Lessons for Canada to be learned from Australian liquefied natural gas development

In 1964, liquefied natural gas (LNG) cargo was delivered for the first time from Algeria to the United Kingdom. Today, there are more than 400 trade routes and upwards of 50 countries participating in the global LNG trade. For a time in 2018, Australia overtook Qatar as the world’s largest exporter of LNG. Alberta and British Columbia hold similar potential, and the announcement in October 2018 of the LNG Canada project (the largest capital project in Canadian history) was a first step towards play in the global LNG game. However, at present, Canadian gas is completely landlocked, lacking pipeline infrastructure from Canadian gas fields to tidewater. What circumstances allowed Australia to become the biggest player in the global LNG business? Perhaps more importantly, why hasn’t Canada? Australia’s LNG development did not happen without its challenges. Relatively compressed timetables, cost inflation, and labour shortages led to delays in almost all energy projects. Rapidly increasing raw material costs, particularly steel, also raised costs of early LNG projects. Some of Australia’s woes were self-inflicted. State governments in Victoria, New South Wales, the Northern Territory, and Tasmania legislated moratoriums on gas development creating regional gas shortages. As a result, in 2017, then-prime minister Malcolm Turnbull initiated the Australia Domestic Gas Security Mechanism (ADGSM), giving the minister of resources the authority to curb Australia’s LNG exports. Industrial gas users praised the plan while the natural gas industry voiced strong opposition, considering the policy damaging to Australia’s reputation as a dependable global LNG supplier. However, in 2011 the Council of Australian Governments (COAG) established the Standing Council on Energy (SCE). The SCE was comprised of representatives of the commonwealth, state, and territorial governments who co-operate to harmonize energy policy, legislation, and market rules. Subsequent legislation is administered by each Australian state and territory, and the commonwealth, with some variations between jurisdictions. In 2014, the SCE became the COAG Energy Council with a collaboration mandate for development of an integrated and coherent national energy policy. The council meets twice a year and discusses and advises on stakeholder engagement, resources and markets, and market reforms. Additionally, in late 2018, a task force of commonwealth, the states, and the Northern Territory governments released a non-partisan initiative to deliver a resources sector roadmap. The Resources 2030 Taskforce was created to help the resource sector advance and be more globally competitive in the medium to long term. The report criticized federal and state governments for not collaborating on much-needed policies to promote exploration and called for more streamlined regulations that avoid unnecessary duplication. These efforts were not in vain. Why did Australia react so much faster to the global LNG business? The major reason is geographic. All of Australia’s states and territories border oceans, coastal terrain is conducive to large, industrial projects, and there is a long history of selling commodities to Asian markets via coastline. Furthermore, unlike Canada, there are no interstate borders to trade and Australia’s offshore LNG export capacity does not face the challenges (physical and societal) of traversing several mountain ranges and communities. The majority of Australia’s natural gas is located offshore in Western Australia and the Northern Territory. Four gas basins account for almost 90 per cent of total estimated resources. The establishment of the COAG Energy Council in 2014, combining federal, state, territorial, and municipal policymakers was a step in the right direction. Harmonizing energy policy, legislation, and market rules and regulatory streamlining was beneficial. But has it been effective? The council’s approach is based on several principles: promoting the interests of electricity and gas consumers; overseeing competitive electricity and gas markets and effective regulation of network monopoly infrastructure; greater productivity, energy efficiency and sustainability; industry and stakeholder participation in policy development and implementation; and regulatory and governance reform to streamline processes and decision-making and deliver outcomes more efficiently and consistently. Structured collaboration to advance defined national interests along with Australia’s geographic advantages have certainly paid off. And is something Canada should learn from. Siloed regions and pressure from communities, environmentalists, and overarching federal policies are turning the Canadian courts into the regulator. Perhaps a national body such as Australia’s COAG Energy Council could help solve some of Canada’s infrastructure and resource development gridlock. Canadian LNG delivered to global markets will be the lowest GHG-emitting gas in the world, and natural gas will be a significant component of the global transition to a lower carbon future. Canada has a moral obligation to provide the rest of the world with responsibly developed energy to improve lives and preserve the environment. All levels of government and Canadians should support LNG development. If not, Canada will miss a great nation-building opportunity. An overarching strategic and pan-national resource policy arm is a must. Kelly J. Ogle is president and CEO of the Canadian Global Affairs Institute. The Hill Times

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Lessons for Canada to be learned from Australian liquefied natural gas development

Canada has a moral obligation to provide the rest of the world with responsibly developed energy to improve lives and preserve the environment.

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