Conservatives from across the country have shown their teeth against the plan to limit emissions from the oil and gas sector for 2030, made official on Monday by the Trudeau government. According to the official opposition in Ottawa, this amounts to killing Canadian jobs and sending money to dictators abroad.
“The ideological crusade of [Justin] Trudeau against Canadian energy must stop. […] Trudeau wants to stifle Canada's energy industry with an arbitrary emissions cap that will devastate Canada's already broken economy,” the Conservative Party of Canada said in a statement.
Pierre Poilievre's party was reacting to the details of a draft regulation unveiled by Environment and Climate Change Canada (ECCC) which plans to impose a cap on greenhouse gas (GHG) emissions for the oil and gas sector in 2030, which gives these companies four years of grace before requiring an effort from them.
The document has the dual aim of encouraging green technologies, such as carbon capture and storage, while reducing pollution emitted by the sector responsible for 31% of all 2022 emissions.
Alberta Strikes Back
“This will likely prevent investment in oil and gas projects. The result will be lower production, fewer exports, fewer jobs, lower GDP and lower revenues for governments,” added the Canadian Association of Petroleum Producers (CAPP).
“Be certain: this ceiling violates the Canadian constitution,” said Alberta Premier Danielle Smith, who spoke of the use of her recent “Alberta Sovereignty Act in a United Canada” to avoid the measure.
His government financed an advertising campaign consisting of broadcasting on a truck that roams the streets of Ottawa with the message “scrap the cap”. This was called “stupid actions” by the federal Minister of Environment and Climate Change, Steven Guilbeault.
“This is disinformation from the conservative movement in Canada. Whether [le chef conservateur] Pierre Poilievre, [ou les premiers ministres conservateurs de l’Alberta et de la Saskatchewan] Danielle Smith or Scott Moe, they claim that climate change does not exist despite the obvious climatic impacts, which are dramatic for the lives of Canadians and for the economy,” he replied in the press scrum.
Surrounded by six other Liberal elected officials, including two ministers, Steven Guilbeault admitted that his regulation reannounced on Monday, but the final version of which will not be announced until 2025, could go to the trash bin if his government were to lose the next elections. “The best guarantee so that Pierre Poilievre does not undo everything we have done on the environment is to re-elect the Liberal Party. »
For their part, the Bloc Québécois and the New Democratic Party (NDP) criticized the low ambition and the delays before implementing this ceiling promised by the Liberals during the 2021 elections.
Increased production
Minister Guilbeault was careful to insist that a cap will not lower the level of oil production.
On the contrary, this framework should give oil companies sufficient leeway to pump 16% more oil in 2030-2032 compared to 2019.
While increasing its production, the oil and gas sector would no longer be allowed to pollute more than a certain level, but which the federal government will not calculate for two years. The federal government will ask companies in the sector to report their emissions from 2026, then set the cap at 27% below the levels of that year, for 2030.
ECCC officials estimate that this cap will amount to a 35% reduction in sector emissions compared to 2019, but cannot guarantee it. A senior official said Monday that he believes “the risk is very low” that companies will suddenly increase their emissions in 2026, the base year, given that it would cost them dearly in waste and federal carbon fees.
This target means that emissions from oil and gas should be around 146 million tonnes in 2030. If the imposed reduction was aligned with the national GHG reduction target, i.e. a decline of 40% compared to 2005, emissions from the sector should cap at 117 million tonnes in 2030.
All companies in the oil and gas sector will have to report their emissions to the government, but the emissions cap is only imposed on large producers, those pumping the equivalent of 365,000 barrels of oil per year. Ottawa offers them the possibility of exchanging offset credits among themselves, in addition to directly purchasing “decarbonization units” at $50 per tonne of CO2. Profits must be used to finance emissions reduction projects.
These environmental measures are designed to enable the country to continue to meet global energy demand. Canada is the fourth largest oil producer and fifth largest gas producer in the world. Sector profits essentially increased 10-fold during the pandemic ($6.6 billion in 2019 to $66.6 billion in 2022).
If these profits are reinvested in decarbonization, which is what Ottawa wants with its emissions cap, a total of 12.4 Mt of GHGs would never be emitted into the atmosphere between 2025 and 2030-2032. Officials estimate that this reduction will save $4 billion in damages from climate change worldwide. They argue that Canada will benefit from a net gain of $428 million.
With Alexander Shields
