Norwegian oil major Statoil will be pulling out of its Canadian oilsands project after nearly a decade with an expected loss of at least USD$500 million.

In yet another sign that Canada’s oilsands – one of the most polluting fossil fuel projects on the planet – is becoming increasingly costly, Lars Christian Bacher, Statoil’s executive vice-president for international development and production, said in a statement: “This transaction corresponds with Statoil’s strategy of portfolio optimisation to enhance financial flexibility and focus capital on core activities globally.”

The 14 December announcement comes just weeks after Prime Minister Justin Trudeau approved the controversial Kinder Morgan Trans Mountain pipeline and the Enbridge Line 3 pipeline in a move to facilitate growth in the oilsands and create jobs.

The international energy giant will sell all of its oilsands assets to the mid-sized Alberta-based Athabasca Oil Corp effective 1 January 2017 in a deal that could produce about 80,000 barrels of oil a day with reserves expected to last up to 70 years. It is estimated to be worth up to CAD$832 million. The deal will also see Statoil retain a stake of just under 20 percent in Athabasca.

Statoil was one of 13 companies operating in the oilsands that had signed a long-term contract with Texas-based pipeline operator Kinder Morgan to ship oil via the Trans Mountain pipeline. However, it is now unclear what will happen with its contract, the National Observer has reported. According to Statoil Athabasca will have the option to enter the agreement.

The move is the latest in a string of losses for oilsands operators since global oil prices began to plummet in 2014, triggering other European companies such as Shell and Total to pull out of projects and resulting in tens of thousands of jobs being lost across Alberta.

And while Trudeau has said recently that tar sands and pipeline expansion will be “integral” to the country’s climate plans, Statoil’s head of sustainability, Bjorn Otto Sverdrup, tweeted on the day of the company’s announcement that Statoil’s exit from the oilsands “bends our cost and emission curves. Building resilience.”  

Today we announced @Statoil exit of oil sands which bends our cost and emission curves. Building resilience @CFigueres @IEABirol @topnigel https://t.co/WvvZYoN0q3

— Bjørn Otto Sverdrup (@BSverdrup) December 15, 2016

Photo: Lawrence Sauter via Statoil

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The federal government is expected to announce the details of Canada’s national climate plan Friday, Dec. 9 at a high-profile gathering of First Ministers in Ottawa.

The details of the climate plan, which amount to a balance sheet of the nation’s carbon emissions, are critical to evaluating the federal government’s recent decisions to approve major fossil fuel projects in light of Canada’s international climate commitments under the Paris Agreement.

“To have confidence in this plan’s ability we need to see credible accounting,” Catherine Abreu, executive direction of Climate Action Network Canada, said.

Trudeau has garnered significant criticism for his recent approvals of the Kinder Morgan Trans Mountain pipeline expansion and Enbridge Line 3 replacement, both of which invite increased production in the Alberta oilsands, Canada’s fastest growing source of greenhouse gas emissions.

In September the federal government approved the Pacific Northwest LNG terminal on the B.C. coast, a project that is expect to be the single largest point source of emissions in the country.

These approvals — and the increase in emissions they entail — have raised questions about the government’s ability to meet its climate targets.

Under the Paris Agreement Canada pledged to reduce emissions 30 per cent below 2005 levels by 2030.

“We know the 2030 target is the one that is top of mind for ministers,” Erin Flanagan, director of federal policy for the Pembina Institute, said. “It’s the one that [Environment and Climate Change] Minister McKenna is referring to when she says we’ll meet or exceed our climate commitments.”

Canada, unfortunately, has a long history of signing up for targets and an equally long history of not meeting them, Flanagan said.

“In fact, Canada’s best reporting through its biennial report indicates we’re a long way off from achieving those goals,” she said. “The report is quite bullish on fossil fuel development.”

By its own accounting the federal government anticipates Canada will emit 814 megatonnes (Mt) of carbon dioxide equivalent per year by 2030. To meet its commitments under the Paris Agreement, Canada must limit that number to 524 Mt.

Flanagan said the federal government has yet to release an updated plan that incorporates recent climate efforts, like the introduction of a national carbon tax, the phaseout of coal power plants and provincial climate plans, into the overall emissions accounting.

A recent analysis done by EnviroEconomics finds that climate progress made under Trudeau’s leadership will help close but not eliminate that emissions gap. The report estimates that by 2030 Canada will overshoot its 2030 target by 152 Mt (or slightly less if international carbon offset credits are used).

