Oil and gas sector emissions must be cut 42 per cent by 2030, new climate plan says

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Ottawa has unveiled its new plan to cut greenhouse-gas emissions – a sector-by-sector blueprint that dramatically increases the pressure on the oil and gas industry, and forces a faster change in the driving habits of Canadians.

The federal government said on Tuesday that it’s going to spend an additional $9.1-billion as it promises to achieve what Canada has failed to do over three decades of climate policies: meet the goals that it sets.

To do that, Ottawa aims to speed up the transition to zero-emissions vehicles, including for heavy-duty vehicles, spend more money helping homeowners make energy-efficient upgrades, establish a national grid council to expand clean-electricity infrastructure, and roll out a tax credit for carbon capture, utilization and storage (CCUS) technologies. It says it will also rely on natural climate solutions, such as sustainable agriculture practices, to meet its targets.

With its ambitious new climate plan, Ottawa demands more of every economic sector - and itself

But the major focus in the 271-page document is on Canada’s oil and gas sector, its largest emitter, which until now has left the heavy lifting on emissions cuts to other parts of the economy. The sector will have to go from decades of emissions growth to a 42-per-cent reduction from 2019 levels by the end of the decade.

The government introduced the new goal at a tricky time. Canada just pledged to increase its oil and gas exports to Europe amid Russia’s war in Ukraine, and Canadian consumers are already facing high prices at the pump and rapidly rising costs for daily life stemming from inflation at a three-decade high.

For the first time, the plan also shows that the government is aiming for the bottom end of its target to cut emissions by 40 per cent to 45 per cent below 2005 levels by 2030. That pledge was first made by Prime Minister Justin Trudeau a year ago.

It relies largely on increasing the speed and ambition of existing climate-change programs – for example, beefing up the mandates for zero-emissions vehicles sales, further limiting the carbon content in fuel through the clean-fuel standard, and expanding the budgets for home and building retrofits.

Officials said the new spending will be spelled out in full in next week’s federal budget. Among the items that are not yet costed is a promised tax credit for companies that develop CCUS technologies. The tax credit was first promised in the 2021 budget.

The plan is the first under a new law that mandates regularly updated emissions-reduction targets and progress reports. Environment Minister Steven Guilbeault tabled it virtually in the House of Commons.

Mr. Trudeau, speaking to reporters at the GLOBE Forum sustainability conference in Vancouver, called the plan a “good start” that is “also doable.”

“The biggest contributor is, of course, the oil and gas sector in this country, so we have put down a clear track for where the sector needs to go,” he said.

But with less than a decade before the 2030 target, the government and industries will have to dramatically ramp up the speed at which they implement policies and roll out new technologies. This is something experts say Mr. Trudeau’s government has struggled with so far.

Catherine Abreu, who sits on Ottawa’s Net-Zero Advisory Body, noted that the new plan shows the government expects to hit its goals in part by increasing the speed and stringency of methane emissions reductions and the clean-fuel standard, which limits the carbon content of some fuels. But the original standard is already late, and Ms. Abreu said the latest research shows that Canada is not yet meeting its previously announced methane target.

“The question is, how is this entire government going to correct its history of watering down and delaying policies and regulations through the implementation phase?” Ms. Abreu said.

Still under development is the emissions cap for the oil and gas sector, promised by the Liberals in the past election. In his keynote address to the GLOBE Forum, Mr. Trudeau described the expected emissions cuts from the sector as a “reasonable contribution.”

“With record profits, this is the moment for the oil and gas sector to invest,” the Prime Minister said.

The major turnaround in emissions spelled out for the sector presents a “significant implementation challenge,” said Dave Sawyer, the principal economist at the Canadian Climate Institute. But the federal plan includes a “diversified approach” that doesn’t just rely on carbon-capture technology but also on hydrogen investments, carbon pricing and methane emission regulations.

The Oil Sands Pathways to Net Zero Alliance, which represents companies accounting for about 95 per cent of Canada’s oil sands production, said it recognizes that the industry has an essential role to play in meeting the federal targets.

The group said it’s still reviewing the plan released Tuesday but believes its previous pledge to cut emissions by 22 megatonnes by 2030 is close to its share of the expected reduction spelled out by the federal government.

The transportation sector follows closely behind oil and gas as the second-biggest emitter and will have to cut emissions by 23 per cent from 2019 levels by 2030. Experts say the life cycle of vehicles makes it more difficult to quickly find emissions savings from the sector, whereas emissions such as methane cuts for oil and gas are easier to find with existing technology.

The government’s biggest new spend is a more than doubling of the low-carbon economy fund. Another $2.2-billion will go to the fund, which is broadly available to provinces, territories, businesses, municipalities and not-for-profits to find emissions cuts.

Ottawa is also going to pour another $1.7-billion into its incentives program for zero-emissions vehicles, making it easier for consumers to purchase the new cars as it also speeds up the move away from internal-combustion engines.

Within four years, 20 per cent of light-duty vehicle sales will need to be zero-emissions cars, the plan says. That will go to 60 per cent in 2030 and 100 per cent in 2035. The government said it also wants to see zero-emissions vehicles make up 35 per cent of medium- and heavy-duty vehicle sales by 2030.

The sweeping plan increases the pressure across the economy to cut emissions. The building sector, which makes up the third-biggest share of Canada’s emissions, will have to cut its portion by 42 per cent below 2019 levels by 2030; most of that pollution comes from space and water heating.

The roadmap includes an additional $458.5-million for the existing greener homes program, which helps cover the costs of energy-conserving improvements such as solar panels and better insulation. The program is popular with homeowners, attracting more than 32,000 applications within days of its launch last May.

The government will also spend $780-million on the existing Nature Smart Climate Solutions Fund, which aims to use natural habitats such as forests to cut emissions. On top of that, the government says it will put $470-million toward sustainable agriculture practices, such as cover crops, rotational grazing and improved manure management.

Environmental groups alternately praised and panned the new plan, noting that the document is the most comprehensive national climate roadmap to date while also highlighting that it strives to reach only the lower end of the 40-per-cent to 45-per-cent target that the Liberals have set for emissions reductions by 2030.

Opposition parties were similarly divided. The Conservatives said it will put too much of a pinch on Canadians’ pocketbooks. The NDP and Greens said the plan doesn’t meet the urgency of the climate crisis.

With a report from The Canadian Press

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