Canada’s $75 billion dollar plan to subsidize more oil production

Parliament examines industry’s ill-conceived scheme to “capture” CO₂ emissions using CCUS technology

The promise by government is that CCUS technology will enable our emissions-intensive oil industry to continue to expand and to maintain high production levels for another 30 years, while we use CCUS to “remove” and sequester the CO₂ emissions that are presently released into the atmosphere during the oil sands extraction process in Alberta (these are referred to as our “upstream” emissions).

The upstream emissions, however, represent less than 15% of emissions associated with every barrel of oil we produce.

The other 85% occur after our exported oil is burned as fuel and the emissions are released as tailpipe emissions.

Those “downstream” emissions from our exported oil cannot be removed from the atmosphere once they are released. “Direct air removal” technologies do not exist.

My colleague Jennifer Nathan and I have made a number of detailed submissions during the past year to the government-appointed Net-Zero Advisory Body and to others calling on them to very carefully examine the implications of ambitious plans that rely on large-scale future deployment of CCUS in our emissions-intensive oil sands sub-sector.

I appeared as a witness on March 31, 2022, at the Parliamentary Standing Committee on Environment and Sustainable Development.

I explain in my testimony why the government’s plan to subsidize CCUS technology in Canada’s oil industry is ill-conceived and why it is inconsistent with our commitment under the 2015 Paris Agreement to act to limit the temperature increase to 1.5°C.

The Committee’s inquiry is to consider whether government subsidies can be justified to support the oil and gas industry in their promised efforts to reduce their GHG emissions.  The estimated cost of the CCUS plan to 2050 is $75 billion. An unspecified portion is to be paid by taxpayers. The second witness in this portion of the video is a representative of the Macdonald Laurier Institute, an industry-funded group that advocates in favour of continued unlimited expansion of oil production in Canada.

An Unforgiving Deadline for Emissions Reductions

In December 2015, when the Paris Agreement was negotiated, Canada and other countries agreed “to pursue efforts to limit the temperature increase to 1.5°C.”

Recognizing that the newly stated 1.5°C goal would require much deeper and faster changes in energy policy, the parties to the Paris Agreement in 2015 requested that the IPCC prepare a study on the impacts of warming to 1.5°C and on the measures needed to meet that goal. Three years later, on October 7, 2018, the IPCC Special Report on Global Warming to 1.5°C was published. It provided the results of comprehensive research about the magnitude of the emissions reductions that would be required to keep the warming increase to 1.5°C.

One core finding reported in the Special Report was that all releases of CO₂ into the atmosphere must reach “net-zero” by 2050 to give us a 66% chance of reaching the 1.5°C goal. “Net-zero” means that, beyond 2050, no additional CO₂ can be safely added to the cumulative amount of CO₂ that by then will already have been released into the atmosphere. A second core finding was that to give us a realistic chance to achieve the goal of net-zero by 2050, the annual level of global emissions must be reduced 50% below the 2018 level by 2030. The Summary for Policy Makers includes this graph, which depicts the massive cuts required to avoid a catastrophic outcome:

In 2020 the annual level of total global CO₂ emissions was a little above 40 GtCO₂.

The unforgiving 2030 deadline is explained by the rising atmospheric carbon concentration level. It tracks the rising amount of CO₂ in the upper atmosphere that is driving the heating of the earth. The recorded level for 2020 was 413.2 ppm CO₂. It is now rising at an average 2.5 ppm every year. To stay within the 1.5 warming threshold, the carbon concentration must be kept below 430 ppm. At the present rate of increase it will exceed 430 by 2028.

If we fail to meet the 2030 emissions reduction target, or choose not to, our last resort will be to attempt later to use CDR technologies on a very large scale to remove the accumulated “residual emissions” from the atmosphere. 

Global oil production: deep cut required by 2030 and 2040  

The International Energy Agency warned in its report Net-Zero by 2050: A Roadmap for the Global Energy Sector that to have a realistic chance of keeping the increased warming of the earth’s atmosphere to less than 1.5°C, global oil consumption must decline 25% below the 2019 level by 2040.

The complete divide between the present intentions of our governments and what human beings need to do within the next nine years is depicted in the graph above. The top blue line (“STEPS”) depicts the IEA’s most recent projection indicating the rising pathway of global oil production between now and 2030, based on the current plans of Canada and the world’s other oil producing countries. The sharply declining green line (“NZE”) shows the magnitude of the cuts in overall world oil production needed by 2030 to give us a 50-50 chance of being able to limit global heating to less than 1.5°C.

On October 20, 2021, the UN Environmental Programme and the Stockholm Environmental Institute released their Production Gap Report 2021.  In the case of oil production, it states:

Nations are, in aggregate, planning on producing around 40 million barrels per day (Mb/d) more oil than would be consistent with the median 1.5°C pathway in 2030 (with a range of 26-56 Mb/d). This excess is roughly equivalent to half of current global oil production.

— Production Gap Report, October 20, 2021, p. 15-1

Canada’s Oil Production

The most recent report released by the Government of Canada on December 9, 2021, shows Canada’s oil production will continue growing until 2032, when it is projected to peak at 5.8 million bpd, about 900,000 bpd above the 2019 level. The Evolving Scenario shows a slight decline that begins in the years after 2032, but Canada’s total production by 2050 will still be at the relatively high level of 4.8 million bpd – only about 2% less than it was in 2019.  Canada’s production shows no significant reduction over the next 30 years. The CER 2021 report gives this succinct summary of the outlook for Canada’s oil production between now and 2050:

From 2019 to 2032, crude oil production increases 19%. Between 2032 and 2050 production decreases by 19%.

— Canada’s Energy Future 2021, December 9, 2021, page 40

Large-scale deployment of CCUS technology in Canada’s oil sands will do nothing to reduce the massive scale of the “downstream” emissions that will continue to be released into the atmosphere by our exported oil for another 30 years.  Canada is the world’s 4^th largest oil producer and 3^rd ranking oil exporter.  

The world’s predicament

Our government says Canada has no legal responsibility to “count” our “downstream” emissions as part of our national emissions.

But the accounting rules are not an answer to the problem we face.

The downstream emissions from our oil are a core problem. They contribute directly to climate change in Canada – to the same extent as if those emissions were released in Saskatchewan or Nova Scotia.

Emissions from our exported oil will contribute directly to climate breakdown in B.C. and Northern Quebec. This catastrophic outcome, which crosses all national borders, is being driven by the physics of climate change.

The currently planned expansion of Canada’s oil production to 2032 and high levels of production to 2050 is incompatible with retaining any chance to avoid a world of catastrophic climate change.

Click the yellow button to get the full 10-page written submission (opens as a PDF in your browser) to the Standing Committee on Environment and Sustainable Development.
This series of hearings began on March 29, 2022, and is ongoing.