Canadian Energy Centre
Canada’s proposed oil and gas emissions cap sends wrong message to allies in Asia: analyst
Prime Minister of Japan Fumio Kishida speaks during the G7 summit at Schloss Elmau, Germany on June 26, 2022 as (L-R) Canadian Prime Minister Justin Trudeau and German Chancellor Olaf Schulz look on. Getty Images photo
From the Canadian Energy Centre
‘We want to fill those pipelines and help Japan and Korea get off Russian supply’
Canada’s proposed oil and gas emissions cap sends a conflicting message to allies in Asia, according to a prominent energy policy analyst.
The plan for the cap – widely seen as a cap on production – is being put together just as Canada nears its first large-scale access to Asia’s growing oil and gas demand, notes Heather Exner-Pirot, a senior fellow with the Macdonald-Laurier Institute.
“Our allies in Asia, particularly Japan and Korea, are waiting for the LNG and the oil,” says Exner-Pirot.
“Everyone knows we only ship to the United States. We haven’t had any real pipeline capacity to the east or to the west. Finally, we’re getting it and now we’re going to curtail production. It makes no sense.”
Heather Exner-Pirot, senior fellow and director of natural resources, energy and environment with the Macdonald-Laurier Institute.
Oil and gas needs in the Asia Pacific region are expected to continue growing through 2030 and 2050, according to the International Energy Agency.
The recently completed Coastal GasLink pipeline is ready to supply natural gas to the LNG Canada export terminal, which is in the final stages of construction and targeted for startup next year.
Meanwhile the Trans Mountain pipeline expansion is weeks away from startup, nearly tripling Canada’s oil export capacity to customers by sea.
The federal plan to cap emissions in 2030 at up to 38 per cent below 2019 levels would require production cuts, according to the Business Council of Canada.
That could threaten world energy security by opening the door to Russia as a bigger supplier instead of Canada, Exner-Pirot says.
“We want to fill those pipelines and help Japan and Korea get off Russian supply and get off OPEC supply, frankly. We want them to have an option,” she says.
“We still haven’t been able to get off Russian oil and gas, and now we want to put in policies that will limit our ability to replace it. Our number one priority should be to replace it.”
A section of the Coastal GasLink pipeline is installed in a challenging section of the Rocky Mountains. Photo courtesy Coastal GasLink
Capping emissions from Canada’s oil and gas sector would come at great economic cost while having negligible impact on the environment, according to analysis by the Montreal Economic Institute (MEI).
“Each time Ottawa forces the Canadian energy sector to contract, it is foreign producers who win,” said MEI public policy analyst Gabriel Giguère.
“Ottawa does not have the means to affect global demand, so reducing local supply will only end up exporting jobs and tax revenues.”
MEI estimates the proposed cap would cost Canada’s economy upwards of $6 billion per year if fully implemented.
Exner-Pirot argues that through initiatives like the Pathways Alliance in the oil sands, Canada’s energy sector already has credible plans reduce emissions and achieve net zero.
“By forcing this abstract date of 2030, you’re making it far more difficult and more expensive, where it will [already] occur within a reasonable timeframe,” she said.
Chief David Jimmie is president of Stonlasec8 and Chief of Squiala First Nation in B.C. He also chairs the Western Indigenous Pipeline Group. Photo courtesy Western Indigenous Pipeline Group
From the Canadian Energy Centre
Stonlasec8 agreement is Canada’s first federal Indigenous loan guarantee
The first federally backed Indigenous loan guarantee paves the way for increased prosperity for 36 First Nations communities in British Columbia.
In May, Canada Development Investment Corporation (CDEV) announced a $400 million backstop for the consortium to jointly purchase 12.5 per cent ownership of Enbridge’s Westcoast natural gas pipeline system for $712 million.
In the works for two years, the deal redefines long-standing relationships around a pipeline that has been in operation for generations.
“For 65 years, there’s never been an opportunity or a conversation about participating in an asset that’s come through the territory,” said Chief David Jimmie of the Squiala First Nation near Vancouver, B.C.
“We now have an opportunity to have our Nation’s voices heard directly when we have concerns and our partners are willing to listen.”
Jimmie chairs the Stonlasec8 Indigenous Alliance, which represents the communities buying into the Enbridge system.
The name Stonlasec8 reflects the different regions represented in the agreement, he said.
The Westcoast pipeline stretches more than 2,900 kilometres from northeast B.C. near the Alberta border to the Canada-U.S. border near Bellingham, Wash., running through the middle of the province.
It delivers up to 3.6 billion cubic feet per day of natural gas throughout B.C. and the Lower Mainland, Alberta and the U.S. Pacific Northwest.
“While we see the benefits back to communities, we are still reminded of our responsibility to the land, air and water so it is important to think of reinvestment opportunities in alternative energy sources and how we can offset the carbon footprint,” Jimmie said.
He also chairs the Western Indigenous Pipeline Group (WIPG), a coalition of First Nations communities working in partnership with Pembina Pipeline to secure an ownership stake in the newly expanded Trans Mountain pipeline system.
