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One of Canada’s largest pipeline operators lobbied the federal government to exclude two major sources of carbon pollution from its emissions cap for the oil and gas sector.
According to an internal government memo obtained by The Narwhal, Calgary-based TC Energy asked the government not to include facilities that produce liquefied natural gas (LNG) in the federal emissions cap. Liquefied gas is a fossil fuel derived from gas extracted deep underground through drilling or fracking. The gas is then cooled to -162 C using energy-intensive compressors until it condenses into a liquid, reducing its volume for shipping.
The company also asked the government to carve out an exemption for methane, a heat-trapping chemical compound and powerful greenhouse gas that is the main component of liquefied gas, the documents show.
“In the context of the federal oil and gas cap regulations, TC Energy has advocated for the exclusion of methane from the cap as well as LNG facilities,” reads the memo, written for Janice Charette, then the head of the federal public service, and released by the Privy Council Office through access to information legislation.
The documents show that, at a time when the country is already struggling to meet its climate goals, TC Energy pressured the government to ignore a growing form of fossil fuel activity in Canada in one of its key climate policies. The burgeoning liquefied gas industry will increase Canada’s domestic carbon footprint, according to internal government briefing notes revealed by The Narwhal.
Similarly, methane officially represents 13 per cent of Canada’s overall carbon pollution but has been shown in multiple scientific studies to have been severely undercounted. The oil and gas sector is the largest emitter of methane in the country, as it both leaks from industry equipment and is deliberately released into the atmosphere during the industry’s drilling and fracking activity.
“Unfortunately this is another example of oil and gas lobbying against practical climate action,” said former federal environment minister Catherine McKenna, after reviewing the position of the company outlined in the documents.
“Of course methane from LNG must be included in an emissions cap,” McKenna wrote in an email. “Methane is 80 times more polluting than carbon dioxide in the short term, and it’s been shown that methane leaks from LNG, often underreported, can make it as polluting as coal.”
Leaving methane and liquefied gas plants out of the emissions cap would have direct consequences for the operations of TC Energy, which owns major oil and gas pipelines in North America, including the Keystone pipeline system that carries Alberta crude oil to U.S. refineries, and over 43,000 kilometres of gas pipelines in Canada.
So far, the pipeline giant’s lobbying efforts don’t seem to have shaped the direction the federal government is planning for its emissions cap — although the policy is not yet finalized.
The memo to Charette, the former public service head, was penned in advance of a May 2023 meeting between herself and TC Energy’s president and chief executive officer, François Poirier.
The fossil fuel boss had requested the meeting to discuss decarbonization, energy security and liquefied gas, the documents indicated. Charette, who retired a month later as clerk of the Privy Council and was replaced this past summer by John Hannaford, did not respond to a request for comment over LinkedIn.
The top public servant was advised that she could ask whether TC Energy had drawn up any internal models where a hypothetical emissions cap would achieve net-zero emissions by 2050 “without impeding” the production of liquefied gas.
She could also ask Poirier if he had any analysis of the “potential impacts on energy security of the oil and gas cap,” or how the emissions cap and methane reduction rules could impact TC Energy’s corporate emissions reduction plans.
TC Energy officials had met a few weeks earlier with a senior public servant in Environment and Climate Change Canada, the memo added, where the company “shared recommendations on the forthcoming methane regulations for oil and gas,” a separate government effort to cut methane pollution in the oil and gas sector.
Despite the lobbying, Environment and Climate Change Canada’s emissions cap regulatory framework published in December 2023 — essentially a set of ideas to guide the creation of final regulations — proposes that both methane and “production of liquefied natural gas” should be covered under the cap’s rules, along with other forms of carbon pollution and fossil fuel production.
The framework envisions the cap functioning as a cap-and-trade system that will be phased in starting in 2026, meaning credits will be given out for units of carbon pollution, and oil and gas producers must either reduce their emissions or buy credits from facilities that have done so. Big polluters will also be allowed to buy offset credits or contribute to a decarbonization fund, up to a certain amount.
The government is still determining how to implement the cap, and is asking for feedback on its latest proposal through Feb. 5.
Environment and Climate Change Minister Steven Guilbeault’s director of communications Oliver Anderson said it was “too early to say definitively” what will be in the cap’s final rules.
But in a written statement, Anderson said the government has been clear that liquefied gas plants “will be included in the cap because we recognize that this is an activity with potential for significant growth.”
“Our government will not compromise on our goal of creating a fair set of rules that are both achievable and ambitious for all parts of the economy, including the oil and gas sector to reduce their emissions, while encouraging re-investment into job-creating projects,” Anderson wrote.
The government expects to publish draft emissions cap regulations in “mid-2024,” after which it will seek further feedback before finalizing regulations.
Tackling methane from oil and gas activity is not only effective in combatting climate change. It’s also one of the most inexpensive ways to do so, argued McKenna, who is now the chief executive officer of advisory firm Climate and Nature Solutions, based in Ottawa and New York.
