Toronto | Treaty Lands and Territory of the Mississaugas of the Credit First Nation, and the traditional territory of the Anishinaabeg, the Haudenosaunee, and the Wendat – Today’s LNG deal with Germany is further evidence of the shaky ground that LNG projects are on. This is not an export success story deserving of hype. This deal doesn’t solve any of the core problems with Ksi Lisims LNG project. This project is still legally contested by impacted Indigenous communities, has lacked investment for over a decade and will leak toxic methane pollution across the supply chain. The federal government is trying to drum up hype over a deal that lacks real substance.

Meanwhile, the economics behind new LNG projects are going from bad to worse. Asian countries are ramping up renewables because it is cheaper, more secure and more reliable, while the war in the Middle East continues to drive sharp swings in LNG prices.

Canadians will be left to pay the price for the mistake of doubling down on gas exports and tying more of our gas supply to global markets. Shipping LNG overseas means higher energy prices here at home. That’s on top of tax dollars that have already gone to LNG companies, with potentially more public money on the way.

Background

• Today, Minister Hodgson announced a deal between Ksi Lisims and the state-owned Germany company SEFE (Securing Energy for Europe).
• The shipments will not be physically shipped from Canada to Germany. The deal suggests that SEFE has signed a long-term purchase agreement for Canadian LNG cargoes, which are typically delivered to Asian markets. Global commodity traders or SEFE can swap equivalent LNG volumes elsewhere in the world. For example, a shipment of LNG leaves from Ksi Lisims to Japan. A U.S Gulf Coast shipment that otherwise would have gone to Asia is redirected to Europe. A financial settlement occurs between traders to balance the value difference. This kind of deal is common in gas markets but it is associated with increases in domestic gas prices. This has been the experience in the USA and Australia. See here and here for an analysis.
• Ksi Lisims has a lifetime export capacity of 480 million tonnes of LNG. Today’s announcement, combined with the 2024 and 2025 offtakes from Shell and Total Energies take the purchased capacity to 100 MTPA, just over 20% of the project’s lifetime capacity.
• LNG is made almost entirely of methane, which is a greenhouse gas which can create effects exceeding 100 times the warming effect of carbon dioxide. Methane has also contributed two-thirds as much warming as CO₂ since the Industrial Revolution.
• The claim that LNG from Ksi Lisims is 94 per cent lower emissions than LNG produced elsewhere in the world by different methods is misleading. It refers to just the process where gas is supercooled into a liquid, which represents between 6 to 10 per cent of the total lifecycle emissions of the fuel.

ABOUT ENVIRONMENTAL DEFENCE (environmentaldefence.ca): Environmental Defence is a leading Canadian environmental advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.

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For more information or to request an interview, please contact:

Lauren Thomas, Environmental Defence, media@environmentaldefence.ca,