The cap set by these Draft Regs is not stringent enough and will make it very difficult to achieve Canada’s 2030 emissions reduction target

An understanding of the numbers is essential to understanding the proposed Framework.

In 2021, Canada submitted its enhanced Nationally Determined Contribution (NDC) to the United Nations, committing to cut its GHG emissions to 40%–45% below 2005 levels by 2030.

Under the Canadian Net-Zero Emissions Accountability Act, the Canadian Environment and Climate Change Minister must establish an emissions reduction plan to achieve that target.

The 2030 Emissions Reduction Plan: Canada’s Next Steps for Clean Air and a Strong Economy (the “ERP”), published by ECCC on 29 March 2022, set out in considerable detail the programs and policies that ECCC would implement to reach our pledge under the Paris Agreement of reducing Canada’s GHG emissions by 40 to 45% below 2005 levels by 2030.

The ERP called for reductions in GHG emissions from oil and gas production of 31% from 2005 levels by 2030.  Because emissions from oil and gas production had risen considerably between 2005 and 2019, this equated to reductions of 42.5% from 2019 levels by 2030.

In the ERP, ECCC included a long table that considered various GHG emitting sectors.  For the “Oil and Gas” sector, it provided the following data:

Figure 1:  Canadian Oil and Gas Sector Actual and Projected GHG Emissions

According to the ERP on 29 March 2022, therefore, the O&G Emissions Cap needed to cut 81 Mt of emissions from 2019 levels by 2030:

 191

–110

   81

So the ERP called for Canada to cut emissions from oil and  gas production by 81 Mt from 2019 levels, and have an emissions cap of 110 Mt in 2030.  It stated:

In order to meet its climate objectives with respect to the oil and gas sector, the Government will pair increased stringency in measures to accelerate and deepen emissions reductions from the sector with a range of supporting policies and investments, including those to support workers.

This includes working with partners and stakeholders to design the cap on oil and gas emissions, as well as to identify supporting infrastructure for the transition (e.g., CO2 pipelines for carbon storage). Reducing methane emissions in the sector will also be key to meeting the 2030 target.

However, the estimated emissions reductions from the Draft Regs are much less than those contemplated by the ERP.  The RIAS states:

The proposed Regulations would set the emissions cap for each year of the first compliance period at 27% below emissions levels reported for 2026 (i.e. only emissions from operators that are required to report in 2027 for 2026). That level is estimated to align with 35% below 2019 emissions levels, but would ensure that the actual cap reflects reported emissions and accounts for changes in production and emissions in the near future.

The sector would be permitted to emit above this level through the use of limited compliance flexibility mechanisms. If the use of compliance flexibilities were maximized, the sector could emit up to a legal upper bound estimated to be 19% below 2019 levels.  [Emphasis added.]

In 2019 emissions from oil and gas production were 226 Mt.  Of that amount, 20 Mt was from “downstream production” (such as petroleum refining and natural gas distribution) and 206 Mt was from “upstream production” (such as natural gas production and processing, conventional oil production, and oil sands mining, in-situ, and upgrading).  The Draft Regs only apply to upstream production, not downstream production.  Thus the emissions they address are the 206 Mt of upstream production.  Reducing that amount by 35% would leave us with 134 Mt of emissions from upstream oil and gas production in 2030.

When the “compliance flexibilities” are permitted, reducing 2019 emissions by only 19% would leave us with [206 –  206 * .19 =] 167 Mt of emissions from oil and gas production in 2030.

That is 57 Mt more than the Emissions Reduction Plan said was necessary for Canada to meet its 2030 target of 40%-45% below  2005 levels.

ECCC is predicting that, prior to these regulations having any effect as a cap, 2026 emissions will be 156.6 Mt. [p.3298 RIAS]:

“The Proposed regulations would set a sector-wide emissions cap on covered emissions at 27% below 2026 reported emissions.  The baseline scenario estimates the 2026 emissions to be 156.6 Mt, resulting in a modeled emissions cap of 114 Mt  [i.e. 156.6 – 156.6*.27 = 114.318 Mt].”

If one adds in the 20% of “compliance flexibility” from some combination of “Canadian offset credits” and “decarbonization units”, we’re at [114 / 0.8 =] 142.5 Mt.  This rounds to 143 Mt, and the RIAS states that 143 Mt of emissions is the “Legal Upper Bound” if producers avail themselves of all the compliance flexibilities that they are permitted to use.  Then add in the 20 Mt from the downstream oil & gas production not covered by the Draft Regs (and assuming that they are not reduced by some other policy), and we’re at 163 Mt.

That is still 53 Mt more than the Emissions Reduction Plan said was necessary for Canada to meet its 2030 target of 40%-45% below 2005 levels.

In its modelling analysis of the Draft Regs set out in the RIAS, ECCC has estimated that the Draft Regs will reduce annual emissions in 2030 by only 8.7 Mt.

Between the release of its National Inventory Report 1990–2021: Greenhouse Gas Sources and Sinks in Canada (the “2023 National Inventory Report” which was released in April of 2023, and the release of its 2024 National Inventory Report, Environment and Climate Change Canada (“ECCC”) changed its methodology for calculating annual GHG emissions.  As a result, ECCC changed its estimate of what Canada’s 2005 emissions were.  The 2003 National Inventory Report states that Canada’s 2005 GHG emissions were 732 Mt.  Using its new methodology in the 2024 National Inventory Report, ECCC increased its estimate of Canada’s 2005 emissions to 761 Mt.

To achieve even the less ambitious target of 40% (i.e. 2030 emissions of 457 Mt) Canada will need to reduce its 2022 emissions of 708 Mt by 251 Mt.

Emissions from Canadian oil and gas production in 2022 were 217 Mt.  That was 31% of Canada’s total emissions.  If we are to achieve even the less ambitious 2030 target by reducing our emissions by 251 Mt, it is almost impossible to believe that we will succeed, regardless of whether the reductions are estimated by a percentage of 2019 emissions (57 Mt less reduction than called for by the ERP), by ECCC’s calculation in the RIAS based on an estimated 156.6 Mt of emissions in 2026 (47 Mt less reduction than called for by the ERP), or ECCC’s modelled estimate that the Draft Regs will only reduce 2030 emissions by 8.7 Mt.

Recommendations:

Citing some of the facts and information above (and any other research you want to do), and using your own words, consider making submissions to the online public consultation similar to these:

• Tell ECCC that the emissions cap established by the emissions allowances, the Canadian domestic offset credits, and Decarbonization fund is simply too high.  It will do almost nothing to achieve Canada’s 2030 emissions reduction target.
• Tell ECCC that it is not fair to require other industries and Canadian citizens to do as much as is required of them to achieve Canada’s 2030 emissions reduction target if so little will be required from Canada’s oil and gas industry.