For over a decade, British Columbians across the political spectrum strove to build up the province’s liquefied natural gas industry. Just as the first LNG project in the country is set to go into production, a major competitive threat is taking shape in Alaska – governments need to act fast or risk losing our edge.
Last month, United States President Donald Trump announced plans for a prospective new massive Alaskan project worth US$44 billion that would position that state as an LNG exporter to Japan. Long thought to be too costly and impractical, the project matches Trump’s “America First” agenda.
Japan is a close U.S. ally, and one that Trump has not disparaged or threatened with punitive tariffs and Tokyo likely wants to keep it that way. Alaskan LNG would also align well with Japan’s push to increase its energy imports and security.
British Columbia is far ahead of Alaska when it comes to construction of LNG projects, but it’s up to Ottawa and B.C. to help secure a strong LNG deal with Japan. The alternative is losing a lucrative, friendly trading partner for B.C.’s natural gas exports.
Japan is one of the world’s largest importers of LNG, and is currently in the process of slowly trying to phase out coal. Finding secure and stable supplies of LNG is key.
Gestures of goodwill and agreements are already taking place between Canadian LNG players and their Japanese counterparts.
Just last month, the First Nations LNG Alliance signed a memorandum of understanding (MOU) in Tokyo with the Institute of Energy Economics, Japan, and Energy for a Secure Future, helping establish mutual interest in an LNG deal as part of Japan’s plan for energy security.
An MOU is one thing, but a trade deal is an entirely different matter, one that requires B.C. to create a friendly investment environment, and Ottawa to do the hard work of hammering out a deal and making the final decision. The longer that is delayed, the more time the U.S. has to catch up or even beat Canada to the finish line.
B.C. now hosts some of the most sustainable, Indigenous-led LNG sites in the world, like Cedar LNG, Ksi Lisims LNG, and Woodfibre LNG. They are not yet fully operational, with Cedar LNG set to begin production in 2028. All are strongly backed by local first nations on whose territories the projects are located. Cedar LNG has received its environmental seal of approval, being powered by the province’s hydroelectricity, keeping its emissions to a minimum.
Canadian LNG is a perfect fit for Japan’s energy plans. All it needs now is for B.C. to clear away obstacles impeding private investment, and for Canada’s federal government to sit down with its Japanese counterparts.
US aggressively lobbying Japan to sign Alaskan deal
Exporting LNG from Alaska to Asia is not a new idea, but it has never come to fruition due to the astronomical costs and physical challenges of the state’s frozen, rugged landscape. However, Trump’s administration is determined to ramp up energy exports and is not afraid to push allies like Taiwan, South Korea, and Japan into purchasing more American fossil fuels.
The proposed Alaska LNG project would require a pipeline more than 800 miles long from northern Alaska to the state’s southern coast. When operational, it could cut out exports from B.C. entirely.
Tokyo has been reluctant to undertake the project in the past because of the enormous costs that would be partially borne by Japan. Co-chair of the Trump-appointed National Energy Dominance Council, Doug Burgum, has been very aggressive in lobbying the Japanese Prime Minister, Shigeru Ishiba, to finally get on board with the project to reduce reliance on oil and gas exports from the Middle East.
BC slow in building LNG capacity
While Canada has been building its LNG capacity, it has been slow. The decade between 2011 and 2022 saw 18 proposals for export facilities in B.C. Just one has substantially progressed.
The existing regulatory regime in Canada, lobbying from environmental NGOs, and Clean BC’s near-zero emission targets have created market uncertainty and resulted in delays and cancellations on B.C. and other Canadian energy projects.
In B.C., LNG Canada phase one is scheduled to begin production this year, but moving swiftly to phase two, which is already permitted, would essentially double capacity. Blocking the way are Clean BC standards stipulating liquified gas production must be powered by hydro-electricity, despite the province lacking the transmission infrastructure and energy-generating capacity to supply it.
Asked if the BC NDP government would consider relaxing environmental targets to allow gas-powered LNG manufacturing for phase two to come on stream faster, B.C. Energy Minister Adrian Dix sidestepped the question.
“A lot of these issues are issues that have already been addressed in [environmental assessment] and permitting processes. But absolutely, we’re going to continue to be committed to economic development, energy development, having high levels of commitment to issues around climate change. We’re going to do both.”
Dix shrugged off any role the province could play in encouraging private investment in LNG, and instead put the responsibility for progress of phase two back onto LNG Canada. “Private sector investments require private sector companies to make final investment decisions, and that’s the circumstance with LNG Canada right now.”
When asked if he was concerned British Columbia’s LNG would get eclipsed by Alaska’s products given Trump’s vow to speed the state’s LNG manufacturing, Dix told Northern Beat, “This issue has been debated for some years. You’ll recall that there were no projects approved [in B.C.] prior to 2017 and now we’ve gone forward [with] some significant projects.” He also pointed to the lower emission liquified gas produced in B.C. as “a real advantage. That’s a real credit to Cedar [LNG], to Haisla Nation, but also to LNG Canada.”
In Haisla Nation, former chief councillor and Skeena MLA, Ellis Ross, urged the B.C. government to take action on phase two.
“Phase 1 is powered by natural gas. phase 2 was to go with natural gas again or electric drives. Electric drives need huge amounts of electricity that BC doesn’t have. Natural gas is dependable but not within Clean BC targets.
“What will it be?” he asked in an X post.
BC needs to back up competitive edge with action
In the meantime, Japan’s Mitsubishi, 15 per cent owner of LNG Canada, mulls over the business case of investing in phase two, and the U.S. plows ahead building several LNG terminals along the Gulf Coast – which could soon be joined by one in Alaska.
Canada’s comparative advantage is that the route for LNG exports from the Gulf Coast to Japan is far longer than the distance from Kitimat to Japan. Gulf Coast LNG must travel through the Panama Canal before reaching the Pacific, while LNG from B.C. is a simple, direct shot across the ocean.
This edge will only last until there’s an LNG export terminal in Alaska. It is imperative that Canada matches the efforts of first nations and industry leaders in B.C. to speed up the construction of LNG projects. If economic nationalism from the White House is the new reality, then Canada must strive to outrace the U.S. when and where it can.
B.C.’s LNG industry has low emissions and shorter routes compared to the Gulf Coast, and there is no reason why Canada should not prioritize negotiations with Japan for long- term supply deals.
If it wants to be, Canada can be Asia’s top LNG supplier in less than a year—but only if it makes it happen.