Week 4
Source
Problem
Canada’s plan to expand liquefied natural gas (LNG) production raises economic and environmental concerns. The key issues revolve around the opportunity cost of prioritizing LNG over renewable energy investments and the negative externalities from the increased greenhouse gas emissions.
Summary
This report talks about the environmental effects of liquefied natural gas production and how the expansion of these projects will negatively affect our environment and hinder the progress of maintaining the temperature target Canada must reach. Furthermore, the expansion of LNG has been noted to not have great economic benefits as some countries, including Qatar and the United States, already have a foothold on the market, and Canada's entrance would oversaturate the market. This article also mentions how countries in the Asian market are already noticing that the market is peaking when it comes to LNGs while also mentioning that if Canada wants to be a part of the market, it would have to incorporate itself for up to 60 years, with the potential for little economic growth.
Economic concepts
- Opportunity Cost: Opportunity costs occur when you pursue one route rather than another, the cost incurred of not pursuing option two is the opportunity cost. The investment in LNG means missing out on the chance to invest in renewable energy and other cleaner technologies. By focusing on LNG, Canada might be giving up the long-term benefits that come with building a green, sustainable energy future.
- Sustainability: Sustainability is caring about possible future repercussions to the economy and the environment that result from decisions made today. It could involve a resource or energy source we only have a limited amount of, or pollution that is a result of certain methods of production. Generally, it is better to lean towards a sustainable solution, but those are not always easy or even possible, such as with fossil fuels.
Application of concepts
- The resources going into LNG projects could be used for more sustainable and forward-thinking investments, like renewable energy. Since the demand for LNG in key markets is expected to decrease in the coming years, spending on LNG infrastructure now might not pay off in the future. Instead, investing in renewable energy—like wind, solar, or hydro—could provide better long-term returns for the economy and create more sustainable jobs. Investing in renewable energy is not only better for the environment but could also be more economically viable in the long run. As countries around the world shift toward cleaner energy, Canada could benefit by being a leader in green technology
- This article discusses the liquified natural gas (LNG) projects in Canada and how they are not leading to a sustainable future. This is because the LNG's produce greenhouse gases, which have been linked to global warming and climate change. Canada had a goal to reach 1.5°C to avoid a certain extent of the worst environmental impacts. While the LNG projects are not sustainable environmentally, they are also not sustainable economically. The LNG projects are a long term commitment, and they could be significantly less economically viable in the future. This makes LNG projects a very unsustainable option for investment, and why members of the International Institute for Sustainable Development are arguing that no more new LNG projects should be created/allowed by the Canadian government.
Prof: You describe the opportunity cost well, but then don't exactly set it out in this application section. Sustainability could have been connected better. We defined sustainability as maintaining the ability of future generations to achieve at least as good a standard of living (or more specifically level of utility) as the current generation. The article sets out reasons for concern, in that the opportunity cost of investing in LNG may be forgoing opportunities to make investments that will have higher payoffs in the future. You do link to these ideas, but I find it a bit convoluted.
Conclusion
The potential costs for Canada to expand into the LNG market seem to be more negative in nature as the cost of entering and staying in the market for decades is high. What would be used to expand the LNG projects could instead be used in the renewable sector and with the economic benefits of staying being very small due to oversaturation, the relevant analysis does not support continuing with LNG. Finally, LNG's could reverse the work done in order to maintain the sustainability goals that Canada has, and almost certainly have negative effects on climate change.