But those calculations are based on what can be gleaned from provincial and federal plans announced so far and not necessarily what the federal government has in store.

On Friday Trudeau will meet with ministers and provincial and territorial premiers to discuss the details of what Trudeau has called an “ambitious and achievable plan” to meet 2030 targets.

The specifics have up to this point remained elusive.

Much-Anticipated Details of Canada’s #ClimatePlan to Be Revealed at First Minister’s Meeting. Maybe. https://t.co/7b11biMXJP #cdnpoli

— DeSmog Canada (@DeSmogCanada) December 8, 2016

Steven Guilbeault, senior director of Équiterre, said the government must show its work.

“Without a balance sheet there is no way to know if this plan is delivering on what it says it does,” he said.

“What is enabling Canada’s emissions to go down? Why are they going up? To be able to adjust that plan over time and to have a genuine understanding and reassurance that we do have a plan that will put us on a path towards emissions reduction is needed for credibility,” Guilbeault said.

“Without the plusses and minuses it’s impossible for us to say whether premiers and the Prime Minister have delivered on that plan.”

This week the Canadian Press reported internal sources said the federal government will not, as expected, release detailed information regarding the country’s greenhouse gas inventory.

Minister McKenna responded to the reports, telling the CBC that Canada will indeed release an in-depth plan.

"We will show how we're going to meet our 2030 targets — what measures we've taken, what additional measures we will be taking to meet the target," McKenna said.

"You will see a specific plan. You will see, in each sector, what we're doing to reduce emissions. You'll see what investments we're making. You'll see how we're working with Indigenous communities, in particular in the north, where they have specific concerns about diesel but also about adaptation."

“We know Friday is not the end of the story,” Dr. Louise Comeau, director of climate change and energy solutions with the Conservation Council of New Brunswick, said.

Wrinkles in the climate framework as they relate to financial arrangements for green infrastructure, low carbon economy funding and equivalency agreements, which aim to standardize accounting of efforts made from province to province, will need to be ironed out moving forward, Comeau said.

Dale Marshall, climate campaigner with Environmental Defence, said he’s confident the ministers’ meeting will end with a climate agreement.

“I think there is high likelihood we’ll get an agreement,” he said.

“The federal government has spent since the last First Ministers’ Meeting in March, coordinating with the provinces, meeting with working groups and signed a number of agreements that had the signon of the country, like the carbon price, within the pan-Canadian framework.”

“Most people are feeling positive that we’re going to have a pan-Canadian framework agreed to by most if not all of the provinces and territories.”

Catheine Abreu said it’s important to ensure what is decided now, will remain relevant to 2030 and beyond.

“What we want to see on Friday is a commitment that the federal government and provinces commit to collaborate on moving forward.”

Abreu added more in-depth discussion is needed on crafting a workable accountability mechanism to ensure governments at all levels are keeping to their targets.

In addition the commitment made under the Paris Agreement isn’t just to limit emissions to 2030 but to strengthen targets every few years moving forward, Abreu said.

Canada committed to complete decarbonization by the end of the century and to work to achieve net zero emissions by 2050.

Abreu said Canada needs top-notch measuring, reporting and verification systems to not only establish emission reduction policies and regulations, but to gradually improve them over time.

“We have to totally or almost totally decarbonize our economy,” Guilbeault said. “Really 2030 isn’t the end.”

Image: Justin Trudeau and First Ministers at a March meeting in Vancouver. Photo: Prime Minister's Photo Gallery

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Last year the Canadian government enjoyed a positive reception at the UN climate talks in Paris. After 10 years of climate inaction under a Conservative government, the international community anticipated the new Liberal government would mean good things for the nation’s climate governance.

But Canada’s contribution to the world’s first climate treaty remains “inadequate” according to a new report released by the Carbon Action Tracker in light of the climate talks.

The Paris Agreement, designed to limit global warming to as close to 1.5 degrees Celsius as possible, was signed in France last year and ratified, with incredible speed, less than one year later on November 4. Although a proud signatory of the agreement, Canada will not meet its climate targets, according to the new analysis.

Prime Minister Justin Trudeau adopted the same climate targets as the previous Stephen Harper government, pledging to reduce Canada’s emissions 30 per cent below 2005 levels by 2030.

