Ahead of Prime Minister Mark Carney’s expected trade mission to New Delhi March 1-2, his energy minister has been aggressively promoting the potential he sees for liquefied natural gas (LNG) exports to the world’s most populous country—despite mounting signs that demand for the climate-busting fuel may soon evaporate.

Confirmed timing of Carney’s trip was tipped this week by Ontario trade minister Vic Fedeli as part of the PM’s “all-out efforts to diversify Canada’s alliances beyond the United States,” Reuters reports. The plan has been in the works since November, when Carney and Indian Prime Minister Narendra Modi met on the sidelines of a G20 meetings to work toward a new bilateral agreement that would double the countries’ annual trade volume to $50 billion by 2030.

Energy and Natural Resources Minister Tim Hodgson, the PM’s former Goldman Sachs colleague recently profiled by the Globe and Mail as “Carney’s dealmaker”, began focusing the conversation toward LNG in late January, after returning from his own advance trip to the country he described as “one of the most important energy markets in the world.”

“There’s real opportunity for Canada to play a more significant role there,” he said. But dialogue between governments “is essential in the Indian context, where most major energy companies are state-owned or state-directed.”

With India aiming to increase natural gas from 6% to 15% of its energy mix, “Canada is looking at new terminals along its Pacific coast that could bring export capacity to 50 million tonnes of LNG annually by the end of the decade,” Bloomberg News reports. “That’s up from about 14 million tonnes today through the LNG Canada terminal in Kitimat, British Columbia, which opened last year.”

Hodgson presented a possible deal as a win for both countries: Canada exports less than 1% of its LNG production to India, and India is looking for alternatives to Russian crude oil to dodge U.S. sanctions.

In Delhi last week, the Indo-Asian News Service looked ahead to Carney’s visit as a possible marker for a “new phase in bilateral ties” between the two countries. “If current trends persist, India–Canada relations over the next decade are likely to be driven less by political turbulence and more by investment flows, energy integration, supply chain partnerships, and deeper people-to-people ties,” the agency reported, citing a report by former Indian diplomat Sanjay Kumar Verma.

“Energy cooperation is expected to deepen through structured hydrocarbon supply engagement and expanded discussions on long-term uranium procurement to support India’s civil nuclear expansion and clean baseload energy requirements,” Verma wrote. “Supply chain complementarities are likely to drive reciprocal market access conversations across agriculture, energy, advanced manufacturing inputs, and services trade.”

Customers Over ‘Pundits’

Last fall, the International Energy Agency (IEA)’s Global LNG Capacity Tracker identified Canada as one of three countries driving the biggest growth wave LNG has ever seen. And Hodgson has been talking up the stock at least since mid-August, when he opined that Canada’s first LNG exports to Germany could arrive in “as little as five years,” despite projections that gas consumption in the European Union will decline.

In the weeks that followed, news reports had Shell and Mitsubishi trying to ditch their investments in the LNG Canada megaproject in British Columbia, colossal fossil ExxonMobil closing a gas deal with Europe that was expected to undercut demand for Canadian exports, analysts persisting in their view that Europe will have no need for new gas supplies, even after banning imports from Russia, U.S. LNG developers scrambling for investment ahead of a global gas surplus, Asian buyers beginning to reduce their LNG imports, and LNG exporters facing a ‘sinkhole’ as the long-awaited global glut took hold.

None of that stopped Hodgson from taking a combative tone at the House Natural Resources Committee when Bloc Québécois natural resources and energy critic Mario Simard (BQ-Jonquière) asked him about the looming supply glut.

“If I understand your question, it’s that pundits don’t think there’s going to be demand for LNG, so why should we build them?” Hodgson said.

“I love pundits, who have no skin in the game, who produce lovely reports that have zero economic impact on anything,” he added. “As a business person, I like to talk to customers, and if a customer tells me they’re willing to pay for something and they’re willing to provide a long-term contract for it, I look at that as a more valuable signal than pundits.”

But some Indian LNG importers like Gail India Ltd. and Bharat Petroleum Corp. are already “holding up some deals spanning decades as they push to lock in cheaper prices, hoping that a surge in supply will tilt negotiations in their favour,” Bloomberg News reported late last month. They’ve been “pushing for lower prices and more flexible long-term contracts, leaving discussions with LNG producers stalled for more than a year,” the news agency added, citing sources familiar with the discussions.

