Canada’s Trudeau government is under sustained attack over its stance on energy and climate change, as oil-rich provinces led by Alberta hit out at federal efforts to slow emissions while watchdogs and activists call for more action.
Ahead of the UN COP29 climate summit in Azerbaijan next week, Canada set out on Monday how it aimed to cut greenhouse gases from the oil and gas sector, responsible for almost a third of its pollution.
The industry is booming, thanks to US demand and Canada’s extensive oil sands, among the dirtiest crude in the world.
Jerry DeMarco, head of Canada’s environment watchdog, has repeatedly scolded the federal government for what he sees as its relative inaction. “Canada is the only G7 country that has not achieved any emissions reductions since 1990,” DeMarco has said.
In response, Canada’s updated plan proposes regulation to put a cap on all greenhouse gas emissions equivalent to 35 per cent below 2019 levels, without a target date. This was slightly less than an expected 38 per cent cut by 2030, and does not align with the nation’s own climate goal of a 40-45 per cent emissions reduction by 2030, however.
“Look around the world, no other oil and gas producer is doing this, the US, the UK, Norway, the Gulf states, we are the only large oil and gas producer to do this,” Canada’s environment minister Steven Guilbeault told a press conference in Ottawa.
The Business Council of Canada immediately hit out, saying the emissions cap made climate policy “even more incoherent and uncompetitive” and would harm exports and make Canadians poorer.
Alberta premier Danielle Smith said it would challenge the plan in the courts. “I’m pissed! I’m absolutely angry,” she said. “This is a vendetta: he [Trudeau] has a deranged vendetta against Alberta, it’s very obvious.”
Energy minister Jonathan Wilkinson said that oil and gas industry profits rose from C$6.6bn in 2019 to C$66.6bn in 2022 and it was time they were reinvested, saying chief executives “know they must decarbonise for access to capital markets”.
Both ministers stressed the cap was on emissions, not production, and have rubbished Alberta’s “scrap the cap” campaign as “disinformation”, and framed the fight as a “culture war”.
Canada’s quandary over climate and energy policy follows a declaration from Prime Minister Justin Trudeau that “climate action can’t wait” at the UN COP26 summit in Glasgow in 2021. He promised back then that Canada would be the first major oil-producing nation to cap emissions.
A key part of that plan, Trudeau’s price on carbon — an election promise in 2015 — has also been a magnet for attack from a group of provinces including Alberta, New Brunswick, Saskatchewan, Ontario and Nova Scotia, as well as the national Conservative opposition.
Tory leader Pierre Poilievre is running an “Axe the Tax” campaign and pushing for the next federal election to be called to resolve the festering issue.
The tax introduced in 2019 rose to C$80 a tonne in April, and is due to increase each year until 2030, with the proceeds returned in rebates and grants to encourage the shift to green energy.
Highlighting Canada’s struggle to meet its UN pledge to reach net zero emissions by 2050 are also the growing wildfires which are made more intense and frequent by climate change. Canada’s emissions from these blazes accounted for almost a third of the global total in 2023.
At the same time, American dependence on Canadian oil has seen crude oil production surge more than 40 per cent over the decade to a record 5.1mn barrels per day, data from the Canada Energy Regulator shows.
This supplied 60 per cent of US crude oil imports in 2023, a jump from 33 per cent in 2013, according to a recent US Energy Information Administration report.
Brian Jean, Alberta’s minister of energy and minerals, said production could go even higher. “We have the ability, resources and commitment to more than double our production while reducing emissions,” he said.
Canada and its fossil fuel industry is copying the playbook of other major oil and gas producers by relying on carbon capture and storage projects to offer a solution to cut emissions while enjoying continued revenues.
CCS could allow large polluters to trap some of the greenhouse gases they produce before it enters the atmosphere, but it remains undeveloped at scale.
While the technology is proven, the challenge remains the huge capital investment to build and implement CCS, said Kevin Birn, chief analyst for Canadian oil markets at S&P Global Commodity Insights. But he believed it would be an “essential tool” as energy demand continued to remain high.
A consortium of Canada’s oil majors, known as the Pathways Alliance, is exploring the prospect of building a C$16.5bn mega-project to cover more than 20 oil sands facilities in northern Alberta via a 400km pipeline that will transport and inject the CO₂ underground.
Carbon capture as a solution has been opposed by more than 500 US, Canadian, and international environmental organisations, calling on both countries to reject it as a “dangerous distraction”, in an open letter that ran in prominent Washington and Ottawa publications.
Among the forerunners in CCS is Canada’s fifth-largest oil producer Strathcona Resources. Its C$2bn joint venture with a public investment fund for a project in Alberta and neighbouring Saskatchewan is supported by government tax credits.
“There is risk in all new technology but the preliminary engineering says it will reduce the carbon intensity by 90 per cent,” said Adam Waterous, chief executive of Strathcona.
But Julia Levin, associate director at the Environmental Defence NGO, said CCS projects green light the fossil fuel industry while diverting public funds away from renewable energy and energy storage.
“Fossil fuel handouts are set to increase. Canada is the second largest contributor to CCS projects, after the US, with new programmes set to subsidise these technofixes by up to US$41bn,” she said.
The Trudeau government funded the Trans Mountain Pipeline to the US that opened in May this year after a decade of disruptions and costing C$34bn, four times over budget. It showed “Canada isn’t taking the climate crisis seriously”, Levin said. “There’s a lot of hypocrisy. The reason? The oil and gas industry’s influence on decision makers.”
The independent Climate Action Tracker scientific project has rated Canada’s plans as “insufficient” when measured against a Paris Agreement goal to limit global warming to no more than 1.5C since the 1850s.
Bill Hare, chief executive of the Climate Analytics research group behind the project, was also critical of the country’s reliance on carbon capture. “Investing in CCS instead of switching away from fossil fuels is not the way to achieve net zero,” he said.
Climate Capital
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here
