Touting clean energy, PM Trudeau questions 'business case' for exporting liquefied natural gas to Europe

Pitching Canada as a reliable supplier of clean energy and a solution for European countries' reliance on Russian oil and gas, Prime Minister Justin Trudeau says he's not sold on the idea of liquefied natural gas exports being part of the long-term plan.

Speaking alongside German Chancellor Olaf Scholz at a press conference on Monday—part of a three-day visit to Canada focused on energy security and clean technology that is set to culminate with the signing of a hydrogen export deal in Newfoundland on Tuesday—Trudeau seemed to question the "business case" for pursuing LNG developments.

"We are in a situation in the short-term, where we will do what we can to contribute to the global supply of energy by increasing our capacities… And explore ways to see if it makes sense to export LNG and if there's a business case for it, to export LNG directly to Europe," Trudeau said.

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"But in the medium-term and long-term, Canada can and will position itself to be a key supplier of energy to the world in a net-zero economy. And that means investments in hydrogen, it means more investments in critical minerals… it means investments in a range of solutions."

Pressed on whether Canada is in a position to export natural gas in a liquid state to Germany, Trudeau said Canada is aware of the need to counter the energy supply crisis, but it would require a significant investment to build the infrastructure required.

"Conversion plants are usually placed close to the sources of LNG. And, as we look at the possibility of LNG plants on the east coast, able to ship directly to Germany, we find ourselves a long way from the gas fields in western Canada. It's doable, we have infrastructure around that, but we're looking very much at how we can best help," Trudeau said.

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Europe has been facing an energy supply crisis and countries are being asked to cut their gas use in the face of ongoing uncertainty around energy supply from Russia. Considerable reductions to the flow of natural gas has left countries clamouring to shore up reserve supply, and has prompted nations such as Germany to seek alternative sources.

Scholz said his country is taking steps to seek alternative energy resources and is expediting building new ports and pipelines, while also keeping in mind German climate goals.

"That is the basis on which we now talk to other countries that have the opportunities. Canada is one of them. We talk to these countries in order to help us to tap new input sources," he said.

Ahead of Scholz visiting, Trudeau said Canada was looking at ways to deliver more oil and gas to Europe "in the short term," while also plotting out how the world could move off oil and gas all together, more quickly. At the time, the prime minister indicated Canada was looking at short-term liquefied natural gas proposals that could eventually be converted to export hydrogen, which is a clean fuel alternative.

On Monday, Trudeau said Canadian companies are still talking with Germany about whether or not "the new context" now makes it worthwhile to invest in outstanding proposed but not pursed liquefied natural gas projects including in Atlantic Canada and Quebec, keeping in mind Germany also has plans to transition to cleaner energy sources.

"From the government standpoint, easing the processes—because of the difficulty that Germany is facing—to make sure that we can move through regulatory hurdles more quickly, is something we're willing to do," Trudeau said. "But there needs to be a business case. It needs to make sense for Germany."

Scholz's visit signals an evolution in Canada's energy relationship with Germany, according to Marla Orenstein, the director of Calgary-based think tank Canada West Foundation's natural resources centre.

She said that while the western Canadian energy industry isn't likely to get much of a boost this visit itself, "it continues to reaffirm Canada as a powerhouse for energy and the other resources that are really critical to the energy transition."

Orenstein cautioned, however, that any deal made during this visit or as a result of it would likely not be something that will be able to help Germany this winter or perhaps even next winter.

"There's been little appetite on the part of our federal government to have LNG export terminals built in Canada. At the same time, we also know that Germany is not ready to receive the LNG either, they don't have any ports that are built right now to receive it, so it's still going to be a couple years away for them as well," she said.

With a file from CTV National News' Judy Trinh