Your retirement savings and Canada's LNG gamble

Why are Canadian pension funds being pressured to invest your retirement savings in risky liquefied natural gas (LNG) projects during a climate crisis? And if these projects are such great investments, why does the government need to help finance them in the first place?  

The federal government has made new LNG export projects a major priority. Prime Minister Mark Carney says Canadian LNG can strengthen Canada's economy and help build national prosperity. But LNG projects are long-term financial bets on uncertain markets – and depend on public support to get built. Despite these risks, the government wants more LNG terminals built and is working to use more public financing and policy levers to transfer the risks for pension funds and other institutional investors to the public.

The projects

Two of the biggest projects being advanced are LNG Canada Phase 2 – which would double production at Canada's first LNG export terminal, and Ksi Lisims LNG, which would become one of the country's largest LNG export facilities and would rely on the controversial proposed Prince Rupert Gas Transmission pipeline, which faces opposition and legal challenges from Indigenous communities. These projects would lock in rising climate pollution and fossil fuel infrastructure for decades – and face growing financial, legal and social licence risks for all involved. 

If LNG is such a great opportunity, why does the government need to help finance it?

Building LNG infrastructure is expensive – and Canada's LNG sector has a history of delays and massive cost overruns. At the same time, investors see growing uncertainty about future gas demand as countries rapidly expand renewable energy and electrify their economies. Analysts warn that today's LNG projects are likely to become tomorrow's stranded assets. 

These financial risks do not exist in isolation. LNG projects also face growing climate, legal and reputational risks. LNG is primarily methane, a powerful greenhouse gas, and despite industry (and government) claims, high emissions occur through methane leakage across each stage of LNG extraction, processing, pipeline transport, shipping, regasification and ultimately combustion. LNG Canada, the country’s only operating LNG export terminal, is already facing scrutiny over emissions and flaring issues. As governments strengthen climate policies and renewable energy technologies become cheaper, these factors add another layer of uncertainty for long-term investors.

Increasingly, private investors are seeking alternative investment sources for LNG-related assets at a time when demand uncertainty and long-term price volatility grow. So how do you make risky projects more attractive to private investors? You shift the risk to the public.

How the government is attempting to de-risk LNG

Governments can make projects more attractive through subsidies, public financing, loan guarantees and other forms of support. Indeed, Canadian governments already have subsidized LNG, to the tune of billions. But these measures do not eliminate risk – they shift it. Canadians have already seen this with the Trans Mountain pipeline, where taxpayers paid billions of dollars in additional costs after private investors stepped away.

Several federal institutions are now playing a role in shifting the risk:

• At the centre of this effort is the federal Major Projects Office, created to accelerate projects deemed to be in the “national interest” – headquartered in Calgary, with former pipeline executive Dawn Farrell as CEO.
  
  
• Federal ministers have been actively promoting Canadian LNG to investors at home and abroad. Energy Minister Tim Hodgson has been travelling the world like a door-to-door salesman pitching Canadian LNG to potential investors and buyers.
  
  
• Export Development Canada (EDC), a federal Crown corporation backed by taxpayer money, is considering acquiring an indirect stake in LNG Canada. This could help absorb investment risks that private and institutional investors won’t take on, making the project more attractive to future buyers – including pension funds. In effect, taxpayers will be helping shoulder risk upfront while private investors collect returns later.
  
  Although EDC has not publicly disclosed how taking an indirect stake in LNG Canada would be used to reduce investment risk, EDC's public financing programs show several ways government-backed capital can help make large infrastructure projects more attractive to private investors. EDC could be on the hook during the riskiest construction and ramp-up phases – as it has supported other projects during early-stage development – before transferring what could appear to be a more stable, operating asset to long-term investors, often at a loss to the public. Its financing support could strengthen the project's balance sheet, reducing financing costs and improving lender confidence during periods of uncertainty. EDC's participation may also serve as a signal that the project has undergone extensive financial and technical due diligence, helping attract investors who might otherwise remain cautious. Together, these approaches can help a volatile, high-risk project appear to be the kind of predictable infrastructure asset that pension funds or other investors typically seek – despite the fact that EDC cannot fully de-risk volatile LNG projects for public pensions or other private investors.
  
