New Report Highlights Economic and Environmental Costs of Canada’s LNG Expansion

June 4, 2024, Ottawa—A new report from the International Institute for Sustainable Development (IISD) says liquefied natural gas (LNG) projects in Canada will not only undermine the country’s progress toward its climate goals but are likely to enter an oversupplied market dominated by cheaper producers, notably the United States and Qatar, making it a perilous economic venture. The report calls upon federal and provincial governments to refrain from granting approvals and export licences for new LNG ventures, and to phase out subsidies and other public support for existing projects.  

Other findings include the following: 

• New LNG facilities will undermine Canada’s domestic and international climate commitments through increased upstream and midstream emissions and, more critically, by diverting scarce financial and clean energy resources toward fossil fuel production and away from more cost-efficient decarbonization efforts. 

• Canadian LNG projects, most of which are not expected to export until the end of the decade, risk entering an oversupplied market.  

• LNG demand in advanced economies such as Europe and South Korea will soon peak (or has already peaked), with slowing growth in emerging Asian markets. 

• The projected lifespans for pending LNG projects range from 20 to 60 years, requiring long-term investments that risk handcuffing Canada to LNG long after it is no longer economically viable. 

"With 60% of new LNG projects under construction in the U.S. and Qatar, expensive Canadian LNG will face stiff competition from these cheaper, incumbent producers," says Nichole Dusyk, senior policy advisor at IISD and co-author of the report. "Expanding LNG projects in Canada amidst weakening market demand risks creating obsolete infrastructure and inevitable losses in a fiercely competitive market—with taxpayers carrying significant risk." 

The United Nations International Panel on Climate Change and the International Energy Agency have concluded that there can be no new long-term oil and gas projects—including Canada’s planned LNG expansion—if the 1.5°C temperature target to avoid the worst climate impacts is to be achieved.  

“Canadian LNG production emits greenhouse gases at all stages of the value chain, putting it at odds with domestic climate obligations,” said Steven Haig, policy analyst and co-author of the brief. “Public and private investment should be directed toward green industries, such as renewable power generation and decarbonizing transportation.”  

The report urges Canadian governments to protect the economy, environment, and taxpayers by mitigating the risks associated with LNG expansion. This can be achieved by refraining from granting approvals and export licences for new LNG ventures and phasing out subsidies and other public support for existing projects.  

Media contact: 

For more information or to interview one of the report authors, please contact Trish Tervit, communications lead, Energy Team: trish.tervit@iisd.net