Greenhouse-gas emissions falling, but oil-sands emissions continue to climb, federal report says

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Federal climate policies have begun to make a dent in overall greenhouse-gas emissions, but oil-sands emissions continue to climb, raising questions about how the country can meet its overall targets as producers ramp up production to feed the Trans Mountain expansion system.

GHG emissions in 2022 were 708 megatonnes, Ottawa announced Wednesday in a report. The total was the lowest in 25 years with the exception of 2020 and 2021, when the economic impact of the COVID-19 pandemic resulted in a sharp drop in emissions.

But oil-sands emissions rose to 87 Mt in 2022, up from 86 Mt in 2021 and in keeping with a steady march upward every year from 6 Mt of emissions in 2006, the report says.

“Our concerns are centred about the emissions from the oil and gas sector – and more specifically, around the oil-sands sector in Alberta,” MC Bouchard, director of oil and gas with the Pembina Institute, a clean-energy think tank, said on Wednesday, adding that she hoped Ottawa would act quickly to implement an emissions cap on the sector.

Alberta’s emissions have risen by 7.4 per cent since 2005 and now account for 38 per cent of total emissions in Canada, according to Pembina.

The National Inventory Report – required under the United Nations Framework Convention on Climate Change and the Paris Agreement – is released in the spring of each year and covers emissions from 16 months earlier.

This year’s report encompasses emissions for the calendar year 2022. It shows that many parts of the Canadian economy are becoming cleaner, said federal Environment Minister Steven Guilbeault.

But the oil sands have an oversized footprint that shows no signs of getting smaller.

Production hit a record high of 3.57 million barrels a day in December, as companies prepared for the completion of Trans Mountain (TMX). The expanded system, which officially opened May 1, can now transport more than 890,000 barrels of oil and refined products from Edmonton to the West Coast each day.

Canadian Natural Resources Ltd. CNQ-T, the country’s largest oil producer, has numerous expansion projects under way to boost production.

However, the company is also focusing on reducing emissions by implementing new methods of getting oil out of the ground. Its in-pit extraction process, for example, replaces traditional bitumen extraction by processing the bitumen right at the mine face, which reduces greenhouse-gas emissions by approximately 40 per cent and eliminates the need for tailings ponds.

On a Thursday morning earnings call, company president Scott Stauth said climate policy is key to lowering emissions, but stressed it must also work for industry.

Take the Pathways Alliance project, an industry group that aims to bring production from the oil sands to net zero by 2050. It consists of CNRL, Cenovus CVE-T, ConocoPhillips COP-N, Imperial IMO-T, MEG MEG-T and Suncor SU-T.

Carbon capture and storage is a key plank of its emission-reduction plans, but there is tension between industry and the federal government about the extent to which public dollars will be used to provide revenue certainty for CCS.

Indeed, Edmonton-based Capital Power Corp. CPX-T announced Wednesday that it had scrapped plans for one of Canada’s largest carbon-capture projects, because it is not economically feasible.

Asked about carbon-capture’s prospects at a press conference in Ottawa, Mr. Guilbeault said it remains part of the government’s overall strategy and called on industry to step up its investment.

“We are putting our money where our mouth is and I would like to see industry do the same,” Mr. Guilbeault said.

Mark Cameron, vice-president at the Pathways Alliance, said Thursday that members have already spent hundreds of millions of dollars on prebuild work for the massive CCS project at the heart of their net-zero goal, including field and environmental studies, and drilling test wells.

Yet companies have only received a small amount of money from governments for that work, he said.

The Alberta and federal governments have talked big about support for carbon capture, but little has materialized, he said; legislation for a federal investment tax credit still hasn’t passed, contracts for differences have not met industry expectations and Alberta’s CCS-specific program hasn’t yet been introduced.

Mr. Cameron said that while Pathways submitted regulatory applications for its CCS project in March, oil companies won’t forge ahead until government support is locked in.

“There’s no way that our companies could make a $20-billion investment without seeing shareholder capital fly, unless we have the financial certainty that the project will be economic in the long term,” he said.

Nichole Dusyk, a senior policy adviser with the International Institute for Sustainable Development, said that Ottawa should act quickly to implement an emissions cap on the sector.

“Failure to address rising oil and gas emissions will mean continued failure on Canada’s part to meet its climate targets, with far-reaching consequences for the environment, public health and future generations.”