Pembina Institute

New report outlines criteria for effective greenhouse gas regulations on Canada’s oil and gas sector Forthcoming federal rules a make-or-break moment for Canada’s 2020 climate target

Published April 2, 2013.

OTTAWA — New recommendations released today by the Pembina Institute set the bar for forthcoming federal greenhouse gas regulations by showing what’s needed from the oil and gas sector to get Canada on track to hit its national climate target.

The federal government says it will publish regulations to limit greenhouse gas pollution from producing and processing oil and gas before the summer.

The Pembina Institute’s analysis indicates that the oil and gas sector needs to make a 42 per cent reduction from its projected 2020 emission level for Canada to achieve its 2020 climate goals.

“The oil and gas sector accounts for nearly a quarter of Canada’s greenhouse gas pollution, and right now there are zero federal constraints on the sector’s emissions,” said Clare Demerse, director of federal policy at the Pembina Institute.

“With a renewed focus on climate change in the U.S., and as a decision approaches on the high-profile Keystone XL pipeline proposal, Canada’s track record on greenhouse gas pollution is under the microscope. Strong regulations would be good news for Canadians and for our economy.”

From 2010 to 2020, emissions from the oilsands are expected to more than double, making it Canada’s fastest-growing source of greenhouse gas pollution. The projected growth in the oilsands is a major reason why the government’s modelling shows that Canada is on track to miss its 2020 climate target by over 100 million tonnes — more than the emissions from Canada’s entire electricity sector.

“The Harper government says it has harmonized Canada’s national climate target with the United States, but we’re nowhere near hitting our 2020 target,” said Matt Horne, the director of Pembina’s climate change program. “Strong oil and gas regulations would help get Canada on track, while weak regulations would leave a gap that would be almost impossible to close.”

Alberta’s intensity-based greenhouse gas regulation is under consideration as a model for federal regulations. If Ottawa uses Alberta’s architecture, it would need to significantly strengthen “the Alberta model” to get Canada on track to hit its 2020 target. This would entail:

  • Setting a sector-wide target that at least reaches a 42 per cent intensity improvement;
  • Setting a price of at least $100 per tonne by 2020 for payments into the technology fund, though a price on the order of $150 per tonne would be  much more likely to close the gap; and
  • Limiting companies’ access to offset credits.

The approach recommended in this report would increase average costs for a typical in situ oilsands facility by an estimated $2.87 per barrel in 2020, after accounting for interactions with royalty and corporate tax rates. A barrel of oilsands bitumen regularly sells for about $70.

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Getting on Track to 2020: Recommendations for Greenhouse Gas Regulations in Canada’s Oil and Gas Sector is available here.

Contact:

Clare Demerse
Federal Policy Director
Cell: 613-762-7449
Office: 613-562-3447 ext. 222

Kevin Sauvé
Communications Lead
Cell: 604-354-2628

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