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Oil and gas sector: a plateau by 2026 | COP28: climate summit in Dubai

Natasha Kumar By Natasha Kumar Dec7,2023

The cap proposed by the federal government aims to reduce greenhouse gas emissions from the oil and gas industry for 2030, not the production of fossil fuels.

Oil and gas sector: a cap by 2026 | COP28

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The oil and gas sector accounted for 28% of Canada's greenhouse gas emissions in 2021, making it the most polluting sector in the country.

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Late in its schedule, the Trudeau government presented its plan to cap greenhouse gas (GHG) emissions from the oil industry at COP28 in Dubai. This is expected to deliver reductions of 35-38% by 2030 below 2019 levels.

Canada is thus responding to a promise made to the international community during COP26 in Glasgow in 2021, by tackling the most polluting sector of its economy. In contrast to other sectors, oil and gas extraction has increased its emissions by 88% since 1990.

For Ottawa to respect its climate target by the end of the decade, the Canadian government planned last year, in itsEmissions Reduction Plan for 2030,that the oil and gas sector reduces its emissions by 42% compared to 2019 levels.

It was a purely economic analysis […] and which did not take into account the technical capacity to achieve these targets, explains the Minister of Environment and Climate Change, Steven Guilbeault.

With this new framework, he continues, we are asking businesses to what they have never done, which is to reduce their GHG emissions by more than a third.

COP28: climate summit in Dubai

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COP28: climate summit in Dubai

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To achieve this, Ottawa will establish a national cap system and trading for emissions from the oil and gas sector, where facilities will have one unit for each tonne of carbon emitted.

In order to comply with the system, companies will therefore have to reduce their emissions to comply with the ceiling or purchase units from installations that have been able to reduce pollution from their activities.

Over time, the number of units granted by the government will decrease.

The system will apply to producers of oil and liquefied natural gas, as well as the upstream sub-sector, which includes the production and processing of conventional oil, offshore oil, tar sands and gas natural. This accounts for the majority of emissions from the Canadian oil and gas sector.

Emissions from refining, distribution and downstream transport will not, however, be covered by the system.

According to estimates from the government, the total unit quantity of emissions in 2030 would represent 106 to 112 megatons of CO2. In 2021, the oil and gas sector emitted 189 Mt of CO2 equivalent.

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Under the plan presented Thursday, the government also provides a limited number of other flexibility measures, including carbon offset credits. These measures would allow facilities to emit levels ranging from 20% to 23% below 2019 levels.

There is a minimum reduction threshold of emissions below which companies cannot go, specifies Minister Guilbeault.

The goal is to give [the sector] a little more time to deploy certain types of technologies. But these flexibility measures will be limited in time. This is not an open bar.

A quote from Steven Guilbeault, Minister of Environment and Climate Change

To know what the timetable imposed by Ottawa will be, Minister Guilbeault indicates that this information will be communicated during the official presentation of the regulation, which should take place in the middle of next year.

Demanded for a long time by environmental defense groups, this capping project is significant, underlines Caroline Brouillette, general director of the Climate Action Network Canada. For the first time, Canada is recognizing, by publishing these regulations, that this is a problem that must be addressed now.

But we have a lot of work ahead of us to tighten the screws, she adds, referring to the flexibility measures that the government intends to grant to the industry.

The government, she points out, can legislate on emissions, and not on production, so as not to encroach on the areas of jurisdiction of the provinces and territories. Under a 2021 decision, the Supreme Court ruled that the federal government could act on pollution, but that it did not have constitutional control over the exploitation of natural resources.

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“No other major oil-producing country has done what we are doing [by imposing] a cap on GHG emissions from the oil and gas sector,” argues the federal Minister of Environment and Climate Change, Steven Guilbeaut. .

However, Canada, the fourth largest oil producer in the world, is among the countries forecasting the greatest increase in production over the coming years. As indicated by the IPCC and the International Energy Agency, this increase is incompatible with the objective of the Paris Agreement, which aims to limit global warming at 1.5 degrees Celsius, notes Ms. Brouillette.

The regulation should lead to an end to the continued expansion [of production] that has long been the elephant in the room of Canada's climate policies.

A quote from Caroline Brouillette, executive director of the Climate Action Network Canada

Of the same opinion, the president of the Climate Institute of Canada, Rick Smith , believes that the process must be accelerated. This ceiling, he specifies, is necessary, reasonable and feasible.

Mr. Smith emphasizes that it is in addition to the regulations on methane, which the federal government also presented in Dubai this week. Under the framework, the oil and gas industry would have to reduce its emissions of methane – a greenhouse gas more harmful than CO2 – by at least 75% compared to 2012 levels. p>

Once the regulatory processes, which require consultations, amendments and approvals, have passed, the regulation on capping emissions from the oil and gas sector could come into force in 2025, according to the government. But the implementation is likely to materialize in 2026.

The targeted installations should register before the end of 2025 or before the release of GHGs as part of an activity covered after January 1, 2026, it is indicated.

The government was initially due to present its plan at the start of 2023, before extending the deadline to the first half of the year and then promising a version by COP28.

These delays, recently denounced by experts from the University of Sherbrooke and the firm COPTICOM, compromise the achievement of targets and delay the action taken yet necessary by the climate emergency.

Even before the most important stages of the implementation [of the] regulation have been taken, the deadlines leading to its adoption are already showing significant delays, they write in a report published at the end of November.

The slowness of the regulatory processes and the opposition of certain provinces and the industry to this new regulation have delayed, according to them, the implementation of this flagship promise.

Provincial governments like those of Alberta and Saskatchewan, whose economies depend on the oil and gas industry, have tried to discourage Ottawa from imposing a cap, the so-called 'high' limit. calling for respect for its areas of competence.

Before the announcement of the regulatory framework, the six largest oil sands producers in the country, united under the banner of the Alliance new routes, had made it known that they were not opposed to the idea of ​​a cap, provided that it did not excessively limit their ability to increase their production.

With the contribution of Elisa Serret and Mathieu Hagnery.

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Natasha Kumar

By Natasha Kumar

Natasha Kumar has been a reporter on the news desk since 2018. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Times Hub, Natasha Kumar worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my 1-800-268-7116

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