2024 Oil & Gas Emissions Cap POLICY TOOLKIT – 5f. The O&G Emissions Cap is based on O&G Production Increasing by 2030

Climate Messengers Canada Policy Toolkit

5. The Problems With The Framework

Toolkit Contents

  1. EXECUTIVE SUMMARY
  2. BACKGROUND – THE OIL & GAS SECTOR GHG EMISSIONS PROBLEM
    1. Production Emissions
    2. Consumption Emissions
  3. BACKGROUND – A TRICKY JURISDICTIONAL BALANCE
  4. HOW THE O&G EMISSIONS CAP WORKS
    1. Scope of Application
      1. Covered Facilities
      2. Covered Activities
      3. Covered Greenhouse Gasses (GHGs)
    2. The Emissions Cap Level: The Starting Point
    3. The Legal Upper Bound: How Much Can Really Be Emitted
  5. THE PROBLEMS WITH THE FRAMEWORK
    1. The 2030 Cap Level Is Not Ambitious Enough – The Numbers
    2. The Cap Proposed by the Framework Will Make It Almost Impossible to Meet Our Canada-Wide 2030 Target
    3. The Framework’s O&G Emissions Cap Will Do Less Work Than It Appears
    4. The O&G Emissions Cap Has Effectively Been Dictated by the Oil and Gas Producers
    5. The Oil and Gas Industry’s Re-investments to Reduce Emissions Has Been Contemptible
    6. The O&G Emissions Cap is based on O&G Production Increasing by 2030
    7. The “Other Compliance Units” Are Mostly a Very Bad Idea
  6. COMPLIANCE FLEXIBILITIES
    1. Emissions Trading
    2. Multi-Year Compliance Periods
    3. Banking of Emissions Allowances
    4. Making Contributions to a Decarbonization Fund
    5. Domestic Offset Credits
    6. Internationally Transferred Mitigation Outcomes (ITMOs)
    7. Delayed Reporting and Verification
  7. SUGGESTED RESPONSES TO THE FRAMEWORK’S DISCUSSION QUESTIONS
  8. I DON’T HAVE TIME TO READ THIS LONG DOCUMENT. WHAT SUBMISSIONS SHOULD I CONSIDER MAKING?
  9. ACRONYMS & GLOSSARY

f. The O&G Emissions Cap is based on O&G Production Increasing by 2030

It is 2024 and the facts about climate change are well-known. The urgency to reduce GHG emissions is so well-accepted that many national and sub-national governments, including the Canadian federal government, refer to it as the “climate crisis”.  In 2023, the UNIPCC stated, “There is a rapidly closing window of opportunity to secure a liveable and sustainable future for all.” [66] Even normally conservative institutions like the International Energy Agency have said that no new fossil fuel infrastructure should be built if we are to limit warming to 1.5°C. [67]

The 2023 Production Gap Report, produced by the United Nations Environmental Program, the Stockholm Environmental Institute, and other organizations, says it well:

Continued production and use of coal, oil, and gas are not compatible with a safe and livable future.

Major producer countries have pledged to achieve net-zero emissions and launched initiatives to reduce emissions from fossil fuel production, but none have committed to reduce coal, oil, and gas production in line with limiting warming to 1.5°C.

There is a strong need for governments to adopt both near- and long-term reduction targets for fossil fuel production and use to complement other climate mitigation benchmarks and reduce the risks of stranded assets. Countries with greater transition capacity should aim for faster reductions than the global average.

Countries should aim for a near total phase-out of coal production and use by 2040 and a combined reduction in oil and gas production and use by three-quarters by 2050 from 2020 levels, at a minimum.

Governments with greater transition capacity should aim for more ambitious reductions and help finance the transition processes in countries with limited capacities. [68]

The stakes could not be higher, but regretfully Canada is one of the countries that has not committed to reduce coal, oil, and gas production in line with limiting warming to 1.5°C. In fact, the Framework is based on the assumption that fossil fuel production will increase between now and 2030.

Figure 3: Production levels used to develop the proposed 2030 emissions cap (allowance levels) and legal upper bound (maximum allowable emissions) [69]

 

2019 Production Levels

2030 Production Levels based on the CER’s Canada Net Zero Forecast

Increase

Total oil production (1000 barrels per day) 

4,400

5,153

+17%

– Oil Sands 

(1000 barrels per day)

3,126

3,730

+19%

– Conventional oil 

(1000 barrels per day)

1,274

1,423

+12%

Natural gas production 

(petajoules per year) 

7,470

7,845

+5%

LNG production 

(billion cubic feet per day) 

0

3.91

n/a – this is a whole new industry

According to the Framework, the emissions cap is explicitly designed to, “make Canada a highly efficient producer [of oil and gas] supplying global demand.” [70]

For climate-concerned Canadians, this admission is shocking and distressing. To put it mildly, it is hard to see how this aligns with Canada’s international commitments or with the reality recently acknowledged at COP28 that the world must, “transition away from fossil fuels in energy systems, in a just, orderly and equitable manner, with developed countries continuing to take the lead.” [71]

Climate justice demands that wealthy countries like Canada, that are responsible for the vast majority of historical GHG emissions, lead the transition rather. Canada should not be enabling O&G corporations’ determination to make as much money as possible supplying the products that threaten the wellbeing of all of us.

Recommendations:

Tell the federal government (using references to the papers we cite here, as you may wish):

• While it is clear that the federal government does not have authority to limit O&G production, they must get creative and use every tool in the toolbox to discourage O&G production and help Canada transition to a fossil fuel-free future.

 
Citations
  1.  Janetta McKenzie & Scott MacDougall, “Comparing Canadian and American Financial Incentives for CCUS”, Canadian Climate Institute and the Pembina Institute, March 2023.  Retrieved on  11 January 2024 from https://climateinstitute.ca/wp-content/uploads/2023/03/comparing-canadian-and-american-incentives-ccus-oil-sector.pdf
  2.  Pembina Institute, Waiting to Launch 2022 year-end update.  Retrieved on 16 December 2023 from https://www.pembina.org/reports/waiting-to-launch-update-q4-infographic.pdf
  3.  Gordon Laxer, Posing as Canadian: How Big Foreign Oil captures Canadian energy and climate policy, December 2021, p. 4.  Retrieved on 16 December 2023 from https://canadians.org/resource/bigforeignoil/
  4. Retrieved on 16 December 2023 from https://pathwaysalliance.ca/who-we-are/our-organization/
  5.  Pembina Institute, Waiting to Launch 2022 year-end update.  Retrieved on 16 December 2023 from https://www.pembina.org/reports/waiting-to-launch-update-q4-infographic.pdf
  6.  Pembina Institute, “Waiting to Launch 2023 mid-year update”, Retrieved on 11 January 2024 from  https://www.pembina.org/reports/waiting-to-launch-update-q2-2023-infographic.pdf