Prime Minister Mark Carney indicated on Friday that the future of the emissions cap on oil and gas producers is contingent on efforts to reduce emissions, hinting at the possibility of scrapping the policy. This represents a potential departure from his previous commitment earlier this year. During a press briefing in Ottawa, Carney responded to queries about the potential abandonment of the emissions cap and the tanker ban along the B.C. coast, which the oil and gas industry and the Alberta government have urged Ottawa to revoke.
Carney emphasized that the decision hinges on various factors and the government’s objective of reducing emissions from the energy, mining, and manufacturing sectors to enhance their global competitiveness. He stressed the importance of achieving tangible results rather than just setting goals. While Carney had previously stated in March that the emissions cap would remain intact, he also expressed a desire to explore alternative methods to reduce emissions.
The emissions cap, scheduled to come into effect in 2030, mandates upstream oil and gas operations to slash their emissions by 35 per cent below the 2019 levels. Ottawa had introduced draft regulations last year, albeit two years behind schedule. As part of the Paris climate agreement, Canada has committed to reducing emissions by at least 40 per cent below the 2005 levels by 2030. Carney and his team have avoided discussions on this target, instead emphasizing Canada’s aspiration to achieve net-zero emissions by 2050.
The emissions cap forms a crucial component of Canada’s strategy to meet its emissions targets, with the oil and gas sector responsible for approximately 30 per cent of total greenhouse gas emissions. Despite reductions in emissions across various sectors, the oil and gas industry witnessed a 1.9 per cent increase in emissions last year, as outlined in a report by the Canadian Climate Institute in September.
Carney mentioned ongoing discussions with Alberta Premier Danielle Smith regarding a potential “grand bargain.” This deal would link Alberta’s pipeline ambitions to the completion of the Pathways Alliance carbon capture project. Smith aims to have a proposal ready for submission to the Major Projects Office by spring, with hopes of finalizing the agreement by mid-November.
When questioned about supporting a new pipeline to the West Coast, Carney emphasized the government’s endorsement of nation-building projects, including traditional energy initiatives. However, he underscored the need for projects to offer substantial economic benefits, align with climate objectives, and provide advantages for Indigenous communities. Carney highlighted that the government would engage with proposals demonstrating potential to fulfill these criteria.
Smith and industry leaders have voiced opposition to any pipeline projects due to the existing emissions cap and tanker ban. Enbridge CEO Greg Ebel emphasized that building a pipeline without the ability to export oil off the B.C. coast is unfeasible. Tensions have escalated between Smith and B.C.’s NDP Premier David Eby, with Eby cautioning against jeopardizing community support and the social license required for future coastal projects.
The political discourse extended to the Senate, where Energy and Natural Resources Minister Tim Hodgson faced scrutiny over Ottawa’s stance on facilitating pipeline projects. Hodgson emphasized the necessity for projects to garner support from the jurisdiction in which they are constructed, noting Alberta’s reliance on B.C.’s cooperation for project development.
Carney’s recent discussions with U.S. President Donald Trump involved pitching the revival of the Keystone XL pipeline in exchange for support for Canada’s steel and aluminum sectors. However, critics argue that even the Keystone XL project could face obstacles if the emissions cap remains unchanged. Conservative MP Andrew Scheer highlighted the futility of constructing pipelines without the ability to transport resources through them.
