Ever since the federal government bought the Trans Mountain pipeline expansion project, people have wondered how the Trudeau Liberals would balance the need to reduce Canada's greenhouse gas emissions against the oil industry’s voracious appetite for growth and expansion. Now, it seems, we have our answer. As part of his party’s official platform, Justin Trudeau is proposing a cap on emissions from the oil and gas industry, one that will begin to ratchet down in 2025.
This surely won’t sit well with the Canadian Association of Petroleum Producers (CAPP), which released its own platform — a wish list, really — a few days earlier. Its members still seem to believe we live in a world where new oil pipelines are both economically and environmentally plausible, and where the government’s most important job is to signal its virtues more aggressively.
The platform’s recommendations include “a visible commitment to work with industry to provide clarity and certainty to the investment community by promoting Canada’s leadership in environment, social and governance (ESG) performance” and efforts to “advance an … (ESG) strategy promoting Canada as an oil and natural gas supplier of choice among global markets.”
This is, of course, exactly the strategy that’s been pursued by the government of Alberta for the last two years with its “war room,” one that has served up a litany of humiliating defeats and embarrassments. The federal government would surely do a better job, if only because it would be impossible to do worse, but that’s a task that belongs squarely to the industry and the companies in it.
Stranger still is the suggestion that Canada should, or even could, export its regulatory regime to the rest of the world.
“If the world developed all of their natural gas and oil the Canadian way,” CAPP tweeted, “global oil and gas production emissions would drop by nearly a quarter.” The “Canadian way,” in this context, refers to our regulations around the flaring and venting of natural gas, which is a byproduct of oil development in most parts of the world. And yes, if countries like Russia, Iraq, and Iran regulated their industries as tightly as Canada does, we’d see some very meaningful reductions.
This is the reddest of red herrings, as well as being a kissing cousin of the Ethical Oil argument, since it ignores the important fact that we can’t export our regulations to other countries. We can and do export our oil, though, and that’s where the rub lies. After all, our oil is fundamentally different from the deposits in places like Texas or Siberia, and it requires different technologies and processes to extract and upgrade it. And while those are comparatively light on the need for flaring, they produce things like tailings ponds — which already contain 1.4 trillion litres of toxic fluids that will cost anywhere between $30 billion and $130 billion to clean up.
Oh, and those greenhouse gas emissions? Despite the progress Canada’s oil and gas industry has made in reducing flaring, the same 2018 paper that CAPP is drawing its “Canadian way” argument from ranked Canada’s average oil output as the fourth most-intensive in the world, with only Algeria, Venezuela, and Cameroon ranking worse. “Of the 34 Canadian oilsands operations measured in this study, led by Stanford University researchers, none fell below the global midpoint for emissions,” Maclean’s magazine’s Jason Markusoff wrote in 2019. “Ten were double that mark; ﬁve of those were triple or higher.”
But maybe the most fanciful part of CAPP’s platform is its belief that Canada should ramp up its LNG exports to Asia and actually get credit for the emissions reductions associated with the switch from coal to natural gas. “Through global offset credits, Canada could still achieve its commitments under the Paris Agreement, instead of implementing costly measures that inefficiently focus on domestic (globally insignificant) emissions reduction,” the platform reads.
Set aside, for the moment, the fact that the domestic emissions reductions are being made using carbon taxes, the most efficient way possible, and ignore the familiar argument that Canada’s emissions aren’t “significant” enough to merit attention. The core of the idea — that increasing our fossil fuel exports would allow us to avoid having to make emission reductions here at home — says everything you’d need to know about how seriously CAPP and its members really take climate change.
As the Ecofiscal Commission’s Jason Dion wrote back in 2019 for Policy Options, “Countries don’t get credit toward their emissions reduction targets for low-carbon exports because the global GHG accounting system doesn’t work that way.”
The most fanciful part of the #CAPP platform is its belief Canada should ramp up its LNG exports to Asia and actually get credit for the emissions reductions associated with the switch from coal to natural gas, writes columnist @maxfawcett. #elxn44
Article 6 of the Paris Agreement, which is cited by CAPP, lays out the ways in which countries can co-operate voluntarily to reduce emissions and meet their targets, and it includes something called “internationally transferred mitigation outcomes,” or ITMOs.
But that doesn’t mean Canada can avoid reducing emissions at home by exporting more LNG to China or India. “If the government of Canada wanted to turn an LNG sale into an ITMO,” Dion wrote, “it would have to enter into negotiation with the importing country’s government. But there’s a problem: it’s not clear what Canada could offer in such a negotiation. Canada would be asking for a benefit (in the form of a credit toward its GHG reduction target) in exchange for something that the foreign business is already paying the market rate for.”
There are, in other words, no free lunches left for us here. Canada cannot continue to grow its oil and gas industry and reduce its greenhouse gas emissions, much less meet the ambitious targets we’ve set for the future. If organizations like CAPP want to be a part of the future, they’re going to have to stop trying to live in the past.