'It's not a production cap': Federal energy minister defends emissions regulations

Jonathan Wilkinson, federal energy and natural resources minister, speaks with Alberta Primetime host Michael Higgins about the Alberta government’s Scrap The Cap campaign.

This interview has been edited for clarity and length.

Michael Higgins: The Scrap the Cap campaign is aimed squarely at policy coming from your government. What's your response to the claims of the Smith government?

Jonathan Wilkinson: I think it's a little bit over the top for a regulation that actually hasn't even been released. I would say though, perhaps that is reflective of the fact that Premier Smith has a leadership review coming up and fighting with the federal government is always good politics.

It's an emissions cap, it's not a production cap. It's not dissimilar to tools that have been used in other sectors to try to actually reduce emissions, and it's important to reduce emissions. Climate change is real and emissions from the oil and gas sector are about 30 per cent of Canada's emissions at the present time. It's the only sector that continues to increase and it needs to start to go down.

The bulk of the emissions that the cap actually looks to target are two areas, one is reducing methane emissions. That's something that Premier Smith, when she developed climate plan with Sonia Savage before the last election, said she agreed with. And the other part of it is, the oil sands and the numbers that we are using, in terms of what emissions reductions are actually achievable, are the numbers the pathways themselves puts out.

So I think people will see that it's a pretty reasonable approach to reducing emissions, and it is not a production cap. I would just encourage Premier Smith to wait for the regs.

MH: How do you counter Alberta's claim that your policies carry a financial impact on everyday Canadians and make everything more expensive?

JW: That's just wrong, and in fact, it works directly in the reverse to what Premier Smith is saying. At the end of the day, reducing emissions from the oil and gas sector is going to actually reduce the carbon intensity of the fuels that we are able to provide to the world. That is going to be one of the bases of competition moving forward.

This is actually about strengthening the competitiveness of the Alberta's oil and gas industry and Newfoundland’s and Saskatchewan’s and British Columbia's, moving forward. It does not create additional costs on individual Canadians, and in fact it actually, as I say, is going to actually help from an economic perspective.

MH: I understand you're speaking with members of the industry today, so as minister of energy, what's your read on the direction of demand for oil and gas and how that translates into the direction of production, especially here in Alberta?

JW: The International Energy Agency released its World Energy Outlook just this week. That is the leading agency with respect to energy forecasting, and of course, it works to ensure energy security for Western countries.

What it said is that under all scenarios, oil and gas are going to peak by 2030 and then they will start to decline in terms of global demand. Most people would actually assume that's the case as we deploy more electric vehicles and we actually move towards more electrification, but what it should say to the sector is, we are going to have to be increasingly competitive, not just from a cost perspective, but in terms of the carbon intensity of the products that we are selling. Because that's going to have value in a world that's moving to lower carbon.

So decarbonization is about enhancing competitiveness in a market that eventually must decline. That's not to say there are not going to be long-term uses for oil and gas, a third of oil is already used for non-combustion applications, doesn't cause climate change, and natural gas can be converted into hydrogen, ultra low carbon hydrogen, which absolutely is going to be valuable in the future.

It is time that we step back and we actually think very clearly and thoughtfully about this, and I think railing against the wind, as Premier Smith seems to want to do, doesn't really get us very far.

MH: Alberta's environment minister says her government has been told and oil and gas production cap is coming at the same time as COP 29, which we know is the UN Climate Change Conference being held in Baku this November. When should Albertans expect release of your draft regulations? What's the timeline?

JW: It will not be released at an international conference. This is an important domestic policy, it's important to release it in Canada. It will be released over the coming weeks, I would expect within the next number of weeks, so it's not too far away.

It will be released in draft form where we will be going out to consult and to actually hear what people have to say. Certainly there can be changes between the initial draft and the later drafts of the regulation, but there will be a several month long period of consultation.

I would also say to Rebecca Schultz that it's interesting, the language that she's using, that the only place in the world that actually already has an emissions cap is Alberta. An Alberta government actually created an emissions cap, this is a federal emissions cap, and it's more ambitious because the other cap allowed for significant emissions growth. But it was Alberta that came up with the concept of a cap.