  
• The Canada Infrastructure Bank, originally created to finance public, clean infrastructure, has just had its mandate expanded by the government to support so-called “nation-building” projects. This risks turning a public infrastructure bank into another tool for helping LNG projects secure financing. The bank recently retained the Texas-based former president of Woodfibre LNG as a consultant to help it review possible financing for the Ksi Lisims project.
  
  
• A proposed $25-billion sovereign wealth fund, announced in April, that would deploy public capital at scale into strategic sectors, including energy infrastructure.
  
  
• A planned international investment summit intended to attract up to $1 trillion in domestic and global investment over five years.
  

Taken together, these measures are not simply supporting LNG markets – they are actively constructing them. In the process, the federal government is steering public finance and institutional capital – including from Canadian public pension funds – toward projects that private investors have become increasingly reluctant to fund.

Litigation risk is growing

Governments and investors often focus on the financial risks of major infrastructure projects. But LNG expansion projects are also facing growing legal uncertainty. 

In May, the federal government, its ministers and Crown corporations – including the Major Projects Office, Export Development Canada and the Canada Infrastructure Bank – received alegal notice warning that constitutional challenges under the Charter of Rights and Freedoms could follow if new or expanded public financing or subsidies are directed to large-scale fossil fuel projects, including Ksi Lisims LNG, LNG Canada Phase 2, or new oil or gas pipelines. This development is unsurprising in light of the International Court of Justice's 2025 Advisory Opinion on states' obligations to address climate change, which has heightened the scrutiny of public financing for new fossil fuel projects. 

Then, in June, three young Canadians, alongside health and environmental organizations,launched a legal challenge arguing that the federal government no longer has a credible plan to meet Canada’s legally binding 2030 climate target. 

These cases highlight the fact that legal risk is increasingly becoming a material consideration for investors. For investors seeking stable long-term returns, legal uncertainty is not a feature of an investment, but a warning sign.

Indigenous rights cannot be ignored

Alongside climate litigation, many LNG projects face unresolved Indigenous rights and consent disputes that create additional legal, financial and reputational risks for investors.

In June 2026, Wet'suwet'en hereditary chiefs and the Union of British Columbia Indian Chiefs formally warned ten of Canada's largest pension funds and Export Development Canada against investing in LNG Canada or its proposed Phase 2 expansion. The letter states that LNG Canada cannot be separated from the Coastal GasLink pipeline that supplies it, a project Wet'suwet'en hereditary leaders say proceeded without their consent.

The leaders warned that investors could face legal, reputational and financial consequences if they support projects linked to ongoing violations of Indigenous rights and title. They called on pension funds to publicly clarify whether they intend to invest in LNG Canada and to ensure future investments respect First Nations rights, title and sovereignty.

For pension funds, Indigenous rights disputes are not simply ethical concerns. Delays, litigation, regulatory uncertainty and social conflict can directly affect project costs, timelines and returns.

This is where your retirement savings come in

Canadian pension funds manage hundreds of billions of dollars on behalf of millions of workers. Their job is to protect retirement security through stable, long-term investments. That means assessing not only market risks, but also climate, legal, regulatory and Indigenous rights risks that could affect the long-term performance of major infrastructure projects.

Yet some pension funds are reportedly bidding as a consortium for investments in LNG infrastructure and pipelines that could operate for decades. Reports also suggest Canadian pension capital could eventually gain exposure to LNG projects not only through direct ownership of infrastructure, but also through companies positioned to purchase LNG from those projects. The Canada Pension Plan Investment Board and La Caisse have both been named as potential buyers of a German company that signed a “letter of interest” for LNG supply from the proposed Ksi Lisims project.  

If LNG projects require government support, public financing, political intervention, and risk-sharing arrangements to get built, are these really the kinds of investments pension funds should be making? And if climate change poses a long-term risk to the economy, how does investing in new fossil fuel infrastructure align with pension funds' own climate commitments? 

These are questions every pension beneficiary deserves answers to. Indigenous leaders are already asking them. If pension funds truly believe climate risk, legal risk and Indigenous rights risk are material to long-term returns, beneficiaries should expect transparency about how those risks are being assessed before retirement savings are committed to new LNG infrastructure.

Because pension funds aren't investing their own money. They're investing yours. Your retirement savings should help build a secure future – not be used to finance risky fossil fuel expansion. Tell EDC: Don't use public money to rope pension funds into LNG.