Nation-Building or Asset Stranding: What Canada’s Latest Megaprojects Tell Us

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Canada’s second tranche of Major Projects Office investments arrives with a familiar mixture of ambition and contradiction. Ottawa has presented it as another step in a nation-building program that spans critical minerals, northern electrification, reconciliation, and export capacity. On the surface that sounds like a strategy that lines up with the energy transition and with the economic shifts that Canada needs to embrace. When you dig into the numbers and examine what the largest projects are designed to do, the picture becomes more complicated. The tension between infrastructure for the future and infrastructure for the past remains strong. The central question is whether Canada is trying to build an electrified, resilient, low-carbon economy or whether it is still pulled toward long-standing fossil export dreams dressed up with new language.

The government’s own framing is clear enough. Senior officials have repeated that Canada will need more clean electricity, more transmission, more critical mineral extraction and processing, and more infrastructure in the North. They have also stressed faster approvals and a stronger role for Indigenous ownership. In broad strokes, these goals align with long-term economic and climate objectives. The problem is not in the narrative but in the alignment of project choices with actual needs. When you examine what has been added to the MPO portfolio, the largest dollars remain tied to fossil supply chains even as the country’s stated goals point in a different direction.

The new additions fall into five clusters. The North Coast Transmission Line is presented as a major extension of BC’s grid and a bridge to Yukon. The Ksi Lisims LNG terminal and the Prince Rupert Gas Transmission line are packaged together as a large export complex. The Crawford nickel project in Ontario, the Matawinie graphite project in Quebec, and the Sisson tungsten and molybdenum project in New Brunswick form a critical minerals group. The Nukkiksautiit hydro project in Nunavut offers a small but important piece of clean northern electrification. Each on its own looks like a reasonable candidate for federal coordination. The challenge is that in capital terms the grouping is not balanced.

When the dollars are tallied, the LNG complex overwhelms the rest of the slate. Ksi Lisims and its pipeline likely represent more than thirty billion dollars of capital. The dedicated 95 km power line adds more. The first phases of the North Coast Transmission Line add another few billion. Everything else in the clean or strategic category is modest by comparison. The critical mineral projects each sit in the one to five billion dollar range. The Nunavut hydro project is a half billion dollar asset at most. The result is that in the second tranche, most of the capital is directed toward fossil export infrastructure with a long life and a narrow set of domestic benefits. When you step back from the marketing and examine proportionality, the weighting is clear.

The scale of governmental largesse flowing toward the two LNG terminals and their associated infrastructure is difficult to miss. Both federal and provincial governments have opened multiple channels of support that go well beyond ordinary industrial policy. BC Hydro has reshaped its tariff framework in ways that shift system costs away from LNG loads and onto other users. The province is fast-tracking grid expansions, power lines and policy exemptions primarily to serve the terminals. The Canada Infrastructure Bank is providing concessional financing for transmission, and federal agencies are preparing Indigenous loan guarantees that will carry significant public risk. Earlier fiscal measures for LNG Canada included tax relief, carbon-tax rebates and accelerated depreciation, and similar structures will likely surround Ksi Lisims as details emerge. When governments subsidise electricity, pipelines, borrowing costs and regulatory pathways in combination, the public ends up carrying a large share of the financial burden while private investors retain the upside. The concentration of support behind LNG compared to other sectors shows how far public policy has tilted toward making these projects viable in a market that may not support them.

Transmission is an important part of this discussion. Canada needs far more long-distance interconnection and regional balancing capacity. Major industry and electrified heat need dependable power. Large volumes of variable renewables need wide geographic balancing and large hydro reservoirs need east-west paths to deliver flexibility. The North Coast Transmission Line can play a real role in supporting communities and mining clusters in northwestern BC, but its schedule and priority have been shaped by LNG anchor loads. Instead of being part of a coordinated national grid plan, it is serving a resource corridor logic that has been common for decades. The country still does not have a plan for a cross-Canada HVDC backbone that would support clean economic growth across regions rather than funnel electricity toward a single export terminal.

Mark Carney’s recent speech to the business community in Toronto adds another layer to the story. He emphasised electricity and transmission as central to economic growth. He talked about accelerating major projects and finding ways to relieve bottlenecks. He downplayed oil pipeline expansion and argued that LNG could play a climate role if it displaced coal abroad. His remarks attempted to merge an idea of Canada as a clean power economy with an idea of Canada as an energy exporter in traditional terms. The problem is that the two ideas do not sit easily together. LNG can only be climate aligned if global demand falls so quickly that new export terminals are used sparingly or become stranded. If the world moves at the speed needed for climate outcomes, LNG infrastructure built in the late 2020s will not enjoy the high utilisation that investors count on. If the world instead locks in long-term LNG consumption, global climate targets become unreachable. Carney’s energy policy vision attempts to hold both options at once, but the economic logic does not bend that way.