The government’s other initiative on methane, which introduced draft regulations like emissions monitoring requirements and equipment inspections in December, is out for public consultation through Feb. 14.
The aim is to cut oil and gas methane emissions 75 per cent below 2012 levels by 2030 and bolster existing federal regulations on methane leaks and venting, which were the subject of fierce lobbying by the fossil fuel industry.
In Alberta, the industry successfully persuaded the government to weaken its methane restrictions, The Narwhal has reported. Those weakened rules were then accepted by the federal government as being “equivalent” to national standards in 2020, even though Ottawa acknowledged the provincial rules were less stringent.
The oil and gas emissions cap is meant to complement the new methane regulations, the government said. Any methane emission reductions that oil and gas companies make will count as reductions under the cap as well.
But those reductions might be hard to track, given Canada’s record of undercounting methane gas, said Anna Kanduth, the director of 440 Megatonnes, a project looking at Canada’s emissions profile by the nonprofit think tank Canadian Climate Institute.
Scientific research has shown that B.C., Alberta and Saskatchewan all have higher methane pollution than their official estimates have suggested. In Saskatchewan, for example, methane from many heavy oil sites has gone unaccounted for because the threshold required to report the gas is higher than the gas volumes that most of these sites emit.
Without more effective measurements and verification systems in place, the uncertainty surrounding methane pollution could result in the value of emissions reductions under the cap-and-trade system of the emissions cap becoming “distorted,” Kanduth said.
“We know that methane emissions are really difficult to measure, just because of the nature of how they’re emitted, and so that means that they’re also really difficult to price effectively,” Kanduth said.
“Certainly methane emissions have to be part of emissions reductions in the sector, but to the extent to which they’re included in the [emissions cap] regulations raises big questions around how the government’s going to effectively measure, record and verify the submission.”
Environment and Climate Change Canada has acknowledged that accurately estimating methane is a challenge, given that the oil and gas industry oversees millions of components, and hundreds of thousands of facilities and wells, all with the potential to emit the gas. The department is re-evaluating how it compiles methane statistics in light of scientific work in this area.
The internal government documents add a wrinkle to TC Energy’s public position on the federal emissions cap. In February 2022, a TC Energy executive told a Parliamentary committee that, while the company had concerns about an “overly restrictive” cap leading to lower fossil fuel investments, or restricting the industry’s ability to dig up and sell as much oil and gas as it could, it had decided it was ultimately “in favour of it.”
TC Energy declined to answer several questions from The Narwhal about its lobbying over the emissions cap. Instead, the company’s media relations department sent a short statement saying it was reviewing the government’s other initiative concerning restrictions on methane pollution.
“We are reviewing the government’s draft methane regulations and support their objective of reducing methane emissions,” the statement reads.
“We represent a practical resource to the government about how their priorities can be implemented from the standpoint of safety, affordability and environmental responsibility. Our proposals would achieve meaningful methane reductions without impacting the energy supply that households and businesses rely on every day.”
Asked in a followup question if it would be addressing the emissions cap, the company said it had “nothing more to add to our statement.” The company also declined to offer the name of a spokesperson to which its statements could be attributed.
TC Energy’s lobbying against oil and gas industry pollution limits also coincides with lobbying by the Pathways Alliance, a group of six major oilsands producers, to weaken and delay the emissions cap. Documents obtained by The Narwhal show that those six companies pushed the government to implement “flexible and cost-effective” rules and give the industry a “long lead time” to prepare for the cap.
In that way, TC Energy’s lobbying reveals how multiple arms of Canada’s oil and gas industry, from producers to pipeline operators, have pushed back against government efforts to limit their sector’s pollution — even though the industry represents the largest share of the nation’s emissions. A spokesperson for Pathways Alliance declined to comment on this story.
“By taking out LNG and methane, you would pretty much functionally make this a cap on oil emissions, and remove gas,” said Caroline Brouillette, executive director of Climate Action Network Canada, a group of organizations focused on climate and energy policy.
“We know that the gas industry is very actively working to continue to expand its production, despite the fact that it is clearly not aligned with a secure climate. That would be very dangerous — and I would say, in direct contradiction with what was agreed at [the United Nations Climate Change conference] that mentioned transitioning away from all fossil fuels.”
At the most recent UN climate conference in December, for the first time in history, almost 200 countries agreed to a text that said the world should be “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner.”
TC Energy itself has committed to cutting the emissions intensity, or the volume of pollution per unit, of its operations 30 per cent by 2030, and committed to reaching net-zero emissions from its operations by 2050. The company has also made investments in renewable gas, hydrogen and nuclear power.
