German Chancellor Olaf Scholz’s recent visit to Atlantic Canada was an opportunity for a serious long-term strategy to address several different aims: European Union (EU) energy security, East Coast economic development, Canadian energy industry growth (and higher federal tax revenue), and the likely-alarmist crusade to lower carbon dioxide emissions. The result of his visit, unfortunately, was abject failure.
Scholz sought assurances that Canada would become a long-term, reliable and responsible supplier of liquefied natural gas (LNG) to the EU, including Germany, which is highly dependent on a hostile and highly unreliable gas exporter, Vladimir Putin’s Russia.
In response, Prime Minister Trudeau and his colleagues dismissed the idea out of hand, on the erroneous pretext that the extension of Western Canadian gas pipelines to the East Coast is not profitable and would take too long. Instead, he suggested ‘green hydrogen,’ an expensive and unproven business and technology. This was a superficial and manifestly untrue portrait of the real situation. Such LNG development is actually quite feasible and likely very lucrative.
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The Canadian Gas Association says that, even were the current dramatically high natural gas prices in the EU to fall to more sustainable but still-robust levels, LNG liquefaction terminals on the East Coast and LNG regasification terminals in the EU would be commercially viable, and, with the vast abundance of Canadian, and, also, American natural gas, there would be lavish amounts of gas to send across the Atlantic. However, wholly artificial obstacles remain.
These impediments include opposition from the Trudeau government and the Quebec provincial government’s moratorium on any further oil and gas development and its opposition to any construction of new or expanded pipelines in the province. Lesser impediments include local or community opposition, climate activist legal action and disruptive blockade protests or sabotage. The current federal government has stated that it will not provide any financial or legal support to pipeline construction, extension or expansion, nor any permitting or construction of LNG terminals.
However, it is neither crucial nor essential that such support is offered nor that the Quebec government accede to pipeline right-of-way construction or other activities. There are already gas pipelines that cross Quebec all the way to the East Coast. They need only be expanded or extended to tidewater in New Brunswick or Nova Scotia for LNG terminals to be built and supplied. It may not be legally possible for Quebec to stop this, as these existing projects come under federal jurisdiction.
Even if Quebec does manage to stymie such expansion or extension, pipelines can be repurposed or expanded through the New England states and thus to New Brunswick, where further construction can proceed. Even if Western Canadian natural gas cannot flow to the East Coast, American gas can be used, and bigger shipments of Alberta, BC and Saskatchewan gas can flow to the mid-continent, to either Ontario or the U.S. Midwest, to make up for gas sent to U.S. tidewater LNG plants. Finally, we can skirt the Quebec problem in one more way; there is serious talk of extending pipelines to tidewater on the Hudson Bay at Port Nelson and Churchill in Manitoba.
High EU demand for green energy natural gas to heat and power homes, offices, and factories will not soon subside, as its policy is to slash coal use, and nuclear power is slow to build up and out. Russia will not be an approved supplier again anytime soon. U.S. LNG exporters are already making big profits selling gas to the EU; Canada can too.
It is past time that Canada takes advantage of this opportunity, help the EU stop freezing to death and assuage its carbon dioxide anxiety, however grossly misguided the latter may be.
Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy.
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