The Canadian government will depend on continuing gas demand from Europe and “exploratory discussions” with potential trading partners in Germany to back up Energy and Natural Resources Minister Tim Hodgson’s pledge last week to deliver a first LNG shipment to Europe in “as little as five years”.

The emerging gas export plan may also hinge on the prospect of liquefied natural gas “swaps” on international markets, according to news reports.

Last week, Hodgson joined Prime Minister Mark Carney in Berlin to launch a major LNG export push, including new port infrastructure under consideration in Churchill, Manitoba and Montreal. The announcement has Canada positioning itself as a key supplier of gas and critical minerals to Europe’s energy transition and resource security.

In an email to The Mix Friday afternoon, a senior media relations advisor in Hodgson’s department, Natural Resources Canada (NRCan), laid out some of the conditions and assumptions behind the top-line announcement.

“While in Germany, [fossil] energy companies and stakeholders expressed strong interest in Canadian LNG,” she wrote. “This was also part of discussions with industry and government. Lower-carbon Canadian LNG could offer Germany the opportunity to displace Russian gas with reliable, stable supply from Canada that would advance their goal of ending imports of Russian energy.”

But “these are very much exploratory discussions at this time,” the advisor added.

“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.”

Future Gas Demand Vs. Massive Energy Savings

The NRCan advisor acknowledged projections from the International Energy Agency that European gas demand will fall 9% between 2023 and 2030, but said the continent’s total consumption will “remain substantial” at decade’s end, at 44.7 billion cubic feet (bcf) per day.

“LNG demand in particular will remain robust,” she wrote, citing the Wood Mackenzie energy analytics firm. WoodMac’s modelling “anticipates that European LNG demand will peak by the mid-2030s (roughly 30 million tonnes above current anticipated demand of 116 million tonnes, in 2025). The majority of that LNG demand is uncontracted beyond 2035, which offers opportunities for Canadian exports.”

But that doesn’t indicate any certainty for projects that require 15 or 20 years of demand to justify major new investment. Last week, a joint reporting effort by The Mix and Berlin-based Clean Energy Wire found multiple analysts who see limited prospects for future LNG trade.

“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, said in an email. EU gas demand fell 17% between 2021 and 2024, spurred largely by the energy shock following Vladimir Putin’s invasion of Ukraine, and consumption will continue to shrink through 2030 as Europe electrifies its economy.

That means the continent “is already heavily oversupplied towards 2030,” he said, 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.”

Ana Maria Jaller-Makarewicz, lead energy analyst, Europe with the Institute for Energy Economics and Financial Analysis (IEEFA), said the EU is on track to reduce its gas imports 25% by 2030 under REPowerEU, its plan to end its dependency on Russian fossil fuels by 2027 through increased energy efficiency, faster growth in renewable energy, and diversified energy supplies. The plan included voluntary gas reduction targets for 2022, 2023, and 2024, and the bloc exceeded its targets for the first two years, though Jaller-Makarewicz warned in a May, 2024 commentary that EU targets for 2024 and 2025 could allow for increased gas use.

Even so, “EU efforts to curb gas demand and diversify energy sources have been vital for Europe’s security of supply,” she told The Mix in an email. “Cutting dependency on gas from Russia or any other country can be achieved if gas consumption reduction measures continue in place.”

With an affordable energy action plan set to replace up to 100 billion cubic metres (more than 3,500 billion cubic feet) of gas by 2030, she added, “the bloc could satisfy demand without additional gas infrastructure or increased imports.”

IEEFA energy finance analyst Clark Williams-Derry said a “reshuffling of deck chairs” might see Germany importing more LNG while the United Kingdom imports less, with the net result that Europe as a whole needs no additional supply. With significant new LNG capacity coming online in the near future, he said the global market will be over-supplied between 2026 and 2036—well past the five- to seven-year delivery target that Hodgson laid out last week—with the peak expected to hit in 2029.

Jaller-Makarewicz said the EU is also operating under Fit for 55, a set of laws aimed at reducing the continent’s climate pollution by at least 55% by 2030. Some of its key elements include a carbon border adjustment mechanism, higher emission reduction targets for industry, and energy savings for vulnerable populations.

A ‘Climate Wake-Up Call’

Meanwhile, European decision-makers heard a stark warning in the last week that the Atlantic Meridional Overturning Circulation (AMOC) could begin shutting down as early as the 2060s, in what European Climate Commissioner Wopke Hoekstra called a “wake-up call” from researchers at Utrecht University. “Shutdown of the AMOC would see temperatures in Europe plummet even as global warming marches on. This would also reduce rainfall and likely bring even drier summers, with devastating consequences for agriculture,” Politico EU reported.

“There’s a sense out there that climate change has taken a backseat because we’re so busy dealing with [other] pressing concerns,” Hoekstra wrote on social media. “So a big thanks to these scientists for giving us another serious climate wake-up call.”

East Coast LNG Vs. West Coast ‘Swaps’

Although much of the initial reaction to Carney’s and Hodgson’s European tour focused on the limited prospects for new LNG terminals in Atlantic Canada, discussions in Berlin centred on two other possibilities: treating Churchill, which Carney cited as “essentially a new port”, as an eastbound export terminal for LNG, or having European companies buy up West Coast LNG and trade it on global markets for suppliers that are closer to home.

“Many of the buyers are prepared to buy LNG off the West Coast of Canada and trade those products in the international market for LNG,” Hodgson told media Berlin.

That line of thought matched up with recent remarks by British Columbia Energy and Climate Solutions Minister Adrian Dix, who told the Globe and Mail he sees his province becoming a leading global supplier of fossil fuels while boosting renewable energy at home.

“At the centre of the strategy is an investment in wind and solar power that Mr. Dix likened in scale to the dawn of B.C.’s modern hydroelectricity system in the 1960s. He suggested it has the ability to draw capital displaced from the United States amid that country’s anti-renewables turn,” wrote Globe columnist Adam Radwanski.

“While the new capacity would partly enable a climate-friendly shift in energy usage—from gasoline-powered cars to electric vehicles, for example—it’s also meant to power the growth of the province’s LNG industry, as well as new mining activity.”

But “B.C.’s version of Mr. Carney’s grand bargain between resource extraction and sustainability remains tenuous,” Radwanski added. Dix’s “overarching message was that Ottawa’s backing—financial, rhetorical and, in some cases, regulatory—could go a long way toward ensuring investor confidence, as well as social licence.”

Dix did contrast B.C.’s wish list of nation-building projects with the westbound oil pipeline that has been loudly championed by Alberta Premier Danielle Smith and opposed by the B.C. government. He said B.C.’s top pick, the 450-kilometre North Coast Transmission Line from Prince George to Terrace, would help electrify the province’s gas industry while opening up critical mineral reserves to supply electric vehicle supply chains.

The project is ready to roll, he told Radwanski, and is no less than “the best national project existing in Canada now.”