“Under its current policies, Canada will miss both its 2020 pledge and its 2030 [Nationally Determined Contribution] targets by a wide margin,” Climate Action Tracker states.

The group estimates that based on current climate policies Canada’s emissions will increase by three to 18 per cent by 2030.

Last month Trudeau announced a national carbon tax that will price carbon at $10/tonne in 2018 and increase to $50/tonne by 2022.

But according to the analysis of four prominent environmental groups, Canada’s fossil fuel subsidies eliminate the supposed benefits of that carbon tax.

Canada Must Phase Out $3.3 Billion In Fossil Fuel Subsidies

“It makes no sense to put a price on carbon while continuing to give handouts to oil and gas companies,” Alex Doukas, senior campaigner and author with Oil Change International, told DeSmog Canada. 

“That's like pouring water on the fire with one hand while spraying gasoline on it with the other.” 

Doukas added Trudeau promised to eliminate fossil fuel subsidies when campaigning last year.

“Now his government has to deliver.”

Canada first committed to phasing out fossil fuel subsidies in 2009 along with other G20 nations. That commitment was later affirmed at a 2015 G7 meeting and named as a priority for Finance Minister Bill Morneau in a mandate letter from Trudeau.

“Unless Canada phases out massive subsidies to oil and gas companies, Trudeau’s carbon price will do little to encourage polluters to cut carbon emissions,” Dale Marshall, national program manager with Environmental Defence, said in Marrakech.

“The three billion dollars in annual subsidies could be put to much better use by investing in climate action, health care and other initiatives.”

In Marrakech, Minister of Environment and Climate Change Catherine McKenna participated in the Carbon Pricing Leadership Coalition, an international group pushing for more integrated market-based climate solutions.

“In light of Minister McKenna’s participation…we take the opportunity to remind Canada that leadership requires coherent fiscal policies,” Annie Bérubé, Director of Government Relations at Équiterre, said.

“Finance Minister Bill Morneau must announce a predictable phase-out of all remaining preferential tax treatment to the oil and gas sector starting in Budget 2017.”

Canada’s #ClimateAction Called ‘Inadequate’ at UN Climate Talks in #Marrakech https://t.co/KpTN378mXJ #cdnpoli @cathmckenna @JustinTrudeau

— DeSmog Canada (@DeSmogCanada) November 15, 2016

More Opportunity for Canadian Leadership at UN Climate Talks

She added there is some work to be done, however, to bridge the gap between Canada’s international climate commitments and decision-making domestically.

“This is a core question that Canada has to reconcile,” she said.

“Can we build a national climate plan that allows us to achieve the 2030 target with deeper reductions over time?”

Canada has come under harsh criticism recently for approving the Pacific Northwest LNG export terminal on the coast of B.C.  The LNG facility is estimated to be the largest single point source of emissions in Canada, adding the equivalent of 1.9 million cars to the roads.

Analysts have pointed out the approval of the LNG project is a serious obstacle to Canada meeting its climate commitments.

Flanagan said she sees an opportunity for Canada to really “do the math” on its climate targets.

“That’s really what this COP is about,” she said. “It’s about taking the rhetoric and turning it into plans that will drive the change we need to see.”

Image: COP22 signage in Marrakech, Morocco. Photo: Carol Linnitt/DeSmog Canada

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Kinder Morgan’s Trans Mountain pipeline proposal cannot proceed without a serious reassessment of its impacts on climate change commitments, indigenous rights and marine mammal safety.

That was the conclusion of the “Report from the Ministerial Panel for the Trans Mountain Pipeline Expansion Project,” released to the public on Nov. 3 by the three members of the self-described “omissions panel” that was formed to make up for perceived flaws in the National Energy Board review process.

“Surprisingly, I think it did do its job,” says Patrick DeRochie, climate and energy program manager at Environmental Defence.

“It’s kind of the icing on the cake of a fatally flawed Kinder Morgan review process. It shows the social, environmental and economic rationale for approving this pipeline simply doesn’t exist. The only viable option coming from this report is the rejection of Kinder Morgan by the federal government.”

The report — produced by the trio of Kim Baird, Annette Trimbee and Tony Penikett — was the culmination of 44 public meetings conducted during the summer, which included 650 direct presentations and 35,259 responses to an associated online questionnaire.

It was published on the same day that Kinder Morgan Canada president Ian Anderson appeared to question climate change by stating: “I’ve read the science on both sides and don’t pretend to be smart enough to know which is right.”

