CALGARY — Chris Severson-Baker, executive director of the Pembina Institute, made the following statement in response to the new memorandum of understanding between the governments of Alberta and Canada:
“Today we were expecting to see an agreement between the governments of Canada and Alberta to strengthening key climate policies that would help make Alberta climate competitive. To be clear, these are regulations that would benefit Alberta, helping futureproof its economy and bringing long-lasting jobs and sustainable investment to the province. After years of Alberta weakening or outright challenging climate policies and regulations, today should have been a reset on how climate policies are being implemented in Canada’s highest-emitting province.
“However, today’s memorandum raises as many questions as it answers. Most concerningly, it opens the door to not only Alberta – but any province – renegotiating new deals on federal climate policies, which will only serve to delay climate action and sow continued investment uncertainty, at a time when Canada must urgently attract private capital to its economy.
“Chiefly, on industrial carbon pricing – the regulation which has the potential to deliver the biggest chunk of emissions reductions and spur the most private investment in low-carbon industries – it appears that Alberta has committed to strengthening its system in a way that has the potential to deliver substantive emissions reductions. A strong commitment to a strong industrial carbon price and stable credit market needed to be a minimum outcome of these negotiations. This appears to be advancing in the right direction, but we expect much more detail by next April when these negotiations are set to conclude.
“On the Clean Electricity Regulations: it is now very unclear how Alberta will avoid locking in an expensive, outdated, high-emitting electricity grid that will limit its economic potential and keep bills high for Albertans. All around the world, governments are recognising that an abundant supply of low-cost clean electricity goes hand-in-hand with economic prosperity and energy security. The Clean Electricity Regulations were designed to facilitate the buildout of clean electricity across every province, in a way that accommodated each jurisdiction’s specific needs. The federal government is now inviting a series of special deals. More than anything, the Clean Electricity Regulations send a signal to renewables developers – who have billions of dollars of capital ready to deploy – that their investment is welcome in Canada. Exempting Alberta from these regulations yet again sends the signal that Alberta is closed for business to renewable electricity developers; an industry which has already suffered under Alberta’s erratic electricity policy changes over the last two years.
“On methane: delaying the methane reduction target for Alberta’s oil and gas industry to 2035 is unwise. Reducing methane emissions quickly, given methane’s near-term warming impact on the climate, is one of the best things we can do to stave off the worst impacts of climate change. It is also highly achievable. As British Columbia has already shown, methane emissions can be dramatically reduced, even as more oil and gas is produced. As our analysis has shown, methane regulations spur the creation of skilled jobs and support hundreds of small businesses in oil- and gas-producing provinces. It is unacceptable that Alberta should be held to a lower standard than other provinces on this; both the climate and Alberta’s economy will ultimately feel the impacts.
“Nevertheless, today’s memorandum will not change the structural decline in global oil demand expected to start within the next decade, driven by explosive growth of electric vehicles sales in Asian markets. In China, for example, there are more than 37,000 new electric vehicles sold every day – more than 13 million this year alone.
“In other words, the business case for a brand-new oil pipeline gets more tenuous every day – such a pipeline would come online just as many in industry expect global oil demand to be in permanent decline. This is why there is still no private sector proponent willing to invest in a new oil pipeline from Alberta. Shareholders are rightly skeptical about gambling tens of billions of dollars on a bad bet.
“As the governments of Canada and Alberta continue negotiations with the oilsands industry over the conditions for a new pipeline, we encourage them to consider our analysis that shows the emissions generated in order to fill a brand new pipeline would undo any emissions reductions that could come from the Pathways carbon capture project.”
Quick facts
- Oilsands emissions have increased 142 per cent since 2005 and would continue to increase in a “grand bargain” scenario where both Pathways and a new pipeline are built.
- Despite record production levels, oilsands producers are cutting their workforce. In 2012, the Canadian oil sector created 38 jobs for every thousand barrels per day of production, but today that number has dropped to fewer than 22 jobs.
- Major oil producers like Shell, BP, and Equinor; the International Energy Agency; and global risk managers like DNV all expect global oil demand to begin a permanent decline within the next decade.
- According to the most recent Pembina Institute analysis, since October 2023, projects amounting to almost 11 gigawatts of wind, solar and energy storage have been withdrawn from the Alberta Electric System Operator project development queue. While attrition is normal, 44 per cent of renewable energy projects have been cancelled compared to 11 per cent of gas capacity proposed in the same timeframe.
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Contact
Benjamin Alldritt
Senior Communications Lead, Oil & Gas, Pembina Institute
587-328-1955
Background
Report: A Not-So-Grand Bargain: The quest for decarbonized barrels in the oilsands
Blog: Grand bargains and perilous pitfalls
Infographic: Wind and solar projects in Alberta cancelled at an alarming rate
Media Release: B.C. meets its methane emissions target two years early, while still growing oil and gas production
