Natural Gas

The Canada West Foundation has released a report that delves into the world of natural gas, explaining its economic benefits for Canada over the past 50 years, and its value as a foundational fuel for our energy systems going forward. Sound policy decisions will ensure that natural gas continues to be a cost effective and stable energy alternative as we move toward a carbon reduced future, says the Foundation. Seismic Shifts: The Changing World of Natural Gas by Michael Cleland, Nexen Executive-in-Residence, examines the future of natural gas from the perspective of both consumers and producers.

Natural Gas accounts for about one-quarter of Canadian energy end use as well as a growing share of fuel for power generation. Canada’s natural gas world is changing: potentially underpinning a truly sustainable twenty-first century energy revolution, potentially growing bigger as we reach to other markets, and continuing to generate economic opportunities and fiscal returns to governments. Natural gas has been good for Canada for over half a century. With sound public policy, it will continue to be good for Canada far into the century ahead.

Seismic Shifts concludes that natural gas is not a “bridging” fuel, but rather a stable foundational fuel that will remain a part of the energy mix in the future. “Although the energy landscape in Canada is shifting with new technologies and resources, the future of natural gas is extremely positive for consumers. Lower costs underpin the competiveness of the Canadian economy, and in addition to being affordable, natural gas is abundant and reliable and can significantly reduce the environmental impact of the energy system,” author Michael Cleland explains. “While the producer’s perspective is less optimistic, Canada needs to look at both internal policies and Asian export opportunities to remain in the game.”

The Seismic Shifts paper outlines several policy directions that need to be discussed when outlining future policies that deal with this resource. These include: reaffirm the basics - markets work and we should be cautious about calls from interest groups for governments to somehow fix things; recognize natural gas as a foundation of a sustainable energy future - including one in which greenhouse gas emissions are steadily declining; keep the consumer front and centre and make sure energy policy emphasizes consumer value, safety, reliability, affordability and choice; approach carbon management through pricing rather than regulation - in an even-handed carbon pricing environment, natural gas is a strong competitor that will contribute to reducing Canada’s greenhouse gas emissions; be adaptable to future uncertainties - avoid trying to pick winners and use performance measures in preference to specified technologies when designing programs or regulations; and help Canadian producers to deal with our competitiveness challenges by facilitating access to Asian markets, making environmental approvals more efficient, and ensuring that fiscal regimes are competitive in a Canada-US context.

“Natural gas is abundant, has relatively low emissions and may be the only part of the energy system not facing increasing commodity costs in the coming decade,” said Cleland. “It is a natural foundation fuel in an increasingly carbon constrained world.” Since the policy foundations for natural gas were laid in the mid-1980s, supply sources, markets, environmental imperatives and technologies have changed. Up to this point, Canada has benefited from a successful natural gas industry, and with some refining and additions to existing policies, has the ability to succeed in the future.

This report is part of the Canada West Foundation’s Powering Up for the Future Project, which focuses on public policy challenges at the interface of the economy, the environment and energy. To download Seismic Shifts: The Changing World of Natural Gas or any other Canada West Foundation paper, visit www.cwf.ca.