Climate change is a global issue, requiring action from individuals, governments, organizations and industries around the world. Addressing climate change is bigger than one industry or one country - it requires a global perspective. But Canada is uniquely positioned to help meet global climate commitments by providing an alternative to coal in Asia through LNG exports.
Canadian Emissions in a Global Context
Canada produces less than 1.5% of the world’s greenhouse gas (GHG) emissions. Of that, Canada’s oil and natural gas industry produces about 0.3% of overall global GHG emissions.
Canadian GHG Emissions in Global Context
Environment and Climate Change Canada, 2019; World Resources Institute, 2016
By acting globally, Canada can make an outsized contribution on addressing climate change.
The challenge is how to reduce global GHG emissions while the global demand for energy is growing. Through innovation, technology and responsible energy production, Canada is uniquely positioned to help meet this challenge.
How We Can Grow Oil and Gas Production While Meeting Climate Commitments
Reducing Global GHGs with Canadian Energy
Canadian energy can offer solutions to GHG emissions and climate change, among the biggest challenges facing the world.
Canada’s oil and natural gas resources are among the most responsibly produced energy sources on the planet, under the most stringent environmental regulations in the world. In Canada’s oil sands, emissions have fallen significantly.
Since 1990 GHG Emissions Per Barrel Dropped 32%
According to data from the Government of Canada’s 2019 National Inventory Report, Canada’s oil sands per barrel greenhouse gas emissions have fallen 32 per cent since 1990. The inventory is Canada’s official report submitted to the United Nations Convention on Climate Change (UNFCCC) on greenhouse gas emissions.
Canada has a huge potential role to play in reducing net global GHG emissions. A single liquefied natural gas (LNG) export facility, exporting Canadian LNG to offset coal use in other nations, can reduce global GHG emissions by 100 megatonnes; the equivalent of taking every passenger car in Canada off the road. Imagine what five LNG plants could do!
World Leader in Energy Innovation and Technology
Developing energy resources, and transporting those resources to consumers, is a challenge that demands innovative solutions. But that’s nothing new for Canada’s energy sector, which is a technology-driven industry. The largest oil and natural gas producers in our country are pledging meaningful reductions to GHG and methane emissions, and their results prove Canada can transition to a low-carbon economy while still creating prosperity and protecting the environment.
Reducing GHG Emissions
From exploration to production, the industry is working to reduce emissions in every process and activity associated with oil and natural gas. Some examples:
- The team at Enhance Energy is using a proven technique called ‘enhanced oil recovery’ (EOR) that involves obtaining CO2 from large industrial emitters in Alberta and injecting it into a developed oil reservoir that is near the end of its conventional life. The result would be a multiple win: producing energy the world needs, creating jobs, and helping reduce greenhouse gas (GHG) emissions. It is expected that oil produced from this project will have 60% lower emissions than conventionally produced oil.
- Canadian Natural Resources has committed to achieving net-zero emissions in the oil sands though innovation. Since 2009, the company has invested $3.1 billion in research and development, and technologies. It has reduced corporate GHG intensity 18% between 2013 and 2017; stored 17.9 million tonnes of carbon dioxide (the equivalent of taking 576,000 cars off the road) between 2013 and 2018; and, reduced methane emissions in heavy oil operations by 71% since 2013.
- Since 2015, Quest CCS has captured and stored five million tonnes of CO2 from the Shell Canada-operated Scotford Upgrader, the equivalent of one million cars. It is the world’s first commercial-scale CCS facility for the oil sands.
Reducing Methane Emissions
Small leaks of methane, called fugitive emissions, come from valves, pump seals, and other equipment used in natural gas drilling and production. Methane is also released when natural gas is flared or vented.
- In 2019 the Petroleum Technology Alliance of Canada (with CAPP as a partner) hosted the Alberta Methane Field Challenge, the only methane challenge assessing real-world performance of new methane sensing technology in comparison with conventional optical gas imaging-based leak detection surveys. A campaign in the spring of 2019 featured 10 methane detection technologies.
- Operations at Modern Resources have achieved near-zero methane emissions with the implementation, Modern Ultra-Low Emissions (MULE), an alternative to natural gas-driven pneumatic pumps. Modern Resources has also installed solar panels to power its valve actuation and added methanol-based fuel cells as backup power supply. It now has three oil and three gas sites fully equipped with MULE, and the remainder are in various stages of implementation.
Did You Know?
Of the almost 10 billion tonnes of carbon dioxide (CO2) emitted globally in 2015, nearly half came from coal.
LNG and Climate Change
Canada can become a world leader on climate action through technology and innovation, and by continuing to develop natural gas responsibly. Electrification of upstream production is an important step in this process.
