OP-ED | Oil and gas emissions cap unnecessary, unaffordable, unattainable

The federal announcement of a Canadian oil and gas emissions cap at COP28 is the equivalent of a ribbon cutting in a hotly contested constituency. It’s a great photo op and gets lots of press. But like many ribbon-cuttings, it is a symbolic gesture that can have non-symbolic consequences.

Enough is enough. Canada doesn’t need an oil and gas emissions cap. We don’t need another set of regulations layered on top of layers of existing regulations. It’s like the cake that collapses under its own weight on the Great Canadian Baking Show. To paraphrase Saskatchewan’s response to the Clean Electricity Regulations — the cap is unnecessary, unattainable, unaffordable and unconstitutional.

There are already numerous overlapping regulations in place specifically designed to reduce greenhouse gas emissions from the sector. The oil and gas industry is subject to emissions pricing under the federal Greenhouse Gas Pollution Pricing Act and the Clean Fuel Regulations and emission limits under the methane regulations in the Canadian Environmental Protection Act (CEPA). The sector is also regulated provincially in Alberta, Saskatchewan and British Columbia with negotiated equivalency agreements provided in some circumstances. The sector clearly does not escape emissions restrictions and pricing.

We already have a cap-and-trade system. It is a key component of the current emissions pricing systems for large emitters across the country. Above a certain level of emissions (the cap), firms must either purchase credits or pay the established price. These credits are validated with a regulatory system to ensure credits represent real emissions reductions.

The federal emissions cap is also unnecessary because the sector has already taken the challenge seriously. In B.C., Alberta and Saskatchewan, the sector has achieved its 2025 methane targets early. New technology and best practices have been developed and adopted. Engineering and field programs have begun on the $16.5-billion investment to build a carbon capture and storage network for the oilsands with a net-zero goal for 2050. Per-barrel emissions in the conventional oil and gas sector have already declined more than 32 per cent since 2000. The increased stringency target for emission reductions is already established and carbon prices are also set to rise. Where’s the need for yet another emissions-reduction tool?

An emissions cap is costly. Given that we already have a carbon pricing system across all sectors, why single out one sector? To achieve deeper emission reductions in one sector will be more costly than lesser reductions in the others. And it will be an expensive blow to the Canadian economy if producers choose to reduce production below market demand to stay under the cap.

Finally, the federal emissions cap is unconstitutional. To maintain that oil and gas sector emissions need even more regulation, the federal government will ultimately have to argue to the Supreme Court of Canada under CEPA that a tonne of CO2 emissions from oil and gas production is somehow different from a tonne of CO2 emissions from other sources — such as vehicles, heavy industry and home heating, which CEPA will not regulate. The Federal Court’s recent decision that the single-use plastics ban was unreasonable and unconstitutional is a similar situation. The Supreme Court decision on the Impact Assessment Act was also clear — emissions are not a reason to override provincial responsibility for resource management.

Canada should be on the world stage proudly championing what has been achieved, what is planned, how we can provide technology and best practice for other hydrocarbon-producing countries, and why the world should preferentially be buying Canada’s products.

As Energy Minister Jonathan Wilkinson argues, decarbonization is how Canada’s oil and gas sector will remain competitive. The emissions cap is not necessary to do so.

Gary Mar is CEO and Colleen Collins is vice-president at the Canada West Foundation.

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