And the week before Hodgson’s broadside, two of those “pundits” published a post on The Hill Times, a daily news site focused on the Parliamentary precinct, that summarized the months of data and analysis pointing to a slackening global LNG market. While the Carney government is focused on speeding regulatory approvals and mobilizing federal support for new LNG projects like the proposed Ksi Lisims terminal in B.C., “it is economic fundamentals—not removing bureaucratic bottlenecks—that will determine what projects attract capital, generate returns, and function as growth engines for the Canadian economy,” warned Mark Kalegha, energy finance analyst at the Institute for Energy Economics and Financial Analysis, and Olaf Weber, CIBC Chair in Sustainable Finance at York University’s Schulich School of Business.

“In this context, trends in global gas markets are flashing warning signs and pointing to mounting risks for Canada’s LNG strategy,” the two authors wrote.

With global LNG trade rising 40% due to an “unprecedented supply surge” and the IEA’s latest World Energy Outlook (WEO) questioning whether the market can absorb all that additional product, “growing consensus among economists, industry executives, and intergovernmental agencies alike reveal a risky oversupply of LNG in global markets,” they added. That caution included citations from market analysts at Morgan Stanley, RBC Capital, and S&P Global, as well as the CEOs of international oil majors TotalÉnergies and Shell.

“While gas supply is set to skyrocket, the same cannot be said for demand,” Kalegha and Weber added. “The global energy transition is expected to decelerate gas demand growth, with long-term consumption expected to flatten or fall as clean energy sources become cheaper, more reliable, and gain market share.”

No Need for the Trash Talk

The response to Hodgson’s committee appearance continued online in the days after Kalegha’s and Weber’s post.

“Natural Resources Minister Hodgson totally trashes pundits predicting a crappy seller’s market for LNG; says he puts more faith in customers who tell him they want Canadian LNG and will sign long-term purchase contracts,” veteran energy analyst Aaron Cosbey, president of Small World Sustainability Consulting, said on LinkedIn.

“Of course buyers around the world are urging him to export more Canadian LNG. It’s in a buyer’s interest to have global over-supply—keeps their costs down,” he wrote. But “nobody would actually offer Canada a long-term purchase contract for hypothetical future exports. And concerns about future trends mean increasingly fewer 20-year agreements; 10- or 15-year more common. Moreover, any agreement would be indexed—not at fixed prices—so over-supply is still a risk for sellers.”

In its biennial LNG Buyers’ Survey, released earlier this month, consulting giant McKinsey & Company said the global LNG market moved out of a period of undersupply and high prices into a “more balanced phase” in 2023-2024, as new production came online and “demand softened in key regions.” The 41 industry voices in the survey predicted that European demand will gradually decline at least through 2040 but continue to rise in Asia, with prices generally expected to level out at $7 to $10 per million British thermal units (MBtu), the standard measure for fossil gas.

But the IEA was less optimistic about that pricing.

“Gas-importing emerging and developing economies would generally need prices at around US$3-5/MBtu to make gas attractive as a large-scale alternative to renewables and coal, but delivered costs for most new export projects need to average around US$8/MBtu to cover their investments and operation,” the Paris-based agency warned in its latest WEO.

“In other words,” the International Institute for Sustainable Development added in a “deep dive” analysis last July, “key importing countries need LNG prices to be lower than what new export projects would typically need to be profitable.”

Those numbers had Alex Walker, energy analytics program manager at Environmental Defence Canada, pointing to a “fundamental misalignment between Canada’s LNG plans and global demand.” On LinkedIn, Walker said the McKinsey analysis revealed that:

• Buyers were 20% more open to short-term contracts in 2025 than they were in McKinsey’s previous biennial survey in 2023, with the biggest shift showing up in the Asia-Pacific. “This signals a market pivoting away from the long-term agreements investors would need to recoup multibillion-dollar infrastructure costs,” they wrote.

• While Canada touts the supposed green premium in B.C. LNG—achieved in large part by devoting all the capacity from the massive and massively controversial Site C hydropower dam to powering LNG operations—buyers are no longer paying attention. Out of eight factors the survey respondents said they consider when they’re negotiating LNG contracts, low emissions and decarbonization place seventh.

Those results show the global market “signaling it wants LNG cheap and flexible, not clean,” Walker wrote. “Canadian LNG is structurally more expensive due to high transmission costs. If the market is unwilling to pay for ‘cleaner’ gas, Canada’s so-called competitive advantage evaporates.”

Richard Brooks, climate finance lead at Stand.earth, had more on the politics behind the Ksi Lisims project in a Vancouver Sun opinion piece.

