In a surprise move, Canada’s southern neighbour is pumping the brakes on its booming natural gas business.
What happened: U.S. President Joe Biden is pausing approvals for new liquefied natural gas (LNG) export facilities in the country, a move that is expected to have a ripple effect on the Canadian energy producers that rely on the U.S. to export their natural gas globally.
-
The White House cited environmental risks for the pause, dealing a blow to LNG proponents who see it as a lower-emission bridge from coal to renewable energy.
- The U.S. — which only started exporting LNG in 2016 — overtook Qatar as the world’s top exporter in 2022, thanks to soaring demand from Asia and Europe.
Why it matters: Not only is Canada the world’s sixth largest LNG producer, but it’s entirely reliant on the U.S. to export its natural gas. Any signal that the world’s biggest exporter is slowing down new operations sends a pretty gloomy message about LNG’s future.
- Canada has one export facility nearing completion in B.C., but experts say the integrated nature of North America’s energy market makes the decision a big blow to Canadian producers.
Yes, but: The pause in approvals won’t stop exports at seven existing U.S. facilities or stop construction at the facilities that have already been approved. Even with the pause, U.S. LNG export capacity is expected to double from its current levels by 2030.
Zoom out: The decision is likely to sound alarm bells in Europe as well, where many countries have come to rely on LNG exported from the U.S. to meet their energy needs, following the supply shocks stemming from Russia’s invasion of Ukraine.—LA