Climate | Ottawa must put its panties on in front of the oil companies

The Trudeau government has a big, big decision to make when it comes to the fight against climate change: will it impose a real carbon tax on the Canadian oil and gas industry?

It’s easy to promise on the campaign trail, like the Liberals did in 2021.

It’s more complicated to do in practice. Especially when you are the fourth oil producing country, with 6% of world production. And that none of the countries of top 10 imposes a real price on CO emissions₂ to its oil producers.

But if it wants to make its contribution to the fight against climate change, Canada no longer has a choice: it must really involve its most polluting industry, responsible for 26% of CO2 emissions.₂ in the country in 2019. Oil and gas production is a highly profitable activity for the Canadian economy. It is also the number one source of CO emissions₂ in the country, ahead of the transport sector (25%).

Unless you live in the land of the unicorns, Ottawa must be the end of recess for Western Canadian oil and gas producers, who haven’t had to pay the carbon tax since 2019 (they’ve had right to an undemanding parallel system).

Warning: true carbon pricing will hurt the oil and gas industry. That is why Ottawa must help Western Canada by supporting affected workers and helping to transform its economy.

But we can’t get out of it: if we want to save the planet, we have to respect our CO reduction targets.₂. And if we want to respect these objectives, we must reduce our level of oil and gas production.

The oil industry counters that new technologies such as CO capture₂ could reduce emissions. It’s far from certain that it will make a significant difference. Anyway, oil also pollutes enormously when it is consumed. We therefore have no choice but to consume much less of it: about 75% less by 2050, according to the International Energy Agency.

Dear friends of Western Canada, you will have to resolve to pay the real cost of extracting oil and gas, which includes CO2 emissions.₂.

In its consultations launched Monday, Ottawa unveils two options: a federal tax or a carbon market (as in Quebec). We have a slight preference for a carbon market. In such a market, CO emissions reduction targets are set₂, whose price adjusts itself according to the targets. Result: the more emissions must be reduced, the higher the price of CO₂ mounted. As a result, polluting projects are no longer profitable. Ottawa does not reduce production itself, the carbon market does it for it.

Ottawa is due to announce its decision in early 2023.

Regardless of the option chosen, the most important thing is that the system is watertight and that no exemptions are given to oil and gas companies.

In Quebec, as in Canada, major industries such as aluminum smelters, pulp and paper mills and cement plants are in theory subject to the carbon tax or the carbon market. But in practice, they receive a host of free allowances so that they only pay about 15% of the normal CO price.₂.

Why do we let them go like this? Because the United States, Europe and China also exempt these polluting industries. These exemptions must be removed. The solution: impose a carbon cost on imports at the border, as the European Union is considering doing.

The pressure will be strong for the Trudeau government to do the same for the oil companies and happily hand out free allowances of CO₂ while waiting for other countries to impose a carbon tax on their oil companies.

To do so would be a serious mistake. Since Canadian oil is already one of the most polluting in the world, it would be better to start early in the pack than to wait for everyone else to follow suit.

The planet is burning, and Ottawa must impose a real carbon market on its biggest polluter.