There is overlap between the communities in the two groups, he said.
CDEV vice-president Sébastien Labelle said provincial models such as the Alberta Indigenous Opportunities Corporation (AIOC) and Ontario’s Indigenous Opportunities Financing Program helped bring the federal government’s version of the loan guarantee to life.
“It’s not a new idea. Alberta started it before us, and Ontario,” Labelle said.
“We hired some of the same advisors AIOC hired because we want to make sure we are aligned with the market. We didn’t want to start something completely new.”
Broadly, Jimmie said the Stonlasec8 agreement will provide sustained funding for investments like housing, infrastructure, environmental stewardship and cultural preservation. But it’s up to the individual communities how to spend the ongoing proceeds.
The long-term cash injections from owning equity stakes of major projects can provide benefits that traditional funding agreements with the federal government do not, he said.
Labelle said the goal is to ensure Indigenous communities benefit from projects on their traditional territories.
“There’s a lot of intangible, indirect things that I think are hugely important from an economic perspective,” he said.
“You are improving the relationship with pipeline companies, you are improving social license to do projects like this.”
Jimmie stressed the impact the collaborative atmosphere of the negotiations had on the success of the Stonlasec8 agreement.
“It takes true collaboration to reach a successful partnership, which doesn’t always happen. And from the Nation representation, the sophistication of the group was one of the best I’ve ever worked with.”
Canadian Energy Centre
Cross-Canada economic benefits of the proposed Northern Gateway Pipeline project
From the Canadian Energy Centre
Billions in government revenue and thousands of jobs across provinces
Announced in 2006, the Northern Gateway project would have built twin pipelines between Bruderheim, Alta. and a marine terminal at Kitimat, B.C.
One pipeline would export 525,000 barrels per day of heavy oil from Alberta to tidewater markets. The other would import 193,000 barrels per day of condensate to Alberta to dilute heavy oil for pipeline transportation.
The project would have generated significant economic benefits across Canada.
The following projections are drawn from the report Public Interest Benefits of the Northern Gateway Project (Wright Mansell Research Ltd., July 2012), which was submitted as reply evidence during the regulatory process.
Financial figures have been adjusted to 2025 dollars using the Bank of Canada’s Inflation Calculator, with $1.00 in 2012 equivalent to $1.34 in 2025.
Total Government Revenue by Region
Between 2019 and 2048, a period encompassing both construction and operations, the Northern Gateway project was projected to generate the following total government revenues by region (direct, indirect and induced):
British Columbia
- Provincial government revenue: $11.5 billion
- Federal government revenue: $8.9 billion
- Total: $20.4 billion
Alberta
- Provincial government revenue: $49.4 billion
- Federal government revenue: $41.5 billion
- Total: $90.9 billion
Ontario
- Provincial government revenue: $1.7 billion
- Federal government revenue: $2.7 billion
- Total: $4.4 billion
Quebec
- Provincial government revenue: $746 million
- Federal government revenue: $541 million
- Total: $1.29 billion
Saskatchewan
- Provincial government revenue: $6.9 billion
- Federal government revenue: $4.4 billion
- Total: $11.3 billion
Other
- Provincial government revenue: $1.9 billion
- Federal government revenue: $1.4 billion
- Total: $3.3 billion
Canada
- Provincial government revenue: $72.1 billion
- Federal government revenue: $59.4 billion
- Total: $131.7 billion
Annual Government Revenue by Region
Over the period 2019 and 2048, the Northern Gateway project was projected to generate the following annual government revenues by region (direct, indirect and induced):
British Columbia
- Provincial government revenue: $340 million
- Federal government revenue: $261 million
- Total: $601 million per year
Alberta
- Provincial government revenue: $1.5 billion
- Federal government revenue: $1.2 billion
- Total: $2.7 billion per year
Ontario
- Provincial government revenue: $51 million
- Federal government revenue: $79 million
- Total: $130 million per year
Quebec
- Provincial government revenue: $21 million
- Federal government revenue: $16 million
- Total: $37 million per year
Saskatchewan
- Provincial government revenue: $204 million
- Federal government revenue: $129 million
- Total: $333 million per year
Other
- Provincial government revenue: $58 million
- Federal government revenue: $40 million
- Total: $98 million per year
Canada
- Provincial government revenue: $2.1 billion
- Federal government revenue: $1.7 billion
- Total: $3.8 billion per year
Employment by Region
Over the period 2019 to 2048, the Northern Gateway Pipeline was projected to generate the following direct, indirect and induced full-time equivalent (FTE) jobs by region:
British Columbia
- Annual average: 7,736
- Total over the period: 224,344
Alberta
- Annual average: 11,798
- Total over the period: 342,142
Ontario
- Annual average: 3,061
- Total over the period: 88,769
Quebec
- Annual average: 1,003
- Total over the period: 29,087
Saskatchewan
- Annual average: 2,127
- Total over the period: 61,683
Other
- Annual average: 953
- Total over the period: 27,637
Canada
- Annual average: 26,678
- Total over the period: 773,662
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