Can Canadian LNG really reach Europe at scale?

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Europe’s demand for liquefied natural gas grew after Russian pipeline deliveries collapsed in 2022. Since then, the region has added regasification capacity and leaned heavily on the United States, which has supplied more than half of Europe’s LNG so far in 2025, up from 48 percent in 2023. Policymakers are also preparing rules to certify non-Russian origin of imported gas, underscoring efforts to meet geopolitical and legal standards.

Canada is often cited as a potential alternative supplier, but its geography and climate policy create barriers. Cargoes departing from British Columbia face longer Pacific routes, making Asian buyers the primary customers unless swaps redirect supply to Europe. Ottawa has reinforced its commitment to net-zero targets by 2030 and stated LNG projects will receive no federal subsidies.

Canada’s LNG buildout is west facing and finally live

After decades of planning, LNG Canada shipped its first cargo from Kitimat in June 2025. Phase 1 capacity is 14 million tons per year, supported by the Coastal GasLink pipeline, which could be expanded with additional compression to move as much as 5 billion cubic feet per day.

Cedar LNG, a 3.3 million ton per year floating facility majority-owned by the Haisla Nation, reached a final investment decision in mid-2024 and is scheduled to start later this decade. Woodfibre LNG, near Squamish, is under construction with a 2.1 million ton capacity and is targeting a 2027 launch, though developers recently cited higher costs.

Why Atlantic options stalled and what it means for Europe

While British Columbia projects advanced, East Coast plans collapsed. Repsol dropped efforts to convert the Saint John Canaport terminal to exports. Quebec regulators rejected Énergie Saguenay in 2021. Goldboro LNG in Nova Scotia, once pitched as a near-term option for Europe, has been shelved indefinitely.

Ottawa’s stance compounds the difficulty. With subsidies off the table and net-zero requirements in place, sponsors face steep challenges. Atlantic Canada’s proximity to Europe is not enough to outweigh regulatory and financial hurdles or competition from established exporters.

How Europe could still tap Canadian gas through swaps

Canadian gas may still reach Europe indirectly. Traders can use swaps, where Canadian LNG delivered to Asia frees equivalent US or Qatari cargoes for Europe. These deals are already common in the LNG market.

Yet European LNG imports fell 19 percent in 2024 as demand softened and terminal use declined. The trend points to limits on Europe’s appetite, with US exporters still dominant. Canada’s late start narrows its ability to capture share.

For Canadian LNG to reshape Europe’s balance, several steps are needed. Coastal GasLink expansion would be vital to lift feedgas supply. Phase 2 of LNG Canada and growth at Cedar LNG could add capacity by the 2030s. Projects will also require clean power to cut emissions, consistent with Canada’s climate commitments.

Even if these steps materialize, volumes may continue flowing mainly to Asia. Europe will remain focused on price, reliability, and proof of non-Russian origin. Canadian LNG is positioned to contribute through swaps and spot cargoes, but not as a cornerstone of Europe’s supply mix.

Sources:

Politico