Fossil fuels are burned for electricity generation, industrial uses, transportation, as well as for the heat in our homes and commercial buildings. Other industries that emit GHGs in Canada include transportation, electricity, cement, chemicals, manufacturing, buildings, agriculture and waste management.
GHGs from human activities are a significant contributor to climate change. To read about human impacts to the climate, please refer to the United Nations Framework Convention on Climate Change (UNFCCC).
Reducing GHG emissions is an important global issue. Specifically for the oil and natural gas industry, our challenge is to reduce GHG emissions while the demand for energy – and the amount of energy the world is consuming – is growing. Global demand for energy is expected to increase 27 per cent by 2040, according to the International Energy Agency.
The chart below shows that while Canadians make up only 0.5 per cent of the global population, Canada's share of global greenhouse gas emissions are less than 1.5 per cent. Of that percentage, the largest portion of GHG emissions comes from the transportation sector.
In 2015, the Government of Canada announced a climate target to reduce Canada’s greenhouse gas emissions by 30 per cent below 2005 levels by 2030.
Life cycle GHG emissions from crude oil
Life cycle analysis, sometimes called wells-to-wheels, estimates the amount of GHG emissions associated with the entire life of a product. For petroleum fuels, this includes crude oil production, transport, refining, refined product transport and ultimately combusting the fuel in a vehicle. When GHG emissions are viewed on a well-to-wheels basis, emissions released during the combustion of fuel (such as gasoline or diesel) make up 70 to 80 per cent of total emissions. (CERA Report, May 2014)
If constraints are placed on activities in certain jurisdictions and not elsewhere, there is inevitably reduced investment in that jurisdiction due to higher cost. As it relates to carbon pricing, this phenomenon is called carbon leakage.
If industry reduces or stops investing in Canada due to the high carbon cost, and production goes to a jurisdiction where there is little or no carbon price, more emissions will be released in that jurisdiction. Since climate is a globally connected system, it is critical that Canadians consider the global implications if our oil and natural gas industry is no longer competitive.
Climate costs without adequate focus on innovation and reinvestment in the oil and natural gas industry will result in higher emissions globally.
Preventing carbon leakage
Many jurisdictions around the world such a California and the Eurpoean Union utilize an emission-intensive, trade-exposed (EITE) methodology to help prevent carbon leakage and help protect EITE industries. We believe the upstream industry qualifies as an EITE industry. Mechanisms to protect competitive parity across international jurisdictions and provide much-needed regulatory and cost certainty as needed across Canada.