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Syncrude's Mildred Lake oil sands upgrader vent's into overcast skies north of Fort McMurray, Alta. on May 27, 2014.AMBER BRACKEN/The Globe and Mail

Canada’s oil sands will likely have to slash up to 1.3 million barrels a day of possible production to meet 2030 federal emissions-reduction targets, according to an analysis by commodity data firm S&P Global, resulting in the loss of somewhere between 5,400 and 9,500 jobs.

The numbers by the U.S.-based company, obtained by The Globe and Mail, underscore Alberta government fears that federal emissions-reduction goals are too much, too fast.

Under Canada’s climate plan, the oil and gas sector is to reduce its emissions to 42 per cent below 2019 levels by 2030. The industry and Alberta have long argued that the target will threaten the province’s most important economic driver – and one of Canada’s, given the energy sector represented $175-billion (or 9.2 per cent) of Canada’s GDP in 2017.

Proponents counter that a failure to significantly hasten emissions reductions in the oil and gas sector puts at risk Canada’s ability to meet its climate commitments and limit the effects of climate change.

The S&P report analyzed only the oil sands, which produce the bulk of Canada’s crude and are the third-largest proven oil reserves in the world.

It estimated that the production region can feasibly reduce emissions by around 15 megatonnes by 2030, based on regulatory readiness, technical feasibility and the time it will take to build large-scale emissions-reduction projects such as carbon capture and storage.

That leaves a gap of 29 megatonnes to achieve the federal target – and plugging that gap would put at risk 800,000 to 1.3 million barrels of forecast production a day. (S&P’s forecast sees oil sands production increase by one million barrels a day, or 34 per cent, between 2019 and 2040.)

However, the deployment of carbon capture technology could allow the oil sands sector to reduce the gap by 2035, and small modular nuclear reactors could further help to reach the 2030 target by 2040, the report found.

Canada’s largest oil sands companies are co-operating under the Pathways Alliance and have pledged to bring emissions to net zero by 2050. The group covers about 95 per cent of oil sands production, but a lack of investment and concrete action to date – particularly as companies raked in historic profits in 2022 – has made critics skeptical of just how serious they are about reducing their emissions.

Kendall Dilling, Pathways Alliance president, echoed the findings of the S&P report, telling The Globe in an e-mail that reaching federal targets by 2030 “is simply not realistic given current technology, construction and regulatory requirements.”

The industry agrees that it needs to significantly reduce its emissions by 2030, he said, but “impractical time frames for emissions-reduction targets could drive investment away from our industry and our country, reducing production in Canada while increasing output and emissions in other countries.”

It’s a message that the industry and Alberta’s United Conservative government will likely deliver to federal Environment Minister Steven Guilbeault this week, when he travels to Calgary for meetings with various groups, including the fossil fuel sector.

Ottawa to require biggest suppliers to disclose emissions, set carbon footprint targets

He will also meet with his provincial counterpart Rebecca Schulz, who said in an interview that the numbers in the S&P report are “hugely concerning.”

Alberta this year released an emissions reductions and energy development plan, which Ms. Schulz argued is far more realistic and reasonable, and “shows a very real commitment to our aspiration of net zero by 2050.”

The plan sets a goal of creating a carbon-neutral economy by 2050, but depends on technology that is not yet viable, regulations that do not yet exist, and interim targets that have not yet been set.

Ms. Schulz said while the province shares a net-zero 2050 goal with Ottawa, the road to get there must ensure “that we’re not putting Albertans out of work and having to cut production, which, at a time when the world needs energy, just doesn’t make any sense.”

Alberta takes emissions reductions seriously, she said, but the effect of a potential 1.3-million-barrel-a-day loss of production “has a huge impact both on our economy, on the fiscal situation for the province and on jobs – and that should be concerning to Albertans and all Canadians.”

Mr. Guilbeault’s office did not respond directly to the numbers in the report, but in an e-mail pointed to an agreement this month to work with the Alberta government on a collaborative approach to incentivize carbon capture and other emissions-reducing infrastructure and “set reasonable and achievable milestones for emissions reductions in these sectors through to 2050.”

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