Liquefied Natural Gas: An Untapped Opportunity for Remote Communities in Canada

There is an estimated 200,000 people living in approximately 300 remote and off-grid communities across Canada.¹ These communities, located in pristine and beautiful wilderness, are not without challenges, including energy security, affordability and high emissions.  Many of Canada’s remote off-grid communities are dependent on diesel and heating oil to generate their electricity and/or heat.  Diesel costs can present challenges for communities.  Taking an example from remote Ontario, the cost of diesel generated electricity for communities is three to 10 times higher in cost than the provincial energy mix. ² This high cost of energy makes it expensive to heat and power homes and increases operating costs for industries in these communities by as much as 30 to 60 per cent.³  A significant portion of the higher price paid for diesel fuel is due to transportation costs to remote regions.  Fuel is delivered to communities by ship, truck and plane.  For remote communities, high energy prices pose economic challenges for families, businesses and industries such as mining operators.

The current federal Liberal government has prioritized transitioning remote off-grid communities to clean energy systems and in 2018 launched a $220 million Remote Communities Fund to support projects.⁴ However, the fund is only open to projects that deploy solar, wind, and bioenergy systems.  While renewable energy has a role to play in remote communities, the GHG emissions produced by these communities’ amounts to 0.3 per cent of Canada’s total emissions. When it comes to affordability, megawatt capacity, and reliability, the role liquefied natural gas (LNG) can play in these communities has been significantly overlooked. Here’s why LNG should be part of Canada’s energy strategy for off-grid remote and indigenous communities.

Over 99 per cent of Canadians homes, businesses and institutions that have access to natural gas have it delivered through pipelines.  Servicing remote communities via pipeline is an uneconomic proposition due to distance from supplies and smaller customer base.  However, improvements in our technological capacity to liquefy and store LNG in smaller quantities has made it possible to transport LNG by truck directly to remote communities.  Already today, the communities of Inuvik, Whitehorse and Ahahim Lake are using LNG as a fuel source for local community needs.  More communities are also examining the economics as are mining operators.  Canada’s first mine to use LNG is the Renard Mine located approximately 1,000 km’s from the LNG facility in Montreal.

For communities, one of the principle barriers now is the absence of more strategically located liquefying plants for subsequent distribution to remote communities.  There are smaller scale LNG plants in British Columbia, Alberta, Ontario and Quebec but most of these facilities are close to urban centres as they are traditionally used for meeting peak winter heating demand.  However, this is slowly changing.  For example, recently commissioned LNG facilities built in northern B.C. and central Alberta are being used to service northern energy needs (oil and gas drilling operations and communities).  Nonetheless, more facilities and central depots are needed to service Canada’s extensive array of remote communities, particularly in central Canada.

There are significant economic benefits in pursuing an LNG based energy market in Canada’s remote off-grid communities.  According to ICF International, when studied over a 25 year period, switching from diesel to LNG would add 12.5 billion to Canada’s GDP, create 115,000 net jobs/year, 4 billion in government revenue and reduce emissions by 500,000 tonnes or the equivalent to taking 83,000 cars off the road.⁵ These are significant economic opportunities that are consistent with the overarching goal of reducing emissions and improving economic opportunities.

A long term vision for remote and indigenous off-grid communities must include a variety of energy solutions.  Many indigenous communities have planned to include renewable power in their energy mix.⁶  When complimented with LNG power generation, communities would be offered a nimble and responsive system able to respond to changes in electricity supply that might occur to a micro-grid that draws on renewable electricity supply.⁷

LNG’s efficient power output could be crucial to ensuring a quick transition away from diesel. In Quebec alone, 175 MW of power generations (much of which goes to energy intensive resource industries) is currently supplied by diesel and heavy oil.⁸ While renewable energy has the advantage of being developed in small projects that can be scaled over time, converting diesel generators to LNG offers effective baseload electrical supply to complement intermittent renewable electricity supply.

Despite these considerable advantages, the opportunity to power remote and indigenous off-grid communities with LNG is largely being overlooked by policy makers.  The Canadian Chamber of Commerce has advocated that public policy on climate change must adhere to the principle that GHG emission reductions be pursued in a way that incurs the least economic cost and allows Canadians to maintain their way of life. For remote off-grid communities, this includes a public policy framework that allows all energy forms to compete based on a consistent and verifiable metric such as cost per tonne of avoided carbon dioxide emissions. This approach will enable broader energy and technology solutions, including LNG and renewables, to the benefit of remote communities.

And so, as shares of solar and wind energy increase in Canada’s electricity mix, efforts should be made to develop the infrastructure that would ensure that LNG is paired with these energy sources to create a more resilient energy grid in the North. The Canadian government should not overlook the importance of developing an LNG market for these communities because the economic and environmental impacts that natural gas would provide are significant.

Aaron Henry, Canadian Chamber of Commerce