According to the most recent data, as of 2022, the oil and gas sector was responsible for 217 million tonnes of carbon dioxide equivalent – or 30.6 per cent of Canada’s overall emissions – annually.
This makes the oil and gas industry the single largest source of emissions in Canada, with the oil sands sub-sector alone being responsible for 87 million tonnes, or 12 per cent of Canada’s overall emissions.
“The need to regulate oil and gas emissions is supported by clear evidence,” said Janetta McKenzie, manager of Oil and Gas with the Pembina Institute.
She adds “While other economic sectors, and everyday Canadians, have taken steps to reduce their emissions in recent years, emissions from oil and gas production have continued to grow.”
While most sector emissions have declined or remained flat since 2005, the oil and gas sector has seen the largest increase, at 11 per cent. As the below figure shows, this increase has been driven by the oil sands – where highly carbon intensive bitumen production has increased, but has not been accompanied by substantive efforts that would reduce absolute emissions.
McKenzie says annual emissions from the oil sands have grown by over 50 million tonnes, an increase of 142 per cent, since 2005. Pembina Institute research has also found that efforts to reduce emissions intensity in the oil sands (amount of carbon dioxide equivalent per barrel) have stagnated and begun to reverse, rising by one per cent since 2018.
Since 2005, all other oil and gas sub-sectors have made progress to reduce emissions. Some of these reductions can likely be attributed to the successful implementation of federal and provincial methane regulations, which have had a greater impact on emissions from conventional oil and gas production, given the scope for methane abatement in those sub-sectors.
“Some of those who oppose this regulation have sought to present this issue as a mutually exclusive choice between economic prosperity in Canada, and the fight against climate change,” said McKenzie. “But as our analysis has shown, companies can meet this cap through technological solutions while still growing their production. As the Government of Canada has shown today in its modelling, by 2032 there is a minimal impact to Canada’s GDP as a result of this cap.
In June 2024, the Government of Canada finalized and passed into law its Carbon Capture Utilization and Storage Investment Tax Credit (CCUS ITC), which covers 50 per cent of companies’ eligible expenses for capture equipment and 37.5 per cent of eligible expenses for transportation and storage equipment — so long as those expenses are incurred before the end of 2030.
“But all of this depends on companies, particularly in the oil sands, being willing to invest in the emissions reduction technologies that are available to them,” said McKenzie.
“While we have now witnessed several years of promises and pledges from the oil sands sector to decarbonize its operations, it is still the case that the companies are reluctant to move ahead with projects unless they can be assured of a profitable return on their investments.”
Pembina commends the Government of Canada for consulting with a wide range of stakeholders – including the oil and gas sector, and the oil sands companies – as it has sought to create a regulation that can put the oil and gas industry on a path to play a role in Canada’s low-carbon economy of the 2030s and beyond.
According to Pembina, reducing emissions from Canada’s oil and gas production means investing in innovation, skills and technologies to reduce those emissions. This will be a source of prosperity and job creation in provinces like Alberta.
“Although the Government of Alberta and industry groups have in the last few weeks repeatedly cited third-party studies modelling the hypothetical impacts of the emissions cap on the province’s economy, Pembina Institute analysis has found that these studies hinge on the assumption that the industry chooses to take very little meaningful action to reduce emissions, and therefore has no choice but to limit production in the future when the cap actually comes into effect,” said McKenzie.
“This is misleading for Canadians. The oil and gas sector has options available to it to future-proof its operations and continue to make an important contribution to Canada’s future economy – but to do so, it must invest in long-promised corporate emissions reduction projects without delay.”
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