Canada’s 2030 Emissions Reduction Plan (ERP) was made public March 29, 2022. Since the country’s oil and gas sector with methane included, plus transportation components, together, represent about half of Canadian emissions, one would have thought these sectors would be objects of strong climate initiatives. Yet, for these sectors, the ERP appears to be the product of accommodation of industry lobbies. The action items stupendously lack integrity and are weak. As such, the ERP like all previous government emission reduction targets, will not achieve its goals.
Oil and Gas Subsidies
First off, contrary to previous government indications, OIL AND GAS SUBSIDIES WILL NOT BE ELIMINATED. Rather “inefficient” subsidies will be removed.
Fuzzy Cap on Oil and Gas Emissions, Not on Production and Carbon Capture
Preposterous is not an understatement on the oil and gas segment of the ERP. The ERP requires consultations with industry and other stakeholders, to establish non-binding caps on emissions, while allowing the oil and gas sector to increase production driven by global demand.
The ERP “miracle” of a cap on emissions, but not on production, is to be achieved with the help of new fossil fuel subsidies for carbon capture, utilization and storage (CCUS) technologies. Important CCUS tax credits are soon to be announced. Budget 2021 already allotted $539 million for CCUS.
Unfortunately, the CCUS emissions reduction potential and economics and scalability are not credible. Almost all, if not all, CCUS projects to-date have achieved nowhere near the projected reductions in emissions – in some instances may even have increased net-emissions; are energy intensive; and are prohibitively so expensive that they are not feasible without humongous government subsidies.
For the oil and gas industry, CCUS offers an avenue for new oil and gas subsidies, while continuing business-as-usual and earning carbon credits in the process.
Worse, CCUS emission reductions do not offer value for money in terms of cost per unit of greenhouse gas (GHG) unit avoided. Credit Suisse estimates that the 19 CCUS projects in operation in 2021, added to the 32 then in the pipeline, would collectively reduce carbon emissions by 100 million U.S. tons annually. This is marginal.
The largest CCUS project in the world, the Chevron investment at the US$54 billion Gorgon LNG plant in Australia had an objective of reducing 80 percent of emissions. But the plant only captured 30 percent. That’s excluding emissions from LNG processing, meaning the original objective, if successful, would have eliminated only 40 percent of the total emissions from Gorgon LNG facility.
For a deeper dive, click here.
Methane Energy Sector Emissions
The ERP stipulates that methane will be lowered by 75 percent below 2012 levels. This is a tall order not only because of leeway for greater fossil fuel sector production.
At the outset, integrity on accountability takes a wallop on methane stemming from the fossil fuel sector. According to the International Energy Agency, fossil fuel methane emissions are underestimated by 70 percent. This is the result of total anarchy in the measurements, reporting and verification of methane associated with venting, flaring and gas pipeline leaks.
In response to this chaos, the European Commission is working on setting standards to address these problems that will include imports, international data transparency rules for companies and governments in addition to a global methane data base on operators and importers.
In the meantime, until international standards put an end to the anarchy in methane analyses, determining if Canadian objectives are being met will depend heavily on the plethora of unreliable assessment methods used by the fossil fuel companies.
For a deeper dive, click here.
On transportation, the ERP indicates transportation accounts for 25 percent of Canadian emissions. However, if upstream emissions are included, that is emissions from extraction to consumption, that comes to 31.25 percent.
For light duty vehicles, the ERP calls for the zero-emission vehicle (ZEV) portion of sales to be 60 percent by 2030 and 20 percent by 2026. This jumps to 100 percent ZEV mandate by 2035.
This does not take into account that the massive and rapid shift of automakers to electric vehicles is the result of progressively severe vehicle emission legislative requirements of the European Union (EU) and China.
Since nearly all automakers are global manufacturers that compete with one another in all critical global markets, the impacts of the legislative initiatives in these two latter jurisdictions are global. The industry is not engaged in a sectorial revolution scrapping a century of investments in internal combustion engine vehicle (ICEV) models and starting anew because the automakers want to invest hundreds of billions in electric vehicle motors, propulsion systems, batteries and redesigned platforms because they want to. Given it will take years for the companies to recoup their costs, implies the vehicle manufacturers are engaged in a massive and rapid transition to electric vehicles because the EU and China regulations mean they have to, not because they want to. They must cope with low profit margins for several years.
With their vehicle emission regulations, Europe and China are aligned for electric vehicles reaching 50 percent of the sales mix by 2025. Without comparable regulated targets to those of the EU and China, the automakers are giving Canada, as well as the U.S., the short shrift. That’s why Stellantis (formerly Fiat Chrysler) and Ford have 100 percent electric vehicle sales targets for Europe by 2030, but not for North America. The Stellantis U.S. electric vehicle portion of sales for 2030 is 50 percent.
With profit margins high for ICEVs and low for electric vehicles, the lineups and inventories are scarce in Canada and the U.S. That also means long wait times between when an order is made and delivery, too often more than 6 months.
Presently, electric vehicles only represent 5 percent of sales in Canada, but 19 percent in Europe and 22 percent in Germany. To achieve Canada’s goal of a 40-45 percent GHG reduction by 2030, based on 2005 levels, electric vehicles would have to represent 70-75 percent of sales by 2030.
With respect to 100 percent ZEV mandates, they are 2025 for Norway and 2030 for the Netherlands, Denmark, the U.K., Germany, Belgium, France, Iceland, Ireland, Israel, Slovenia, Slovakia Sweden and the U.S. State of Washington.
For medium- and heavy-duty vehicles, the ERP ZEV target is 35 percent of sales by 2030 and 100 percent by 2040 “for a subset of vehicle types,” the latter mandate being fuzzy. This falls short of the California Advanced Clean Truck Regulation. Under California targets, half of trucks will be required to be ZEVs by 2035 and the other half by 2045. In between 2035 and 2045, the California targets will increase incrementally. Since California has roughly the same population of Canada, it is inexplicable that Canada cannot emulate California.
Though not entirely up-to-date, a deeper dive can be found here.
Though incomprehensible, the ERP is designed to fail.
It is a tragedy that Canada, with 0.5 percent of the global population is the world’s 10th largest emitter, has the highest cumulative emissions per population and is not on course to improve its climate profile.
The science is clear. Climate change, if not properly addressed, has greater catastrophic implications for the planet and all of its inhabitants than any other challenge the world has ever faced.
Canada can do better. Canada must do better.