Despite Prime Minister Justin Trudeau’s commitment to put an end to “most” of Canada’s $46 billion in annual subsidies to fossil fuel producers by 2025, the national government may need to continue spending billions per year to provide climate “cover” for the country’s oil and gas industries.
Ex-fossil executive and energy analyst Ross Belot lays out the likelihood of that scenario in his most recent op ed on iPolitics.
“Nowhere in the impressively-titled Pan-Canadian Framework on Clean Growth and Climate Change do we see an accounting by sector of reductions to meet or beat Paris,” Belot points out.
And “there’s a reason for that. Alberta’s plan is to hold at best to 2005 emissions levels. B.C. just had an LNG facility approved that will increase its emissions by over 20%. Saskatchewan doesn’t want to play. The West represents 60% of our emissions today—which means that if the region even managed to hold its emissions flat, the rest of Canada would have to cut their emissions by 75% from 2005 levels by 2030 to hit the overall national goal of 30%. That’s not going to happen.”
Against that reality, “how can the government keep saying it’s going to hit our target, even as it approves investments that only serve to increase emissions?” Belot asks. Citing a line in background documents obtained by the Globe and Mail, he answers that, “the federal government may have to purchase ‘costly’ international carbon credits to meet the Canadian COP21 commitment.”
The Globe and Mail reports, in connection with that assessment, that Canada’s current and anticipated emissions track implies greenhouse gas releases of 44 megatonnes above its committed target of 523 MT for 2030. At the country’s proposed minimum carbon price of $50 per tonne for 2022, closing the gap entirely with international credits would cost Canadian taxpayers $2.2 billion.
“Think about that for a moment,” Belot writes. “In order for Western Canada’s fossil fuel growth to be accommodated under our Paris commitments, we’re going to be subsidizing the energy industry again.”
In an examination of the country’s most carbon-heavy fossil sector, meanwhile, CBC News opened the year with a forecast that even without the intentional, planned phaseout of the sort that the Prime Minister recently mused about, Alberta’s tar sands/oil sands are unlikely to return to the pell-mell expansion that supercharged the province’s economy for much of the last two decades.
“The problem with oilsands projects is that they take between five and seven years to receive proper permits, they need another five to seven years to build, and only then do they start producing oil and making money,” the national broadcaster observes. “Both conventional oil and fracking in locations closer to pipelines are less expensive than getting oil from oilsands.”
CBC anticipates that after 2020, the industry will see fewer and much smaller, incremental additions to existing facilities, but few new large-scale investments. And “if commodity prices slump again, environmental policies become more stringent, and costs rise, some projects may prematurely close their doors.”
Nonetheless, Oilsands Manager Patrick McDonald of the Canadian Association of Petroleum Producers gave CBC a sanguine outlook. “Oilsands projects are a very large initial investment, and there is such scrutiny in the approval process to get those projects off the ground and built,” McDonald said. So “even in today’s environment, those operators in the oilsands are in it for the long haul.”
And so, it seems, may be the bill Canadian taxpayers foot to keep those operators subsidized and in business.