The head of the oil sands decarbonization consortium says the federal government’s 2030 emissions reduction targets won’t be possible for the industry until at least 2035 – and anything faster under current conditions would mean a drastic reduction of oil production.
“It will take another five or 10 years to reach these levels based on the current plan,” Kendall Dilling, president of the Pathways Alliance, told CBC News.
“By the mid-2030s, we could probably reach that level of ambition.”
The Pathways Alliance, a group representing 95% of oil sands companies, is working to make its production carbon neutral by 2050.
The federal government has the same date in mind to make Canada a net emitter of greenhouse gases. He set benchmarks along the way, including goals for the end of the current decade.
These 2030 targets require the oil and gas sector to reduce emissions by 42% from 2019 levels. An emissions cap is also expected to be unveiled towards the end of 2023. The oil sands produce an estimated 70 million tonnes of emissions per year, according to the Government of Alberta, or about 11% of Canada’s total pollution.
Pathways has committed to reducing oil sands emissions by 22 megatonnes by 2030.
Much of this reduction depends on a large carbon capture and storage (CCS) facility planned near Cold Lake, Alberta, which would collect carbon from nearby facilities and store it underground.
Even the timeline for this $16 billion project is in jeopardy, Dilling said, and it depends on an action plan emerging from ongoing talks with governments and stakeholders.
“2023 is the year we collectively determine if 2030 is actually achievable,” he said.
“We probably have the first half of 2023 to really land on the fiscal and regulatory framework needed to continue with these projects so that we can keep them on schedule for 2030. If we slip much beyond that, 2030 will be very difficult. “
How patient are the Feds?
The oil and gas industry is having its most lucrative year on record, with free cash flow estimated at around $152 billion, according to a recent Pembina Institute Report.
At a time when there is money available, companies have been criticized for not investing more in the development of clean technologies or accelerating their commitments to existing options.
“The investment climate in which any of these companies would make one of these big CCS investment decisions is still not completely favorable…And so it’s not that surprising for something like this. as big as it ends with a delay,” said Andrew Leach, professor of law and economics at the University of Alberta.
“I think the urgency kind of comes from the patience that our government is going to wait for the oil and gas industry or the Pathways group to figure this out and get something that clearly shows they can deliver on their promises.”
“The world has evolved”
The group is in close consultation with the federal government to see what regulations, funding and commitments might be needed to get as close to the goals as possible. The federal government has indicated that it is trying to avoid a reduction in production.
But Dilling says politics aren’t the driving force behind the Pathways group.
“We are agnostic of the current government,” Dilling said.
“We have to work with whoever is in power and we only have one goal, which is to decarbonise our industry. And so if a future government comes along and the rules change, it doesn’t really concern us because we don’t We’re not doing this simply because the regulations require us, we do it because our lenders require it, our insurers require it, our shareholders require it.
“The world has moved on.”
Last year’s federal budget promised big incentives for deploying CCS technology, with tax credits expected to cost $1.5 billion a year starting in 2026.
With that came a reminder for industry not to drag their feet on cutting emissions – incentives will be halved between 2031 and 2040.
Critics of the strategy worry about possible CO2 leaks in the future and say decarbonising production does not take the world away from fossil fuels.
Dilling is realistic about the trust the industry needs to build.
“You can’t say we’re on a path to net zero by 2050 and we’re going to do it all in the 2040s. Nobody’s going to give you that track. So we’re going to deliver a really impressive reduction by 2030. And then, with that goodwill in the bank, there will be plenty of ways to talk about continuing the incentives beyond that point.
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