The Right Honourable Justin Trudeau
Prime Minister of Canada
80 Wellington Street
Ottawa, ON K1A 0A3
Subject: Natural Gas – a domestic and a global opportunity for Canada
Dear Prime Minister:
Thank you for your letter of February 20th, responding to my January 29th update to you. As you noted in your letter:
Natural gas was a vital source of reliable energy during the cold snap in western Canada the second week of January. It is critical to ensuring an affordable and reliable energy mix, not just when we experience extreme weather events.
At times this reality – the vital and critical role of natural gas for our country’s energy well-being – seems hard to impress on decisionmakers in Canada. Your clear statement should help us change that.
You went on to note that:
Natural gas will play a key role as energy systems across the country diversify to include a broader mix of supply options on the road to a net-zero future.
The gas delivery industry agrees strongly on the key role of natural gas. Not only is it an essential fuel for direct use by Canadians, but it is a critical partner for intermittent renewables (when the wind isn’t blowing and the sun isn’t shining, the gas is still flowing).
The industry is also working constantly to improve the performance of the gas system. A key example of this is our work across Canada on other gaseous fuels, like renewable natural gas and hydrogen. The most cost-effective way to move these gaseous fuels to Canadians is through the hundreds of thousands of kilometres of gas infrastructure we have in place now. Those who call for gas bans are saying we don’t need this infrastructure. In so doing they ignore the realities of the Canadian energy system, including the vital importance of reliability in our climate. Bans will endanger Canadians in extreme weather: they will eliminate the affordable pathways that deliver natural gas now, and which promise the delivery of hydrogen, renewable natural gas and any other new gaseous fuel going forward.
But the opportunity is not just domestic, it is global.
We recently marked the second anniversary of Russia’s invasion of Ukraine. Quite apart from the horror this war has visited on the Ukrainian people, it has also fundamentally changed the global energy conversation. Energy security and geo-political security have become more entwined than ever. Many allies – most recently Greece but before them G7 colleagues Germany, Japan, and Italy – have indicated a desire to see Canada play a bigger role on energy security going forward. What can Canada do?
Quite simply, when it comes to natural gas, we can do more. We can produce more, we can build pipelines to move more to the US – which has over a short space of time become the world’s biggest gas exporter, and we can build pipelines and more LNG facilities to export directly to global markets.
Some talk in hypothetical terms of the possibility of stranded LNG assets. Markets around the world say anything but. Major global producers anticipate a 40% increase in gas demand over the next few decades. The world wants natural gas and will for a very long time to come because it offers such extraordinary value in so many ways.
Where will this gas come from? What is likely to be a short term pause in LNG export development in the US will not change the reality that North America is a preferred supplier for buyers around the world. Canada should be doing more as part of that North American supply story.
But if we do not step up, the consequences will be profoundly negative. For those who care about GHG emissions, or air quality and other environmental concerns, less Canadian natural gas means more higher-emitting fuels to produce energy. For those concerned about energy diversity, less Canadian natural gas means, paradoxically, less alternative fuel development, because natural gas is so essential as a partner to renewables, as a feed gas for new fuels like hydrogen, or as a foundation for other gaseous energy delivery given the incredible adaptability of its infrastructure to move those fuels. For those concerned about reliability, less Canadian natural gas means a less reliable energy system globally, given how foundational gas is to so many energy systems. For those who care about poverty, less Canadian natural gas means higher energy costs (due to supply constraints) that translate into slower economic development for those in most need in poorer countries, and more economic hardship for those in more developed countries. For those concerned with geopolitical security, less Canadian gas means alternative suppliers – including bad actors who seek to undermine freedom and security around the world – have more leverage to advance their agendas.
Russia’s aggression continues to be fuelled in no small part by revenues from energy exports. The last G7 Communique recognized that point, and you and your colleagues stated:
We will continue taking steps to limit Russia’s future energy revenues.
Canada accelerating its own natural gas export development is a clear way to achieve this objective.
The upcoming G7 meeting in Italy, and next year’s G7 which we will host in Canada, provide opportunities for Canada to step up and articulate a clear a vision of how our resources – like natural gas – can be used to establish a more sustainable and secure world. Canada’s gas industry stands ready to help.
Respectfully,
Timothy M. Egan
President and CEO, Canadian Gas Association
Chair, NGIF Capital Corporation