The Canadian federal election of September 20, 2021 brought the Liberals back to power, once again as a minority government. As with previous elections, the Liberal election campaign leading up to voting day, placed a major emphasis on addressing climate change. Though the Liberals failed to deliver on previous emission reduction targets, this time things appeared to be different in that a former climate activist, Steven Guilbeault, was appointed the Minister of the Environment and Climate Change Canada.
What has happened since this nomination constitutes a sad tale of giant steps backwards. These are presented hereafter.
Oil and gas industry negotiated fuzzy cap on emissions, not production
Canada’s 2030 Emissions Reduction Plan (ERP), revealed March 29, 2022, calls for a cap on oil and gas emissions, but not on production. The ERP cap is to be negotiated in collaboration with the industry. By August 2022, there was still no indication as to what the cap will constitute. This is a big deal since conventional oil, oilsands and gas production have increased 83% in the last three decades. A final plan supposedly will be revealed sometime in early 2023.
This ERP magic is only possible if one is ideologically aligned with the carbon capture, usage and storage (CCUS) fantasy of the oil and gas industry. Specifically, the industry wants us to believe that with CCUS technology, the industry can increase production to maintain business-as-usual, while concurrently reducing emissions and earning carbon credits.
Yet all CCUS projects around the world failed to achieve their emission reduction objectives. Typically, they entail humongous costs, exceed project timelines, and may even increase net emissions.
The net emissions impacts of CCUS are fuzzy for three reasons.
First, huge amounts of energy are consumed to power CCUS equipment.
Second, CCUS captured global warming gases are often buried in no longer productive wells making it possible to reactivate production from these wells a little longer, often referred to as enhanced oil recovery (EOR). EOR contributes to additional emissions.
Lastly, as much as half of captured emissions are “lost” before being piped into a near depleted well and there aren’t enough old eligible wells around.
New fossil fuel subsidies
Not to worry, Budget 2022, presented to Parliament on April 7, 2022, allots $5 billion to CCUS. This runs contrary to Government of Canada participation in the April 2017 meeting of G20 during which there was a consensus to phase out fossil fuel subsidies by 2020.
The CCUS 2022 to 2030 investment tax credits are 50% for investment in equipment to capture CO2; and 37.5% for investment in equipment for transportation, storage and use. The costs of these tax credits were not revealed in Budget 2022.
Not bad for a Budget 2022 which explicitly states that the government will “phase out or rationalize” inefficient fossil fuel subsidies by 2023.
Export Development Canada: Not subsidies, just support
In addition to public funding for fossil fuel deemed as subsidies, there is sector financing not called as such. Rather it is referred to as industry support.
During the 2022 first trimester, Export Development Canada (EDC) supported Canada’s oil and gas sector to the tune of $1.4 billion for 47 new projects by way of commercial loans and capital investments and insurance.
By comparison with the Harper years, EDC fossil fuel support by the Trudeau government has increased. EDC has no plans to reduce its support for the Canadian oil and gas industry. Instead, EDC indicated that it would prioritize sector stakeholders that curtail their extraction activities.
Push for fossil fuels: Keystone XL
A little-noticed bombshell occurred on June 20, 2022 at the meeting of the Organization of American States in Los Angeles where Deputy Prime Minister Chrystia Freeland encouraged U.S. Treasury Secretary Janet Yellen to complete the construction of Keystone XL.
If completed, Keystone XL would increase oilsands exports to the U.S. of the planet’s dirtiest oil, by 830,000 barrels/day. Keystone XL would transport the oilsands output to U.S. refineries in the Gulf states for subsequent export to counties outside the U.S.
In President Biden’s first day in office, January 20, 2020, he signed an executive order to abandon the Keystone XL project to demonstrate his commitment on tackling climate change.
Push for fossil fuels: Bay du Nord
On April 6, 2022, one day prior to the release of Budget 2022, Minister Guilbeault announced the approval of the Bay du Nord offshore oil project, 500 km east of St. John’s, Newfoundland.
The Impact Assessment Agency of Canada (IAAC) had based its evaluation of Bay du Nord on a document submitted by the promoter, Equinor, indicating a potential production of 300 million barrels. A mere 3 weeks after the government decision, Equinor claimed the potential is more like 500 million barrels.
But the latest Equinor projection may be an underestimate too. Equinor believes that with further exploration, Bay du Nord production capacity could prove to be even higher than 500 million barrels.
The IAAC evaluation did not take into account the quantity of oil in question, nor the possibility to discover additional reserves surrounding the area in the project description. And tallying emission consequences is more than a matter of quantity of oil extracted because 90% of oil emissions are associated with consumption. Consequently, it is impossible to determine the project’s emissions upshot.
Push for fossil fuels: Trans Mountain, Dam the $21.4 billion new estimate for public purse
The Parliamentary Budget Officer (PBO), Yves Giroux, on June 22, 2022, presented an analysis on the construction cost of twinning the Trans Mountain 1,150 km pipeline to transport oilsands from Alberta to the BC coast. The PBO pegged the price tag at $21.4 billion. This is considerably up from the original construction completion estimate of $7.4 billion when the Government of Canada bought Trans Mountain assets from Kinder Morgan on May 29, 2018.
With the PBO new cost projection, the PBO concluded the pipeline would never be profitable and incur a net loss of $600 million. This would translate into writing off $14.4 billion of assets for the twinning of Trans Mountain to increase its output to 890,000 barrels per day (bbld), up from the current 300,000 bbld.