As a result of heat-trapping carbon pollution from burning oil, gas and coal, scientists say the planet is teetering on the verge of crossing a critical 1.5 C heating threshold that will accelerate an era of supercharged storms, droughts, floods, wildfires and heat waves in many parts of the world, threatening plants, animals and the lives and livelihoods of millions of people.
Last year, amid the hottest year on record, Canada was subjected to its worst-ever wildfire season, with toxic smoke choking major cities. Even so, some analysts expect Canada to produce more oil than it ever has this year, as the Trans Mountain oil pipeline expansion is expected to come online, facilitating more oil exports.
“The oil and gas industry has, for decades, at every attempt to regulate their activities, in any form, and by any order of government in Canada, resisted and pushed back,” said Brouillette.
“Prime Minister Justin Trudeau and his government should not cave, once again, to pressure by an industry that has been raking in record profits at the expense of people and planet.”
TC Energy is in the final stages of building the Coastal GasLink pipeline, which will carry gas to LNG Canada, a large liquefied gas plant being built on the B.C. coast as part of a joint venture between some of the world’s largest oil and gas companies. Coastal GasLink travels across Wet’suwet’en territory and was the subject of fierce opposition from some Indigenous leaders and land defenders.
An LNG Canada spokesperson said the organization is evaluating the emissions cap framework to “assess its potential impact on Canada’s emerging LNG export industry.”
“Achieving emissions reductions requires global co-operation and strong and well-balanced domestic policy fundamentals. LNG Canada shares the commitment to global greenhouse gas reductions in the fight against climate change,” the spokesperson wrote in an emailed response to questions from The Narwhal.
“We also recognize the importance of ensuring the world maintains access to affordable, secure and low-carbon sources of energy. Reducing industrial emissions can support Canada’s supply of low-carbon competitive and sustainable resources and help achieve climate targets, but it must be done in a way that maintains industrial competitiveness with other jurisdictions, mitigates carbon leakage and creates a long-term, predictable policy pathway. At the same time, limited compliance options will constrain the value chain’s ability to deliver greenhouse gas reductions.”
Meanwhile, Natural Resources Canada has launched a program that is attempting to track the climate impact of exported Canadian liquefied gas. Senior public servants met with executives from TC Energy and at least three other oil and gas companies about the plan, according to government documents reported by The Narwhal.
Those documents suggest that, at the time they were written, the government lacked evidence to back up the controversial industry claim that exports of Canadian liquefied gas could somehow lower global greenhouse gas emissions by displacing energy sources like coal that, in theory, are more carbon-intensive.
Scientific studies have flagged the need to move away from liquefied gas as a fuel and stop construction of new plants in order to meet climate goals. The International Energy Agency has found that, in a world that holds global temperature rise to 1.5 C and achieves net-zero emissions by 2050, demand for liquefied gas can be met by plants that already exist today.
In 2021, the Quebec government rejected a plan to construct a liquefied gas plant north of Quebec City that would have exported 11 million tonnes of liquefied gas to Europe and Asia, Brouillette pointed out.
Quebec’s Bureau d’audiences publiques sur l’environnement (Office of public hearings on the environment) had found the project would not contribute to reducing global carbon pollution, as its promoters had claimed. If anything, the office found, it would likely be a net addition to emissions.
Canada is also hunting for evidence that there is any environmental benefit of liquefied gas exports at the same time as the Biden administration in the United States is considering implementing new, tougher criteria for approving liquefied gas plants. Last month, the U.S. finalized new restrictions on methane and this month, it proposed new rules to fine oil and gas companies for excess methane emissions.
The federal government has said the emissions cap is “critical to achieving Canada’s emission targets” of cutting carbon pollution at least 40 per cent below 2005 levels by 2030 — part of the country’s obligations to the Paris Agreement, meant to hold global average temperatures to below 2 C above pre-industrial levels.
Yet federal environment commissioner Jerry DeMarco found industry lobbying on the emissions cap is one reason it had been delayed in its rollout, frustrating efforts to achieve Canada’s climate goals.
A United Nations expert panel on net-zero pledges from large corporations, which McKenna chaired in 2022, found that in order to drive progress towards net-zero emissions, companies need to align their external engagement with climate goals, including “lobbying for positive climate action and not lobbying against it.”
With several different planned liquefied gas developments in B.C., the industry will likely be heavily lobbying to push the idea to governments that liquefied gas is some sort of greener fossil fuel, Brouillette said.
“Canadian decision-makers and governments need to be really vigilant because, now more than ever, this is the type of rhetoric that we’re going to hear from the gas sector,” she said.
“This idea that we can reduce our emissions while expanding gas production and exports, truly doesn’t hold water.”
Updated on Jan. 17, 2024, at 1:06 p.m. ET: This story has been updated to replace an image meant to portray an LNG plant. The previous image had depicted an aluminum smelter.
Updated on Jan. 19, 2024, at 3:06 p.m. ET: This story has been updated to provide additional information on the process of extracting natural gas and converting it into liquid form.
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