2024 Oil & Gas Emissions Cap POLICY TOOLKIT – 2. BACKGROUND – THE OIL AND GAS SECTOR GHG EMISSIONS PROBLEM

Oil & Gas Cap Policy Toolkit​

2. Background - The Oil & Gas Sector GHG Emissions Problem

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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

a. Production Emissions

In 2019, 26% of all of Canada’s greenhouse gas (“GHG”) emissions came from the production of oil and gas.  Of the 730 Megatonnes (“Mt”) of CO2e of total Canadian GHGs in 2019, 191 Mt were from oil and gas production. 

The federal government’s 2022 discussion paper noted that, “addressing emissions from the oil and gas sector — the largest source of GHG emissions in Canada — is critical to the achievement of Canada’s climate goals and international commitments.” [9] Quite simply, we cannot meet our emissions reduction targets and do our part to secure a livable future for all without putting a limit on emissions from the production of oil and gas.

b. Consumption Emissions

The emissions created by the production of fossil fuels are dwarfed by the size of the emissions from using (i.e., burning) them.

When fossil fuels are burned within Canada, the GHGs are counted toward Canada’s annual GHG emissions.  They are subject, one way or another, to the federal/provincial “carbon tax system” (with some exceptions and gaps in coverage that will not be discussed here). The objective of the “carbon tax” is to create, “a financial incentive for people and businesses to pollute less.” [11] By putting a price on GHG emissions, people will change their behaviour to find cheaper, more climate-friendly options.

But of course the climate doesn’t care where GHG emissions take place. Canada exports a large proportion of our oil and gas. The GHGs emitted from the fossil fuels that were produced in Canada in 2019, but that were exported and consumed in other countries, totaled 954 Mt. 

According to the national GHG emissions accounting rules established by the United Nations Intergovernmental Panel on Climate Change (the “UNIPCC”), those 954 Mt are counted as part of the annual GHG emissions of the country in which they are consumed, not in the country where the fossil fuels were produced. [12]

Citations
  1.  Environment and Climate Change Canada, National Inventory Report, 1990-2019: Greenhouse Gas Sources and Sinks in Canada – Canada’s Submission to the United Nations Framework Convention on Climate Change, Part 1. p. 10, Figure ES-7.  Retrieved on 10 January 2024 from https://publications.gc.ca/collections/collection_2021/eccc/En81-4-2019-1-eng.pdf.  Note that the calculations of a given year’s GHG emissions for Canada can change over time.  For example, this 2021 National Inventory Report for Canada stated that Canada’s 2019 emissions were 730 Mt, whereas Canada’s 2022 National Inventory Report revised that figure to 739 Mt.
  2.  Environment and Climate Change Canada (ECCC), Options to Cap and Cut Oil and Gas Sector Greenhouse Gas Emissions to Achieve 2030 Goals and Net-Zero by 2050 – discussion document, 18 July 2022. (Hereafter the “Discussion Document”). Retrieved on 15 December 2023 from https://www.canada.ca/en/services/environment/weather/climatechange/climate-plan/oil-gas-emissions-cap/options-discussion-paper.html.
  3. Environment and Climate Change Canada, “How carbon pricing works”, retrieved 15 January, 2024 from https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work/putting-price-on-carbon-pollution.html.
  4. Fraser Thompson, “To avoid climate catastrophe, Canada must account for its hidden emissions”, Canada’s National Observer, 27 July 2021.  Retrieved from https://www.nationalobserver.com/2021/07/27/opinion/canada-hidden-fossil-fuel-emissions-avoid-climate-catastrophe on 5 August 2022.  See also https://ecojustice.ca/to-avoid-climate-catastrophe-canada-must-account-for-its-hidden-emissions/, retrieved 5 August 2022.