Québec, Ottawa take down Saguenay LNG project — taxpayers could be on the hook for $20 billion in damages

The liquified natural gas (LNG) companies behind GNL Québec and Gazoduq are suing Canadian taxpayers for $20 billion in compensation after Ottawa pulled the plug on their natural gas liquefaction terminal and gas pipeline projects in Saguenay, Québec.

Québec, Ottawa take down Saguenay LNG project — taxpayers could be on the hook for $20 billion in damages
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The $14 billion project constituted a terminal for LNG exports from Western Canada and a 780-kilometre pipeline connecting the port of Saguenay to northeastern Ontario.

On Thursday, Ruby River Capital LLC filed a request for arbitration against Ottawa by invoking the North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico Agreement (CUSMA) in its claim. 

Québec first rejected the Énergie Saguenay terminal in 2021 following a critical report by the province's environmental review agency, the Bureau d'audiences publiques sur l'environnement (BAPE).

Premier François Legault's government initially supported the project, hoping to diversify its economy further. But they could not maintain their initial enthusiasm as principal financial backers withdrew their support as environmental concerns mounted. 

The province set three criteria for approving the natural gas facility — with the plant failing the first two, and deciding not to test the third.

The project had to aid the transition toward greener forms of energy, lower greenhouse gas emissions, and have sufficient public support.

"It is a project with more disadvantages than advantages," said Legault in July 2021, whose cabinet met earlier to finalize the decision not to support the facility's construction.

While the decision at the time only concerned the LNG plant, Environment Minister Benoit Charette acknowledged it would likely cancel the pipeline, too.

GNL Québec expressed disappointment with the announcement and evaluated what to do next.

The natural gas would have come from Western Canada, mainly from hydraulic fracturing operations in BC and Alberta. 

The environment minister expected many in Alberta to fret over Québec's decision.

"To our friends from Alberta, we say, let's work together on other kinds of projects, on cleaner projects," said Charette.

In February 2022, Canada's Ministry of Environment and Climate Change also turned down the terminal liquefaction project.

Environment Minister Steven Guilbeault said he based his decision on the findings of an environmental assessment report by the Impact Assessment Agency of Canada (IAEC).

The report concluded the project would increase greenhouse gas emissions by 8 million tonnes annually and harm the cultural heritage of Innu First Nations and marine animals like the St. Lawrence beluga whales.

Énergie Saguenay argued the opposition, stating the project would have replaced coal, leaving hydroelectricity to power the LNG plant.

Now named Symbio Infrastructure, the company announced it reached an agreement with the Ukrainian state company Naftogaz to supply the country, then already at war, with LNG and hydrogen.

Although the proposed terminal has been turned down, the Canadian government is still conducting an environmental assessment of the pipeline.

The firm claims Ottawa based its decision on politics and is against the spirit of free trade agreements.

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