What we are missing is political will and candour
On March 29, 2022, the Federal Government released its most recent climate policy statement, called the 2030 Emissions Reduction Plan (ERP). The document lays out details of promised future policies that the government says will reduce Canada’s total domestic greenhouse gas emissions by 2030. Yet it also includes a plan by our government to continue increasing Canada’s oil production to 2030 and maintain high production levels for another 20 years after that. It envisions no significant reduction in Canada’s oil production levels before 2050.
At a press conference on April 4, 2022, Canada’s Minister of Environment Steven Guilbeault confirmed that Canada’s new climate plan is “based on” increasing oil production:
…the plan we presented last week, the Emissions Reduction Plan, was based on the Canadian Energy Regulator projections that oil and gas production would increase in Canada between now and 2030…
The Canadian Energy Regulator’s data projects that our oil production will further increase to 2040, to a level 36% higher than it was in 2019.
In sharp contrast to that, the International Energy Agency’s (IEA) Net-Zero by 2050 Scenario, published on May 18, 2021, warned of the immediate need to halt any further expansion of global oil production and set out detailed findings showing the rapid pace and severity of the deep cuts in oil use needed by 2030 and by 2040 to give the world any chance to keep the heating of the earth to within the 1.5°C warming threshold. Most significantly, the IEA concluded that within this decade a 25% reduction in global oil production would be required, down to 72 million barrels per day (bpd) by 2030, and that a 50% cut to 44 million bpd must be achieved by 2040. Global oil production is currently about 100 million bpd. Canada is the world’s 4th largest oil producer. We account for about 5% of global supply.
Canada’s political leaders don’t want to talk about any near-term need for reducing oil production.
Many political leaders in Canada claim that the Federal Government has no constitutional power to limit oil production by the provinces. Environment Minister Steven Guilbeault told the media in an interview published on September 2, 2022:
I know there are people out there who say we should be capping production. That’s a point of view I respect. But constitutionally we can’t do that.
Guilbeault is misleading Canadians. Constitutionally, the Federal Government has very significant powers that are determining the path of Canada’s oil production. This same Liberal Government in November 2016 approved two pipeline expansion projects (TMX and the Line 3 Expansion) that will add an additional 910,000 bpd of pipeline shipping capacity to facilitate our growing oil exports – which is almost equivalent to the entire amount of the projected 1.1 million bpd increase in Canada’s oil production that will occur between 2019 and 2030.
Under our constitution, the Federal Government has the exclusive legal power to approve inter-provincial pipelines. The Federal Government had full constitutional authority to refuse to approve TMX and Line 3 – and it had ample warning between 2014 and 2016 that these projects, if approved, would enable higher levels of oil production that are incompatible with our climate commitments made in Paris in 2015. The government ignored those warnings.
On April 6, 2022, the Federal Government announced the approval of a major new offshore oil field in Newfoundland which is expected to come into production by 2028. Bay du Nord will contribute an additional 200,000 bpd to 300,000 bpd to Canada’s oil production level. The new project will continue producing through to about 2058. The approval came just one week after the Emissions Reduction Plan was published. More offshore oil projects are awaiting approval on the Atlantic coast. The Federal Government has the exclusive constitutional power to approve (or refuse to approve) offshore oil development and had full power to refuse to authorize Bay du Nord.
Most of the currently planned expansion to 2040 is the direct result of a series of deliberate policy choices by the Liberal Government after it assumed power in October 2015.
Furthermore, even under our existing constitution, which divides lawmaking powers between the Federal Government and the provinces and assigns exclusive authority over the development of natural resources (including oil and gas) to the provincial governments (subject to overriding Federal control over pipelines and offshore oil), Ottawa has additional very powerful law-making powers that can curb oil and gas production.
Most significantly, when it comes to the threat of climate change, the law is clear. On March 25, 2021, the Supreme Court of Canada (SCC) released its decision in the Greenhouse Gas Pollution Pricing Act (GGPPA) case ruling that the Liberal Government’s new legislation imposing a carbon price across all provinces is properly within the constitutional powers of the Federal Government.
The government’s residuary powers under section 91 of the Constitution Act empower the national government to regulate industries, including the oil and gas industry, where the substance or purpose of the Federal law is to curb greenhouse gas emissions.
The Federal Government has formidable constitutional powers to enact regulations that will significantly limit, and preclude, future expansion of oil production in Canada. It has the legal authority to impose a very substantial carbon price on every single barrel of oil we produce in Canada. An immediate rise in the carbon price applied to the oil sands industry, and successive sharp increases over the next few years, would curb Canada’s oil production.
The discussion paper linked by the yellow button below examines the scientific evidence presented to the Court about what is driving climate change and the impacts of climate change. Based on that evidence, the majority of the judges (7 out of the 9 judges) agreed that, if the Federal Government did not have the constitutional power to take action to limit greenhouse gas emissions in all the provinces, “irreversible harm would be felt across the country and would be borne disproportionately by vulnerable communities and regions, with profound effects on Indigenous peoples, on the Canadian Arctic, and on Canada’s coastal regions.” The Court agreed that given the nature of the threat posed by greenhouse gas emissions, a carbon price would be properly within federal powers.
Notwithstanding its undoubted constitutional authority to act, the Liberal Government has deliberately chosen not to act. It has imposed on oil producers in Canada only a very minimal carbon price, which has been set at an exceptionally low rate – a low carbon price that is justified, by the government, as supporting the Canadian oil industry’s ambitious plans to continue expanding its production to 2030 and 2040. The government’s explanation is that a higher carbon price on oil producers in Canada will cause Canadian exporters to lose “market share”. The unsurprising result is that Canada’s oil production continues to rapidly increase. What is missing is not constitutional power to impose a substantial carbon price on the oil industry. What is missing is political will and candour.
Click the yellow button to get the discussion paper (opens as a PDF in your browser).