Ottawa is urging Alberta to enforce its oil sands emissions cap as new numbers show the sector would blow past the limit, if all projects that have been approved but not yet constructed were brought online.
The level of greenhouse gas emissions from the oil patch and the cap’s status have received a renewed focus as the federal cabinet decides whether to approve Teck Resources Ltd.’s Frontier oil sands mine. The two governments appear on a collision course as they try to tackle the competing interests of limiting greenhouse gas emissions with the need for investment in one of Canada’s biggest economic drivers.
Viewed on its own, Frontier’s 4.1 megatonnes in annual emissions appear to fit under the sector’s 100-megatonne emissions cap. However, put in the context of what Ottawa says are 20-plus projects already approved and awaiting construction, federal Environment Minister Jonathan Wilkinson said the picture looks different.
“If they were all up and operating in 2030, [emissions] would be greater than 130 megatonnes,” Mr. Wilkinson said in an interview on Monday.
Investment in the sector has slowed since oil prices began to plummet in 2014. The change prompted companies to delay projects until market conditions improved. Even in a worst-case scenario though, where none of those new projects get built, Mr. Wilkinson said the sector is still on track to hit the cap in the next decade.
Alberta introduced the cap on oil sands emissions in 2016, as Ottawa was weighing the future of the Trans Mountain pipeline expansion. The cap was passed by the Alberta Legislature, under then-premier Rachel Notley. But regulations required to enforce the law were never tabled and Premier Jason Kenney’s government has said it has no immediate plans to introduce them.
“We expect ... that they will bring in place the regulations to ensure that the cap is effective,” Mr. Wilkinson said.
A spokesperson for Alberta Environment Minister Jason Nixon said until now Ottawa has not raised the outstanding regulations as an issue. Mr. Wilkinson’s comments on Monday are “concerning,” Jess Sinclair said in a statement.
“If Ottawa is once again changing its position, we would be happy to discuss,” she said.
Mr. Wilkinson said the cap is a “pre-existing commitment" from Alberta that is separate from the Frontier mine decision. He added that the promised emissions limit is what allowed Ottawa to approve the Trans Mountain pipeline expansion without jeopardizing Canada’s climate change plan.
Also on Monday, Mr. Kenney released a letter to Prime Minister Justin Trudeau in which he warned that a federal rejection of Teck’s proposed mine would “have devastating impacts” on the economy.
Ottawa does not have its own database of emissions associated with oil sands projects that have passed the regulatory hurdles but not yet been built. Mr. Wilkinson said the government is in the midst of collecting the data, but in the meantime is relying on research compiled by the Pembina Institute.
The environmental think tank’s research shows if all of the projects go ahead it could push emissions to nearly 144 megatonnes, although a researcher for the group said that was unlikely because companies are limiting construction amid a lack of new pipeline capacity. Since the cap was legislated, the group has found emissions from the oil sands have increased on average by about three megatonnes annually.
It’s likely that some of the growth in emissions could be offset by new technology that would cut emissions as production ramps up. Oil sands operators could reduce the emissions from the production of each barrel of oil by 20 per cent over the next decade, said Kevin Birn, an analyst at IHS Markit.
“Projects approved three or four years ago are already different, the pressures of the price collapse have forced them to re-engineer, change their costs and bring on production faster,” he said.
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