India Leapfrogs Into Solar

Meanwhile, observers and analysts are beginning to weigh in on India’s rapid rush into renewable energy. At the COP26 summit in Glasgow in 2021, Modi pledged to install 500 gigawatts of non-fossil electricity and meet half of the country’s power needs from renewables by 2030. Not yet five years later, the country is taking its place as the world’s second electrostate and shifting to renewables even faster than China did at the equivalent stage of economic development.

“India is harnessing some of the cheapest solar in the world to power its industrial rise—bypassing an expensive, insecure, fossil-burning interlude,” Kingsmill Bond, director and energy strategist at the Ember clean energy think tank, and ReNew CEO Sumant Sinha wrote for Climate & Capital Media late last month. “Where China and the West took the long road to the energy future, India is taking a shortcut.”

That road won’t necessarily be smooth. This week, Bloomberg News is reporting that a 13-fold increase in India’s solar manufacturing industry since 2020 produced a “structural glut” that has shrunk the plants’ capacity utilization from more than 70% to around 40% since March 2023. “The scale of that surge prompted the government late last year to urge banks lending to the sector to exercise caution,” the news agency writes. “Manufacturers, meanwhile, are beginning to pull back from lower-value output.”

But even so, India’s big shift “has consequences, both at home and abroad,” Bond and Sinha wrote. “It offers a faster, cheaper route to growing electricity. It means greater energy sovereignty at an earlier stage of development. It can position India as a third pole of influence in a world where energy is being reshaped by electrotech and trade by Sino-American competition. Such advantages are not a foregone conclusion, but the signs are promising.”

India is taking good advantage of the “plummeting cost” of electrification technology over the last two decades, they added.

“In 2004, when China crossed 1,500 kWh of electricity use per capita, coal generation was about 10 times cheaper than nascent solar photovoltaics (PV). What followed was predictable: over the next decade, coal made up nearly 70% of the growth in China’s electricity generation,” they explained.

Now, “as India crosses 1,500 kWh of electricity use per capita, solar-plus-storage costs around half as much as new coal plants. This gap is widening as solar and battery costs fall along predictable learning curves, while coal power becomes more expensive [per kilowatt-hour] with declining utilization.”

The UK’s Ember clean energy think tank published similar results last month, concluding that India is “electrifying faster and using fewer fossil fuels per capita than China did when it was at similar levels of economic development,” Bloomberg wrote at the time. “It’s a sign that clean electricity could be the most direct way to boost growth for other developing economies, too.”

The wider implication is that “the country long assumed to be the last great engine of global oil and gas demand growth, may already be bending away from fossil fuels faster than China did,” added Energi Media publisher Markham Hislop. “That version of India’s energy future undermines the strategic assumptions underpinning energy policy in exporting nations from the Middle East to North America, including Canada.”

The driving force behind that shift is “simple and structural,” Hislop said, citing Ember. “China had to pioneer modern electric technologies at scale. India does not. It is industrializing at a moment when solar panels, batteries, and electric vehicles are abundant, cheap, and improving every year. India is not taking a fossil detour because it no longer makes economic sense to do so.”

Which in turn led Hislop to the implications for fossil fuel exporters. “If India’s oil and gas demand really is nearing a peak, or never reaches the levels long assumed, the implications ripple outward.,” Hislop says. “For global markets. For geopolitics. And for countries like Canada that have built their long-term energy ambitions on the idea that someone, somewhere, will always need more hydrocarbons.”

None of which means there will be no demand for LNG to India in the immediate future. But the McKinsey buyers’ focus on short-term contracts shows them hedging their bets over the time span that Canadian exporters and their investors would need to break even on a new export terminal they decided on today.

In one short post last week, the Reuters news agency cited analysis by the government-funded National Institution for Transforming India that showed the country’s coal consumption more than doubling through 2050 before plummeting sharply in the shift to clean energy. But that conclusion was based on a largely discredited IEA model, reintroduced last fall after extensive arm-twisting by the Trump administration, that assumes no new government action on climate change or the energy transition through mid-century, resulting in rising oil and gas demand through 2050 and 3°C average global warming.

“Trump has pressured the IEA to resurrect a zombie scenario from the past—the Current Policies Scenario, in which the current momentum of the energy transition evaporates,” Climate Analytics CEO Bill Hare said at the time. “This is an unrealistic assumption when we look at the progress renewables are making around the world. And even if the CPS were realized, it only shows that Trump’s vision is a disaster for the economy, household bills, and the climate.”