The federal cabinet administered what one critic called a “slap in the face” to climate science with a decision today to approve the massive Bay du Nord oil and gas megaproject off the Newfoundland coast.
The $9.4-billion project led by Norwegian state fossil Equinor is expected to extract 300 million to one billion barrels of oil from a site about 500 kilometres northeast of St. John’s, beginning in 2028.
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Environment and Climate Minister Steven Guilbeault announced the decision just two days after the latest warning from the Intergovernmental Panel on Climate Change that humanity is less than 10 years away from exceeding a carbon budget that would deliver just 50-50 odds of holding global warming to 1.5°C. The IPCC warned that “continued investments in unabated high-emitting infrastructure” would be a barrier to faster, deeper emission cuts, increasing the risk of missing carbon reduction targets that would otherwise by attainable.
“Such overshoot pathways imply increased climate-related risk, and are subject to increased feasibility concerns and greater social and environmental risks,” the UN agency said.
But Guilbeault said the IPCC still sees demand for fossil fuels in 2050, even in a 1.5°C scenario, with daily consumption that is 10 million barrels higher than the International Energy Agency projected in its own net-zero pathway last year. “So we have a responsibility to ensure that the oil that we will still be using in 2050 is the lowest possible in terms of emissions and is entirely abated” through carbon capture and storage, he told The Energy Mix Wednesday evening, with much of that production devoted to products like lubricants, solvents, and asphalt that aren’t meant to be burned.
He added that his own Emissions Reduction Plan released last week had oil and gas production rising by nearly a million barrels per day, with the country still hitting its 2030 carbon targets. But that increase in production was based in part on a December, 2021 projection from the Canada Energy Regulator that critics wrote off as deeply unrealistic. Guilbeault acknowledged that “it would have had an influence on the decision, for sure” if the CER had come up with a less expansive projection, alongside other analysis that factored into this week’s decision.
137 Legally-Binding Conditions
In the end, a Wednesday afternoon release from the Impact Assessment Agency of Canada led off with the statement that “now more than ever, Canadians expect the Government of Canada to take action and promote innovative measures to combat climate change,” citing the project approval as an “important step in that direction.”
It said the project “is not likely to cause significant adverse environmental effects when mitigation measures are taken into account,” pointing to 137 legally-binding conditions it had attached to the project in areas like greenhouse gas reductions, protection for fish habitats and migratory birds, species at risk, air quality, human health, and Indigenous peoples’ use of resources.
“The Bay du Nord Development Project may proceed, subject to some of the strongest environmental conditions ever, including the historic requirement for an oil and gas project to reach net-zero emissions by 2050,” Guilbeault said in the release. “As the demand for oil and gas falls throughout the coming decades, it will be more important than ever that Canadian projects are running at the best-in-class, low-emissions performance to play a competitive role.”
Over the phone, Guilbeault pointed to a separate letter he sent Wednesday to Suncor Energy President and CEO Mark Little that raised doubts about the company’s proposed Base Mine Extension Project, a tar sands/oil sands venture that would produce nearly three million tonnes of emissions per year.
“We have come to a shared recognition that emissions at this level may not align with the pace and scale of emissions reductions required to achieve our targets, and that this would hinder Canada’s international commitments in respect of climate change,” he wrote [pdf]. “As such, I am of the opinion that the project, as currently proposed, would likely cause unacceptable environmental effects within federal jurisdiction.”
While the letter did not constitute a final decision on Suncor’s plan, the net emissions impact of the day’s political action was about 250,000 tonnes per year approved at Bay du Nord and three million tonnes…strongly discouraged at the Suncor mine.
In the hours before the announcement, Guilbeault’s department also issued a news release and backgrounder on its work with Newfoundland and Labrador to protect biodiversity and establish new protected areas.
But the IPCC report put all of those calculations in a wider context, concluding that the current inventory of fossil projects in operation or under development around the world would be enough to push atmospheric warming beyond 1.5°C.
“Climate scientists warn that we are already perilously close to tipping points that could lead to cascading and irreversible climate impacts,” UN Secretary General António Guterres said in his response to the IPCC release. “But high-emitting governments and corporations are not just turning a blind eye; they are adding fuel to the flames. They are choking our planet, based on their vested interests and historic investments in fossil fuels, when cheaper, renewable solutions provide green jobs, energy security, and greater price stability.”
The science dictates a 45% emissions reduction this decade, but current climate pledges under the Paris climate agreement would only deliver 14%, the secretary-general added. “Climate activists are sometimes depicted as dangerous radicals. But the truly dangerous radicals are the countries that are increasing the production of fossil fuels.”
Billions of Dollars, Loads of Emissions
The Canadian Press captured the trade-offs the federal cabinet believed itself to be grappling with, with Finance Minister Chrystia Freeland and Labour Minister Seamus O’Regan said to be supporting the project and ministers from Quebec, Ontario, and British Columbia opposed.
The project “is expected to put billions of dollars into the provincial purse and spew millions of kilograms of greenhouse gases into the atmosphere each year,” CP wrote. And Equinor “says Bay du Nord will be worth about C$3.5 billion to the Newfoundland and Labrador government, with oil production beginning in the latter part of the decade. Bay du Nord would be Canada’s first deepwater project to produce oil, with wells in about 1,200 metres of water pumping around 188,000 barrels of oil a day.”
In the weeks leading up to Wednesday’s announcement, voices in Newfoundland and Labrador stressed the economic gains that Equinor has promised if the project goes ahead, in a province facing dire hardship. Without Bay du Nord, “Newfoundland and Labrador is going to suffer for a long, long time,” Brigus, Newfoundland Mayor Shears Mercer told CP. “We’re broke. The province is broke.”
