When ‘Nation-Building’ Goes Wrong: Carney, Hodgson Must Think Bigger Than LNG Exports

You can’t make LNG exports a nation-building project when no other nation will want you to build it. Good thing there’s a wider menu of lower-carbon options for PM Mark Carney to tap into.

Kenueone/Pixabay

With Prime Minister Mark Carney and Energy and Natural Resources Minister Tim Hodgson just back from their liquefied natural gas (LNG) sales trip to Germany, the nation-building projects they crave are busting out all over.

Just not in the way they seem to expect, or in the places they’re most avidly looking for them.

During their sojourn in Berlin Tuesday and Wednesday, the PM and his former Goldman Sachs and Bank of Canada colleague distinguished themselves by touting the promising market they see in Germany for a fuel that much of the world is looking to leave behind, or will be soon enough. LNG is emerging as a centrepiece of their quest for “nation-building” projects to diversify Canada’s economy and assert our sovereignty against Donald Trump’s tariff warfare and annexation threats.

“I think you’re probably talking about five to seven years,” Hodgson told Politico EU in an interview Wednesday, adding that he’d been surprised by long-term interest from German industry in LNG supplies that are typically seen as climate-unfriendly. “They believe that there will be more LNG required and for longer as a transition fuel,” he said.

Wow! The German gas and utility industry is touting strong future demand for gas? Stop the virtual presses!

In fairness, Hodgson’s department, Natural Resources Canada (NRCan), responded with good detail and substance when The Energy Mix asked where they saw reliable demand for a 15- to 20-year gas export contract. A senior media advisor cited modelling by energy analytics firm Wood Mackenzie that shows European gas demand peaking by the mid-2030s, with export opportunities beyond 2035.

But NRCan acknowledged that Canada is a long way from a firm LNG deal. “These are very much exploratory discussions at this time,” the advisor told The Mix in an email. “Commercially viable projects that have the support of the province, and affected Indigenous communities will be considered by the federal government. Regulatory approvals would follow existing processes and the decision to build lies with proponents and investors.”

Big Questions About Gas

No one is seriously suggesting we can shut down gas production tomorrow. But the uncertainties around global gas markets and future demand date back a decade or more, and the case is getting weaker, not stronger. Users of all kinds, from households to big data centres, are looking for affordable, hyper-reliable energy that is quick to install and keeps the lights on in a heat wave or storm. On any of those criteria, gas can’t match the performance of wind or solar with battery backup, supported by heat pumps and building retrofits to boost efficiency.

At some point, you have to wonder…if economic diversification through new trading partners is the point of the exercise, can you call it a nation-building project if you can foresee a time when no other nation will want you to build it?

In Europe, in particular, countries learned another brutal and heartbreaking lesson over the last 3½ years. After Vladimir Putin invaded Ukraine, then tried to use oil and gas dependency as a pressure point on European neighbours, energy independence became the continent’s rallying cry. The EU couldn’t turn on a dime (or a Eurocent) to dump gas completely. But faster energy efficiency improvements and wider renewable energy deployment were the quickest, best ways to prevent a dictator from using fossil fuel exports as a weapon of war. Fast forward to this year’s tariff negotiations between the EU and the Trump administration, and getting out from under fossil fuels is the way to avoid a $750-billion shakedown by another dictator.

It’s good to know that there was some actual number-crunching behind Hodgson’s very optimistic, five- to seven-year timeline. But the WoodMac modelling runs counter to a small mountain of analysis, all of it suggesting that more LNG is the last thing Germany or Europe will need.

“In the medium and long term, we’re not anticipating an increase in gas demand, certainly not in Western Europe,” Pawel Czyzak, Europe programme director at the Ember energy think tank, told The Mix in an email last week, with consumption already down 17% between 2021 and 2024 and set to shrink further through 2030 as the economy electrifies. The continent “is already heavily oversupplied towards 2030,” he added, and “that oversupply will get even more severe if the questionable fossil fuel imports from the EU-U.S. trade [and tariff deal] are implemented.”

“Cutting dependency on gas from Russia or any other country can be achieved if gas consumption reduction measures continue in place,” added Ana Maria Jaller-Makarewicz, lead energy analyst, Europe at the Institute for Energy Economics and Financial Analysis. With an affordable energy action plan in place, “the bloc could satisfy demand without additional gas infrastructure or increased imports.”

It’s Also a Climate Bomb

All of those legit, important arguments against gas are proxies for the reality that it’s also a climate bomb.

The gas industry everywhere has done a great job of spinning its product as a “clean” transition fuel and a reasonable gateway to a low-carbon future. But the main component of natural gas is methane, a climate super-pollutant with 84 times the warming potential of carbon dioxide over the crucial, 20-year span when we’ll all be scrambling to get climate change under control.

