Proposed emissions cap on oil and gas sector ‘overly ambitious’

The head of Canada's largest oil-and-gas producing company criticized the federal government's proposed emissions cap for the energy sector Thursday.

The head of Canada’s largest oil-and-gas producing company criticized the federal government’s proposed emissions cap for the energy sector Thursday, arguing environmental goals must be balanced with economic and energy security concerns.

Canadian Natural Resources Ltd. president Tim McKay made the comments during a conference call with analysts. While the purpose of the call was to discuss the company’s second-quarter financial results, McKay took aim at Ottawa’s proposed cap in his opening remarks.

He also talked up the emissions reduction efforts that are already under way through Pathways Alliance, an industry group that includes CNRL and other major Canadian oilsands producer.

“In our view, this (federal) cap is unnecessary and overly ambitious in light of our stated preference for government and industry to continue to work together through the Pathways initiative to achieve an already announced emissions reduction target,” McKay said.

“It is important for all parties to continue to work together.”

The Trudeau government indicated earlier this year that it would impose a cap on greenhouse gas emissions from the oil and gas sector in order to enable Canada to meet its 2030 emissions reduction target.

While the government has so far not indicated what the allowable level of emissions will be, it issued a discussion paper earlier this month in which it said it is considering two options — a cap-and-trade system that will set regulated limits on emissions from the sector, or a modified carbon pricing system for heavy emitters that would see oil-and-gas players pay a higher carbon price.

The federal government has stated it believes Canada’s oilpatch is capable of reducing emissions by 31 per cent below 2005 levels by 2030, or 42 per cent below 2019 levels. (Emissions from the sector have risen by 20 per cent since 2005, due to increased production, though emissions intensity per barrel has decreased).