Canada says it is putting $200 million toward the construction of a liquefied natural gas plant off the coast of British Columbia.
In an announcement Thursday, the Ministry of Energy and Natural Resources Jonathan Wilkinson said it would send the federal dollars to Cedar LNG, a nearly $6-billion floating gas facility being built off Kitimat, B.C.
Under construction since July 2024, the floating facility will be fed by the Coastal GasLink pipeline. Once the gas reaches the facility, it will be cooled to minus 162 degrees Celsius, transforming three million tonnes into a liquid every day. From there, it would be loaded onto ships and exported to Asia starting in 2028.
“The need to build a resilient economy with new export opportunities for Canadian energy suppliers has never been clearer," said Wilkinson in a statement.
“Our international partners are looking for a reliable supplier of low-carbon energy sources, and Canada will be there to enable communities — and in this case, Indigenous partners — to be the stable provider they are looking for, while creating good jobs and driving economic growth.”
One of the world's greenest LNG operations, say proponents
The latest federal funding announcement comes as oil and gas companies, and some political leaders, have argued U.S. tariffs should move Canada to expand pipelines and ramp-up new energy projects.
On Wednesday, Conservative Leader Pierre Poilievre said he wanted "shovel-ready zones" that would have pre-approved permits for major resource or energy projects.
In a media statement, Poilievre said companies would be able to buy pre-approved land for a project, receive a permit, and then complete a "checklist" on how they intend to protect "nature and people."
In B.C., Cedar LNG is one of 18 mining and energy projects the provincial government said it would fast-track for development as a response to U.S. tariffs.
The project is owned by the Pembina Pipeline Corp. and the Haisla First Nation, which announced a final investment in June 2024.
At the time, Export Development Canada (EDC) — the national export credit agency — said it would provide a loan to the offshore facility worth between $400 million and $500 million.
Project proponents say it would generate 100 full-time jobs while having “one of the cleanest environmental profiles in the world.”
EDC senior advisor Zoé de Bellefeuille told BIV in June that “the Cedar LNG project will be primarily powered by B.C.’s clean hydro-electricity," making it one of the world’s "lowest GHG emission natural gas operations.”
Fears of spiralling gas markets, impact on climate
A statement from the Innovation, Science and Economic Development Canada said Friday that the Cedar LNG project is expected to generate $275 million in gross domestic product (GDP) through the construction phase and $85 million in annual GDP contributions during its operations phase.
But opponents of expanding oil and gas projects point to studies showing demand for gas peaking before many facilities could recoup their expense.
The International Energy Agency (IEA) has found a glut in LNG supply by mid-decade will likely drive down prices. At the same time, gas demand in Asia is expected to level off.
Critics of LNG have also raised concerns over forecasts suggesting gas isn't as green as some proponents suggest.
The main ingredient in gas is methane. When it leaks into the air, it acts as a greenhouse gas 80 times more powerful than carbon dioxide over the first 20 years in the atmosphere.
Research has increasingly found more methane leaks along the gas supply chain than once thought — such as during extraction, as gas runs along pipelines, or when it’s shipped overseas.
In 2021, the IEA modelled paths for the world to achieve net-zero carbon emissions. That's the minimum but formidable target countries around the world need to hit to stave off 1.5 C in global temperature rise from pre-industrial levels — the point where scientists say irreversible damage will be done to the Earth’s climate system.
That target that will likely be impossible to achieve without axing future oil and gas exploration and scrapping new LNG projects, the IEA found.
More recently, an October 2024 report produced by the U.K. firm Carbon Tracker, on commission from the David Suzuki Foundation and the Pembina Institute, found all of B.C.’s proposed LNG projects are at risk of generating lower than expected returns as they arrive as a “late entrant” in markets already dominated by lower-cost, more established producers.
The Carbon Tracker report found Cedar LNG would not be viable under any plan to keep warming below 2.2 C.
The Carbon Tracker report found Cedar LNG would not be viable under any plan to keep warming below 2.2 C.
Unsanctioned projects — which would exclude facilities such as LNG Phase 1 and Woodfibre — were forecast to produce gas 26 per cent more expensive than the global average. B.C. gas was forecast to cost up to 80 per cent more when compared to gas from bulk producers in the U.S., Mozambique and Qatar.
Thomas Green, the senior climate and policy advisor for the David Suzuki Foundation, said that report shows the international gas market will face oversupply by the end of this decade.
“It really is a risky time to double down on further LNG expansion,” Green said at the time. “The revenue streams that government has been counting on will likely not materialize and the projects may not end up in the black.”
— With files from the Canadian Press