Methane leaks into the atmosphere at every step in the gas production process—from fracking, to pipeline transport, to the ships that carry LNG across oceans—and the industry has been famously inept at accurately measuring and reporting leaks. Methane controls are widely recognized as one of the quickest, cheapest paths to the deepest possible emission reductions through 2030. Yet methane regulations are always on the hit list when fossil lobbyists and their hired hands like Alberta Premier Danielle Smith insist on killing off the minimal, often ineffective government regulations they face.

Nation-Building That Builds Our Future

LNG is the dominant but not the only flavour of nation-building project on the federal government’s agenda. In Germany last week, Carney also signed a declaration of intent for critical mineral development. Regional clean power grids are on the agenda, although completing an east-west grid doesn’t seem to be a priority. And the PM has talked in general terms about energy efficiency as a goal for the emerging Build Canada Homes affordable housing program.

But that’s just one corner of the menu of nation-building projects the government could adopt to build Canada’s strength and solidarity from the ground up—while bringing us the ultimate safety and security of helping to get climate change under control.

• The first piece of this puzzle must be a good idea, because it comes directly from our readers (or as public broadcasting would have us say, from readers like you!).

After emergency physician Nicolas Chagnon submitted this well-argued case for a federal rooftop solar program, two other readers, Martin Benum and Ron Moore, chimed in with detailed comments on what it would take to make those projects work. It wasn’t that the post received dozens of replies, more that the discussion immediately got so specific and substantive. It brought home to me that, just like the push for balcony solar in Europe and the U.S. state of Utah, the obstacle to faster renewable energy deployment isn’t public demand. It’s the rules, regulations, and financing models that are holding us back.

• Quebec is going all-in on wind power with a target of 10,000 megawatts of new capacity by 2035, much or most of it developed in partnership with Indigenous communities. “In Quebec, we spend $10 billion a year on fossil fuel supplies,” said Energy Minister Christine Fréchette. “That’s crazy. So let’s take some of that money and invest it in renewable energy, which will generate benefits for Quebecers and clearly transform the Quebec economy, in addition to contributing to the well-being of the planet.”

“Prediction: this sentiment is going to catch on in other Canadian provinces and in fossil fuel import-dependent jurisdictions worldwide, as it should,” Dan Woynillowicz, principal of Polaris Strategy + Insight, commented on LinkedIn.

• Efficiency Canada is pushing hard on the arguments for energy efficiency as a nation-building project that can produce quick results, boost productivity, support Canadian businesses and technology, deliver regional fairness, and help build a “more adaptable and tariff-proofed economy”. But the Building Decarbonization Alliance warned last month that the clock is beginning to tick on a deep energy retrofit initiative that could be a “megaproject moving in slow motion” if it’s allowed to meet its full potential, but will sink without a trace if Carney’s government forgets or neglects to renew it.

Which may happen if they’re too preoccupied with their LNG adventures to pay attention to the stuff that is actually poised to deliver results.

• In new construction, modular housing companies like CABN are setting the pace with affordable, factory-built homes that are quicker to complete and, in CABN’s telling, can be net-zero or even net-negative for emissions. There are a lot of detailed claims baked into that calculation and it’s up to regulators to verify the results. But with housing already high on the federal agenda, there’s an opportunity for Ottawa to turn the affordability crisis into an essential nation-building moment—and make the net-zero performance pioneered by CABN a baseline requirement for grants and incentives when bigger players enter the prefab space.

• In agriculture, Canadian farmers were eager enough to embrace soil carbon storage, nitrogen fertilizer reductions, and other emission reduction options that the $200-million On-Farm Climate Action Fund ran out of funds ahead of schedule—making it the first but not the last Trudeau-era program that federal financial minders declared too successful to continue. Agrivoltaics are quickly emerging as a win-win for farmers, rural communities, solar developers, and even avowedly hostile regimes like the Danielle Smith government—as the Vatican is now showing with a project outside Rome. (Hat tip to another reader, Diane Beckett, for pointing us to that last link.)

• To help rural communities build stable, diversified economies that don’t begin and end with fossil fuels, we’re hearing more and more that a local solar or wind farm won’t be a big source of long-term jobs once it’s built—once the installation is done, the main job “baaa-nefit” will go to the sheep or goats brought in to clear the brush around the panels. (Yes, we went there. Again.) But the prospect of reliable, local power at 6¢ per kilowatt hour will draw the investors that will make a local economic development officer’s heart sing.

• And no nation-building effort will be complete without facing down the massive rise in youth unemployment, across Canada and particularly in Ontario. If Carney and his team want to get serious about job creation for the generation we always say we’re thinking of when we talk about climate change, a Youth Climate Corps would get the job done—but not if it’s just a token pilot project. Watch The Energy Mix for an upcoming feature interview with Climate Emergency Unit Team Lead Seth Klein, who distinguishes the YCC’s promise of meaningful work for a living wage with some of the recent calls for mandatory national service.

