The Canadian Climate Institute estimates that oil and gas emissions increased 1 per cent from 2022, and now comprise 31 per cent of Canada’s national total.ED JONES/Getty Images
An early estimate of Canada’s national greenhouse gas emissions indicates a drop of about 1 per cent in 2023, but the oil and gas sector has continued its long-standing trend of steadily increasing emissions, undermining gains in other sectors.
The estimate by the Canadian Climate Institute, an environmental think tank, shows that Canada’s emissions are now 8 per cent lower than 2005 levels, the baseline year for the country’s 2030 target of a 40- to 45-per-cent reduction. But oil and gas emissions increased 1 per cent from 2022, and now comprise 31 per cent of Canada’s national total, according to the estimate. That’s in contrast with emissions from the electricity sector, which are 62 per cent lower than they were in 2005.
The report, released Thursday, is a precursor to the official 2023 National Inventory Report from the federal government to the United Nations Framework Convention on Climate Change, slated for release in April. This is the institute’s third annual early estimate of national emissions.
Dave Sawyer, the institute’s principal economist, told media during a Wednesday briefing that Canada is “continuing to work against this rise in emissions coming out of oil and gas,” and needs to focus on how to decouple rising emissions from economic growth, or risk missing its climate target; in other words, it must lower its emissions intensity, which is the emissions per unit of economic activity.
“We’re not on track to 2030 with that level of emission intensity,” Mr. Sawyer said of Canada’s climate goals. “Although there’s modest progress, we need to pick up the pace and we need to build momentum.”
On the oil sands specifically, a separate report released Thursday by the Pembina Institute, an environmental think tank, pegs that sector alone as Canada’s highest emitter, responsible for about 12 per cent of the country’s overall emissions.
As its emissions increase, the oil sands sector remains in a strong financial position, which companies are using to pay down debt, give record returns to shareholders and invest in increased production capacity.
But they are failing to spend on activities to reduce their environmental footprint, according to the Pembina report. It notes that companies say they are working toward net-zero by 2050, but “time is now quickly running out” for them to deliver on emissions-reduction pledges.
Report author Matt Dreis said in an interview that, while there has been a reduction in oil sands emissions intensity (the level of emissions per barrel produced) over the past decade, movement has stagnated in recent years – and absolute emissions have gone up.
That analysis is reflected in the emissions estimate for the oil and gas sector as a whole. Mr. Sawyer, from the climate institute, said it has had one of the highest decreases in emission intensity, despite having the largest increase in absolute emissions since 2005.
While the estimate doesn’t parse out the impact of specific policies on pollution, Mr. Sawyer said that the federal government’s large-emitter programs such as industrial carbon pricing and the oil and gas emissions cap will play a large role in driving down emissions.
Given the urgent need for a global shift to lower-carbon energy systems, and the importance of the oil and gas sector to Alberta’s economic stability and Canada’s export balance, Mr. Dreis said it’s crucial that companies prioritize reducing their environmental footprints – especially with corporate guidance focused on maximizing production.
“We just haven’t seen the meaningful emissions-reduction investments that we would expect to see,” particularly given the suite of government incentives available to facilitate that spending, Mr. Dreis said.
Take carbon capture and storage (CCS). The federal CCS investment tax credit covers 50 per cent of companies’ eligible expenses for capture equipment and 37.5 per cent of eligible expenses for transportation and storage equipment incurred before the end of 2030. Alberta, too, has developed a CCS incentive program to run alongside the federal one.
Environmental groups criticize the programs, saying taxpayers should not subsidize the fossil fuel sector.
Canada’s largest oil sands producers, through an industry group called the Pathways Alliance, advocated long and hard for the incentives, but there has been little movement by Pathways members to take advantage of the offer on the table, Mr. Dreis said.
“Alberta is one of the leaders as far as carbon capture storage goes. We have operating CCS projects, we’ve built large carbon carbon dioxide pipelines, and there’s the regulatory environment to get to move these projects forward,” Mr. Dreis said.
“CCS isn’t the only solution, but for for the oil sand sector and Alberta and Canada’s oil and gas industry, it is going to be a big player.”
Kendall Dilling, the president of the Pathways Alliance, said the group is still pursuing its foundational CCS project – a proposed transportation line to gather captured carbon dioxide from more than 20 oil sands facilities and move it to a proposed underground storage hub near Cold Lake, Alta.
He said that, while the federal investment tax credits for CCS are an important part of getting it built, they are “only one piece of the fiscal framework that would need to be in place.”
Mr. Dilling said Pathways continues to work with federal and provincial governments to determine the most appropriate way to enable large investments in major projects.