Canada’s Oil and Gas Challenge

Oil and gas emissions in Canada are rising as oil and gas companies in Canada systematically weaken and delay Canada’s climate plan while reaping more federal subsidies and continuing to increase oil production.
Aerial view of fracking infrastructure in Northeastern BC.

Federal and provincial governments in Canada want to be seen as climate leaders. Yet they continue to introduce policies and spend billions of taxpayer dollars to expand oil and gas production.

Working with Environmental Defence Canada, has released Canada’s Oil & Gas Challenge, a report that details what Canada must do to curtail climate change, what Canada has promised to do, and how the very same governments have been regularly meeting with oil and gas lobbyists, capitulating to their demands for more even more subsidies from taxpayers than the industry is already receiving.

Canada’s existing 2030 greenhouse gas (GHG) reduction target under the Paris Agreement is highly insufficient. As such, it is welcome that Canada’s Environment and Climate Change Minister has committed to strengthen it. However, the level of ambition and action will have to be at least doubled for Canada to be in line with what the latest science suggests is required to avoid catastrophic impacts from climate change.

The current growth trajectory for oil and gas production in Canada is wholly inconsistent with the country meeting even its existing target.

This is the problematic contradiction that exists within Canada. On the one hand, federal and provincial governments want to be seen as climate leaders, and on the other hand have introduced policies, spent billions of taxpayer dollars, and used significant political capital to facilitate and support the continued expansion of oil and gas production.

The oil and gas sector is the largest and fastest growing source of GHG emissions in Canada. Because policies to adequately address these emissions have not been a major part of Canada’s Pan‐Canadian Framework on Clean Growth and Climate Change (PCF), any emission reductions from the plan are predicted to be overwhelmed by increased emissions from expanded production of oil and gas.

Canada should be doing much more than its current target. The Intergovernmental Panel on Climate Change (IPCC) Special Report on 1.5 degrees highlights the many reasons for limiting warming to that temperature. They state that the additional global impacts that will occur between 1.5 degrees and 2 degrees Celsius of average global warming significant and dire, potentially beyond the point where changes are irreversible. It is why the Canadian government supported and even fought for the reference to a 1.5 degree limit in the Paris Agreement.

In contrast to allowing increased production and GHG emissions from Canadian oil and gas, the IPCC estimates that global oil production needs to shrink by 37% by 2030 and by 87% by 2050 (all reductions are from 2010 baselines). Natural gas production must decline by 25% by 2030 and 74% by 2050.

GHG reductions for Canada’s 2030 Paris Agreement target would therefore have to be at least doubled (from ‐30% to ‐60% below 2005 by 2030) in order for Canada to take on the same emission reductions as the global average under the safest IPCC 1.5 degree scenario. That’s because, contrary to industry claims, the average carbon intensity of Canadian oil has gradually increased from 1990 until 2016 (latest available data).

Under the Canadian government’s current plan, by 2030 oil and gas will be responsible for 38% of Canada’s total emissions. This in turn would force steep cuts in other sectors, and provinces without oil and gas development.

The Canadian climate framework has some ambitious policies to reduce, and in some cases eliminate, GHGs from emitting sectors, including coal power, road transportation, and buildings. But the federal and provincial governments have proposed much less for the upstream oil and gas sector. As the industry faces stiff headwinds due to high cost structures, low oil and gas prices, and opposition from First Nations and Canadian citizens, governments have facilitated and supported oil and gas expansion. Significantly, new government subsidies totaling in the billions of dollars have been introduced by the federal, Alberta, and British Columbia governments.

The Alberta government has increased the already billions of dollars it extended in subsidies to oil and gas companies. It has also weakened regulatory oversight in several ways. Despite commitments to the contrary, Alberta has failed to pass regulations to cap GHG emissions from oil sands projects. It has accepted the oil sands industry’s plans, which violate the government’s own framework, by allowing continued increases in the volume of tailings ponds and delaying land reclamation by up to a century.

The oil and gas industry is aggressively lobbying Ottawa to weaken government policies on climate change. The industry has actively attempted to weaken, kill, or delay an improved environmental impact assessment for energy projects, the federal Clean Fuel Standard, methane regulations at the federal and provincial levels, and carbon pricing.

Canada appears intent on finally addressing climate change and building a low carbon economy, but the idea that this can be done without extensive cuts in oil and gas production is a fallacy. The solution for Canadian governments is to take seriously the IPCC Special Report on 1.5 degrees, and implement policies that will get Canada on a low carbon trajectory by 2030 and to a zero carbon goal by 2050. That would include:

  • Implementing policies that restrict the supply of oil and gas from Canada, including a climate test for new energy projects, the retirement of approved licenses, and the near‐term elimination of all fossil fuel subsidies
  • Developing a just transition strategy for workers and communities in all fossil fuel sectors that is based on production levels aligned with achieving a zero carbon goal by 2050
  • Strengthening climate policies including methane regulations, carbon pricing, and measures to reduce emissions in emitting sectors such as transportation and buildings
  • Developing an accountability mechanism that tracks progress on climate action and ensures course corrections
  • Fully implementing the U.N. Declaration on the Rights of Indigenous Peoples