The plan to reduce greenhouse gas (GHG) emissions tabled this week by the federal government of Justin Trudeau affirms that Canada can meet its GHG reduction targets for 2030 without reducing its oil production.
This achievement would not be magic, but rather the technological advances on which Mr. Trudeau and his Minister of the Environment, Steven Guilbeault, rely to reduce emissions from the Canadian oil and gas sector from the 191 million tonnes that they were in 2019 at 110 million tonnes in 2030, a decrease of 42%. At the same time, according to the 300-page document filed on Tuesday, crude oil production is expected to increase from 4.2 million barrels per day in 2020 to between 5.1 million and 5.6 million barrels per day in 2030. It This is an increase varying between 22% and 33%.
We know to what extent the war in Ukraine and the desire of European countries to free themselves from their dependence on Russian fossil fuels have upset all forecasts for the past month. The Trudeau government has just announced that Canada will soon export the equivalent of 300,000 barrels per day more of oil and gas products to the United States to help our neighbors make up for the shortfall caused by the ban which President Joe Biden hit Russian oil.
After unsuccessfully trying to persuade Saudi Arabia and other OPEC nations to increase short-term oil production beyond the promised 400,000 additional barrels a day, Biden announced this week that his government would draw 180 million barrels from the U.S. strategic reserve over the next six months, in addition to the 32 million barrels drawn in November “to increase supply […] until production [américaine] accelerate later this year. Mr. Biden has even threatened to withdraw their drilling permits from American oil companies that do not use them to increase production in the coming months.
The scenario of an increase in oil production adopted by Mr. Guilbeault’s department is likely to disappoint all those who consider any increase, whatever it may be, to be unacceptable, even if this industry is becoming “cleaner” thanks to new technologies for carbon capture, utilization and storage (CUSC). At this time, these technologies are only a hypothetical solution to reducing emissions from the oil and gas sector, which account for 26% of all Canadian emissions.
Billions of dollars would have to be invested in CCUS projects for the Trudeau government’s grand plan to hold water. The oil industry says it counts on financial assistance from Ottawa to launch such projects. However, Mr. Trudeau made a commitment during the last election campaign to end fossil fuel subsidies.
“Now is the time for the oil and gas sector, which is making record profits, to invest in a sustainable future that will benefit business, communities and our future,” said Mr. Trudeau in unveiling his plan. But while it is true that the rise in the price of oil over the past few months has allowed Canadian industry to reconnect with the boom years before 2014, the main players in this industry insist that investments in the CUSC will not simply won’t do without help from Ottawa, let alone at a level comparable to what the US, Norwegian and Dutch governments are offering to their own oil and gas industry.
According to the Carbon Neutral Tar Sands Initiative, which brings together companies representing 95% of oil sands production, a first $20 billion CCUS project could be delivered in 2030 — provided Ottawa pays the bulk the invoice’s. But it would take several similar projects for the oil industry to reach the GHG reduction target adopted by Ottawa.
The budget to be tabled next Thursday by federal Finance Minister Chrystia Freeland should provide some details on the introduction of a tax credit for capital invested in CCUS projects. Ottawa claims that such a measure is not intended to subsidize oil production, but rather to reduce the carbon intensity of each barrel of oil produced in Canada with the aim of reaching the global average of about 50 kilograms of CO2 per barrel within a few years. But by helping the industry improve its GHG profile, isn’t the Trudeau government also promoting an increase in production?
This is the question that neither Mr. Trudeau nor Mr. Guilbeault want to answer for the moment, even if the document that the government tabled this week clearly shows that it is working on such an increase. The Minister of the Environment still promises to set a cap on emissions from the oil and gas sector, but postpones the determination of this cap until 2023 or later. The target of 110 million tonnes of GHGs in 2030 would therefore only be one objective among others. See you in eight years.