Unpacking Canada’s oil and gas dilemma: international leadership challenges on the road to net-zero

ABSTRACT

Despite significant policy and regulation efforts by Canada’s federal government since its signature of the Paris Agreement, the specific question of whether Canada can retain its role as an energy production powerhouse while gaining some political capital as an international leader with regard to climate change has continued to plague its GHG reduction ambitions. In this article, I argue that despite an exceptional clean energy resource endowment, options to demonstrate the country’s serious intentions to meet its international climate commitments while keeping a sizeable oil and natural gas production sector come with complex implications well beyond the simplistic economic challenge linked to replacing the sector’s exports and employment levels. I explore three such options to keep oil and gas production high by using techno-economic modeling: compensating with more reductions elsewhere, using CCS in the oil and gas sector to avoid the sector’s emissions, and using negative emission technologies to compensate them. Compared with reducing emissions through large cuts in oil and gas production levels, each of these options comes with both significantly higher costs for society and a much higher risk of not delivering the expected emissions reductions.

RÉSUMÉ

Malgré les efforts considérables déployés par le gouvernement fédéral canadien en matière de politique et de réglementation depuis la signature de l'Accord de Paris, la question particulière de savoir si le Canada peut conserver son rôle de puissance de production énergétique tout en gagnant un certain capital politique en tant que leader international de la lutte aux changements climatiques continue de peser sur ses ambitions de réduction des GES. Dans cet article, je soutiens qu'en dépit d'une dotation exceptionnelle en ressources énergétiques propres, les options permettant de démontrer le sérieux des intentions du pays de respecter ses engagements internationaux en matière de climat tout en conservant un secteur de production de pétrole et de gaz naturel important ont des implications complexes qui vont bien au-delà d'une description simpliste du défi économique lié au remplacement des exportations et des niveaux d'emploi du secteur. J'explore trois de ces options visant à maintenir la production de pétrole et de gaz à un niveau élevé en utilisant une modélisation technico-économique : compenser les GES émis par cette production par davantage de réductions ailleurs, utiliser le CSC dans le secteur du pétrole et du gaz pour en éviter les émissions, et utiliser des technologies d'émissions négatives pour les compenser. En comparaison avec une réduction des émissions par une diminution importante des niveaux de production de pétrole et de gaz, chacune de ces options s'accompagne à la fois de coûts nettement plus élevés pour la société et d'un risque beaucoup plus grand de ne pas obtenir les réductions d'émissions escomptées.

KEYWORDS:

• Energy
• climate change
• net-zero
• decarbonization
• carbon capture and sequestration
• negative-emission technologies

Acknowledgements

The author is grateful for the entire research team that worked on the Canadian Energy Outlook 2021 publication, including the modeling team at ESMIA, which helped produced the results on which this study builds.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 See Langlois-Bertrand et al. (2021) and its appendices for more detail on these sets of constraints.

2 The reader should note that there is no specific legal definition for “net-zero” in Canada, other than for it to cover “all emissions” in general terms. For the purposes of this paper, therefore, “net-zero” means factoring in energy-related emissions from all sectors including fugitive emissions, as well as “non-energy” emissions from industrial processes, agriculture and waste. Emissions from land use, land use change and forestry (LULUCF) are however excluded. In terms of GHGs, CO₂, methane, and hydrofluorocarbons (HFCs) are included and must be net zero overall (i.e., the sum must be neutral in CO₂e terms).

3 The Greenhouse Gas Protocol classification is typically used by private and public actors around the world as a global standardized framework to measure and manage GHG emissions. Three scopes of emissions are defined as: emissions from fuel combustion and fugitive emissions resulting from the direct actions of the actor (Scope 1); emissions from the generation of electricity, heat and steam purchased by the actor (Scope 2); and all other indirect emissions that occur in the actor’s value chain, for instance from purchased goods and services, transportation and distribution, or waste disposal (Scope 3).

4 In both Figures 3 and 4, the full set of the main scenarios of the Canadian Energy Outlook 2021 is displayed. This includes the REF scenario as well as the NZ45, NZ50 and NZ60 scenarios, as well as an alternative reference scenario (CP30) which added the carbon pricing schedule announced by the federal government up to 2030. Even though this carbon pricing increase was not legislated at the time of the modelling, it was included for reference since it represented a key commitment from the government and was considered by many as an important tool in inducing the transformations required by the GHG reduction targets.

5 Bioenergy with carbon capture and sequestration (BECCS) refers to energy or heat production where biomass is the feedstock, and where emissions from the process are captured with CCS technology. Given that the biomass has already subtracted the CO₂ it contains from the atmosphere, “re”-capturing this embedded CO₂ when it comes out of combustion processes results in net negative emissions overall (provided, importantly, that the harvested biomass is renewed fully and rapidly).

6 See, for instance, IPCC (2005) and Vernon & Stork (2016).

Additional information

Funding

This work was done with the financial support of the Institut de l’énergie Trottier.

Notes on contributors

Simon Langlois-Bertrand

Simon Langlois-Bertrand is a research associate at the Institut de l'énergie Trottier, based at Polytechnique Montréal. He holds a Ph.D. in international affairs and specializes in global energy politics and policy, as well as in sustainability transitions.