www.cgai.ca 2019 • VOLUME XVII • ISSUE II A publication of the Canadian Global Affairs Institute IN THIS ISSUE: LNG: Caught in the Web of Opposition to Energy Projects by MONICA GATTINGER 8 First Nations, LNG Canada, and the Politics of Anti-Pipeline Protests by WILFRID GREAVES and WHITNEY LACKENBAUER 14 Energy in Canadian Foreign Policy by JEAN-SÉBASTIEN RIOUX 43 Royal Canadian Air Force Image Gallery DEFENCE PROCUREMENT IN CANADA’S 43RD PARLIAMENT 6TH ANNUAL DEFENCE PROCUREMENT CONFERENCE NOVEMBER 20, 2019 | CHATEAU LAURIER OTTAWA, ONTARIO www.cgai.ca Published by the Canadian Global Affairs Institute Contributing Fellows: Art Agnew Monica Gattinger Beat Nobs Ken Barker Sarah Goldfeder Roy Norton John Barrett Andrew Griffith Kevin O’Shea David Bercuson Marius Grinius David Perry Kevin Birn Robert Hage Vanja Petricevic Jean-Christophe Boucher Benjamin Hautecouverture George Petrolekas Brett Boudreau David Higgins Jeff Philips Brian Bow Roger Hilton Joël Plouffe Andrew Caddell Rolf Holmboe Andrew Rasiulis Phil Calvert Deanna Horton Tom Ring David Carment Andrew House Chris W.J. Roberts Anthony Cary Rob Huebert Colin Robertson Andrea Charron Peter Jones Lindsay Rodman Michael Cleland Thomas Juneau Stephen Saideman Jeffrey Collins Amy Karam Hugh Segal Howard Coombs Tom Keenan Bill Sigler Lindsay Coombs Brian Kingston Per Sjögren Barry Cooper Adam Lajeunesse Elinor Sloan Daryl Copeland Eugene Lang Sarah Smith Jocelyn Coulon Gavin Liddy Gary Soroka Glenn Davidson Julian Lindley-French Hugh Stephens Francisco Suárez Dávila Matthew Lombardi Alan Stephenson Mike Day Randolph Mank Kelly Sundberg Ferry de Kerckhove Barbara Martin Denis Thompson Douglas Dempster Kyle Matthews James Trottier Jim Donihee Dennis McConaghy Heidi Tworek Timothy Dunne Eric Miller Stéfanie von Hlatky Ross Fetterly Robert Muggah Ron Wallace Matthew Fisher Stephen Nagy Charity Weeden Patricia Fortier Michael Nesbitt John Weekes Frédérick Gagnon David Curtis Wright Carol Wise Prepared for the Canadian Global Affairs Institute 1800, 421 – 7th Avenue S.W. Calgary, Alberta T2P 4K9 www.cgai.ca ©2019 Canadian Global Affairs Institute| ISBN: 978-1-77397-094-3 Volume XVII • Issue II The Global Exchange | 3 I N S I D E 2019 | VOLUME XVII • ISSUE II 6 35 Introduction: LNG’s Potential in A Study of Liquefied Natural Gas Canada’s Future Development in Australia and by CHRISTY CLARK Requisite Learnings for Canada by KELLY J. OGLE 8 LNG: Caught in the Web of 43 Opposition to Energy Projects Energy in Canadian Foreign Policy: by MONICA GATTINGER Missing the [LNG] Train by JEAN-SÉBASTIEN RIOUX 14 First Nations, LNG Canada, and the 49 Politics of Anti-Pipeline Protests China’s LNG Market: Past, Present by WILFRID GREAVES AND and Future WHITNEY LACKENBAUER by WENRAN JIANG 21 55 LNG Trade and Market Shifts The Case for Carbon Offsets and by GEOFFREY CANN Trading in B.C. and Canada’s Climate Framework 28 by ROB SEELEY How to Manage LNG Project Risk? by MATTHEW FOSS 63 Salvaging Canadian LNG Potential by DENNIS MCCONAGHY AND RON WALLACE 4 | The Global Exchange 2019 CGAI Advisory Council Rona Ambrose Hon. Rona Ambrose is a former leader of Canada’s Official Opposition in the House of Commons, former leader of the Conservative Party of Canada and currently, a Global Fellow at the Woodrow Wilson Center’s Canada Institute in Washington D.C. Ian Brodie Former Chief of Staff to Prime Minister Stephen Harper and currently, an Associate Professor of Law & Justice at the University of Calgary. Jean Charest Hon. Jean Charest is a former Premier of Quebec and Federal Cabinet Minister and currently, a Partner at McCarthy Tétrault LLP. Laura Dawson Director of the Canada Institute at the Woodrow Wilson Center in Washington D.C. Bruce Donaldson Vice Admiral (Ret’d) Donaldson, is a 36 year veteran of the Royal Canadian Navy, a member of the Royal Roads University Board of Governors and chairs the Salvation Army Advisory Board in Greater Victoria. Richard Fadden National Security Advisor to the Prime Minister from 2015—2016, and from 2009—2013, Director of the Canadian Security Intelligence Services. Janice MacKinnon Executive Fellow at the University of Calgary’s School of Public Policy and a Professor of fiscal policy at the School of Public Health at the University of Saskatchewan. John Manley Hon. John Manley is President and CEO of the Business Council of Canada and former Deputy Prime Minister of Canada. Jack Mintz President’s Fellow of the School of Public Policy at the University of Calgary, and is Chair and Vice-President of the Social Sciences and Humanities Research Council of Canada. Kathleen Monk Former Director of Strategic Communications for former NDP leader Jack Layton and currently, a Principal with Earnscliffe Strategy Group. Marie-Lucie Morin National Security Advisor to the Prime Minister from 2008 to 2009 before becoming an Executive