This July, over 10,000 delegates descended upon Vancouver for the liquid natural gas (LNG) industry’s conference, LNG2023. The four-day exhibition had the buzz of an industry on the upswing as it races to meet rising energy demand in emerging economies.

Industry insiders say this momentum is reminiscent of the last cycle, where US producers built over 90 million tonnes per annum (Mtpa) of LNG export capacity. Despite having a similar level of proposed development (~100 Mtpa), Canada failed to ‘catch’ the last wave – developing only one facility of 14 Mtpa (currently under construction).

Fortunately, Canada has a second shot at becoming a major player in LNG. Doing so could deliver considerable economic and environmental benefits. However, industry and governments need to move quickly to capitalize on this opportunity and ensure that Canada doesn’t miss out again.

Norway serves as a template for how Canada can “get this right.” At home, Norway has reduced per capita carbon emissions by roughly 20% since 2007 by expanding low-carbon power access and electrifying its energy demand. Abroad, Norway has exported lower carbon fuels to countries that would otherwise consume higher-carbon alternatives, enabling global decarbonization.

Opponents argue that Norway’s energy policy is contradictory. We disagree. It might seem inconsistent for Norway to reduce hydrocarbon consumption at home while exporting fuels abroad. But in both contexts Norway’s actions advance decarbonization.

Even in the most optimistic decarbonization scenarios, hydrocarbons are forecast to comprise 50% of world’s energy needs by 2040. Take recent history as our guide. Over the past 5 years, the energy sector has invested over $1 trillion into non-hydrocarbon energy over five years. This monumental investment has trimmed the share of fossil fuel in global energy consumption by two percentage points—taking it from 85% to 83%. This is not to argue that change is impossible—we believe the shift toward cleaner forms of energy is both necessary and inevitable. But if fossil fuels are going to be around for decades, as data shows they will, we should do what we can to decarbonize them.

This is where Canadian LNG comes in.

To meet demand, global LNG volumes are forecast to increase by 20% or more between now and 2030. This growth cannot be wished away, nor will it be changed by what Canada does. Canada’s only choice is whether its energy will be part of the global solution or not.

Canada is well positioned to serve growing demand for LNG due to its resources (over 200 years of gas reserves at current production levels) and with advantaged access to Northeast Asian importers (approximately half the distance of leading alternative suppliers - US & Qatar). This potential is validated by commercial momentum. Western Canada has one LNG terminal under construction and five proposed LNG terminals under active evaluation. And, critically important, four of the five proposed terminals can be supplied by existing pipelines or those already under construction.

Over their project lifetime, these five proposed developments would generate over $250 billion in investments, employ roughly 50,000 Canadians, and generate approximately $90 billion in government revenues. It is also worth noting that Indigenous communities would realize many of these benefits – two of the projects have direct Indigenous ownership, while the others all have benefit agreements. Put differently, these five projects alone would have an economic impact equivalent to half of Canada’s auto industry, all while providing economic opportunities in historically marginalized communities.

And here is the climate kicker—similar to Norwegian exports, Canadian LNG can reduce global emissions by backing out higher-carbon alternatives. Canadian LNG can be 50% less carbon intensive than the global LNG average – meaning for every ton of carbon emitted in Canada, two tons are saved elsewhere. This advantage is driven by lower upstream emissions (due to Canada’s stringent fugitive methane regulations) and electrified transmission and liquefaction (enabled by clean power). As a result, these proposed projects could reduce global emissions by about 15 million tonnes per annum, equivalent to taking three million passenger vehicles off the road.

Some are worried about these assets being “stranded” as Asian buyers decarbonize. But, thanks to the physical advantages of shipping LNG (compared to hydrogen or alternative fuels), we foresee a role for low-emission Canadian LNG well beyond 2040 when paired with local carbon capture facilities.

The alternative of Canada not meeting this demand is higher global emissions and economic benefits that accrue elsewhere. That tradeoff should be unpalatable to Canadians of all political persuasions.

To deliver these benefits, we recommend two actions.

First, Canadian policymakers must recognize the climate potential of supplying the world’s lowest carbon LNG. Ongoing negotiations on Article 6 of the Paris Agreement could explicitly enable Canada to incorporate overseas emissions reduction in its nationally determined contribution. If a multilateral solution is not achieved, Canada could work with overseas allies to develop bilateral agreements. Even if this is not plausible, we urge Canadian leaders to recognize that emissions are a global (not local) problem and support Canadian LNG in driving a net reduction of emissions globally.

Second, Canada must expand clean power generation and transmission to support increasing industrial demand. Unfortunately, clean power constraints are hindering LNG proponents’ ability to electrify their liquefaction, eroding some (but not all) of the environmental benefits of Canadian LNG. We believe that Canada can use the growing industrial demand for LNG to catalyze the buildout of clean power generation (doubling the clean power growth forecast from Alberta and British Columbia to 2030) and upgrade of grid interconnects (connecting renewable rich Alberta to British Columbian power demand). This growth is ambitious, but not implausible.

Navigating energy transition tradeoffs is rarely straightforward. But Canadian LNG is an opportunity that the entire country can rally behind. Like Norway, Canada can use LNG to accelerate development of clean power at home and reduce the footprint of fuels consumed abroad, all while driving significant economic benefits. This is an opportunity that Canada can’t afford to miss.