BC caps emissions despite requests to work with industry instead
Despite requests from the Resource Municipalities Coalition and the Fort St. John and District Chamber of Commerce late last year, for the provincial government to work with communities in the North on the “long-term vision for industrial growth for our region to help enable the type of emissions reductions that we both intend to achieve,” the province has decided to go ahead and implement an oil and gas emissions cap.
In letters to the Minister of Energy, Mines and Low Carbon Innovation Josie Osbourne in October, the two organizations urged the government to work with community and industry to set an Output Based Price System (OBPS) that is competitive with other regions and continue working to measure and manage methane.
Although the announcement does contain an OBPS, it’s in addition to the cap, not an alternative as the communities and businesses in the heart of the province’s petroleum producing region requested.
Osbourne claims in her statement during the announcement that the cap is on emissions, not production, and that it “can provide certainty to industry on the investments needed to ensure it becomes more sustainable and efficient.”
This is the opposite of what the RMC told the Minister in October. In their letter, the mayors of five northeastern BC communities said that the policies in the New Energy Action Framework will have a significant impact on the industry within the province and the communities of northeastern BC. The emissions cap of CleanBC will make natural gas production in BC uneconomic and drive companies to invest elsewhere, resulting in job losses.
The Minister of Environment and Climate Change Strategy, George Heyman said in a statement announcing the cap that it is a “necessary tool to fight pollution and meet our emission reduction targets.”
Yet, in the backgrounder attached to the emissions cap announcement, the government notes that reduction in methane emissions from the oil and gas sector has already exceeded its 45 percent target by 2025, as emissions have been reduced by 50 percent.
Additionally, federal government numbers show that emissions from BC’s oil and gas sector in 2021 have decreased by 13 percent since 2007, and 10 percent since 2018 – industry’s emissions are on target to reach the 2030 goal, having been reduced from 13.6MT (megatonnes) in 2007, to 11.9MT in 2021. The emissions reduction goal is 9.1MT per year, a 33 percent reduction by 2030.
The lack of infrastructure in the North, coupled with the terrain, make electrification of industry in the region difficult, if not impossible. The inability to electrify the oil and gas industry would have a negative impact on current and future LNG projects, which are key to helping other countries reduce their emissions.
A study by the Business Council of British Columbia, using the province’s own modelling shows that pursuing this path will shrink BC’s economy by $28 billion by 2030. Real per capita income is projected to drop by $4,600, which will take prosperity back ten years, approximately $11,000 per household.
At the same time, carbon will still be produced in other jurisdictions while economic opportunities leave British Columbia.
The Fort St. John and District Chamber of Commerce’s new executive director, Tiffany Hetenyi says that while the concept to reduce greenhouse gas emissions and balance industry is a valid goal, the government has not provided enough information or resources to be able to prepare for the changes asked of industry.
“The technologies need to be tested and tried in all climates, technology that works in southern BC may not work in northern BC in the winter, and we can’t just stop operations because it is cold,” Hetenyi said.
“The policy and framework outlines what need to be reduced and general outlines of how it might be done but needs more resources of how companies can do it and do it in a cost-effective way.”
Regulatory measures are to be introduced in 2025, and will take effect in 2026, as a backstop to the federal emissions cap.
According to the province, the backstop will “only apply in the event there are gaps between federal coverage and BC’s targets.” However, it will also apply if the federal cap is either not implemented or cancelled.
Reduced production in the sector would represent a significant impact to BC and to the Peace region by reducing future royalty revenues by an estimated $800 million annually. It would also reduce industry investment to municipalities and First Nations, which between 2018-2021 totaled $4.7 billion, and supported over 2400 BC based businesses.
“The Chamber will support our communities where we can,” said Hetenyi, “and continue to advocate on the BC oil and gas sector cap."