Wilkinson says Ottawa not looking to curb oil production in attempt to calm oilpatch fears
In a trip to Calgary this week, Natural Resources Minister Jonathan Wilkinson will try to assuage oilpatch leaders’ fears with a message that the Liberal government’s climate plan will not curtail fossil fuel production, at least in the short term.
The federal government just closed consultations on a proposal to cap greenhouse gas emissions from the oil and gas sector, stoking fears in the oilpatch over potential future curbs on production. The proposal has also drawn noisy objections from Alberta politicians, who have argued Ottawa is at risk of overstepping provinces’ constitutional right to control natural resource development.
Wilkinson said Ottawa doesn’t expect to see significant declines in the use of oil prior to 2030, though he added some reductions could begin prior to 2035.
“Eventually, we will (see declines), if we are making progress towards reducing emissions, as we see zero-emission vehicles deployed in larger numbers in particular,” Wilkinson said in an interview.
“In the short term, we need to find ways to reduce emissions on a pathway where we are not looking to reduce the production of oil, we’re not looking to shut in production.”
Wilkinson said he hopes to work collaboratively with the industry to ensure emissions reductions can be achieved economically, because time is getting short for Canada to meet its climate targets.
If we're going to make significant reductions by 2030, we're running out of time
“We’re running out of time,” Wilkinson said. “If we’re going to make significant reductions by 2030, we’re running out of time. Especially when many emissions reductions require significant capital projects. We need to move this along. We don’t have three years to have a conversation about these things.”
Ottawa has already introduced a suite of policies aimed at reducing emissions across the Canadian economy, including a price on carbon, clean fuel regulations and an investment tax credit for capital invested in carbon capture, utilization and storage.
But last July, Ottawa announced it would be gathering feedback on a proposed hard cap on oil and gas emissions, including a possible sector-specific cap-and-trade system or a modified carbon pricing system.
The Trudeau government has previously said the sector must reach an emissions reduction target of 110 million tonnes by 2030, equivalent to a 42 per cent cut from 2019 levels — reductions that some in the oil and gas industry have argued can’t be achieved without shutting in production.
During his swing through Alberta, the minister said he will be meeting with members of the Pathways Alliance — an organization representing some of the biggest firms in the oilsands — and the Canadian Association of Petroleum Producers (CAPP).
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Wilkinson said he has heard the oilpatch’s concerns about the risk of Ottawa layering on another policy targeting emissions, as overlapping strategies aimed at reducing emissions could result in unintended consequences for the sector. Critics of the proposed federal cap have warned that both the cap-and-trade regime and a modified carbon price could increase uncertainty in the energy industry, making it difficult for producers and investors to gauge the cost of emitting in the future.
“But from many folks, what I’m also hearing is a willingness to engage that conversation and to try to ensure that we are implementing a cap on emissions in a manner that actually will address those issues,” Wilkinson said.
“This is not a not an esoteric thing. Science tells us that we need to make these kinds of changes if we’re going to actually avoid the catastrophic effects that would happen if we do not achieve our emissions reduction goals, and others don’t around the world. But how do we do that in a way that’s also economically sensible?”
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