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Canadian Energy Centre

Business leaders blast Ottawa’s ‘unnecessary and unacceptable’ oil and gas emissions cap

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From the Canadian Energy Centre

By Deborah Jaremko

The federal government is proceeding with its plans to cap emissions from the oil and gas industry in a move business leaders say will ultimately hurt Indigenous communities and everyday Canadians.  

The Business Council of Canada called the cap part of a “full-on charge against the oil and gas sector.”

The government announced on December 7 that it will implement measures to cap oil and gas emissions in 2030 at 35 to 38 percent below 2019 levels. A similar cap has not been announced for any other industry. 

“It all seems punitive and short-sighted,” wrote Business Council of Canada vice-president Michael Gullo and Theo Argitis, managing director of Compass Rose Group.  

A cap on production 

They don’t put much stock into the government’s claims that the cap is not intended to limit Canada’s oil and gas production. 

“That’s semantics. To work, a cap would ultimately need to be severe enough to curtail production if needed, and that would have significant economic consequences,” Gullo and Argitis said, warning of a “direct and immediate” loss of income for Canada’s economy. 

“There would be significant indirect costs as well, incurred by every household and business across the nation because Canada relies on income generated by oil and gas companies—totaling $270 billion in 2022 alone—to support social programs like health care, education, and infrastructure,” they wrote. 

Already on the path to net zero 

On the world’s current trajectory, oil and gas will still account for 46 per cent of world energy needs in 2050, down only moderately from 51 per cent in 2022, according to the International Energy Agency.  

Industry leaders argue that Canada’s oil and gas producers are already on the path to net zero emissions without the need for the cap. 

According to Environment and Climate Change Canada’s latest report to the United Nations, emissions from so-called “conventional” (non-oil sands) production declined to 26 megatonnes in 2021, from 34 megatonnes in 2019.     

Producers in Alberta have already reduced total methane emissions by 45 per cent compared to 2014, hitting the target three years ahead of schedule 

Oil sands emissions did not increase last year despite production growth, and total emissions are expected to start going down before 2025, according to S&P Global.  

“Imposing an emissions cap on Canada’s oil and gas producers, who are already achieving significant emissions reductions as shown in the federal government’s own data, is unnecessary and unacceptable,” the Explorers and Producers Association of Canada said in a statement 

A cap on Indigenous opportunity 

The Indigenous Resource Network (IRN) – which advocates for Indigenous participation in resource projects – said the cap would be “devastating” for Indigenous communities.  

“A pathway to self-determination is being achieved through the ownership of oil and gas projects and involvement in the sector,” said IRN executive director John Desjarlais.  

“This would result in a cap on Indigenous opportunity in the oil and gas sector.” 

Desjarlais said the IRN is seeking an exemption from the cap for Indigenous communities who are engaged in oil and gas development.  

He said the proposed cap directly contradicts the government’s promises on reconciliation and its support for the United Nations Declaration on the Rights of Indigenous People.  

Counterapproach to the United States 

The approach of capping emissions runs counter to the incentive-based approach being pursued in the United States, the Canadian Association of Energy Contractors (CAOEC) said in a statement. 

“There, the Inflation Reduction Act has attracted capital and accelerated low-carbon technology and innovation in the energy sector at the expense of Canadian businesses and workers,” the CAOEC said.

Ottawa has yet to finalize announced investment tax credits to support clean technologies like hydrogen production and carbon capture, utilization and storage (CCUS), the Business Council of Canada noted.  

“We have engaged the federal government in good faith over the past two years and have asked them to partner with us to accelerate the deployment of carbon abatement technology. As of today, we have received no support from this government,” said CAOEC president Mark Scholz. 

“Stop working against us and start working with us.” 

Final regulations on the proposed emissions cap are expected in 2025.  

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2025 Federal Election

Canada’s pipeline builders ready to get to work

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From the Canadian Energy Centre

By Deborah Jaremko

“We’re focusing on the opportunity that Canada has, perhaps even the obligation”

It was not a call he wanted to make.

In October 2017, Kevin O’Donnell, then chief financial officer of Nisku, Alta.-based Banister Pipelines, got final word that the $16-billion Energy East pipeline was cancelled.

It was his job to pass the news down the line to reach workers who were already in the field.

“We had a crew that was working along the current TC Energy line that was ready for conversion up in Thunder Bay,” said O’Donnell, who is now executive director of the Mississauga, Ont.-based Pipe Line Contractors Association of Canada (PLCAC).

“I took the call, and they said abandon right now. Button up and abandon right now.

“It was truly surreal. It’s tough to tell your foreman, who then tells their lead hands and then you inform the unions that those three or four or five million man-hours that you expected are not going to come to fruition,” he said.

Workers guide a piece of pipe along the Trans Mountain expansion route. Photograph courtesy Trans Mountain Corporation

“They’ve got to find lesser-paying jobs where they’re not honing their craft in the pipeline sector. You’re not making the money; you’re not getting the health and dental coverage that you were getting before.”

O’Donnell estimates that PLCAC represents about 500,000 workers across Canada through the unions it works with.

With the recent completion of the Trans Mountain expansion and Coastal GasLink pipelines – and no big projects like them coming on the books – many are once again out of a job, he said.

It’s frustrating given that this could be what he called a “golden age” for building major energy infrastructure in Canada.

