Page 5 - NorthAmOil Week 07 2022

NorthAmOil COMMENTARY NorthAmOil

per credit. That was the first year of a new emis- recently found that oil sands GHG intensity had
sions regulatory system introduced by the rul- fallen to 69 kg of carbon dioxide (CO2) equiv-
ing United Conservative Party (UCP), which alent per barrel in 2020. The consultancy said
took power in Alberta in 2019. that since 2009, the earliest year in its records,
Credits trade at roughly 80% of the federal the GHG intensity of oil sands production had
carbon price, which was CAD40 ($31) in 2021, declined by 17 kg of CO2 equivalent per barrel,
with emitters able to use 2020 credits for com- or 20%, representing an average decline of just
pliance that year. over 1.5 kg of CO2 equivalent per barrel each
The planned changes mean that the opera- year.
tors of oil sands mines will no longer be able to Meanwhile, emissions from the oil sands as
financially benefit from their emissions when a whole are estimated to have reached 70mn
they account for their 2021 performance this tonnes in 2020. With production from the
year, according to Reuters’ sources. region rising, bolstered by strong crude prices,
The upcoming changes mark the latest adjust- there is scope for oil sands emissions to increase
ment under the UCP government, which over- further still.
hauled the emissions-reduction rules that it had The emissions
inherited from the previous government. Under What next?
the changes it brought in from 2020, major There are expectations, however, that oil sands intensity of oil
emitters such as oil sands operations were given emissions will peak soon. IHS Markit noted sands output
new flexibility. that a growing number of oil sands producers
This flexibility allows large emitters a choice was now focusing not just on emissions inten- continues to
in how they measure their emissions intensity – sity but also on absolute emissions. And as this
against a facility’s past performance, or against plays out, the consultancy believes that total oil fall thanks to
an industry benchmark. sands emissions could begin to fall in the next
“This is fundamentally the problem, that a five years. technological
facility can show some continuous improve- Meanwhile, Ottawa is set to tighten its emis- advances among
ment and gain credits, but still be a high emitter sions stringency standards in 2023, and Can-
and be a relatively poor emissions performer ada’s provinces will be expected to bring their operators.
from its peers,” environmental economist Dave own standards into line with minimum fed-
Sawyer, who advised a previous Alberta gov- eral requirements. This means that initiatives
ernment on managing emissions, was quoted to decarbonise the oil sands will take on even
by Reuters as saying. more urgency. At the same time, though, Alber-
Indeed, the emissions intensity of oil sands ta’s move to close the loophole for credits for oil
output continues to fall thanks to technological sands mines will likely be seen as a setback by
advances among operators, even as total emis- producers, who are calling for more federal and
sions from the oil sands are rising in tandem provincial government support for their costly
with growing output. Consultancy IHS Markit decarbonisation initiatives.™

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