capp says in the report, must be recognised both at home and internationally, where they can make a significant contribution to Canada’s commitments under the Paris Agreement.

Article 6 of the Paris Agreement spells out how countries could share offset credits - Internationally Transferable Mitigation Outcomes (ITMOs) – with partnering countries. Terms of ITMO sharing were debated for more than two weeks at COP 24 in Poland last year, but participants failed to come to a consensus on implementing the terms and the matter was put off until COP 25 later this year in Chile.

“It is essential these rules are in place following COP 25 in 2019,” Capp’s report says.

Recognising ITMOs would be beneficial for Canada in two ways, Capp says:

• Through global offsets, Canada could achieve its Paris commitments, instead of implementing costly and inefficient measures that focus only on domestic emissions reduction.
• Canada could grow its domestic natural gas and LNG industries to help meet global market demand while helping to reduce global emissions and create economic and other benefits at home.

“Canada must take a leadership role and finalise these negotiations so Canadians receive the benefit we deserve for our contribution to reducing net global emissions.”