Review Panel Criticized For Lack of Clear Mandate, Hastily Organized Meetings

Critics had suggested the “review of the review” lacked a clear mandate, repeating the flaws of the original NEB process.

Such alleged faults included a lack of clarity on how the cabinet would use the report, a failure to conduct proper outreach to key participants including municipal and First Nations leaders, a lack of proper note taking and an alleged conflict of interest due to Baird’s previous business relationship with Kinder Morgan.

“And yet, their report reinforced what we’ve been hearing from British Columbians about this project,” Sierra Club BC campaigns director Caitlyn Vernon says. “How do you do this in the face of First Nations opposition and the UN Declaration on the Rights of Indigenous Peoples. You don’t. How do you do this in the face of Canada’s climate change commitments? You don’t.”

Report Pointed Out Major Concerns About Climate Change, Spills, Killer Whales

The 58-page report, submitted on Nov. 1 to Minister of Natural Resources Jim Carr, outlined concerns about the potential impacts of the new pipeline on upstream greenhouse gas emissions, oil spills, reconciliation with indigenous peoples and the endangered southern resident killer whales; it noted that “as the panel moved west, opposition increased markedly.”

It concluded by posing six incisive questions to cabinet, including “can construction of a new Trans Mountain Pipeline be reconciled with Canada’s climate change commitments?” and “how might Cabinet square approval of the Trans Mountain Pipeline with its commitment to reconciliation with First Nations and to the UNDRIP principles of ‘free, prior, and informed consent’?”

“The part that gave me real delight was the six questions that they framed, and seeing that, rather than attempting to gloss over or evade the issues, they addressed them square on,” says Karen Wristen, executive director of Living Oceans.

Ministerial Panel on #KinderMorgan Pipeline Actually Nails It https://t.co/GMcRh9LW7f #bcpoli #cdnpoli #Burnaby #TankerBan

— DeSmog Canada (@DeSmogCanada) November 7, 2016

Trudeau Promised Review of Environmental Assessments Would Include Kinder Morgan

During the federal election, Prime Minister Justin Trudeau said that the “modernization” of the National Energy Board and Canadian Environmental Assessment Agency “applies to existing projects, existing pipelines as well.” In addition, the Liberal platform pledged to “restore robust oversight and thorough environmental assessments of areas under federal jurisdiction.”

Yet the National Energy Board recommended a conditional approval of the Trans Mountain pipeline — which would triple the amount of oil flowing to Vancouver — relying on the same processes that were implemented by former Prime Minister Stephen Harper and the Conservative Party.

That review didn’t include an assessment of upstream greenhouse emissions associated with the new pipeline or impacts on marine environments, and denied intervenor or commenter status to over 460 people. Serious concerns have been raised by indigenous communities including Tsleil-Waututh Nation and Squamish Nation over the quality and scope of consultations.

The review panel was formed as an ad-hoc substitute.

Vernon emphasizes the panel “did not remedy the flaws of the original NEB process.”

‘If Cabinet Takes the Questions Seriously, There’s No Way This Pipeline Can Be Built.’

The federal cabinet must issue its final verdict on the project by Dec. 19. Recent reports indicate Trudeau is leaning toward an approval.

Carr has suggested the new review panel will lend “credibility” to the environmental assessment process. However, there’s no clear understanding of if and how the report will be used by cabinet as it isn’t legally binding.

DeRochie says the review asked “key questions about the fundamental future of this country [that] have not been answered yet,” noting that his organization has been calling for a suspension of the process until the National Energy Board and Canadian Environmental Assessment Act have been “modernized” as promised.

He also emphasizes the conversation isn’t just about British Columbia, but pertains to national issues around credible review processes, commitments to reconciliation and the future of pipelines in Canada.

It appears that this review panel’s report will be the final assessment conducted prior to cabinet’s verdict. Many agree it poses questions that undermine the possibility of the Trans Mountain pipeline in its current form.

“If cabinet doesn’t take these questions seriously, approving this project would be abandoning any commitment to climate action, abandoning a commitment to reconciliation with indigenous peoples, imposing a death sentence on the endangered killer whale and inviting the economic and ecological disaster,” Vernon says.

“If cabinet takes the questions seriously, there’s no way this pipeline can be built.”

Image: Justin Trudeau via Prime Minister’s Photo Gallery

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