But mid-way through a week that had already seen the IPCC report and the Bay du Nord decision, the reaction through the day Wednesday ranged from rage to tears.
“For the first time in my life I had to choke down tears talking to a journalist about the Canadian government approving the Bay du Nord project. Doubling down on new fossil production while it could not be clearer this is the wrong thing to do is nothing else than heartbreaking,” tweeted Caroline Brouillette, national climate policy manager at Climate Action Network-Canada.
“It hurts to see the work of so many people inside and outside of government undermined by expanding fossil fuel infrastructure, yet again,” Brouillette added. “Moments like these show how inadequate our governments’ (even the most ‘progressive’ ones) response to the crisis are. How unwilling @JustinTrudeau is to be honest with Canadians about the need to plan for a future climate and economy that is safe and sustainable.”
Trudeau “is doubling down on the myth that Canada can be a climate leader while continuing to produce and export vast amounts of climate-destroying fossil fuels,” she added in a release. “The longer our leaders postpone being honest with Canadians about the incompatibility of increased oil production and a climate- and jobs-safe future, the rougher the awakening will be. Today’s decision is a failure of courage.”
“The Government of Canada’s decision to approve a new billion-barrel mega-oil project is a slap in the face to climate scientists, communities across Canada, and the world impacted by the climate crisis,” said Julia Levin, senior climate and energy program manager at Environmental Defence Canada. “The planet is on fire and the science is crystal clear. Approving Bay du Nord is another leap towards an unlivable future. The decision is tantamount to denying that climate change is real and threatens our very existence.”
University of Waterloo political science professor Angela Carter, a member of the province’s Net-Zero Advisory Council, called the approval “unsettling, deeply unsettling” in light of the IPCC report just days before, and a mountain of equally alarming science reports dating back years.
“We’re told in no uncertain terms by global scientists that all the current fossil fuel projects we have on the books, the currently planned and existing ones, already blow us past any safe temperature increase,” she told The Mix. “And then we get this from the federal government, that yet another huge project, a billion barrels of oil, gets environmental approval. It makes no sense.”
An ‘Ideal Opportunity’ to Say No
And Bay du Nord was a project that should have been easy for Ottawa to refuse, Carter added.
“This was the perfect opportunity for the federal government,” she explained. “It has jurisdiction, since we’re talking about offshore oil development. It should have been the ideal opportunity to not approve a project that flies in the face of its climate commitments, and instead offer the people of Newfoundland and Labrador a transition package” to end the province’s dependence on oil and gas once and for all.
“That of course would have been not only an economic lifeline. It would have been a climate win,” Carter said. “Instead, the federal government signalled yet again that it is not serious about the climate crisis. Because we can’t have it both ways. We can’t make lofty emissions reduction commitments and keep expanding oil and gas production. It’s just another signal that the federal government doesn’t get it.”
Guilbeault said he could “understand the frustration, and I can understand how for many this was a symbol,” while noting that the Emissions Reduction Plan was built on an increase in fossil production through 2030.
But Carter pointed out that Bay du Nord is meant to begin operations in 2028, just two years short of the end date for the federal plan, and when the IPCC says global emissions must peak before 2025 to hold onto any hope of keeping a 1.5°C target in sight. “A big, emissions-intensive project like this is going to be another one of our large final emitters in this country. It’s going to be coming online four years after we’re supposed to be hitting that peak, and it’s going to keep producing until apparently 2058,” she said. “This is unthinkable.”
The approval also puts the onus on the province and its vocal fossil lobby to prove they were serious when they promised jobs and economic benefits if the project went ahead, Carter added. So far, out of the $143 billion in sales the Newfoundland and Labrador industry has produced, she said only $20 billion went to a cash-strapped government that is now considering major cuts to health care, and to the province’s only university.
“For 25 years, people here have been told oil is going to bring us prosperity. And yet here we are, the province is in such a bad financial situation,” with massive debt, high unemployment, food insecurity, and terrible inequality. “So how are we going to do this differently with this project? What is the plan to use the revenue so that Newfoundland and Labrador can finally get the prosperity that oil was supposed to bring us?”
Guilbeault said Ottawa will be working with Newfoundland and Labrador to help the province shift in the direction of offshore wind and hydrogen production. “So this is economic diversification. This is transition,” he said. “I have spoken a couple of times with Premier [Andrew] Furey, and he’s not a climate skeptic. He understands that his province needs to transform and move away from its dependency on fossil fuels. And that’s what he wants to do.”
Scope for Legal Action?
Ecojustice lawyer James Gunvaldsen Klaassen wouldn’t speculate on the scope for legal action to reverse or slow down the federal cabinet decision, but pointed to its downstream emissions—the 80% or more of the carbon pollution in a barrel of oil that is emitted after it reaches its end user—as a big gap in the government’s project analysis.
“Obviously, downstream emissions are a major problem with all these projects, and if there’s a legal hook to that, we’ll certainly explore it and take our best shot as to what grounds might exist,” he told The Mix.
Meanwhile, there’s still some possibility that Equinor will make the decision that Ottawa couldn’t or wouldn’t, with a company spokesperson telling CP that a final project decision is still a couple of years off. That’s the available window of time to continue building pressure against the project, climate hawks told The Mix.
“With every mounting month of insurance and financial risk, Equinor could pull the plug on this,” Carter said, adding that the future of fossil fuel production is also a hot topic of debate in Norway, where the company is based. “So oil is not being produced yet. There are many steps between now and then.”