The lifetime emissions from Canada’s two Pacific LNG terminals place them among the largest single industrial carbon sources ever proposed in the country. Using the same method that I applied to LNG Canada, which measures the entire chain from wellhead to combustion abroad, LNG Canada Phase 1 at 14 million tons per year produces about 46 million tons of CO₂e annually, leading to roughly 1.8 billion tons over 40 years and more than 2.2 billion tons over 50 years. Ksi Lisims, even with electrified liquefaction, still moves similar volumes of gas and delivers a full-chain footprint of about 37 to 39 million tons per year, or about 1.5 billion tons over 40 years and close to 2 billion tons over 50 years. These numbers are driven almost entirely by the CO₂ released when the gas is burned in foreign power plants and industries rather than by emissions inside Canada. When added together, the two terminals would enable well over 4 billion tons of global emissions if operated at nameplate capacity for a typical project life, which raises questions about how any national climate strategy can reconcile that outcome with stated emissions targets.

There are multiple studies that question simplistic claims that LNG always offers a climate benefit, especially when the full lifecycle is considered and when shorter timeframes or high methane emissions are used. One major study by Howarth shows that using a 20-year global warming potential (GWP20), the full well-to-consumption footprint of LNG can be worse than coal, driven primarily by upstream methane leaks and long transport. Another technical paper found that methane slip from LNG shipping engines remains significant: for example, newbuild LNG engines recorded methane slip rates around 2.8 g/kWh, which can undermine any downstream CO₂ benefit. Many of the more favourable results for LNG depend on using GWP100 (which treats methane’s long-term impact as lower) rather than GWP20 (which better reflects near-term warming). Only in the best case scenarios—low methane leakage, short transport distance, high-efficiency liquefaction, and favourable end-use substitution—does LNG begin to show climate upside. The reality is that in many real-world supply chains the assumptions needed to make LNG climate-positive simply do not hold.

A recent ruling by the International Court of Justice has added a new layer of risk for any country that builds large fossil export infrastructure. The Court found that states can be held responsible for the foreseeable climate harm caused by emissions from fossil fuels they extract and export, even when those emissions occur outside their borders. This principle of national culpability for offshore emissions is now part of emerging international climate law. For Canada, which is concentrating political capital, regulatory attention and public financing on two very large LNG export terminals, the implications are significant. If these projects enable billions of tons of emissions abroad, and if global climate impacts continue to worsen, legal liability for those exported emissions is no longer a theoretical concern. The effort being invested in LNG as a national priority could translate into exposure under future international claims or treaty frameworks. Policymakers should recognise that building infrastructure that drives large offshore emissions is not just an economic or climate gamble but a legal one as well.

Ksi Lisims is presented as an Indigenous led, hydro powered, low emission LNG project. A closer look shows a different picture. The project is led by Houston-based Western LNG, which holds the majority of equity in the export-terminal structure and is listed as the owner of a wholly-owned Canadian subsidiary for the Ksi Lisims LNG facility. At the executive level, Western’s founder and CEO, Davis Thames, previously held senior commercial and finance roles at Cheniere Energy and earlier worked for Enron. U.S. private-equity backers of the project include firms such as Blackstone and Apollo Global Management, each of which has documented links to the Trump administration and major Republican campaign finance networks. These ownership details raise questions about the alignment of Canadian national interest, the domestic benefits of the project and whether governance checks are sufficient given the high public exposure. So much for elbows up.

The LNG plant is designed as a floating barge unit constructed overseas and brought to BC for installation. That sharply limits Canadian engineering and fabrication roles and reduces long term local employment. Canadian public exposure shows up instead in the PRGT pipeline, the dedicated power line, the tariff adjustments inside BC Hydro, and a transmission system that must be sized around the terminal’s load. If global LNG markets weaken, the barge can be moved to another location while the sunk domestic assets stay behind. The highest risk stays on the public side while the mobile asset retains flexibility. That is not a great design for Canadian industrial strategy.

Early signs from Kitimat suggest that the local consequences of LNG production are already being felt while the economic upside largely leaves the region. Residents have reported higher respiratory irritation, disturbed sleep during flaring events and short-term spikes in nitrogen dioxide above provincial objectives. Independent modelling indicates that a second phase of LNG Canada would push peak NO₂ levels well beyond national guidelines in a valley that already struggles with the emissions profile of the aluminum smelter. These impacts are not abstract and they are not exportable. They remain in the community long after the gas is shipped overseas and the profits flow to foreign owners. It is reasonable to expect that a second large terminal on the coast, backed by offshore fabrication and foreign capital, would create a similar pattern. The revenue streams and ownership rewards will exit Canada, but the air quality burden and associated health impacts will stay in Canada, concentrated in communities with little capacity to absorb them.