Canadian natural gas presents opportunity for significant environmental benefit. Natural gas is the cleanest-burning hydrocarbon – emitting about 40% less carbon dioxide (CO2) when used in electricity generation.
LNG: The Coal Alternative
LNG is an alternative to coal emitting 50% less CO2 when used for electricity generation
Alternative to Coal in Asia
Exports of Canadian liquefied natural gas (LNG) to Asia would help displace coal-fired electricity generation, resulting in decreased net global GHG emissions.
In fact, for every LNG facility built in Canada, global emissions could be reduced by 100 megatonnes of CO2 equivalent (MtCO2e) per year. Estimates show that by 2040, about 1,500 MtCO2e could be eliminated every year if new power plants in China, India and Southeast Asia are fuelled by natural gas instead of coal. (Source: CAPP)
Natural Gas is a Clean Energy Source
IEA, New Policies Scenario, 2018
Natural Gas: A Partner for Renewable Energy
Natural gas can also play an important role in advancing renewable energy. Electricity generated from natural gas can contribute to the electrical grid when intermittent renewable energy sources, such as wind and solar, are not available.
According to the Canada Energy Regulator (CER), electricity generation in Canada must grow 30% by 2040 to meet demand, with natural gas-fired and renewable-based energy showing the largest increases. The CER expects power generation from natural gas to increase from 10% to 16%, and generation from renewables to grow from 5% to 11%. (Source: Canada’s Energy Future 2018: Energy Supply and Demand Projections to 2040)
Canadian Carbon Policy
Canada is a world leader in climate policy. Compared to global competitors, Canada has one of the world’s toughest climate policies based on price and stringency. Climate policy is governed in Canada by provincial and federal governments.
Currently, several provinces have put a price on carbon and the federal government intends to implement a backstop policy for provinces without a carbon price. The federal backstop would raise the carbon price to $50/tonne by 2022. Find out more:
- B.C. Climate Leadership Plan
- Alberta’s Technology Innovation Emission Reduction (TIER) Regulation
- Saskatchewan’s Prairie Resilience – A Made-in-Saskatchewan Climate Change Strategy
- Ontario Climate Change Policy
- Quebec Climate Change Action Plan
- Nova Scotia’s Action on Climate Change
- Canadian Federal Government: Action on Climate Change
Climate change policies also have a different kind of price. As the cost of doing business increases – resulting from policies such as carbon pricing, compounded by other policies and regulations – investment in the oil and natural gas industry is decreasing or leaving Canada altogether. Companies are choosing to invest and produce in other countries where climate change policies are less stringent or don’t exist. This situation, called carbon leakage, results in no net reduction in global GHG emissions.
CAPP supports policies that are efficient and effective. Many jurisdictions around the world, such a California and the European Union, use an emission-intensive, trade-exposed (EITE) method to help prevent carbon leakage and help protect EITE industries. Canada’s oil and natural gas industry qualifies as an EITE industry. Canada needs mechanisms to protect competitive parity across international jurisdictions and provide regulatory and cost certainty.
Action on climate change includes emissions-reducing technology, and effective government policy across Canada.
Video: What is Carbon Leakage
CAPP’s Climate Change Policy Principles
Canada’s oil and natural gas producers are ready and willing to do their part to contribute to the overall Canadian plan on climate change. CAPP and our members have developed principles to help guide creation of effective climate change policy in Canada:
Collaborative and Solutions-Oriented
- Given Canada’s climate commitments and industry impacts, CAPP will proactively collaborate with governments and stakeholders towards appropriate policy solutions.
- Policy solutions need to be adaptive and carefully consider environmental, economic, and social outcomes.
Efficient, Effective and Predictable
- Climate policy should target reductions where they are most efficient and effective right across the entire energy value chain from production to end use and considering fairly all sectors and jurisdictions.
- Climate change policies should achieve emissions reductions at the least cost to Canadians, the economy and industry.
- Revenues from climate policy should be fully recycled back into the economy to incent innovation or reduce other taxes and levies.
Technology and Innovation Focused
- Policy should incent technology and innovation to address climate change, and capture the opportunity to export solutions to the world.
- Considerable future emissions reductions will stem from improving the hydrocarbon energy sector requiring continuing strong innovation and policy in these areas.
- Canada’s climate policies must ensure our resource development is cost and carbon competitive with other jurisdictions, especially the U.S. as our largest trading partner.
- Canada’s climate policy leadership should bring proportionate benefits to Canada, including ensuring we receive full value for Canadian energy products through effective access to global markets.
- Canada is highly dependent on the development and trade of its natural resources, and on its ability to attract foreign investment. Canada’s climate policies must be designed to maintain our ability to raise global investment capital.