When Prime Minister Justin Trudeau and Environment Minister Steven Guilbeault released Ottawa’s targets for greenhouse-gas emissions for the oil and gas sector in March, they insisted there would not need to be a trade-off between “clean air and good jobs, a healthy environment and a strong economy.” They called their blueprint “an ambitious and achievable sector-by-sector approach” for reducing Canada’s overall emissions to 40 per cent below 2005 levels by 2030.
Despite the upbeat presentation, not many observers bought the government’s line that Canada’s oil patch could cut its emissions by 81 megatonnes, or 42 per cent, within eight years – at least not without slashing production and incurring all the negative consequences that would entail for the Canadian economy.
Some wondered whether Ottawa was secretly banking on cuts in oil and gas production – driven by market forces, rather than mandated by government – when it first hatched its plan. After all, hadn’t Mr. Trudeau mused in 2017 about the need to “phase out” the oil sands?
The emissions-reduction plan was many months in the making and mostly formulated before Russia’s invasion of Ukraine and the paradigm shift in energy markets that the war engendered. If Ottawa had been counting on weak oil prices in the future to drive many oil-sands projects out of business, geopolitical factors now have analysts predicting high prices for many years to come.
Lofty prices have reinvigorated Canada’s oil patch. Market forces are incentivizing new production. But while the industry has made impressive strides in reducing the per-barrel carbon intensity of oil-sands crude, there is little likelihood that the sector can meet Ottawa’s emissions targets while at the same time increasing output.
“We made it very clear, those numbers for our industry by 2030 – there’s no way that we’re going to make them,” Martha Hall Findlay, chief climate officer at oil-sands leader Suncor Energy Inc., told the Financial Times last week.
We now know that Mr. Guilbeault’s own officials had come to much the same conclusion before Ottawa released its plan. As The Globe and Mail reported this week, analysts in the Environment and Natural Resources departments concluded that oil-and-gas-sector emissions reductions of 43 megatonnes could be “technically feasible” by 2030. Even then, such a feat would require “extraordinary efforts” and costly technological breakthroughs to be realized.
An Environment Canada spokesperson countered that the earlier departmental analyses did not incorporate the expected improvements in carbon capture, utilization and storage (CCUS) and direct-air capture (DAC) technologies that Ottawa is counting on to enable the oil and gas industry to meet its targets.
Still, it is not credible to suggest that enough CCUS and DAC projects in the planning phase, and the hundreds of kilometres of pipelines that would be needed to transport CO2 emissions to underground storage sites, could be approved, funded, built and operating by 2030 to capture 81 megatonnes of oil-and-gas-sector emissions.
Neither the math nor the science support that hypothesis, much less the political hurdles that are already encountered by proposed energy infrastructure projects in Canada.
“Like many things in climate change scenario planning, there is a huge band of uncertainty as to how capture technology will grow and if a clear ‘winner’ will emerge,” a recent TD Economics study concluded. “The capital investment required for CCUS technologies, storage and transportation networks is not inconsequential and estimate bands are wide as technology and efficiencies continue to evolve, making it even more difficult to plan.”
Cost estimates for CCUS and DAC projects are all over the map, depending on which technologies are deployed. But suffice it to say, the $7.1-billion in tax credits that the April federal budget allocated for CCUS does not come close to what is needed.
So what if Ottawa’s targets for the oil-and-gas-sector GHG emissions reductions aren’t really targets, but rather, as the fine print in the 300-page 2030 Emissions Reduction Plan that Mr. Guilbeault released in March explains, just an “indicative understanding” of the “pathways” that could open up if enough miracles are produced between now and 2030?
“It is important to note that pathways are not sectoral targets, they are projected sectoral contributions: the emissions reductions ultimately contributed by each sector are likely to vary over time as Canada responds to real-world changes, such as other countries implementing their climate plans and changes in global demand for oil and natural gas,” one reads on page 82 of the plan. “Technological feasibility, labour availability, and the enabling infrastructure needed to achieve modelled reductions are all considerations that will influence Canada’s pathway to 2030 by sector.”
In other words: your guess is as good as mine.
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Konrad Yakabuski