Despite the European Union striving to slash its demand for Russian gas by two-thirds by the end of this year and to end all its dependence on Russian fossil fuels by 2027, there’s no path for liquefied natural gas (LNG) from Canada to help the continent meet its short-term energy needs, the International Institute for Sustainable Development concluded in a policy brief in August.
Canadian fossil companies have still been loudly touting the possibility of ramping up Canadian exports in the EU’s hour of need. But the research reveals “a fundamental mismatch with Canadian supply opportunities,” write researcher Lasse Toft Christensen and IISD senior policy advisor Nichole Dusyk.
“Dependence on Russian gas supplies has the EU looking for supplies to fill immediate needs before winter 2022,” they acknowledge. But “Canada cannot ramp up supply before 2025, while Europe’s energy needs will largely be resolved by that time.”
After that, “high prices and energy security concerns, combined with climate commitments, suggest that new Canadian liquefied natural gas infrastructure would be at risk of becoming stranded,” with insufficient customer demand to pay back the cost of getting the projects built.
With Europe “accelerating its plans to reduce gas use by ramping up energy efficiency and the use of renewable energy sources,” they add, Norway will be a “more logical” source of gas for companies with immediate supply needs to fill.
Canada cannot ramp up supply before 2025, while Europe’s energy needs will largely be resolved by that time.
“National-level plans and analyses for member states, including Germany, Italy, and Denmark, show how phasing out Russian imports will be accomplished, in part, by an accelerated transition away from gas,” IISD writes. “Noting these dynamics, one of Germany’s leading economic institutes, DIW Berlin, has said that ‘building fixed LNG terminals in Germany… does not make sense because of the long construction times and the sharp decline in natural gas demand in the medium term.”
Separate analysis in April reached a similar conclusion, showing no need for new export terminals to move US gas to Europe.
IISD looks at the potential locations for LNG export terminals in New Brunswick, Nova Scotia, and Newfoundland and Labrador, reinforcing past analysis showing little if any prospect for any of the projects. While Repsol SA’s existing LNG import facility in St. John, NB, is the frontrunner among the three, “estimates for completion still range from three to five years,” the policy brief states, “and LNG facilities have a poor track record for delays.
Importantly, both the Goldboro [Nova Scotia] and the Repsol projects would need additional pipeline capacity to supply gas for export and would need to source gas from the United States or via additional pipeline volumes through Quebec.”
Any attempt to expand fossil infrastructure in Quebec “would likely be met with public opposition, which could add time and expense to the project,” Toft Christensen and Dusyk add. “In addition, directing existing supply to export raises questions about whether export contracts will conflict with supplying gas to meet domestic demand.”
Mitchell Beer is publisher and editor of The Energy Mix. This article was originally published on www.theenergymix.com
