An oil pumpjack near Calgary in 2022. Ottawa and Alberta have struck a deal in principle on reducing methane emissions from oil and gas production.Jeff McIntosh/The Canadian Press
Ottawa and the Alberta government have struck a deal in principle on reducing methane emissions from oil and gas production, a key provision of a memorandum of understanding that could pave the way for a new oil pipeline to the West Coast.
Under the proposal, Alberta would combine regulations, offset credits and targeted investments with the goal of cutting emissions of the potent greenhouse gas by 75 per cent below 2014 levels by 2035, Prime Minister Mark Carney’s office said in a statement.
By the end of 2024, Alberta’s oil and gas industry had reduced methane emissions by 51 per cent from 2014, through a combination of technology, regulation and financial incentives, according to government figures.
In exchange for cutting the emissions, Alberta would be exempted from federal methane regulations, providing that reductions are equal to those mandated by the federal rules, the statement said.
The agreement in principle means that two of the four MOU provisions that the two sides had targeted for an April 1 deadline are in place. Alberta and federal government officials previously agreed on another provision, a co-operation deal that gives the province jurisdiction over regulatory approvals for major projects in its territory.
Two more remain unresolved, and Alberta Premier Danielle Smith said on Tuesday that those may not meet the schedule. However, negotiations on those items – an industrial carbon-pricing regime and a multibillion-dollar CO2-capture project in the oil sands – are constructive, she said.
The MOU, announced by Mr. Carney and Ms. Smith in November, envisions Ottawa backing Alberta’s proposal for a one-million-barrel-a-day pipeline to the Pacific Coast in exchange for dozens of provisions to lessen the environmental impact of the province’s energy sector. Ms. Smith said she expects the details to be worked out by June.
B.C. Premier David Eby has said he opposes any pipeline project that would require lifting a federal moratorium on tankers loading crude on his province’s northern coast. He has said an expansion of the Trans Mountain Pipeline to Burnaby, B.C., from Alberta is a more “realistic” option.
The proposed pipeline is still without a private-sector proponent or defined route, though discussion has mostly centred on an export terminal on the north coast, including the Port of Prince Rupert, which is subject to the tanker ban.
That location faces staunch opposition from a number of B.C. First Nations, which have also called for the moratorium to remain in place.
Wednesday’s agreement in principle would see the appointment of an independent third party to assess reductions in emissions of methane, a gas with as much as 30 times the heat-trapping intensity of carbon dioxide. Alberta has agreed to publish information on emissions sources covered by the deal, and the two sides agreed that as-yet unspecified corrective action could be taken if reductions fall short.
Once Alberta and the federal government finalize their agreement, the deal will undergo a 60-day consultation, with a goal of putting it into force on Jan. 1, 2027.
The deal signals an end to disputes between Alberta and the federal government over a key aspect of climate and energy policy, and should lead to more employment as companies work to meet the target, said Amanda Bryant, manager of the oil and gas program at the Pembina Institute, an environmental think tank.
It should also help ensure access to global natural gas markets that are calling for lower emissions from fossil fuels, such as the European Union, South Korea and Japan, she said in a statement.