Oil and gas sector warns emissions cap could lead to production curtailments

Alberta Premier Danielle Smith says Ottawa’s proposed cap on greenhouse gas emissions from the oil patch singles out her province for punitive measures and she promises another court fight with the federal government over it. In a press conference from Dubai, where she is attending the COP28 climate meetings, Smith called federal Environment Minister Steven Guilbeault an extremist and a menace who refuses to work with her province. “You do not come to an international conference and then drop two unilateral policies in our jurisdiction out of the blue without getting our agreement,” Smith said.

“That is what they essentially did this past week. It’s unacceptable and it’s unprofessional.” She says Canada is facing a crisis because of the proposal.

“The attitude that Minister Guilbeault has taken towards our province is absolutely unacceptable. And in fact, he has arrogantly said that whatever conversations that we’ve had at this table are irrelevant,” Smith said. “He’s demonstrated that by coming here, unilaterally announcing two policies and expecting us to just suck it up.”

Smith says Alberta will fight until the end against Ottawa if it has to. “They would be wise to simply withdraw this proposal and work with us on our 2050 targets because, as I’ve said, we’re going to fight them every step of the way,” she said. “I quite frankly hope that Justin Trudeau replaces this minister.

He’s a menace. He’s a menace to us, he’s a menace to national unity. He is clearly destructive in trying to get to some common ground and that is on him.

It’s not on us.” Alberta Environment Minister Rebecca Schulz is calling the federal proposal a new National Energy Program — a ’70s-era federal policy that still evokes anger in the oil patch. Guilbeault says the oil and gas industry will have to cut emissions by more than one-third by 2030 or buy offset credits.

Guilbeault says the plan is both feasible and constitutional and is critical to lower emissions from Canada’s most carbon-intensive sector. “We owe it to Canadians and to the rest of the world to address these emissions, as we owe it to our workers and businesses to ensure that Canada’s well-earned reputation for energy innovation remains our strong suit for the 21st century,” he said. “We’re not trying to burden the industry with regulations, but the refineries will have to reduce their greenhouse gas emissions, just not under the cap under another piece of regulation.”

The framework says the sector will have to cut emissions 35 to 38 per cent below 2019 levels by 2030. However, they can buy offset credits or contribute to a decarbonization fund that would lower that requirement to just 20 to 23 per cent. The Canadian Energy Regulator says Alberta is the only jurisdiction in Canada where greenhouse gas emissions continue to increase, mostly because of oil patch production.

Calgary-based Birchcliff Energy says it is disappointed by the regulations, in what it feels is a pile-on from the federal government. “It’s not an emission cap, it is a production cap,” CEO Jeff Tonken said. “The government is piling on to make energy less affordable.

It’s a sad day for Canadians because people don’t want to invest in our country when they read those rules or regulations. So it’s self-fulfilling that energy costs go up.” Tonken says Canada’s energy producers have faced several hard months due to new regulations.

“We’ve had increased carbon taxes, new methane regulations, new clean electricity regulations and so we have what’s called a piling on or a pancake of new regulations,” he said. “And I start from a position that Canada has one of the best records with respect to emission reductions.” Pembina Institute applauds the federal government’s new regulatory framework, which is still in its draft stage.

“This is meant to start to really meaningfully bend the curve on emissions from the oil and gas sector, which is still Canada’s highest-emitting sector,” said Janetta McKenzie, director of Pembina Institute. “This is a reasonable target that the federal government has put out on a reasonable timeline. It’s not a business-as-usual scenario — industry is going to need to take action and make investments in decarbonization.”

Ottawa plans to publish draft regulations next spring and get the final regulations in place in 2025.

(With files from The Canadian Press)