Together, more than 62,000 people were hired to build the Trans Mountain expansion and Coastal GasLink projects, according to company reports.

O’Donnell is particularly interested in a project like Energy East, which would link oil produced in Alberta to consumers in Eastern and Atlantic Canada, then international markets in the offshore beyond.

“I think Energy East or something similar has to happen for millions of reasons,” he said.

“The world’s demanding it. We’ve got the craft [workers], we’ve got the iron ore and we’ve got the steel. We’re talking about a nation where the workers in every province could benefit. They’re ready to build it.”

The “Golden Weld” marked mechanical completion of construction of the Trans Mountain Expansion Project on April 11, 2024. Photo courtesy Trans Mountain Corporation

That eagerness is shared by the Progressive Contractors Association of Canada (PCA), which represents about 170 construction and maintenance employers across the country.

The PCA’s newly launched “Let’s Get Building” advocacy campaign urges all parties in the Canadian federal election run to focus on getting major projects built.

“We’re focusing on the opportunity that Canada has, perhaps even the obligation,” said PCA chief executive Paul de Jong.

“Most of the companies are quite busy irrespective of the pipeline issue right now. But looking at the long term, there’s predictability and long-term strategy that they see missing.”

Top of mind is Ottawa’s Impact Assessment Act (IAA), he said, the federal law that assesses major national projects like pipelines and highways.

In 2023, the Supreme Court of Canada found that the IAA broke the rules of the Canadian constitution.

Construction of the Coastal GasLink pipeline. Photograph courtesy Coastal GasLink

The court found unconstitutional components including federal overreach into the decision of whether a project requires an impact assessment and whether a project gets final approval to proceed.

Ottawa amended the act in the spring of 2024, but Alberta’s government found the changes didn’t fix the issues and in November launched a new legal challenge against it.

“We’d like to see the next federal administration substantially revisit the Impact Assessment Act,” de Jong said.

“The sooner these nation-building projects get underway, the sooner Canadians reap the rewards through new trading partnerships, good jobs and a more stable economy.”

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Canadian Energy Centre

First Nations in Manitoba pushing for LNG exports from Hudson’s Bay

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From the Canadian Energy Centre

By Will Gibson

NeeStaNan project would use port location selected by Canadian government more than 100 years ago

Building a port on Hudson’s Bay to ship natural resources harvested across Western Canada to the world has been a long-held dream of Canadian politicians, starting with Sir Wilfred Laurier.

Since 1931, a small deepwater port has operated at Churchill, Manitoba, primarily shipping grain but more recently expanding handling of critical minerals and fertilizers.

A group of 11 First Nations in Manitoba plans to build an additional industrial terminal nearby at Port Nelson to ship liquefied natural gas (LNG) to Europe and potash to Brazil.

Courtesy NeeStaNan

Robyn Lore, a director with project backer NeeStaNan, which is Cree for “all of us,” said it makes more sense to ship Canadian LNG to Europe from an Arctic port than it does to send Canadian natural gas all the way to the U.S. Gulf Coast to be exported as LNG to the same place – which is happening today.

“There is absolutely a business case for sending our LNG directly to European markets rather than sending our natural gas down to the Gulf Coast and having them liquefy it and ship it over,” Lore said. “It’s in Canada’s interest to do this.”

Over 100 years ago, the Port Nelson location at the south end of Hudson’s Bay on the Nelson River was the first to be considered for a Canadian Arctic port.

In 1912, a Port Nelson project was selected to proceed rather than a port at Churchill, about 280 kilometres north.

The Port Nelson site was earmarked by federal government engineers as the most cost-effective location for a terminal to ship Canadian resources overseas.

Construction started but was marred by building challenges due to violent winter storms that beached supply ships and badly damaged the dredge used to deepen the waters around the port.

By 1918, the project was abandoned.

In the 1920s, Prime Minister William Lyon MacKenzie King chose Churchill as the new location for a port on Hudson’s Bay, where it was built and continues to operate today between late July and early November when it is not iced in.

Lore sees using modern technology at Port Nelson including dredging or extending a floating wharf to overcome the challenges that stopped the project from proceeding more than a century ago.

Port Nelson, Manitoba in 1918. Photo courtesy NeeStaNan

He said natural gas could travel to the terminal through a 1,000-kilometre spur line off TC Energy’s Canadian Mainline by using Manitoba Hydro’s existing right of way.

A second option proposes shipping natural gas through Pembina Pipeline’s Alliance system to Regina, where it could be liquefied and shipped by rail to Port Nelson.

The original rail bed to Port Nelson still exists, and about 150 kilometers of track would have to be laid to reach the proposed site, Lore said.

“Our vision is for a rail line that can handle 150-car trains with loads of 120 tonnes per car running at 80 kilometers per hour. That’s doable on the line from Amery to Port Nelson. It makes the economics work for shippers,” said Lore.

Port Nelson could be used around the year because saltwater ice is easier to break through using modern icebreakers than freshwater ice that impacts Churchill between November and May.

Lore, however, is quick to quell the notion NeeStaNan is competing against the existing port.

“We want our project to proceed on its merits and collaborate with other ports for greater efficiency,” he said.

“It makes sense for Manitoba, and it makes sense for Canada, even more than it did for Laurier more than 100 years ago.”

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