On Jan. 27, the federal government injected yet another syringe filled with uncertainty in to the country’s gas and oil sector, announcing a nebulous plan to overhaul Canada’s environmental assessment tactic to incorporate concerns over greenhouse gas emissions. Of course, the initial announcements are long on lofty goals and short around the devilish details. However, many situations are clear.
First, cue the climate accountants. A safe assumption is the fact that whatever shakes out as the procedure for defining how Canada defines upstream emissions is going to be something roughly in line with the methods utilized by the Un Framework Convention on Climate Change, or UNFCCC. The UNFCCC defines upstream emissions as “GHG emissions linked to the production, processing, transmission, storage and distribution of the fossil fuel, starting with the extraction of raw materials in the fossil fuel origin and ending using the delivery of the fossil fuel to the site of use.”
The UN graciously excludes “other greenhouse gas (GHG) emissions sources, for example those associated with the construction of equipment (which) are relatively small , therefore not considered.” So, oil and gas producers do not possess to go all the way back to tally up the GHG emissions related to producing their drilling equipment, trucks, pipeline segments, or even the materials used to build the types of materials accustomed to produce said equipment. That’s a silver lining, since it’s possible to only imagine the recursive navel-gazing that might be required to calculate the GHG emissions leading up to the fabrication from the staples used in the administration centers.
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Second, set a course to delay. Decisions around the proposed twinning of the Trans Mountain Project will be challenge four or five months with additional consultations, community involvement and, critically, this new procedure that must “assess the upstream greenhouse gas emissions associated with this project and make these details public.”
And what does this mean for Canada’s gas and oil sector? Well, a self-inflicted public relations problem, for one thing. Canadian oilsands do take more energy to create than a number of other kinds of oil, they must be heavily processed before they may be used, plus they should be transported long distances to reach markets. The brand new requirements will likely boost estimates of the greenhouse gas intensity of oil sand production compared to alternative causes of hydrocarbons. Environmental groups will latch onto these upstream estimations with glee, further raising the barriers that Canadian companies must overcome to obtain what is an increasingly Will-O’-the-Wisp-like “social licence” to develop and export Canada’s gas and oil resources.
If these new emission metrics wind up in a carbon-pricing scheme, it can make us much less competitive
And if these newly assessed upstream emissions wind up being included in any carbon-pricing scheme, Canadian producers will face a substantial disadvantage to competing oil-producing jurisdictions all over the world that don’t implement such pricing schemes.
All of this, we’re told, would be to “restore public trust” within the environmental assessment process. Whether or not it’ll achieve this is dubious: Environmental groups make it plain their goal would be to halt fossil fuel production altogether, and to start immediately. They’ll hardly be appeased by new GHG accounting methods, and can certainly be happy to use them to continue their attacks on Canada’s oil sands as “dirty” fuel.”
Needless to say, after your day, Canadian investors, consumers, and those who benefit from the public services funded from oil production and trade will feel the pain in our new greenhouse gas accounting requirements.
Kenneth P. Green is senior director of Natural Resource Studies at the Fraser Institute.
