Prime Minister Justin Trudeau and his German counterpart, Chancellor Olaf Scholz, appeared to pour cold water on the idea of shipping Canadian natural gas to Europe when asked about the proposal on Monday.
At a press conference in Montreal, the two leaders instead suggested that their priority was to develop cleaner energy sources like green hydrogen in Canada for export to Europe to help solve the continent’s energy crisis.
While not ruling out the role of Canadian natural gas in alleviating the energy shortage in Europe, Trudeau said there was not yet a clear business case for building a terminal. exporting liquefied natural gas to Saint John, New Brunswick or elsewhere.
Trudeau said natural gas should be shipped by pipeline from western Canadian gas fields to an as-yet-unbuilt liquefaction terminal on the Atlantic coast.
It would be an expensive undertaking and may not be a prudent investment, given Europe’s commitment to a rapid transition to a cleaner economy, Trudeau said.
“One of the challenges with LNG is the amount of investment needed to build infrastructure for it,” he said.
“There has never been a strong business case because of the distance from the gas deposits, because of the need to transport that gas long distances before liquefaction.”
Trudeau said private companies are investigating whether such multi-billion dollar investments would be helpful in this “new context.”
The war in Ukraine has disrupted the global energy market.
Russia, a major supplier of natural gas to Europe, has been accused of withholding some of its supply to retaliate against crippling sanctions imposed by Western countries, including Germany, over its unprovoked attack on Ukraine .
To reduce Europe’s dependence on Russian gas, observers have floated the idea of shipping some of Canada’s abundant natural gas across the Atlantic to terminals in Germany.
But because Canada has been slow to develop proposed LNG sites in the Atlantic provinces, that scenario is unlikely to materialize any time soon.
Trudeau said Canada will continue with LNG projects already under construction on the country’s west coast, terminals that will supply gas to another energy-starved region: Asia.
With more gas coming from Canada, other major suppliers, such as Qatar, would have a freer hand to send their product to Germany and other European countries, he said.
“Right now, our best [solution] is to continue to contribute to the global market, to move gas and energy that Germany and Europe can then locate from other sources,” Trudeau said.
Scholz said Germany wants to help Canada develop its hydrogen production capacity — it’s still a nascent industry with very little production going — so it can eventually exploit the resource.
Trudeau and Scholz will travel to Newfoundland and Labrador on Tuesday to meet with companies there that are launching new hydrogen projects that could eventually provide power to Europe.
Germany is interested in “green” hydrogen – a form of fuel that is produced by electrolysis with no resulting emissions.
In a recent report, Canada’s Environment Commissioner, Jerry DeMarco, found that the actual annual production of hydrogen in Canada is only about 3 megatons – almost all of which is “grey” hydrogen. “, a dirtier form that produces about twice the emissions of natural gas. .
The commissioner said there were doubts about whether hydrogen could play a meaningful role in Canada in the short term, as very little of the necessary infrastructure – such as hydrogen pipelines and liquefaction plants – is in place.
Green hydrogen is also prohibitively expensive. A gigajoule of natural gas costs about $3.79 to produce, while a gigajoule of green hydrogen costs more than $60 if produced from electricity from renewable sources such as wind and solar , noted the commissioner.
But Scholz said rapid technological innovation is possible and hydrogen could soon be a crucial energy source for major industrial economies.
“What we’re doing right now is stepping them up, which would really change the world of industry and production on a global scale,” he said.
“It’s like every other industrial process in the past. It starts off slow but there is a point where, from one day to the next, there’s a big scaling up because so many different industries decided they had to change.”