'A cap on pollution, not production': Pembina Institute supports federal emissions cap

Janetta McKenzie, manager of the Pembina Institute’s oil and gas program, discusses the federal emissions cap with Alberta Primetime host Michael Higgins.

This interview has been edited for clarity and length.

Michael Higgins: You're a proponent of the draft regulations. What makes those regulations realistic?

Janetta McKenzie: Ultimately, we know that oil and gas emissions are a problem in this country. Oil and gas emissions contributed almost a third of Canada's total greenhouse gas emissions last year, according to the national inventory report.

What the federal government has proposed here is a regulation that gives the industry time to start planning, but also will require some action, when it comes to ramping up decarbonization activities in order to comply with the cap.

It's designed to be complementary with regulations that are already on the table, including industrial carbon pricing like Alberta's tier program, or draft methane regulations that are also slated to be finalized next year.

MH: What level of impact do you see an emissions cap having on the production of oil and gas in Alberta?

JM: It's sort of in the name: This regulation is a cap on pollution, not on production. The sector has several options available to it to reduce emissions. Between abating and mitigating methane from oil and gas production, which is a relatively low cost option, to finalizing and moving forward with the Pathways Alliance-proposed carbon capture and sequestration project in Alberta.

In addition to that, there are also compliance flexibilities included in this proposed regulation which give more flexibility to the sector, especially in those first few years after the implementation of the regulation, and also the absolute level of the cap.

The absolute megaton level of the cap will be set based on data collected in 2026, so there's this quite gentle on ramp to ensure that this is, in fact, a cap on pollution and on emissions, not on production.

MH: The Alberta government is heralding a 52-per cent cut in methane emissions by the oil and gas producers since 2014. It's a message it plans to take to COP 29 this week in Baku.

How do you assess energy sector efforts to reduce emissions and meet targets to this point?

JM: There have definitely been some successes, particularly when it comes to reducing methane in the oil-and-gas sector in Alberta, B.C. and across Canada.

A lot of those methane reductions have come as the result of existing methane regulations at the provincial level, which have been deemed equivalent by the federal government.

What's been put on the table for oil and gas methane by the federal government now is the next step of methane reductions, aiming for a 75-per cent decrease in methane from oil and gas by 2030, which is very in line with the International Energy Agency recommendations, as well as some of that lower hanging fruit when it comes to reducing emissions from the sector.

It will be quite critical in meeting this proposed emissions cap, as well.

MH: In terms of response from the other side of the coin, the Calgary Chamber of Commerce is demanding Ottawa withdraw the emissions cap, saying it would do absolutely nothing in the global quest to decrease emissions.

How do you respond to voices, be they business or political, claiming such?

JM: I think there's a couple things to keep in mind here. First of all, when it comes to the global energy transition, it truly is a global energy transition.

The reason that most countries, the overwhelming majority of countries, got together in 2015 to agree that there needed to be some coordinated effort and coordinated goals for reducing emissions is because it is a little bit like turning a very large ship in the water.

Second is that, Canada on an absolute basis, contributes fewer emissions globally than China or the United States or the European Union on a per capita basis, though we emit quite a few emissions and do have a responsibility to reduce those emissions for the sake of avoiding the very worst impacts of climate change, which have a real financial cost to our country and to Canadians.

But also to set up Canadian industry, including the Canadian oil and gas industry, to compete in that low-carbon future and that low-carbon economy as the rest of the world moves on climate.

MH: What do you see coming of the political environment around emissions with Donald Trump returning to the White House?

JM: I think it's a little early to speculate exactly what sort of energy policy the Trump administration will implement and exactly what that will look like.

Obviously, there's lots of speculation right now when it comes to the Canadian approach. It is important to look at what our trading partners are doing and what our neighbors to the south are doing, but it also is important that we design a made-in-Canada approach that works to reduce emissions and also works with the existing policy that we've got on the table.

We have a very multi-pronged approach to reducing emissions in this country. We have industrial carbon pricing, like Alberta's tier program or the federal output-based pricing system, we have methane regulations, EV sales mandates, and all those things work together to make the Canadian approach to reducing emissions and to setting up the economy to compete in the net-zero economy.

We'll have to watch what the new Trump administration does closely and perhaps make adjustments, but what's been put on the table is a multi-pronged approach.