Design recommendations for a national oil and gas emissions cap - Pembina Institute comments and recommendations

The Pembina Institute generally supports the level and scope of the proposed cap, despite the cap level being misaligned with the economy-wide target of a 40-45% reduction in emissions by 2030. [...] Net-zero worldwide: Even faster declines in production The proposed cap is based on a production trajectory similar to the CNZ; however, if global oil and gas production is closer to the trajectory of the Canada Energy Regulator’s Global Net-zero (GNZ) scenario (Figure 1), the emissions cap is achievable without the use of compliance measures with technically achievable reductions. [...] What process should be established to review the emissions cap trajectory for the post-2030 period? Regular review of the emissions cap is absolutely essential to assess the performance of the policy and the state of the allowance market; to ensure that the marginal price signal in existing carbon pricing systems is maintained; and to align the sector with net-zero by 2050. [...] How should the proceeds from the decarbonization funding program be distributed? How should contributions be used to support decarbonization of the oil and gas sector? We recommend that a portion of the revenue raised by the decarbonization fund be allocated to R&D for solutions that would increase the ability of the sector to reduce emissions past 2030. [...] The Global Net-zero scenario is calculated based on the Canada Energy Regulator production forecasts and associated emissions intensities from the 2021 National Inventory Report, representing the emissions intensity in the year 2019 and resulting in an emissions increase of only 5 Mt CO2e in the year 2030.12, 13 Methane: Methane emissions from the oil and gas sector could be reduced by 35 Mt assum.