Critical minerals projects stand in clear contrast. The Crawford nickel project, the Matawinie graphite operation and the Sisson tungsten and molybdenum mine all plug directly into supply chains for batteries, motors, alloys and defence materials. They offer a path from extraction to processing and, in some cases, to domestic manufacturing nodes. These projects may not be as large in absolute terms, but they point toward durable value. The Nunavut hydro project also falls into this category. It replaces diesel, strengthens northern resilience, improves local economic prospects and lays the groundwork for clean growth. These are the kinds of projects that match the government’s stated objectives and create future aligned economic foundations.

The subsidy picture reinforces the imbalance. Critical mineral projects receive the Critical Mineral Investment Tax Credit and, in some cases, CCUS credits for tailings. They have access to federal equity or loans through the Canada Growth Fund or Export Development Canada. The Nunavut hydro project fits easily under Arctic infrastructure funds. LNG projects also benefit from the same clean economy credits where they apply, but they receive structural support in the form of BC Hydro rates that shift costs to other users, loan guarantees for equity stakes, and prioritised transmission alignment. The largest public commitments in this space are not direct cheques but system level concessions that enable LNG to be supplied with firm power at costs that do not reflect full system burden.

The larger question is whether the LNG terminals themselves are likely to earn the long-term revenues assumed in their pitch materials. The evidence from global markets suggests that they will struggle. India’s gas fired generation fell by more than 30% in the first half of 2025 as solar, wind and batteries expanded and imported LNG remained expensive. China’s LNG imports fell by close to 20% year on year as domestic production and Russian pipelines grew and renewables multiplied. These were the two markets most often cited as the drivers of new LNG demand. At the same time, the United States, Qatar, Mozambique and others brought large volumes of new liquefaction capacity into construction and operation. Analysts at IEEFA have pointed out that more than 190 million tons per year of new LNG supply will enter the market this decade, far more than plausible demand growth. IISD has calculated that Canadian LNG export costs are significantly higher than US Gulf Coast costs, which means Canada will be pushed to the margin in any oversupplied environment. Global Energy Monitor has warned that a mid-decade supply boom may create long periods of low prices and under-utilisation. When you combine weakening demand in Asia with rising global supply, the most likely outcome is that new Canadian LNG terminals will operate below capacity or become stranded assets.

This creates the odd situation where the only climate aligned path for Canada’s LNG expansion is the one in which the terminals do not succeed as export engines. If global LNG demand collapses fast enough to match climate goals, the terminals will face economic pressure and potential early write-downs. If global LNG demand remains high enough to justify the terminals’ utilisation, climate targets are off the table. That is not a coherent national strategy. It reflects a tension between two visions that have not yet been reconciled.

When I compare the first and second MPO tranches to my earlier assessment, the pattern becomes clear. There are bright spots in critical minerals, northern clean power and transmission, but the largest single blocks of capital remain tied to fossil pathways. Canada is still trying to push LNG into a market that is shifting away from it. At the same time, the country has not built the transmission backbone that would support electrified industry, renewable growth and regional balancing. The promising pieces are present, but they have not been elevated to the scale that the country needs.

A cross-Canada HVDC spine, something the budget unlocks the potential for but does not address directly as I noted recently, calling for a second golden spike for national unity, would change that. Budget tools already exist to support incremental HVDC expansion. Provinces could link hydro reservoirs, variable wind, solar resources, and industrial clusters. This would support major loads without relying on fossil anchors. It would make clean industrial development in the prairies and central Canada far more realistic. It would reduce congestion, increase reliability and create a platform for the next generation of clean manufacturing. It would strengthen Arctic and northern links in ways that a single regional transmission line cannot. Canada has built national infrastructure before. Railways, highways and pipelines all reshaped the country. A clean era project of similar scale would do the same for electricity and industry.

A future aligned strategy would build out critical mineral extraction and processing clusters, expand clean ports for industrial goods rather than fossil fuels, link provinces with a national HVDC backbone, upgrade renewable and storage capacity, and invest in northern electrification. It would also invest in the industrial heat systems, freight corridors and advanced manufacturing needed for an electrified economy. These investments match global economic trends and domestic climate goals. They create durable employment and lower long term risk. They provide the economic backbone of a modern industrial nation.

Canada now faces a choice. The MPO portfolio contains pieces of a forward looking strategy, but its largest projects still point backward. If the country builds more LNG capacity into a saturated market, it risks locking in stranded assets rather than future growth. If it directs capital toward a national electrical backbone, clean extraction, processing, and electrified ports, it aligns with the global trajectory and the needs of the next decades. Canada can choose to build infrastructure that will be used or infrastructure that will be regretted. The country has the tools to build the future. It only needs to decide to use them.