By Darius Snieckus, Canada’s National Observer
senior European Union official signaled that the bloc has little appetite for large-scale imports of Canadian liquefied natural gas (LNG), calling clean energy “the way forward” for its 27 member states.
Future energy trade agreements with Canada would prioritize “clean energy sources”, Belén Martinez Carbonell, secretary general of the EU External Action Service, the diplomatic arm in charge of international relations, told reporters during a visit to Ottawa last week.
Oil and natural gas prices surged on Monday after the US and Israel launched weekend air attacks on Iran, and Tehran retaliated with strikes on fossil fuel infrastructure in the region and threatened tanker shipping routes. The price and supply volatility has renewed calls for the EU to end its reliance on fossil fuels and accelerate a shift to renewable energy.
Asked about Europe’s interest in Canadian oil and gas, Martinez Carbonell said the EU’s pro-green energy policy was aligned to the 2015 Paris Agreement’s emissions reduction targets, which aim to limit global heating to 1.5C of pre-industrial levels.
“Seventy per cent of Europe’s electricity comes from either renewables or nuclear,” she said. “This is the way forward. It is simple.”
The uncertainty driven by events in Iran and the Middle East underlines the need for secure and affordable Canadian renewable energy, backed by domestic manufacturing and a proven global supply chain, the Canadian Renewable Energy Association (CanREA) said.
“Canada needs low-cost, low-emissions, quick-to-deploy electricity to meet growing domestic demand, deliver economic security, build major projects and bring costs down for Canadian ratepayers,” Fernando Melo, CanREA’s head of policy, told Canada’s National Observer.
Wind, solar and power storage are the “most affordable and fastest-to-deploy sources of new electricity” needed for Canada’s nation-building strategy, he added.
Canada’s some 25 GW of total installed renewable energy capacity is expected to nearly double in the next decade, according to CanREA. The country’s nuclear fleet is forecast to add 50 GW by 2050 from a current operational level of nearly 13 GW, the Canadian Nuclear Association has forecast.
European investors are already scoping projects in the domestic renewables sector — from offshore wind sites in Atlantic Canada to solar farms in the West. There’s also an ambitious plan to build a giant bundle of high-voltage power lines connecting Canada and Europe across the Atlantic Ocean.
Late to the LNG party?
The Liberal government has made LNG exports a cornerstone of its energy strategy, despite warnings that Canada may be late to the table and faces cost challenges as a global supply glut and slumping Asian demand are expected to put pressure on prices this year.
Ottawa nevertheless remains bullish on the country’s LNG exports, which Energy Minister Tim Hodgson has repeatedly championed as “the lowest-risk and the lowest-carbon in the world.”
“When you buy Canadian LNG, you are buying supply that cannot be turned off by politics or coercion,” he said following a trade visit to Germany last year.
Hodgson told a parliamentary committee last month that Canada could export up to 100 million tonnes a year, double his government’s previous forecasts.
LNG Canada’s flagship Kitimat facility in BC came online last year, the first of six projects granted export permits by Ottawa that could produce around 50 million tonnes a year by 2030 for markets in Southeast Asia and India.
A further two LNG projects have been proposed in the Atlantic provinces for European markets.
However, market intelligence firms have cautioned that the global LNG market is “on track for massive oversupply” by the early 2030s, driven by expansion in the US, the world’s top LNG exporter, and number three Qatar that would add more than 150 million tonnes a year of new LNG production capacity.
Research firm Ember Energy projects a seven per cent drop in EU gas demand by 2030 as renewable energy use rises and economies electrify. Ember’s analysis of EU member states’ national energy plans showed gas demand is set to fall from 326 billion cubic metres (bcm) in 2023 to 302 bcm in 2030. EU gas demand had already dropped by 19 per cent from 2019 to 2023.
Investors For Paris Compliance, a shareholder activist group, warned last week that Ottawa’s push to expand the LNG sector was “an increasingly risky gamble”, noting that Canada’s first four LNG megaprojects were already facing cost overruns that doubled original estimates.