Notwithstanding, the Trudeau administration has not altered its plans on continuing construction of the money pit. The government position stands even though the pipeline is not expected to be ready for shipping oil until June 30, 2023, an extension from the initial approximation date of September 30, 2022
Fossil fuel subsidies at-large
Prior to the U.S. Inflation Reduction Act, Canada spent 10 times more per capita on fossil fuel subsidies than the U.S. Not surprisingly, Canada ranks 7th among G7 countries on reducing dependencies on oil and gas.
Deplorable electric vehicle targets
The Emissions Reduction Plan also disappoints on zero emission vehicles. Electric vehicle (EV) targets are 20% of new vehicle sales in 2026 and 60% in 2030.
This contrasts with the stringent vehicle legislative and policy initiatives in the European Union and China.
Electric vehicles in Europe at the beginning of 2022 stood at 19% of new vehicle sales; in China in the first half of 2022 at 26%; and in Norway in the beginning of 2022 at 84%. In Canada, the EV portion of sales in Q1 2022 reached 8.3%.
Norway will ban internal combustion engine light duty vehicles in 2025, while Sweden, the Netherlands, the U.K., Belgium, Denmark, Israel, France, Ireland, Iceland, Slovenia, Slovakia and the U.S. state of Washington will do so in 2030.
Should the EV sales rate of growth in China continue, China may attain 100% all-electric vehicles by 2025.
Canada’s gas-powered vehicle ban begins 2035. By then all sales will be EVs anyway, thanks to the momentum initiated by the China and EU.
Coming sometime soon is Canada’s methane strategy. This is important because methane is the second largest source of global warming gases and 80% more potent than CO2 during the first 20 years after being released, after which it dissipates.
The new methane strategy entails regulations which will not come into effect until 2025. The original target year for new regulations was 2020 under the Obama-Trudeau Canada-U.S. methane agreement. But when Trump pulled out of the deal, the target year was shifted to 5 years later.
At the COP26 conference in Glasgow, October-November 2021, Canada signed the Global Methane Pledge to reduce methane emissions by at least 30% by 2030, based on 2020 levels.
While the Canadian methane goals may appear to be progress, unless the upcoming strategy addresses methane leaks from oil and gas sector pipeline and wells, including from fracking, in addition to methane emissions associated with venting and flaring, the strategy will fall dreadfully short. This is because methane emissions are underestimated by 70%, as per the analysis of the International Energy Agency.
The methane emissions underestimation is due to anarchy reigning in the oil and gas industry on methane measurement, reporting and verification, in particular for upstream operations which represent 75% of oil and gas sector methane emissions. Leaks from oil and gas pipelines are equivalent to as much gas as Europe consumes annually.
Consequently, without some form of emulation of the European Union (EU) to establish accountability norms, a methane strategy amounts to a lot of hot air. To boot, the new EU standards will apply for achieving an 80% methane reduction goal by 2030.
Some companies may choose CCUS for capturing methane, but CCUS has proven to be ineffective for addressing methane.
Plastic pollution mediocrity
The same day as the Canadian request to the U.S. to complete Keystone XL, June 20, 2022, Environment Minister Steven Guilbeault confirmed the federal government will ban a half dozen of single-use plastics by the end of 2023. Greenpeace Canada has estimated that the ban only covers 3% of the country’s plastic waste. For the other 97%, the government plans to address plastic pollution in 2030, but has no plan.
This has serious climate implications since the petrochemical sector represents 10% of petroleum consumption. In anticipation of declines in oil and gas demand associated with global climate actions of governments, the industry majors are investing heavily in expanding plastic production.
Meanwhile the European Union and China have engagements that recognize the complexities of managing plastics as ubiquitous products that are manufactured with seemingly infinite compositions.
Accordingly, these two jurisdictions have acknowledged that a step-by-step process is required. They have embarked on incremental timelines to deal with all phases of plastic management, including producing, distributing, consuming, recycling and disposing of plastic and the advancement of alternative products.
Less than a year into the new mandate, the Trudeau administration climate and related environmental minuses and deficient actions exceed the weight of the pluses.
Increasing financial support for fossil fuels is still on the agenda.
The Canadian government commitment to phase out or rationalize inefficient subsidies by 2023 seems to be lost somewhere in the definition of “inefficient.”
United Nations secretary-general António Guterres has a more efficient view. He sees the present high fossil fuel prices as an opportunity to tax the largest energy companies to finance the transition to a green economy. Global revenues from the sector in the first quarter of 2022 were US$100 billion.
This backdrop is accompanied by measures to reduce emissions that are half-hearted.
While the Liberal minority government requires the backing of the social-democrats, the New Democratic Party (NDP), the latter has unfortunately failed to exercise its balance of power to support a green economy. Consequently, the reprimands are shared.
Unlike the Biden administration’s Inflation Reduction Act, Canadian Liberals and the NDP have not had to make climate contradictory concessions to get someone like Senator Joe Manchin onside.
Canada, with 0.5% of the global population is the world’s tenth largest emitter, outside the Middle East petro-states, and has one of the planet’s highest emissions per capita. Though Canada experienced wildfires in British Columbia, the Yukon and Newfoundland in 2022; has had an accumulation of flooding events across the country, including Manitoba 2022 floods in various parts of the province and Gatineau, Quebec has had major floods in 2017 and 2019, it is small stuff compared with elsewhere.
In 2022, Western Europe has confronted has a conflagration of forest fires and excruciating successive heat waves and draught. In Africa where 60% of the population are farmers, in a continent that produces 4% of global emissions, severe flooding and draught has created millions African climate refugees. The Lake Mead reservoir which supplies water to 40 million Americans in southwestern U.S is drying up, with only 27% of its capacity remaining. Around 70% Pakistan been flooded, impacting 33 million people.
All this has not been enough for government of Canada wake-up calls.