An oil sands extraction facility is reflected in a tailings pond near the city of Fort McMurray, Alta, in June, 2014.JASON FRANSON/The Canadian Press
Martin Olszynski is a law professor at the University of Calgary. Sara Hastings-Simon is a professor at the University of Calgary whose work focuses on the energy transition.
“[M]ore than any government has done in 60, 80 years,” proclaimed then minister of energy Sonya Savage. A “sensible approach overall,” according to the Explorers and Producers Association of Canada. The “first serious attempt to tackle a problem,” observed one long-time industry columnist.
Such was the reception back in 2020 to Alberta’s “new” management framework for conventional oil and gas liabilities (i.e., the costs of cleaning up wells and related infrastructure), which according to internal regulator estimates from around that time were approaching $130-billion. While critics were skeptical, this new framework did include a promising annual spending quota for cleanup work, set at $700-million for 2023 and then forecast by the regulator to increase yearly, reaching $992-million by 2027.
But talk is cheap, and these spending requirements never became binding regulations. The unsurprising result is that this year’s spending didn’t increase, while the forecast increases for subsequent years have all mysteriously vanished. Meanwhile, the liability crisis remains essentially unchanged.
Unfortunately, the same basic dynamic – a lot of talk but little actual walk – is appearing in the context of the sector’s greenhouse gas emissions, where many industry players and surrogates are pushing back hard against a proposed federal oil and gas emissions cap that merely codifies existing industry commitments.
After decades of steadily increasing GHG emissions (now representing 28 per cent of Canada’s total emissions), the oil sands industry launched the Pathways Alliance in 2021 with a stated goal “to help Canada meet its climate goals, including its Paris Agreement commitments and 2050 net-zero aspirations.”
More concretely, in the short term, its stated goal was to reduce emissions from their company operations by 22 million tons by 2030, heralded – once again – by Ms. Savage as “an industry-driven, made-in-Alberta solution which will strengthen our position as global ESG leaders.” This commitment was publicized at dozens of events throughout 2023 by both industry and provincial politicians. The goal was called “ambitious but achievable” by one Pathways member company at a major energy industry gathering in 2023, and vaunted as a “big part of the solution” at the most recent global climate conference in Dubai, COP28.
These commitments are key to understanding the potential impact of the proposed federal oil and gas emissions cap, and to judge the surprising backlash it currently faces among the industry’s various surrogates.
A closer look shows that, for the oil sands, the proposed emissions cap is simply holding the industry to what it has already committed to achieving: an annual reduction of 20 million tons from a baseline 2030 level. This is actually slightly less ambitious than the Pathways Alliance’s own stated short-term goal.
In other words, unlike the proposed Clean Electricity Regulations, where the federal government appears to have initially taken an aggressive position, pushing provinces and sectors beyond their voluntary commitments (and having recently recalibrated some aspects of the regulations in response to legitimate pushback), the proposed emissions cap appears designed to align closely with the industry’s own commitments from the outset.
Emissions regulation is important in the near term, as Pathways members attribute the slow progress in starting construction of these emissions-reduction projects to the long timelines for approval of capital-intensive projects. The proposed emissions cap addresses this time lag and allows the industry to signal clear intent through binding regulations that can hold industry accountable to its own commitments.
Industry commitments to improve performance are a good thing, but the history of such efforts in the oil and gas sector shows that talk is cheap. Bearing in mind that it is the Canadian public that will be left holding the bag, whether on liabilities or failed emission reductions, we should be wary – and weary – of sectors that are quick to promote their plans but resistant to being held to them.