2030 emissions targets look more like 2035, oilsands group says

The head of the oilsands decarbonization consortium says the federal government's emissions reduction targets for 2030 won't be possible for the industry until at least 2035 — and anything faster under current conditions would mean slashing oil production. 

"It's gonna take another five or 10 years to get there to those levels based on the current plan," Kendall Dilling, the president of the Pathways Alliance, told CBC News.

"By the mid-2030s we could probably get to that level of ambition."

The Pathways Alliance, a group representing 95 per cent of oilsands companies, is working to make its production carbon neutral by 2050.

The federal government has the same date in mind for making Canada a net-zero greenhouse gas emitter. It has benchmarks set along the way, including goals for the end of the current decade. 

Those 2030 targets require the oil and gas sector to cut emissions by 42 per cent below 2019 levels. An emissions cap is also expected to be unveiled near the end of 2023. The oilsands produce about 70 million tonnes of emissions annually, according to the Alberta government — about 11 per cent of Canada's total pollution output. 

Pathways has committed to reducing oilsands emissions by 22 megatonnes by 2030. 

Much of that reduction hinges on a sprawling carbon capture and storage (CCS) hub planned for near Cold Lake, Alta., which would gather carbon from nearby facilities and store it underground. 

Even that $16-billion-dollar project's timeline is under threat, Dilling explained, and it hinges on a gameplan from ongoing talks with governments and stakeholders. 

"2023 is the year where we will collectively determine if 2030 is actually achievable," he said.

"We have probably the first half of 2023 to really land on the fiscal and regulatory framework that is needed for these projects to go forward so that we can keep them on that 2030 timeline. If we slide much beyond that, 2030 will be very challenging." 

How patient are the feds?

The oil and gas industry is having its most lucrative year on record, with estimated free cashflow around $152 billion, according to a recent Pembina Institute report. 

At a time when there's money available, companies have been criticized for not investing more into clean technology development or accelerating their commitments to existing options.

"The investment climate under which any of these companies would make any of these big CCS investment decisions is still not completely favourable ... And so it's not that surprising for something this big that it ends up on a delay," said Andrew Leach, a professor of law and economics at the University of Alberta.

"I think the urgency comes in a way from how patient our government is going to be in waiting for the oil and gas sector or the Pathways group to figure this out and get something that makes it clear that they can deliver on their promises."

'The world has moved on'

The group is in close consultation with the federal government to see what regulations, funding and commitments might be needed to get as close to the targets as possible. The federal government has indicated it's trying to avoid a production cut.

But Dilling says politics isn't the driving factor for the Pathways group. 

"We're agnostic to the government of the day," Dilling said. 

"We have to work with whoever's in power and we just have one objective, which is to decarbonize our industry. And so if a future government comes in and the rules change, that actually isn't that relevant to us because we're not doing this just because regulations are making us, we're doing it because our lenders are requiring it, our insurers are requiring it, our shareholders are requiring it.  

"The world has moved on."

The federal budget from last year promised big incentives for deploying CCS technology, with tax credits expected to cost $1.5 billion annually starting in 2026.

With it came a reminder for the industry to not drag its feet on reducing emissions — the incentives will be halved in 2031 through 2040. 

Critics of the strategy have concerns about possible CO2 leaks in the future and say decarbonizing production doesn't move the world away from fossil fuels.

Dilling is realistic about the trust the industry has to build. 

"You can't say we're on a path to net-zero by 2050 and we're going to do it all in the 2040s. No one will give you that runway. So we're going to deliver a really impressive reduction by 2030. And then with that goodwill in the bank, there'll be lots of ways to talk about continuing the incentives beyond that point."