Natural gas is a key piece of Canada climate puzzle

Contributed to The Globe and Mail
Tim McMillan
President and CEO
Canadian Association of Petroleum Producers
June 08, 2016

As part of the Paris climate treaty, Canada has signaled its collective commitment to do its part to tackle global climate change.

This is no small task. But it’s doable, and natural gas has a strategic role to play for the long term.

It will require realistic, achievable solutions at home at the provincial and federal levels. It will also require our industry to continue its focus on continuous environmental performance improvement. And we can take action globally by exporting some of our abundant energy, produced under one of the most stringent regulatory systems in the world, to countries that need it.

Here’s how.

Natural gas is a complementary power generation source for wind and solar, and acts as a backup to ensure reliable baseload capacity and thus encourage growth in renewable power generation. Ontario and Alberta, for example, are committed to increasing the share of renewables in their energy mix. Natural gas can help achieve this ambition.

Ontario Premier Kathleen Wynne recently addressed a group of Calgary-based business professionals and was clear that natural gas will play an important role beyond 2030. She emphasized that natural gas will be part of Ontario’s entire energy mix for decades.  

In Canada, natural gas is the single-largest form of energy used in Canadian homes. It’s abundant, easily transported and affordable. More than six million homeowners use natural gas to heat their houses and water. Homes are also enjoying the benefits of increasingly efficient natural gas furnaces and appliances. In Ontario, about 70 per cent of the homes are heated with natural gas, and it meets about 27 per cent of the province’s energy needs.

Other countries, particularly in Asia, are not using natural gas as widely, but they’d like to use more of it. Global natural gas demand is increasing as a result. The International Energy Agency forecasts that global demand for natural gas will increase 46 per cent by 2040, driven primarily by the rapidly expanding Asian economies.

This is an opportunity for Canada to export natural gas overseas. In doing so, we can help fuel cleaner power generation in countries that rely on coal and thus help slow the rate of growth of global greenhouse gas emissions. This is consistent with Canada’s commitment to global action on climate change.

Take a look at China.

Natural gas represented only five per cent of China’s primary energy consumption in 2013, according to the IEA, while coal represented 68 per cent. This mix is gradually changing, as the Chinese government plans to cap coal use at 62 per cent of its total primary energy consumption by 2020. Over the same period, China plans to double its use of natural gas and enable more renewables. As a result, China is now the world’s third-largest importer of liquefied natural gas (LNG).

Making more Canadian natural gas available to China will lower the amount of carbon in its energy mix. This would be a positive Canadian contribution to address global climate change.

It would also allow our country to benefit economically at a time North American natural gas markets have changed fundamentally.

Even a modest West Coast LNG industry, exporting about 30 million tonnes per year, would grow Canada’s economy by an average of $7.4 billion per year over the next 30 years, according a Conference Board of Canada study. The increased economic activity from natural gas development and exports would increase national employment by an annual average of 65,000 jobs, the study says. This increased international trade would also generate substantial new government revenues through royalties, taxes and land tenure payments.

Natural gas is not the only answer to how Canada can help tackle global climate change. But it is a key part of the answer, because greater use of it can reduce reliance on less environmentally sound energy sources, help support renewable energies and make energy available to countries as an alternative to getting that energy from countries with less stringent regulations than Canada’s.