[Disclosure: Energy Mix community engagement staffers Mike Hager and Lella Blumer are on part-time assignment with the Climate Emergency Unit, where part of their job is to help amplify the case for the Youth Climate Corps.]

All of these initiatives are practical, affordable, and ready to scale up. And, unlike the government’s economically tenuous LNG agenda, they all bring climate solutions and PM Carney’s stated Value(s) back to the centre of the conversation.

A Plan That Meets the Moment

It’s easy enough to sort through the spin and pick apart the Carney government’s latest LNG adventure. But those facts and arguments miss the point if they don’t get at the real point of the exercise.

For better and for worse, Carney was elected with one overarching job: to protect Canada from the predatory sociopath currently occupying the White House. If in doubt, Job #2 is to refer back to Job #1. It isn’t the way we should have to spend our time and resources when we have climate change and a host of overlapping crises to address. But it’s what we’ve got, largely thanks to obscene levels of campaign financing from the U.S. fossil industry.

And now, Canada and Germany seem to have concluded that anything else they hope to achieve depends on projecting strength in terms that Donald Trump will understand. If that’s what was going on last week in Berlin—and I’ve heard no one say that out loud—it wouldn’t be the first time that Trump theatre has taken the place of real, practical policy in the international sphere.

But nations are built on real results, not theatre. So even if a desperation move to embrace LNG is seen as one way to keep our #ElbowsUp, we also have to keep our hearts, minds, and hands open to real nation-building initiatives that will bring us the country we want in a liveable, zero-carbon future.

Which isn’t anything that Carney doesn’t already know, hasn’t already told us in his own words.

“Climate policy has never been just about the environment,” writes Simon Donner, co-chair of Canada’s Net-Zero Advisory Body, last seen warning Team Carney that the “grand bargain” they want on oil and gas could get them in trouble with the new trading partners they’re trying to develop.

“The reality is that good climate policy is good economic policy,” Donner adds. “Despite headwinds south of the border, climate action and the transition to clean energy are accelerating. Emissions have decreased across the G7 over the last two decades. The global market for the six key clean energy technologies—solar cells, wind turbines, electric vehicles, batteries, electrolysers, and heat pumps—quadrupled in size over the last decade, buoyed by >90% drop in costs. The real question is whether we are willing to make the up-front policy and infrastructure investments today to build future low-carbon industries and transition to a low-carbon energy system.”

---

Mitchell Beer traces his background in renewable energy and energy efficiency back to 1977, in climate change to 1997. Now he and the rest of the Energy Mix team scan 1,200 news headlines a week to pull together The Energy Mix, The Energy Mix Weekender, and our weekly feature digests, Cities & Communities and Heat & Power.

---

Chart of the Week

Jan Rosenow/LinkedIn

---

Alberta Restrictions Cancel 10.7 GW of New Renewables, 89% of Province’s Peak Power Demand

EU Gas Demand Still Set to Fall as Canada Touts LNG Exports to Germany in ‘as Little as Five Years’

Electric School Buses Going Idle as New Owners Renege on Lion Electric Warranties

Mi’gmaq Chiefs, Locals Push Back Against Proposed NB Gas Plant

Carney’s Major Projects Office ‘Sidelines Indigenous Rights’, Leaders Say, as Ex-Trans Mountain CEO Takes Charge

Investors Line Up to Expand CABN’s Brockville Manufacturing Plant

Africa Could Be on the Verge of a Solar Surge, Study Shows

How A Federal Rooftop Solar Program Could Transform Canada

U.S. Emissions Rise, China’s Fall, in Massive Shift Between World’s Biggest Climate Polluters

---

Trump immigration agents arrest firefighters working on Washington State wildfire (Seattle Times)

Situation 'critical' as Fort Providence, NWT ordered to evacuate (Canadian Broadcasting Corporation)

Alberta eyes Japanese refining investment to boost oil exports, sources say (Canadian Broadcasting Corporation)

B.C. Energy Minister wants to lead in clean power at home while exporting fossil fuels abroad (Globe and Mail)

Air pollution from oil and gas causes 90,000 premature US deaths each year, says new study (The Guardian)

Ikea begins offering balcony solar kits (PV Magazine)

A V2G-ready EV could earn $10,000 in 10 years (Electric Autonomy Canada)

Climate spillover effects for reinsurance should concern regulators, say experts (Green Central Banking)

How a solar energy company is trying to lower Arctic communities' diesel dependency (Canadian Broadcasting Corporation)

A Controversial Fishing Method, Bottom Trawling, May Dredge Up a Climate Time Bomb (Scientific American)

Solar panels make better...wool? (Katharine Hayhoe/LinkedIn)

With one of the world’s largest trees ablaze, this crew began a daring climb (Washington Post)