The emission limit is a dose of cold reality for a warming world

Prime Minister Justin Trudeau’s statement this week on a promise to implement a declining limit on greenhouse gases from the Canadian oil and gas industry – along with some of the reactions provoked by his comments – is coming true.

Informed by rigorous science, the nations of the world have decided that global greenhouse gas emissions must reach a net zero by 2050 to limit the catastrophic effects of climate change. Canada has agreed to do its part by turning its national emissions to net-zero by mid-century. Every major federal party agrees with that goal.

The engagement is driven by some very basic math.

In 2019, the last year for which data is available, Canada produced 730 megatons of GHG emissions. The oil and gas industry accounted for 26.2 percent of that total.

The total emissions of the sector increased from 159.9 Mt in 2005 to 191.4 Mt in 2019. In the oil sands specifically, emissions more than doubled from 35 Mt to 83.1 Mt. Now those emissions need to be significantly reduced over the next 30 years.

Better late than never?

Chris Severson-Baker, Alberta’s regional director for the Pembina Institute, said this week that a legislated emission limit has lasted “a long time.”

“To have a credible position behind the promises we have made and which we are trying to encourage the rest of the world to make, we must actually have an answer on how we will deal with oil and gas emissions in the future,” he said.

Manufacturers may feel fortunate that the federal government is concentrating on emissions, Severson-Baker said. Some environmentalists have demanded a direct limit of production.

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But it’s not just politicians, scientists and environmental groups adopting network zero as a goal. On Wednesday, ConocoPhillips became the newest company to join an alliance of major Canadian oil producers – collectively representing about 95 per cent of total oil sands production – promoting its own initiative “Pathways to Net Zero”.

“We made a commitment to work together to put together a plan … that reduces emissions. So the ads that came out this week – I guess what I would say, we’re indifferent to those because that’s something we’re already working on,” said the director of Pathways Al Reid on Wednesday.

“The road matters”

If everyone agrees on the goal, the logical next step is to figure out how to get there. And a gradually tightening emission limit is one way to make sure you make steady progress and arrive on time.

“The road is important a lot because the effects of GHGs are cumulative. Reducing earlier is a bigger benefit than doing it later. That’s why having a committed plan for the road to a net zero has value,” said Blake Shaffer, an economist at. the University of Calgary which studies energy and climate change.

Finding out the resources has always been a challenge. But a cap forces political and industry leaders to face that reality.

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Actually implementing a cap won’t be easy – and both Severson-Baker and Shaffer suggest it will lead to difficult choices about how the permitted space for emissions is used. But the big questions now are how much the emissions from oil and gas production can be reduced, how quickly that should happen and and how many governments should help.

The answers will include technologies such as carbon capture capture and storage (CCUS). In addition to proposing an emission limit, the federal government is also advising on plans to provide an investment tax rebate for CCUS. One industry association suggested such a tax rebate would cover 75 percent of costs – Pembina proposed 50 percent – while the government of Prime Minister Jason Kenney in Alberta reportedly asked for $ 30 billion over the next ten years in federal support.

The industry is facing its future

The Pathways initiative introduced by major oil producers envisages a pipeline and storage hub that would connect more than 20 oil sands facilities. In the medium term, it also points to hydrogen development and small nuclear reactors, while also leaving a large place in its long-term projections for offsets and emerging technologies such as direct air capture.

All of this work would be done “collectively” with federal and provincial governments. Two industry executives suggested it would require investments totaling $ 60 billion.

Reid said it would be “difficult” to estimate total cost “but I think it will require an unprecedented level of private and public cooperation to make this work.”

But it won’t make sense to decarbonize all oil projects, Severson-Baker said – especially as global demand for oil declines.

So the push to implement a restriction on oil and gas emissions should also accelerate thinking about how to support people who may be forced to change jobs in the coming decades. The government can help give the industry a “fighting opportunity to meet that limit while maintaining economic performance and jobs,” but beyond that is the question of “how do you implement the transition more smoothly,” Shaffer said.

Tough choices ahead

The notion of a “fair transition” is often advocated, but – as a netizen – it must now be turned into something real and credible.

As they decarbonize the economy, governments may also have to make choices about how limited public finances will be allocated across different sectors and resources, Severson-Baker said.

“If we get into a situation where we have to choose … I think there are a lot of arguments to say that we have to put more into the sectors that we know we really need and will be close to in the future. A carbon-limited world. , “he said.

Severson-Baker said one thing the Alberta government could do now is remove unnecessary regulatory hurdles that hinder the decarbonization projects.

The same Liberal election platform that included a commitment to limit emissions from the oil and gas industry also proposed zero-emission vehicle mandates for car sales and clean electron standard. That makes it quite difficult to claim that oil and gas are being unfairly targeted now.

But the sector’s policy of reducing emissions is uniquely complicated. It would be easier if the industry were not so regionally concentrated. And it’s perhaps unfortunate that the challenge fell to a prime minister named Trudeau (Stephen Harper once promised to do something about oil and gas emissions, but was never able to fulfill himself).

But some prime minister will have to face that reality. And now is as good a time as anyone to do that.

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