Director at the World Bank. Bob Rae Hon. Bob Rae, former Premier of Ontario and was the interim leader of the Liberal Party of Canada. Partner at OKT—Olthuis Kleer Townshend LLP. Jeffery Simpson Former Globe and Mail national affairs columnist, Senior Fellow at the University of Ottawa Graduate School of Public and International Affairs and an Officer of the Order of Canada. Brad Wall Hon. Brad Wall is former Premier of Saskatchewan (2007-2018) and leader of the Saskatchewan Party (2004-2018). Chris Waddell Associate Professor and Director of Carleton University’s School of Journalism and Communications. Rob Wright Canada’s Ambassador to China from 2005—2009 and Ambassador to Japan from 2001—2005. Volume XVII • Issue II The Global Exchange | 5 Introduction: LNG’s Potential in Canada’s Future by CHRISTY CLARK hen Alberta Premier Peter Lougheed We will produce the lowest emission LNG in founded the Alberta Energy the world. W Company in 1973, even he may not have imagined the colossal impact the oil The Paris agreement explicitly encourages sands would have on Canada: today, an developed countries to export products that annual contribution of $14 Billion to our GDP. will reduce emissions overseas. If we make use of it, exporting LNG could be recognized as the When I became Premier of British Columbia, I biggest contribution Canada has ever made to looked to his example. fighting climate change. I believed, and still do, that with liquefied Unfortunately, the list of reasons not to invest in natural gas, Canada has a chance to create an the resource sector in Canada is growing faster industry whose value to the economy and than our advantages. Canadian workers could be almost as large as that of the oil sands. The tangle of regulation is much heavier than it was in 1973. We now have the most expensive, time Imagine if that $14 Billion in annual oil sands consuming, regulatory process in the world. contribution grew to $25 Billion with new revenues from LNG. The impact on every The botched implementation of a national citizen would be felt in the form of lower taxes, carbon tax has added massive uncertainty for higher wages, better health care, and better investors. Rising taxes in Canada vs. tax cuts schools. south of the border have further chipped away at our competitiveness. Citizens in Asia and South Asia are demanding cleaner air. This is putting intense pressure on We were once globally known to be a governments to convert from coal to natural gas – a dependable trading partner and a safe product that is 30 – 40 per cent cleaner. investment destination - not anymore. The result: LNG demand will continue to increase until In late 2017, Shell announced final approval for 2040 – even as demand for oil flattens. its LNG project in Kitimat – a project that our government had championed since 2011. But, like Peter Lougheed, do Canadian Since then, Petronas and several other of the politicians have a plan to get our country into largest LNG investors have pulled the plug. this lucrative game? The others are on indefinite hold. Many suspect it’s “one and done” for new Canada has significant advantages. Our governments in B.C. and Ottawa. proximity to the world’s biggest markets means shorter transit times and faster turn arounds. Perhaps it just seems too hard to them. There We host a well educated population and we is no denying that it took enormous are governed by the rule of law. commitment to shepherd along the 19 LNG 6 | The Global Exchange 2019 projects that were once in the approvals amongst the very best in the world. With process. political will and an appetite to embrace gas the way Premier Lougheed once championed We led dozens of trade missions to open oil, we can still put the wealth of Western markets for our natural gas. We created new Canadian gas to work for the good of all tax and environmental legislation. We invested Canadians. in new infrastructure and skills training to grow the workforce and reduce the risk of capital The papers that follow will be essential pieces cost inflation due to labour shortages. We also for policy makers as they map out the path to negotiated 60 agreements with First Nations Canada’s next great economic transformation. along the LNG right of way. This last element was vital because, in B.C., most First Nations don’t have treaties. CHRISTY CLARK is the former-Premier of British Columbia. When Ms. Clark left office, British Columbia had been Canada’s economic leader for three years running—the first time that has In their absence, those agreements are the happened since the 1960s. B.C. went from being ninth in job underpinning of the strong indigenous support creation to first among provinces. And, after inheriting a deficit of that exists for LNG today. Most indigenous $1.2 billion, her government went on to balance five consecutive budgets.