Question Period Note: Oil and Gas Sector Emissions Caps

Oil and Gas Sector Emissions Caps

• The Canadian Net-Zero Emissions Accountability Act commits Canada to achieve our Paris targets for 2030 and net-zero emissions by 2050.
• The Government will continue to provide national and international leadership to combat climate change, and we recognize that this requires reducing greenhouse gas emissions from the oil and gas sector.
• The oil and gas sector is both the largest source of GHG emissions in Canada, as well as a major contributor to jobs and investment.
• We are committed to putting in place measures to ensure that the sector reduces emissions at a pace and scale needed to meet net zero by 2050.
• Last summer, we launched consultations and over 20,000 Canadians made written submissions. We are reviewing that input. Additional consultations with Indigenous peoples will also be held.
• Putting these measures in place is essential for Canada to reduce our overall emissions. But it will also require hard work by all involved.

• The Intergovernmental Panel on Climate Change (IPCC) released a report in October 2018 concluding that global emissions need to reach net-zero around mid-century to limit global warming to 1.5ºC above pre-industrial levels. The best available science says this is what is required to avoid the worst impacts of climate change. The Government of Canada introduced the Canadian Net-Zero Emissions Accountability Act to formalize our commitment to net-zero emissions by 2050.

• The Act will set rolling five-year emission reduction targets, require plans to reach each target and reports on progress, require the Government of Canada to publish an annual report describing how departments and crown corporations are considering climate change in their decision making, and enshrine greater accountability and public transparency.

• Work is ongoing to establish the five-year emissions reductions targets and to develop credible, science-based plans for achieving each target.

• The oil and gas sector accounts for roughly one quarter of Canada’s total GHG emissions, and also hundreds of thousands of direct and indirect jobs.

• These plans will incentivize innovation and the adoption of clean fuels and clean technologies, with an expected larger role for low-emitting hydrogen, biofuels, and carbon capture, utilization, and storage (CCUS). By adopting these changes, Canadian workers and businesses will be positioned to thrive in a low-carbon global economy.

• The 2030 Emissions Reduction Plan (ERP) presents the most efficient, affordable pathway to meet Canada’s 2030 target. Based on that modelling, the ERP projects a contribution from the oil and gas sector of a 31% reduction in emissions below 2005 levels in 2030 (equivalent to 42% reduction from 2019 levels). This analysis, as well as information from industry, provinces and territories, Indigenous Peoples, and other stakeholders will inform the government’s work to develop the cap trajectory.
• Formal engagement on the approach to the cap was launched in July 2022 with the release of a discussion paper. The discussion paper outlined two potential regulatory options: 1) national cap-and-trade system for the oil and gas sector, 2) modifications to existing carbon pricing systems.
• The oil and gas emissions cap will build on other actions to reduce emissions from oil and gas including:
o Reducing oil and gas methane emissions by at least 75% below 2012 levels by 2030. This builds on the current target of 40-45% reductions by 2025.
o Creating the $750 million Emissions Reduction Fund to help firms take action to reduce methane and greenhouse gas emissions.
o Carbon pricing in place across Canada since 2019 covering large industry, including oil and gas, and finalizing the Clean Fuel Regulations.
o Canada’s Strategic Innovation Fund – Net-Zero Accelerator – will provide $8 billion over five years to large emitters (including oil and gas) to speed up decarbonization projects, scale-up clean technology and accelerate Canada’s industrial transformation across all sectors.
o Budget 2022 proposed a refundable investment tax credit for eligible carbon capture, utilization and storage (CCUS) expenses.
o Best in Class Guidance to require proponents of new oil and gas projects subject to a federal review to demonstrate they will have “best-in-class” low-emissions performance.

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