Ottawa’s push to have oil and gas companies cut emissions by at least one-third of 2019 levels by 2030 is not only “unrealistically ambitious” but also risks curtailing production, CIBC says.
Environment Minister Steven Guilbeault, who announced the plan at the United Nations Climate Change Conference in Dubai, the United Arab Emirates, said that “pollution from the oil and gas sector is still going up” and that the emissions cap would “establish a pathway to carbon neutrality by 2050.”
At the announcement, Natural Resources Minister Jonathan Wilkinson added that the oil and gas cap is an “important part of Canada achieving its goal of a 40 to 45 percent reduction across the economy by 2030.”
The emissions cap would take the form of a cap-and-trade system. The oil and gas sector will be able to buy a limited number of carbon offset credits or contribute to a decarbonization fund to lower the requirement to cutting just 20 to 23 percent.
‘De Facto Production Cap’
CIBC’s Mr. Merwat and Mr. Fong reiterated in their note that the timing of the cap remains “unrealistically ambitious” even though they view the imposed reduction as being “largely feasible from a technological standpoint.”“It is simply unrealistic in our view to expect 20 megatonnes of carbon capture to come online in five years given the scale and operational learnings required,” they wrote. “In that sense, achieving the emissions target, as stated, would in effect become a cap on production.”
“It’s an emissions cap, it is not a production cap, because that is outside of our jurisdictional authority,” he said.
He was responding to host Catherine Cullen who asked what he would say to environmental groups that criticized the Liberal government for not moving fast enough to cap the emissions.
“Canada is a complicated country and production is the responsibility of the provinces, not the federal government,” the minister said.
“We have to clearly stay in our lane and the Supreme Court has been very clear about that. We regulate emissions. And what we are doing is focusing on how fast we can go with respect to what is technically feasible to get done between now and 2030, to ensure that the sector is making a significant contribution to achieving Canada’s overall climate plan.”
In her statement posted on X on Dec. 7, Ms. Smith said the move by Ottawa was an “intentional attack” on her province’s economy and the financial well-being of millions of Albertans and Canadians.
She added that the Trudeau government is infringing provincial jurisdiction.
“Alberta owns our resources and under the constitution we have the exclusive jurisdiction to develop and manage them,” she said.
‘Our Constitutional Right’
Saskatchewan Premier Scott Moe also condemned Ottawa’s regulatory framework to cap oil and gas emissions.“Saskatchewan remains opposed to the new methane regulations and the oil and gas emissions cap, and we will protect our constitutional right to build our economy in accordance with the priorities of Saskatchewan families and businesses,” the premier said in his statement.
Mr. Moe stressed that both policies would burden the province’s energy sector with “more red tape and regulations.”
“These new federal policies will have serious economic impacts on Canadians and limit our sustainable Canadian energy products from providing heat and electricity to the world,” he said.
