Can Canada, U.S. tackle both the energy and climate crisis?

Globe Forum panel focuses on areas of cooperation between U.S., Canada on energy

Natural Resources Minister Jonathan Wilkinson, left,and U.S. Ambassador to Canada David Cohen talk U.S.-Canadian cooperation on energy transition. | Globe Forum 2022

Canada’s new emission’s reduction plan, which calls for a 42% reduction in emissions in Canada’s oil and gas sector in just eight years, is unrealistic and unachievable, or not nearly aggressive enough, depending on which special interest group you listen to.

The fact the plan, released yesterday during the Globe Forum in Vancouver, has been questioned by both fossil fuel hawks and doves suggests Canada may have hit the “sweet spot,” said American Ambassador to Canada David Cohen.

“When basically people on both sides of the fight – and there shouldn’t be sides in this fight – say it’s too aggressive or not aggressive enough, you must have done a pretty good job of designing that plan,” Cohen said in a panel discussion with Canadian Natural Resources Minister Jonathan Wilkinson on Canada-U.S. cooperation on energy policies.

Right now, both Canada and the U.S. are focused on a global energy crisis, which will necessitate trying to supply Europe with more oil and natural gas. Wilkinson said neither country can lose sight of the longer-term goal of reducing the world’s reliance on fossil fuels.

“At the end of the day, we of course need to work to stabilize global energy pricing,” he said. “We of course need to work to assist our European friends and allies during what is a terrible crisis.

“Of course Canada – and I’m sure the United States – want to be there to support. And that means helping them to displace reliance on Russian oil and gas. But we similarly need to be conscious of the impacts with respect to climate and ensure that this is considered in the context of a broader transition.”

Last week, while meeting with the International Energy Agency and his counterparts in European governments, Wilkinson said, “to a country, the focus is on ensuring that we actually address the short-term requirements, that we focus on accelerating the transition towards renewables and hydrogen.”

The emissions reduction plan the federal government released yesterday sets targets for emission reductions in all sectors of the economy. It includes strategies for greening Canada’s grid, wider adoption of electric vehicles, and improving energy efficiency in buildings.

The oil and gas and transportation sectors are the two that must achieve the greatest reductions, since they are the two biggest sources of greenhouse gases.

The challenge for Alberta’s oil patch, and B.C.'s natural gas and LNG sectors, will be growing production while lowering their emissions intensity.

Emissions from Canada’s oil and gas sector have increased by 22% since 2005, which has been the benchmark Canada uses for emissions reductions targets.

“We’re looking for about a 30% reduction from 2005, but it’s a 42% reduction from 2019, because emissions have gone up,” Wilkinson said. “And while the industry has improved its emissions intensity per barrel produced, we have not seen declines in absolute emissions thus far.

“We must see declines in absolute emissions if Canada is to achieve its targets. Luckily, the industry agrees.,” Wilkinson said. “The Pathways Group, which is the major oil sands companies, has committed to net zero by 2050, and have asked for the kind of collaboration that was embedded in the document that was unveiled.”

The plan for oil and gas includes aggressive methane reductions, which Wilkinson said is a big source of the sector’s emissions.

The plan also provides an investment tax credit to provide an incentive for the fossil fuel sector to invest in carbon capture and storage, and ultimately there will be a firm cap on emissions for the sector.

But the plan lacks detail in terms of just how much each policy tool – whether it is methane reductions or CCS – might reduce the sector’s emissions. If the bulk of emissions reductions are to come from CCS, for example, that could be a challenge, given the amount of time it would take to finance, get regulatory approval for and then build CCS facilities.

Canada and the U.S. have different challenges, with respect to emissions reductions. Canada already has comparatively low-carbon electrical grid, for example, thanks to hydro and nuclear power, whereas the U.S. is still weaning its electrical grid off coal – with some success.

“In the United States we’ve actually been able to reduce our emissions 12% through 2019,” Cohen said. “And we fully expect next year’s numbers to be even better.”

Cohen didn’t explain where the bulk of those emissions reductions came from. While some of the emissions reductions came from increased used of wind and solar power, the bulk of the emissions reductions in the U.S. have come from switching from coal to natural gas for thermal power generation, according to agencies like the Energy Information Administration. (EIA).

Wilkinson and Cohen said there are opportunities for the two countries to collaborate, one of them being clean-tech research, development and adoption.

Cohen acknowledged the importance of clean technology in addressing climate change, but cautioned against thinking it is a silver bullet.

“We can’t be seduced that clean-tech is going to solve this whole problem,” Cohen said. “We have to keep doing the hard stuff, even if we get push-back from the energy sector, from the automobile sector. We have to take an all-of-the-above approach.”