Canada’s largest fossil fuel companies are lining up to dismiss the federal government’s new emissions cap for their sector as ‘very aggressive’ and ‘almost unrealistic’, even as Environment Minister Steven Guilbeault rushes to offer them flexibility and an extended deadline to reach the long-awaited target.
Guilbeault’s 29-page emissions cap discussion paper, released in mid-July, consistently showed deference to the fossil fuel industry’s current footprint in the Canadian economy, laying out the emissions as the way to keep the industry going and suggesting no path towards reducing oil and gas production.
But obviously not deferential enough. With public consultations underway until September 30, Canadian Fossils wasted no time in pushing back the plan.
“It’s very aggressive and stretches the capacity of what is technically and economically feasible,” Imperial Oil CEO Brad Corson told analysts late last month, adding that the plan amounted to an overrun by Ottawa. . This was after his company reported profits of C$2.41 billion for the second quarter of the year, six times the C$366 million it had taken in during the same period in 2021.
“It’s 30% ambitious,” said MEG Energy CEO Derek Evans. “I don’t know how we get to 42%. I think personally, IMHO, that’s almost unrealistic.
“In our view, this cap is unnecessary and overambitious given our stated preference for government and industry to continue to work together…to achieve an already announced emissions reduction target,” Tim McKay, President of Canadian Natural resources ltd. (CNRL), said last week. CNRL’s second-quarter profits more than doubled from $1.6 billion to $3.5 billion over the past year, according to The Canadian Press.
“As presented, the two options for capping emissions have the potential to limit oil and natural gas production in Canada by adding regulatory burden and eliminating options for economy-wide cooperation. on emissions reductions,” added Lisa Baiton, President and CEO of the Canadian Association of Petroleum. Producers, in a statement to CP.
The working paper notes that the fossil fuel sector is the country’s biggest carbon polluter, responsible for 27% of total emissions. He outlined two options to reduce these emissions by 31% below 2005 levels, or 42% below industry’s 2019 output, by 2030: a cap and trade system that would set regulated limits for sector emissions, or a new carbon price. system for large transmitters.
He noted that oil and gas emissions increased by 5% between 2005 and 2020, a period in which fossil production increased by 26%, driven by a tripling of oil sands/oil sands production and more than doubled emissions, from 35 to 81 million tonnes. . Despite declining emissions per barrel produced, “Canadian oil production’s GHG emissions intensity is among the highest in the world, driven by combustion-intensive oil sands production processes,” the document says.
A few days after its publication, Guilbeault emphasized the language of the discussion paper which offered the industry flexibility to meet its objectives, beyond the 2030 deadline.
“They should still meet the 2030 targets, but we would allow, for a short period of time, in a limited way, the use of flexibility mechanisms,” Guilbeault told CBC on July 25. “Basically, these companies could use carbon credits to meet some of the regulatory requirements for reducing emissions. But again, it would be for a short time, for a short period, two years, and it would be in limited supply.
The minister’s senior communications adviser, Bruce Cheadle, said it was just ‘a matter of trying to show flexibility and goodwill’.
The next round of goodwill unfolded late last week, after UN Secretary-General António Guterres denounced the “scandalous” profits and “grotesque greed” of global industry . Canada’s Department of Finance told CBC that Ottawa has no plans to introduce a new windfall tax on Canadian fossil fuels, saying in an emailed statement that “we have been and remain committed to doing so that everyone pays their fair share of tax”.
NDP Finance Critic Daniel Blaikie responded that there is “absolutely” a place for the federal government to tax “excess profits” at a time when “people are really under pressure when it’s about being able to afford” rent, food and gas, CBC writes.
“We’ve seen Tories in the UK do this, for Pete’s sake,” Blaikie said, after then-UK Prime Minister Boris Johnson’s government introduced a windfall tax on 25% on fossil production in the North Sea, but with a built-in incentive for new oil and gas exploration.