Alberta, energy sector press Ottawa to clarify how climate targets will be reached

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Industry groups and Alberta want Ottawa to move quickly to clarify and implement policies intended to get Canada on track to meet its 2030 climate goals if the oil and gas sector is to have any chance to deliver steep emissions cuts under tight timelines.

Confidential government documents obtained by The Globe and Mail show that federal bureaucrats identified only about half of the emissions cuts required from the pollution-heavy oil and gas sector just weeks before Prime Minister Justin Trudeau unveiled his March climate plan.

Government officials have said the internal analysis presents an incomplete picture because it doesn’t reflect all of the new policies Ottawa will implement to push for steeper emissions cuts.

“Given Canada’s past track record on building critical infrastructure, we need to find a way to speed up the approval of projects that support Canada’s climate ambitions,” said John Dillon, a senior vice-president of the Business Council of Canada.

The Prime Minister and Environment Minister Steven Guilbeault told the House of Commons on Tuesday their emissions reduction plan is achievable. It pledges at least a 40-per-cent cut in emissions below 2005 levels by 2030. For the oil and gas sector, that translates to an 81-megatonne cut from the industry’s 2019 levels.

“Canadians know that we have the only real, concrete plan,” Mr. Trudeau said.

Canada’s 2030 climate targets for oil and gas industry not feasible, government analysis says

The emissions reduction plan includes a new investment tax credit, an emissions cap, a strengthened industrial carbon-price system and a stricter clean-fuel standard to speed uptake of technology. The government says the policies will spur changes in how oil is extracted, and encourage the use of carbon capture, utilization and storage – a major part of the energy sector’s plan to reduce emissions, particularly in the oil sands.

However, with less than eight years to go before the 2030 deadline, many of those policies aren’t yet in place or fully developed.

And industry groups and the Alberta government say time is running out for companies to plan, build and launch new emissions-reducing technology by the end of the decade.

The Oil Sands Pathways to Net-Zero Alliance, a group of companies that operate about 95 per cent of oil sands production and plan to hit net-zero by 2050, is counting in part on a huge new pipeline to transport captured carbon to where it can be sequestered underground.

But Mark Cameron, a senior adviser with the alliance, said construction on the project would have to start around 2025 to help the industry reach its 2030 targets.

“Final investment decisions on capture projects and the transportation line will require greater policy certainty,” Mr. Cameron said.

Optimism about carbon capture technology for reducing emissions is high in Alberta. Six projects received government approval earlier in the year to explore carbon hubs, central facilities where a range of emissions-intensive industries can store emissions. Alberta is also sorting through upward of 40 more applications to use the province’s bounty of geological formations that can store carbon.

Mr. Cameron said more certainty is also needed on the federal government’s investment tax credit and carbon credit pricing, and Alberta’s rules that will allow companies to deduct some of their investment costs from their royalties. In the meantime, the alliance plans to start an application process for its carbon sequestration hub.

“We share the government’s goal of achieving net zero by 2050, but we need to balance ambition with what can be practically and economically achieved by 2030,” he said.

Canada's government plans to cut greenhouse gas emissions by 30 per cent by 2030

The Business Council of Canada has also backed Ottawa’s pledge to hit net-zero emissions by 2050. It says it supports “significantly reducing” emissions by 2030, but echoed the concerns of the alliance. Mr. Dillon said the clean fuel standard and the cap on oil and gas sector emissions also need more clarity.

In March, Mr. Guilbeault told Reuters the emissions cap will be completed by early 2023.

The Finance Department was not able to say on Tuesday when the legislation for the investment tax credit will be tabled, but noted it will apply to eligible expenses retroactive to 2021.

One of the documents The Globe reported on Tuesday says that about 42 megatonnes of emissions cuts from the oil and gas sector by 2030 could be “technically feasible” but would require “extraordinary efforts.” The document says that going beyond those reductions would likely require a production cut, which the government has said it’s not contemplating.

The internal report aligns with what Alberta Energy Minister Sonya Savage has said is actually achievable by the end of the decade. She said in an interview on Tuesday that the federal government doesn’t have the jurisdiction to impose a production cut, and doing so would run counter to Canada’s economic and energy security interests.

While there’s enough time for new technology to come online to meet the 2050 emissions targets, Ms. Savage said she’s concerned the 2030 interim target comes too soon.

In the House of Commons on Tuesday, opposition parties said the government’s climate-change rhetoric is out of step with reality.

Mr. Trudeau’s “net-zero reduction plan had net-zero chance of meeting its emissions targets,” New Democrat MP Charlie Angus said in Question Period. Meanwhile, Bloc Québécois Leader Yves François Blanchet said the documents show the Prime Minister and Mr. Guilbeault made “phony announcements,” and called on Mr. Trudeau to apologize for misleading voters.

The federal Conservatives say Mr. Trudeau should have stuck to a less ambitious target for 2030. Conservative MP Kyle Seeback said the government needs to show how it will meet its target without forcing an oil and gas production cut.

Meantime, Mr. Angus took issue with the government’s plans to allow production to continue to grow. “The government has a fiction that you can massively produce oil, burn it and somehow the planet’s not going to notice,” he said.

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