Brian Zinchuk is editor and owner of Pipeline Online
Alberta Premier Danielle Smith, with Saskatchewan Premier Scott Moe at the Lloydminster Heavy Oil Show in September. Photo by Brian Zinchuk
Editor’s note: Reaction to federal government’s draft oil and gas emissions cap came in fast and furious on Nov. 4. This is part 1 of the reaction – each piece presented verbatim:
Government of Alberta – Premier Danielle Smith, Minister of Environment and Protected Areas Rebecca Schulz and Minister of Energy and Minerals Brian Jean joint statement
“This production cap will hurt families, hurt businesses and hurt Canada’s economy. We will defend our province, our country and our Constitutional rights.
“Make no mistake, this cap violates Canada’s constitution. Section 92A clearly gives provinces exclusive jurisdiction over non-renewable natural resource development yet this cap will require a one million barrel a day production cut by 2030.
“The evidence is overwhelming. Three reports from reputable firms have shown that these regulations will sucker-punch Canada’s economy, a million barrels cut every day according to S&P Global, $28 billion a year in lost GDP according to Deloitte, and up to 150,000 lost jobs according to the Conference Board of Canada.
“The losses to GDP mean billions a year will disappear from the economy. Billions that won’t be going towards new schools, hospitals and roads, all for a reckless ideological scheme that will not reduce global emissions.
“Ultimately, this cap will lead Alberta and our country into economic and societal decline. The average Canadian family would be left with up to $419 less for groceries, mortgage payments and utilities every month. Canadian parents and workers will suffer while Justin Trudeau outsources the duty to provide safe, affordable, reliable and responsibly produced oil and gas to dictators and less clean producers around the world. We could be the solution. Instead, Ottawa would rather sacrifice our ability to lead.
“Tweaks won’t work. This cap must be scrapped. Alberta’s government is actively exploring the use of every legal option, including a constitutional challenge and the use of the Alberta Sovereignty within a United Canada Act. We will not stand idly by while the federal government sacrifices our prosperity, our constitution and our quality of life for its extreme agenda.”
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Pembina Institute – Janetta McKenzie, Manager of the Pembina Institute’s oil and gas program
“The need to regulate oil and gas emissions is supported by clear evidence. While other economic sectors, and everyday Canadians, have taken steps to reduce their emissions in recent years, emissions from oil and gas production have continued to grow. The companies in this sector are now responsible for almost one-third of Canada’s overall greenhouse gas pollution.
“But there is one part of the oil and gas industry that warrants particular attention: the oilsands. Annual emissions from the oilsands – where six companies account for almost all production – have grown by over 50 million tonnes, an increase of 142 per cent, since 2005.
“Some of those who oppose this regulation have sought to present this issue as a mutually exclusive choice between economic prosperity in Canada, and the fight against climate change. But as our analysis has shown, companies can meet this cap through technological solutions while still growing their production. As the Government of Canada has shown today in its modelling, by 2032 there is a minimal impact to Canada’s GDP as a result of this cap.
“But all of this depends on companies, particularly in the oilsands, being willing to invest in the emissions reduction technologies that are available to them. While we have now witnessed several years of promises and pledges from the oilsands sector to decarbonize its operations, it is still the case that the companies are reluctant to move ahead with projects unless they can be assured of a profitable return on their investments. This is despite billions of taxpayer dollars on offer from the federal and Alberta governments to help pay for close to two-thirds of the upfront cost of carbon capture and storage technology, for example.
“We commend the Government of Canada for consulting with a wide range of stakeholders – including the oil and gas sector, and the oilsands companies – as it has sought to create a regulation that can put the oil and gas industry, and those who work in it, on a path to play a role in Canada’s low-carbon economy of the 2030s and beyond. Reducing emissions from our oil and gas production actually means investing in innovation, skills and technologies to reduce those emissions – a source of prosperity and job creation in provinces like Alberta.
“Although the Government of Alberta and industry groups have in the last few weeks repeatedly cited third-party studies modelling the hypothetical impacts of the emissions cap on the province’s economy, Pembina Institute analysis has found that these studies hinge on the assumption that the industry chooses to take very little meaningful action to reduce emissions, and therefore has no choice but to limit production in the future when the cap actually comes into effect. This is misleading for Canadians. The oil and gas sector has options available to it to futureproof its operations and continue to make an important contribution to Canada’s future economy – but to do so, it must invest in long-promised corporate emissions reduction projects without delay.”
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MEI – an independent public policy think tank with offices in Montreal, Ottawa and Calgary – Krystle Wittevrongel, director of research
Capping emissions in the energy industry will cost Canadian workers dearly, while having only a negligible effect on the environment, observed an MEI researcher in reaction to newly published federal regulations.
“By targeting Canadian producers, the federal government has no effect on global oil demand,” explains Krystle Wittevrongel, director of research at the MEI. “Ultimately, every barrel of oil Ottawa keeps in the ground here will be replaced by a barrel of oil produced elsewhere in the World.
“This announcement has much more to do with Steven Guilbeault’s bias against the energy industry than effective environmental policy.”
Federal Environment Minister Steven Guilbeault is set to publish new regulations today aimed at capping the emissions of Canada’s oil and gas sector at a level 35 per cent lower than in 2019. This cap would apply starting in 2026.
A report published last March by consultancy firm Deloitte estimates that by 2040 the new regulation would lower Canada’s GDP by one per cent in comparison with its potential. In constant 2017 dollars, this represents a $34.5 billion drop in Canada’s economic potential.
According to the same report, capping oil and gas emissions would cause the loss, or prevent the creation, of 112,900 jobs in the country by 2040.
The researcher notes that the jobs in the oil and gas sector are among the highest paid in the country. The average salary of workers in oil and gas extraction is $151,461, which is almost 2.4 times the average Canadian salary.
“There is nothing to indicate that the jobs Guilbeault has in mind for the tens of thousands of workers he seeks to render unemployed are as well compensated as the ones they have now,” explains Wittevrongel. “Considering the negligible effect it would have on oil and gas consumption, it’s easy to understand why workers in the industry think it’s not worth the risk.”
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