Canada is mismanaging its vast natural gas resources that could help other countries reduce their own emissions under the Paris Accord, according to a new study by a US-based think tank that says the country’s policy paralysis with respect to climate change is undermining its competitive position in global LNG markets..In fact, Canada should be using Article 6 of the Paris Climate Agreement to build out its natural gas sector — especially LNG — according to Eric Miller, who heads the Rideau Potomac Strategy Group and authored the arm’s length study for the Canadian Chamber of Commerce. That’s because Article 6 enables companies and governments from different countries to share or trade carbon credits under what’s called the Internationally Transferable Mitigation Outcomes (ITMOs) to reduce their own emissions — coal fired power plants in Asia, for instance..Among the report’s recommendations, Export Development Canada should pursue a dedicated strategy to switch out coal-fired power infrastructure to cleaner, Canadian natural gas-powered infrastructure around the world, Miller wrote. . Canada’s global emission profileExporting Canadian LNG could offset the country’s entire emissions. .“This initiative could not only support natural gas exports but an array of services, technology, and materials exports. Canada should use the global carbon market framework to build a stronger Canadian natural gas sector and a cleaner world.”.The report says if just 20% of Asia’s coal-fired power plants were converted to natural gas, global emissions would be reduced by more than Canada’s total annual emissions. In other words, converting a relatively small share of Asia’s power infrastructure would “save a Canada” in emissions..“Regardless of whether Canada leaves its resources in the ground, other countries will not produce or consume less energy. Doing so could in fact worsen global emissions by making way for dirtier energy sources and its suppliers,” it said.. Canada’s gas fieldsCanada has vast natural gas resources That can be used to reduce emissions globally. .Although natural gas is technically a “fossil fuel” the report notes that Canada’s is preferable because it is produced under a carbon price. The only other Top 10 producer with a similar tax regime is Norway. .The report further notes that gas has an outsized role to encourage the development of renewable energy such as wind and solar by providing the base level capacity to keep the lights on when the wind isn’t blowing and the skies are grey. Even in sunny California, fully a third of its renewable energy base is backstopped by natural gas from Alberta..However, the report also notes that nearly two decades of regulatory uncertainty with respect to emissions have put the country at a distinct competitive disadvantage to countries such as the US and Australia, “representing billions of dollars in foregone economic activity” with respect to LNG. .Miller notes that the Biden Administration has continued to support natural gas even as it has moved to limit oil development on federal lands. Indeed, Canadian natural gas producers are actually looking to the US to export LNG through the Gulf of Mexico..The report makes several key recommendations, including:.• Recognize natural gas as an essential component of a lower carbon energy mix;.• Advance the idea that natural gas produced under a carbon price is a superior and more marketable product;.• Promote the understanding of the engineering and economics around an eventual transition from natural gas infrastructure to hydrogen;.• Build infrastructure to transport Canadian gas across Canada and to global markets;.• Align and develop more efficient regulatory processes to increase Canadian competitiveness;.• Work with First Nations across the country to expand their participation in natural gas projects;.• Pursue a comprehensive initiative to support the conversion from coal- to gas-fired power plants abroad;.• Operationalize Article 6 of the Paris Climate Agreement in a manner that will see it become a key driver of the Canadian natural gas sector’s growth.
