Mixed messages: Carney Liberals pledge money for LNG while bridling against industry demands

The federal Liberals are sending mixed messages about their climate commitments after a recent combination of harsh words and generous gifts for the oil and gas industry. 

Just before the election began, Energy and Natural Resources Minister Johnathan Wilkinson offered a pointed response to the fossil fuel sector’s call to party leaders in the electoral race to jettison all and any environmental or climate restraints on production. 

In his initial response to the oil industry, Wilkinson expressed disappointment that 14 of Canada’s biggest oil and gas corporations wanted the federal government to abandon the levy on the industry’s carbon pollution, to do away with the promised cap on plant-warming emissions, and ensure new projects got approved within six months. He suggested the sector — which enjoyed record production levels and healthy profits the year prior — was looking to roll back its former support for climate policies and leverage threats emerging from south of the border for its own gain. 

Yet the following day, Wilkinson announced the Liberal government is providing $200 million to the Cedar LNG project on the West Coast, which involves two fossil fuel companies he’d just rebuked, reportedly in a bid to divert trade from the U.S. market and reduce dependency on exports there. 

The contradictions are a result of the struggle Liberals face in this election to balance the public's economic fears — spurred by Trump’s trade war threats — and the climate crisis, said Kathryn Harrison, a political science professor at the University of British Columbia. 

“We are starting to see the different ways [Liberals] are prioritizing economic concerns at the moment, and the easiest thing is to double down on [fossil fuel] projects that are already on the drawing board,” said Harrison, who specializes in climate policy. 

“The private sector seems to have been reluctant to put a lot of their own money into these projects, and that gives them a strong bargaining position when the federal government is trying to show that they can get shovels in the ground and diversify Canada's export markets.” 

Canada’s National Observer did not get a reply to repeated questions or interview requests to Wilkinson’s campaign office before publication deadline. Nor did it receive a reply from Liberal Party Leader Mark Carney’s campaign office. The Ministry of Natural Resources said in an email the department has no further comment on the funding announcement. 

Jointly owned by the Haisla Nation and the Pembina Pipeline Corporation, Cedar LNG is a floating liquefied natural gas export facility in Kitimat slated to come online in 2028. The first Indigenous-majority-owned LNG project in the world, it will be powered by B.C. Hydro’s electrical grid to reduce carbon pollution produced at the facility. 

After an initial delay, Cedar LNG secured its final investment decision in June. Aimed to serve the Asian market, the project will produce 3.3 million tonnes of gas annually — most of which is spoken for through 20-year guaranteed supply contracts with Pembina and ARC Resources that have secured 1.5 million tonnes annually each. 

LNG is a triple burden to taxpayers

In addition to the recent funding, Cedar LNG also got $500 million in loan guarantees from the Liberal government to secure its investment in the summer, said Sven Biggs, Canadian oil and gas program director for Stand.earth.

“I think it's fair to say that this project would not have gone forward without those public dollars,” he said. 

With the economy under threat and so many people struggling to make ends meet, Biggs said it's obscene to hand hundreds of millions of dollars to highly profitable oil and gas corporations like Pembina and ARC Resources when the burning of fossil fuels is driving the climate crisis. 

“We could better deploy $200 million to create jobs and boost the Canadian economy by supporting the small and medium-sized businesses that are going to face the brunt of the tariffs coming down the pipe, rather than these very large international corporations,” he said. 

Taxpayers bear a triple burden when public funds are used to subsidize oil and gas projects despite the industry’s deep pockets, Biggs said. 

Beyond footing subsidies through their taxes, people face higher energy rates to pay for new electrical infrastructure so LNG plants can stop burning gas for power to reduce their carbon emissions. Natural gas diverted to higher-paying export markets drives up domestic prices for gas, raising costs for home heating. Finally, people also shoulder increased costs for food, transportation, insurance, housing and healthcare from climate disasters like wildfires, floods and droughts. 

Indigenous ownership

The Liberals aren’t backtracking on their policy to reduce fossil fuel subsidies, said party spokesperson Carolyn Svonkin Thursday. Indigenous oil and gas projects — like Cedar LNG, which has 50.1 per cent Haisla Nation ownership — continue to be eligible for federal funding due to the party’s commitment to reconciliation and because of the lack of access to capital in Indigenous communities for energy projects, she said. 

“We are also in a moment where there are some real vulnerabilities when it comes to energy, and the fact that we rely… on the United States for 100 per cent of our gas exports.” 

Svonkin couldn’t clarify if Cedar LNG, which got a green light from financial backers and loan guarantees from Ottawa, is struggling financially — nor why the project needs further public investment if it has a viable business case. Interview requests and questions to Pembina and Cedar LNG on why the project needs further federal investment got no reply. 

The Haisla say the project is critical to creating Indigenous jobs and economic prosperity and will allow the nation to invest in their community’s well-being and culture. 

“Haisla values of sustainability and environmental protection are core to how Cedar LNG has been designed, and will result in one of the most innovative LNG facilities in North America, with one of the lowest carbon footprints in the world,” said Chief Councillor Crystal Smith in a press statement on the new funding. 

There’s significant economic uncertainty for LNG projects and what world demand for gas will look like by the end of the decade, Harrison said. 

“The International Energy Agency's last World Energy Outlook report from last fall concluded that just with the projects already under construction, as well as those already operating, there would be a significant glut of LNG capacity under all scenarios in 2030,” she said. 

And reducing the carbon footprint of LNG or oil production in Canada doesn’t eliminate the carbon pollution when those fossil fuels are burned overseas, she added. 

Biggs said there is no evidence for the common industry and government claim that LNG imports offset coal consumption in other countries and investing in fossil fuel infrastructure may displace investments in renewable energy, which is now cheaper than oil and gas. 

However, there is still significant daylight between the Liberal Party and the Conservative Party, Harrison said, noting the Tories are aligned with the oil and gas sector and fully committed to expanding fossil fuels and clawing back all climate policy. 

Regardless, the Liberal Party is unable to reconcile the continued funding of LNG projects with meeting its climate targets, Biggs said. 

“You have to view everything that has happened in the last couple of weeks through the [lens] of the election,” he said. 

“It’s hard not to think that [the funding] is about politics more than it is about good policy.”

With files from John Woodside / Canada’s National Observer and Canadian Press

Rochelle Baker / Local Journalism Initiative / Canada’s National Observer