Prime Minister Mark Carney pitched a Canada-European Union energy alliance in talks with EU leaders in Strasbourg, France, this week, as Europe hunts for replacements for Russian and Persian Gulf supplies and its trade ties with the U.S. fray. Ottawa is framing the pact as a way for Canadian oil and gas to shore up Europe’s energy security—but analysts say Canada has no East Coast pipelines or export terminals capable of moving that energy across the Atlantic, meaning any near-term supply would flow through paper swap contracts rather than tankers.
The pitch lands as the EU scrambles for dependable suppliers on several fronts at once. The bloc cut its long-standing reliance on Russian energy after Moscow’s 2022 invasion of Ukraine, and Middle Eastern producers covered part of the shortfall until the war launched by the U.S. and Israel against Iran in February disrupted shipments out of the Persian Gulf. American LNG, a major source for European buyers, is now entangled in the trade upheaval set off by U.S. President Donald Trump.
“Europe is in a precarious situation on multiple fronts,” Werner Antweiler, an economist at the University of British Columbia, said. Carney appeared alongside European Parliament President Roberta Metsola at a joint news conference in Strasbourg on Thursday.
Canada’s problem is geography. Its pipelines and marine terminals for oil and gas exports sit on the West Coast and point toward Asia, with no equivalent on the Atlantic side. At the University of Calgary’s School of Public Policy, R.J. Johnston heads the energy and natural resources policy file, and he sees no quick fix. “There’s nothing imminent in the short-term that’s ready to physically take the oil and gas easily off the East Coast to Europe,” Johnston said. He noted that building such capacity would take years even with Ottawa’s new regulatory guidelines and the public-sector backing that appears to be on offer for those projects.
In the meantime, European companies could lock in Canadian gas through swap arrangements, in which a cargo bound from B.C. to an Asian buyer is exchanged for one produced closer to Europe. Ksi Lisims LNG, a proposed facility on B.C.’s northern coast, has already lined up two German firms as buyers, with both signing agreements earlier this year to take its liquefied natural gas.
For Canadian producers, the appeal of a European alliance is new customers rather than new reserves. Energy economist Peter Tertzakian argued that the sector’s difficulties stem from selling almost exclusively into one continental market. “For years, Canada’s natural gas sector has been constrained not by geology but by market structure,” he wrote, pointing to episodes of negative prices for Western Canadian gas, when producers paid to have their output taken away.
Tertzakian has set the threshold for meaningful market influence at roughly 50 million tonnes of LNG per year, a level he wrote would end the era of Canada being hostage to market discounts. Whether the supply exists to fill that capacity is another matter. Heather Exner-Pirot, the director of energy, natural resources and environment at the Macdonald-Laurier Institute, warned that a federal carbon price of approximately $130 per tonne would leave no new oil for a new pipeline and no new gas-fired generation for data centres, producing capital flight instead of investment.
Exner-Pirot argued the binding constraint on any energy alliance is domestic policy rather than geopolitics. “The noose is tightening, not loosening. Any success our energy sector is having in this geopolitical moment is largely despite, not because of, Ottawa,” she wrote, citing finalized methane regulations and a December discussion paper on industrial carbon pricing that industry viewed as undercutting the Alberta-Canada memorandum of understanding.
Hub contributors have argued that Canada’s energy dilemma has always been buyers, not barrels. Nearly half of the country’s gas production flows to the U.S., leaving producers exposed to tariff threats and regulatory shifts they cannot control. LNG Canada’s Phase 1 terminal, at roughly 14 mtpa, marks the country’s entry into global markets, and Woodfibre and Cedar LNG could lift capacity toward 20 million tonnes annually, still a modest presence. Reaching roughly 50 million tonnes per year would give Canada real leverage, but a $130/tonne carbon price and a stack of largely intact Trudeau-era regulations threaten the new production needed to get there.
The European overture fits a broader diversification push. As The Hub reported in June, Carney has pledged to double non-American exports within a decade after Trump declined to renew CUSMA, though the U.S. still takes close to 70 percent of Canadian exports, down from 76 percent a year earlier.
On whether the alliance offers a credible route away from U.S. dependence, the analysts’ answer is conditional. Johnston and Antweiler described a real European need that Canada can serve only on paper for now, while Tertzakian and Exner-Pirot tied any lasting shift to export scale and a regulatory overhaul that has yet to materialize. Whether Thursday’s talks produce binding contracts, and whether Ottawa’s promised approval reforms shorten the timeline for Atlantic infrastructure, remain unresolved.
Prime Minister Mark Carney proposed a Canada-EU energy alliance to bolster Europe’s energy security amid the ongoing crisis stemming from reduced reliance on Russian supplies. However, analysts highlight that Canada lacks the necessary East Coast infrastructure to facilitate energy exports to Europe, meaning any immediate supply would rely on swap contracts rather than direct shipments. The situation is complicated by Canada’s geographical limitations and regulatory hurdles that could hinder the development of new pipelines and export terminals. While the alliance presents an opportunity for Canadian producers, significant challenges remain in achieving meaningful export capacity.
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