Canadian oilsands
Alberta oilsands

According to a new report from environmental think-tank the Pembina Institute, Canada’s oil and gas industry will have to reduce its greenhouse gas emissions by 42 percent to enable the country to meet its total reduction targets by 2020.

The Pembina Institute also said that the only way to meet those targets was to ensure that upcoming federal regulations on the sector go far beyond those already in place in Alberta. The federal government pledged to introduce new greenhouse gas rules for the oil and gas sector in 2008 and it hopes that the new regulations to put limits on greenhouse gas pollution will be revealed this summer.

Regulations for Canada’s oil and gas industry are expected to follow those that were introduced for the transportation and electricity sectors, which aim to reduce the nation’s total greenhouse gas emissions by 17 percent from 2005 levels by the end of this decade.

Not so fast

It’s been pointed out that Canada is not likely to meet its target unless urgent measures are taken. In fact, instead of reducing emissions, the national oil and gas sector is predicted to produce more than double the amount of emissions from oilsands between 2010 and 2020, turning Canada into the fastest-growing source of greenhouse gas pollution globally.

The rules governing the oil and gas sector will be of major importance for the targets because the industry is responsible for 22 percent of the entire amount of emissions, the report from the Pembina Institute noted. According to Clare Demerse, director of federal policy of the think-tank, this is a milestone for Canada’s climate credibility. The industry has been under scrutiny for a long time but it is going to be at the center of attention even more in the future because of its environmental record. Putting rigid regulation in place will help to re-establish public trust in the sector, Demerse added.

Overarching rules

Implementing overarching rules to emissions reduction would be more productive that the current individual approach toward each individual sector, the institute believes. Still, it is likely that the regulation will be based on the precedent-setting regime that has already been put in place in Alberta, Demerse pointed out.

In order to meet Canada’s targets for cutting greenhouse gas emissions, the report from the Pembina Institute proposed three steps. The first concerns setting a target of at least 42 percent emissions reduction for the sector. If businesses fail to do so, by 2020 they should be required to pay at least $100 per tonne into the technology fund. However, the price may have to reach $150 per tonne to increase the chances of closing the gap. The third proposed rule includes restricting businesses’ access to offset credits, the institute said.