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From the Fraser Institute

By Annika Segelhorst and Elmira Aliakbari

Canada’s most timely opportunity to lower overall global emissions is through expanded exports to regions that rely on higher-emitting fuel sources.

The COP30 climate conference in Brazil is winding down, after more than a week of discussions about environmental policy and climate change. Domestic oil and natural gas production is frequently seen as a fundamental obstacle to Canada’s climate goals. Yet the data shows that Canadian energy production is already among the world’s cleanest, generating lower greenhouse gas (GHG) emissions per barrel-of-oil-equivalent produced, among major producing countries. Expanding the role of Canadian oil and gas in global markets can replace higher GHG-emitting alternatives around the world, driving down global GHG emissions.

Prime Minister Carney’s first budget highlights Canada’s “emissions advantage” in a chart on page 105 that compares the amount of GHG emissions released from producing oil and natural gas across 20 major producing countries. Compared to many other top-producing countries, Canada releases fewer GHG emissions per barrel of oil and gas produced when considering all phases of production (extraction, processing, transport, venting and flaring).

For oil production, Canada has an advantage over most major producers such as Venezuela, Libya, Iran, Algeria, Nigeria, China, Russia and Qatar. Canada’s emissions per barrel of oil produced are below the global average, making Canada among the lower emitting producers worldwide.

Similarly, Canada’s natural gas production has an emissions per barrel equivalent that is lower than the global average and is below major producers such as Turkmenistan, Uzbekistan, Nigeria, Indonesia, China, Argentina, Malaysia, Australia, Algeria, Iran, Russia, India and the United States. The chart below reveals countrywide average GHG emissions per barrel of oil or natural gas produced in 2022.

Source: International Energy Agency (2023), The Oil and Gas Industry in Net Zero Transitions 2023, IEA, Paris, p. 69 

Canada’s emissions advantage stems from years of technological innovations that require less energy to produce each barrel of oil along with improvements in detecting leaks. From 1990 to 2023, Canada’s total production of crude oil rose by 199 per cent, while emissions per barrel of oil produced declined by 8 per cent, according to Environment and Climate Change Canada (ECCC). In the oilsands, since 1990 emissions per barrel have fallen by nearly 40 per cent while emissions from natural gas production and processing have decreased by 23 per cent.

Canada has already implemented many of the most practical and straightforward methods for reducing carbon emissions during oil and gas production, like mitigation of methane emissions. These low-hanging fruits, the easiest and most cost-effective ways to reduce emissions, have already been implemented. The remaining strategies to reduce GHG emissions for Canadian oil and gas production will be increasingly expensive and will take longer to implement. One such approach is carbon capture, utilization, and storage (CCUS), a technology which traps and stores carbon dioxide to prevent it from reaching the atmosphere. Major infrastructure projects like this offer potential but will be difficult, costly and resource intensive to implement.

Rather than focusing on increasingly expensive emission reductions at home, Canada’s most timely opportunity to lower overall global emissions is through expanded exports to regions that rely on higher-emitting fuel sources. Under a scenario of expanded Canadian production, countries that presently rely on oil and gas from higher-emitting producers can instead source energy from Canada, resulting in a net reduction in global emissions. Conversely, if Canada were to stagnate or even retreat from the world market for oil and gas, higher-emitting producers would increase exports to accommodate the gap, leading to higher overall emissions.

As Canada’s climate and energy policy continues to evolve, our attention should focus on global impact rather than solely on domestic emissions reductions. The highest environmental impact will come from enabling global consumption to shift towards lower-emitting Canadian sources.

Annika Segelhorst

Junior Economist

Elmira Aliakbari

Director, Natural Resource Studies, Fraser Institute