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Energy Transition, Natural Gas, Emissions
November 04, 2024
By Ashok Dutta
HIGHLIGHTS
Draft plan aims to cut methane emissions by 75%
But faces uncertain future with Liberals in minority
Would require 1 million b/d output cut: Alberta
The Canadian government issued draft regulation to cap greenhouse gas emissions from oil and gas production at 35% below 2019 levels by 2030, Federal Environment Minister Steven Guilbeault said Nov. 4.
“Canada’s oil and gas sector accounts for almost a third of our total GHG emissions, which is more than double the emissions from all other light and heavy industries,” Guilbeault said on a webcast as the Liberal Party-led Canadian government unveiled its draft that will need parliamentary approval.
He did not reveal the country’s current GHG emissions. But information on the the federal environment ministry said Canada’s total GHG emissions in 2022 – the latest available so far – were 708 million mt of carbon dioxide equivalent, up 1.3% from 698 million mtCO2e in 2021.
“The oil and gas sector has also been experiencing record profits and they have grown tenfold since the pandemic going from C$6.6 billion [$4.75 billion] to CAD$66 billion. So, we are asking the oil and gas sector to invest their record profits into pollution-cutting projects. Projects that can create and keep good jobs,” he said.
Besides reducing GHG levels, the draft legislation includes a cap-and-trade system that would reward low polluting facilities and incentivize higher polluting facilities, Guilbeault said, without providing details on the system.
“What this means is no matter what happens to production, the pollution levels will go down," Guilbeault said. "This system was carefully designed through rigorous consultations and we go after pollution and not production. What we have developed is to keep the industry accountable to their own promise that they have committed to be carbon neutral by 2050."
Along with GHG emissions, the federal government is also looking to reduce methane emissions by 75% from 2019 levels by 2030, Federal Natural Resources Minister Jonathan Wilkinson said on the same webcast.
The federal government plans to finalize these draft regulations next year, with the new rules coming into effect Jan. 1, 2026, Guilbeault said.
Doubts remain on the future of the draft regulations, as the Liberal Party-led federal government in Ottawa has been reduced to a minority position in the Canadian parliament following the withdrawal of its junior coalition partner the New Democratic Party on Sept. 4.
The House of Commons, the Canadian parliament's lower house, has 338 members, with Liberals holding 154 seats, the Conservative Party at 119 members, the Bloc Quebecois with 32, NDP with 24 members, Green Party with two, and independents at three.
Canada is due to hold its next parliamentary elections in October 2025.
Alberta, home to Canada's oil sands production, already adopted in 2016 an emissions cap of 100 million mt. Current emissions are about 70 million mt, according to the provincial government website.
“We will defend our province, our country and our constitutional rights,” Alberta’s Premier Danielle Smith said in a statement Nov. 4.
“Make no mistake, this cap violates Canada’s constitution. Section 92A clearly gives provinces exclusive jurisdiction over non-renewable natural resource development, yet this cap will require a 1 million b/d of production cut by 2030,” Smith said.
The Alberta government is working along multiple lines to reduce GHG intensity levels per barrel of its heavy crude, Smith said, in line with maintaining its social license and a growing demand for Canadian crude in the US and now in Asia with the start up of the 590,000 b/d Trans Mountain Expansion pipeline.
Smith said the way forward will be a combination of carbon capture, small modular reactors and direct air capture.
Calgary-based Pathways Alliance filed an application with the Alberta Energy Regulator in April for the planned carbon dioxide transportation network and storage hub project that aims in its first phase to reduce greenhouses gases by 22 million mt by 2030. A 260-mile pipeline will be laid to transport carbon dioxide from the oil sands producing areas of Fort McMurray, Christina Lake and Cold Lake to an underground storage hub in Cold Lake in northern Alberta, the alliance said at the time.
Pathways is an alliance of six leading oil sands producers – Suncor Energy, Cenovus, ConocoPhillips Canada, Imperial Oil, MEG Energy and Canadian Natural Resources – that have joined hands to build a mega carbon capture and storage facility at an estimated cost of C$16.5 billion.
Some producers like Cenovus – along with Alberta Innovates – are also working on pilot studies for SMRs that provides significant benefits to decarbonize the electricity sector and also provide power for oil sands production.