Page 5 - NorthAmOil Week 29 2022

NorthAmOil COMMENTARY NorthAmOil

no surprise that alternatives to the use of fossil gas industry. This week, the government released
fuels are being explored. And nuclear power a discussion paper outlining two options for
offers one such potential alternative. such a cap. The first entails a cap-and-trade sys-
The Pathways Alliance, which represents the tem that would set regulated limits on emissions
six leading oil sands producers that account for from the industry. The second involves modify-
95% of output in the region between them, has ing the carbon pricing benchmark requirements
formed a committee to formally explore the for heavy emitters in order to create price-driven
potential to replace gas with nuclear power in incentives to cut emissions to levels that corre-
oil sands operations. The group is pursuing a spond to the cap.
reduction in greenhouse gas (GHG) emissions The discussion paper comes at the start of a
from oil sands production of 22mn tonnes per consultation period that will run until the end
year (tpy) by 2030, followed by net-zero GHG of September 2022. After this, the government
emissions by 2050. said it expects to outline the design of the oil and
The alliance’s main proposals centre on the gas emissions cap early next year.
development of carbon capture and storage The industry’s concern is that the cap, once
(CCS) capacity in the oil sands, with the system it has been finalised, could require oil sands
potentially delivering around 10mn tpy of emis- producers to curtail output to force them to stay The industry’s
sions and starting up by around 2030. But this within a regulated limit by 2030. So far, Ottawa
alone will not be enough, and additional ways to has not indicated what the ceiling on emissions concern is that
cut emissions are also being considered. could be. However, according to this week’s the cap, once
As with carbon capture, the alliance can be discussion paper, emissions must not increase
expected to call for government financial sup- from current levels and a cap would have to it has been
port and a favourable regulatory environment account for targets set out in the government’s
for SMR development. Emissions Reduction Plan. finalised, could
Indeed, the industry has previously con- That plan calls for emissions of 110mn
sidered using nuclear power but rejected the tonnes by 2030, equivalent to a 42% cut from require oil sands
idea, largely owing to the high costs involved. 2019 levels of 191mn tonnes. The Pathways producers to
However, this was prior to the adoption of net- Alliance has warned that these targets could
zero emissions targets by producers and the be unrealistic. curtail output.
Canadian government alike. Net zero “changes This will likely not be the last time the Liberal
everything”, non-profit advisory group the government finds itself at odds with the oil and
Transition Accelerator’s president and CEO, gas industry over the pace of decarbonisation
Dan Wicklum, was quoted by the Canadian and what the process will look like. But while
Press as saying. the industry will push for more favourable
terms, it will likely have no choice but to step
What next? up emissions-cutting efforts. And the roll-out of
This is playing out as Ottawa moves closer to commercial SMR technology, when it happens,
implementing an emissions cap on the oil and seems well-placed to help with these efforts.™

Week 29 21•July•2022 www. NEWSBASE .com P5