Fossils Won’t Hit 2030 Carbon Target Without Cutting Production, Federal Analysis Shows

This article was originally published in The Energy Mix on June 14, 2022.

Internal analysis by federal officials raises tough questions about whether the Canadian fossil industry can achieve the 81 megatonnes of emissions cuts the Trudeau government has promised by 2030 without cutting production, according to confidential documents obtained by the Globe and Mail.

The government “has staked its reputation on achieving Canada’s climate goals—if it does, it would be the first time ever that the country met a promised emissions target,” the Globe reports. “But the documents underscore the uncertainty in the climate change plans and show the leap between what government officials can detail in expected cuts and how much more it hopes to push the industry to do through incentives, new rules, and higher costs.”

When Prime Minister Justin Trudeau released his updated 2030 target in March, it included what’s considered a steep reduction from a fossil sector that accounted for 26% of the country’s emissions in 2019—and the government took heat for not mandating steeper cuts. But by the time the PM made his announcement, “Ottawa’s own numbers indicated the industry could reach only about half of the 81-megatonne cut it was assigned,” the Globe writes, citing the documents from the federal environment and natural resources departments.

“The internal analysis reveals that more emissions cuts in the oil and gas sector, beyond what department officials assessed was ‘technically feasible,’ would likely come from production cuts,” the news story adds. But “several federal officials said the documents obtained by The Globe present an incomplete picture of how the critically important industry can reach its targets.”

The news story had the Globe’s editors recalling that they were “both positive and skeptical” when Trudeau first announced the target. “The reductions, as pictured by Ottawa, depend on transforming Canada’s relatively dirty oil into much lower-carbon barrels, without reducing oil production,” they wrote yesterday. “Technology as saviour, and salvation arriving in less than a decade.”

In March, the editorial board called that proposition “difficult”. Now, while the government insists its 2030 target is “doable”, the confidential document said even a “technically feasible” reduction of 43 megatonnes of fossil industry emissions would require “extraordinary efforts” and rely on “high risk” options—a category that includes the carbon capture and storage (CCS) technologies that received lavish subsidies in the last federal budget. Though not enough, apparently, to get fossil industry leaders like Cenovus Energy CEO Alex Pourbaix onboard to invest.

The Globe’s coverage has details on the 42 or 43 megatonnes the internal analysts thought it was realistic for the industry to cut, along with commentary from an Environment and Climate Change Canada spokesperson who said the confidential documents gave an “incomplete picture” of “the full scale” of cuts the industry could achieve with technologies like CCS and direct air capture. Environment Minister Steven Guilbeault maintained in a statement that “our final analysis gets us to the 81-megatonne emission reduction for the oil and gas sector,” and officials in a private technical briefing told the Globe they stood by the figure.

Chris Bataille, an adjunct research fellow at the Columbia Center on Global Energy Policy, told the Globe that target would require “a quantum jump upward in effort from what’s been done in the past”. Dave Sawyer, principal economist at the Canadian Climate Institute, said his organization’s analysis had shown potential for 55 to 76 megatonnes, not far off the federal figure.

Those short-term targets would require “serious heavy lifting” from Environment Canada, Sawyer told the Globe, and would be “contingent on credible policy being developed and deployed as quickly as possible.”

Neither the internal analysis nor the Globe’s coverage got at the bigger question of whether that serious heavy lifting is worth the effort for a fossil sector that is moving rapidly into its sunset. Writing for Clean Energy Canada, Executive Director Mark Zacharias and Chief Innovation Officer Merran Smith, ran through all the reasons that an industry currently enjoying record profits will never see another price boom.

“It’s no secret that the oil and gas industry is cyclical: as prices drop, the music stops, the lights come on,” they write in a Globe and Mail op ed. “Historically, prices go back up, and the cycle repeats.”

But this time, “there is not likely to be another rebound in the oil and gas sector,” they warn. “The great irony now is that soaring fossil fuel prices will also contribute to the industry’s accelerated undoing. There will be no greater incentive for families and companies to shift away from something than brutally high bills amid broader inflation and a potential recession.”

And “this time, the incumbent has a fierce competitor,” led by electric vehicles, astonishingly affordable solar and wind power, and government policies driving for faster, deeper carbon cuts—all pointing to global oil demand peaking as soon as 2025, according to the International Energy Agency.

“The shift away from fossil fuels is accelerating, and it will be permanent, so it’s time for politicians, especially Western premiers, to name the opportunity and talk publicly about what this generational shift in our economy will look like over the next two decades,” Zacharias and Smith write. “The party always ends, but this time the club has been sold. We’re going to need to build a new one.”

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