Canadian LNG is not path to energy security, stronger domestic economy

This research paper by the International Institute for Sustainable Development (IISD) argues that expanding liquefied natural gas (LNG) exports is a risky economic and environmental strategy for Canada. The authors contend that LNG fails to provide energy security for importers or economic resilience for exporters due to extreme price volatility, high infrastructure costs, and a global shift toward cheaper renewable energy. The document highlights that Canadian projects face significant competitiveness challenges against producers like the United States and Qatar, while importing regions in Europe and Asia are actively reducing their LNG demand.

• Canadian LNG projects face severe economic risks due to high capital intensity, frequent budget overruns, and long construction timelines. For example, LNG Canada Phase 1 took over six years to move from the start of construction in 2019 to operations, with the terminal and Coastal GasLink pipeline incurring an estimated CAD 14.5 billion in unexpected costs, running 29% and 263% over budget respectively.
• Canada struggles to compete with established, lower-cost producers such as Qatar and the United States. The U.S. specifically uses the threat of tariffs to pressure importers to purchase American LNG, further challenging Canada's competitiveness in a mercantile trading environment.
• LNG market volatility creates risks for both exporters and domestic consumers. Global supply shocks can drive up domestic gas prices in Canada, as seen in May 2022 when diverted shipments to Europe caused record-high prices that impacted home heating and electricity bills. Additionally, ratepayers in British Columbia are expected to face more expensive electricity rates as they partially subsidize grid expansions for LNG.
• A global oversupply of LNG is forecasted to begin as early as 2026 and continue into the 2030s, threatening the profitability of new projects. This glut is driven by increased supply and a transition toward renewables, which are now the cheapest option for new electricity generation in most markets.
• Major importing regions are reducing their reliance on LNG. The European Union's RePowerEU plan aims to reduce total gas demand by over 40% between 2024 and 2030. In East Asia, Japan's LNG imports fell 8% in 2023 and South Korea's fell 4.9%, while China is using renewables rather than LNG to displace coal.
• In South and Southeast Asia, a price gap exists between what importers can afford and what exporters need for profitability. Emerging economies generally require prices around USD 3-5/MBtu to make gas attractive, whereas new export projects typically need average delivered costs of around USD 8/MBtu to cover operations and investments.
• LNG expansion is incompatible with global climate goals and increases greenhouse gas emissions across its value chain, including extraction, liquefaction, transport, and combustion. The U.S. Department of Energy concluded that producing and exporting U.S. LNG increases global GHG emissions, and the authors argue that LNG may delay renewable investments abroad.
• Public financial support for LNG projects in Canada is substantial, with combined support from the government of Canada and the government of British Columbia expected to reach CAD 3.93 billion by 2030.

APA

Haig, S., & Dusyk, N. (2025). Canadian LNG is not path to energy security, stronger domestic economy. International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/canadian-lng-is-not-path-to-energy-security-stronger-domestic-economy

Chicago

Haig, Steven, and Nichole Dusyk. Canadian LNG is not path to energy security, stronger domestic economy. International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/deep-dive/canadian-lng-is-not-path-to-energy-security-stronger-domestic-economy.

Wikipedia

{{cite report |last1=Haig |first1=Steven |last2=Dusyk |first2=Nichole |title=Canadian LNG is not path to energy security, stronger domestic economy |publisher=International Institute for Sustainable Development |date=10 July 2025 |url=https://www.iisd.org/articles/deep-dive/canadian-lng-is-not-path-to-energy-security-stronger-domestic-economy |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{haig2025canadian, author = {Haig, Steven and Dusyk, Nichole}, title = {{Canadian LNG is not path to energy security, stronger domestic economy}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = jul, url = {https://www.iisd.org/articles/deep-dive/canadian-lng-is-not-path-to-energy-security-stronger-domestic-economy}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }