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Record oil exports test Trudeau’s climate-change ambitions

Record oil exports test Trudeau’s climate-change ambitions

Record oil exports test Trudeau’s climate-change ambitions

Erik Hertzberg and Brian Platt 5/5/2022

(Bloomberg) — Canada is becoming more reliant on the fossil-fuel sector, even as Prime Minister Justin Trudeau seeks to strengthen the country’s policies on climate change.

Oil, natural gas, coal and refined petroleum exports hit a one-month record of C$17.4 billion ($13.6 billion) in March, according to data released Wednesday by Statistics Canada. The past 12 months saw approximately C$150 billion in shipments — another record. 

The fossil-fuel industry accounted for 27.4% of total merchandise exports in March, matching the record set by former Prime Minister Stephen Harper in 2014. 

Surging commodity prices are driving these gains. However, the numbers also illustrate the difficulties Canada faces in trying not to rely on the oil and natural gas industry. Crude is both a source of wealth and global influence for the country, and Russia’s invasion of Ukraine only amplifies the importance of Canada’s vast energy reserves to economic security. 

This may explain the recent shift in Canada’s attitude toward oil and gas production. Trudeau’s officials have so far shunned any push to accelerate the phaseout of fossil fuels, in favor of a slower path that seeks to ramp up efforts to decarbonize the industry and keep production growing. The strategy was evident in recent moves by Trudeau’s cabinet, including the approval last month of a major offshore oil project and the introduction a pricey tax credit for investments in carbon-capture technology.

“Canada has decided through its policy actions that an aggressive decarbonization strategy is a better route to net zero than conceding the market to dirtier suppliers of oil and gas,” said Ed Greenspon, chief executive of the Public Policy Forum, an Ottawa-based think tank that argued against an accelerated phaseout in a March report. “As an exporter, this is good news for the Canadian economy. As a reliable exporter, it is good news for the world economy.”

The Trudeau government’s plan to meet its climate targets relies on a 42% cut in emissions from the oil and gas sector over the next eight years. It leans heavily on technical improvements — such as carbon capture  — while still allowing for barrels to be pumped, to the chagrin of environmentalists.

On Tuesday, Steven Guilbeault (Environment Minister) was challenged by an opposition lawmaker because he promoted the idea of oil production with lower emissions than Canada’s exit from the fossil-fuel industry.

“Low-carbon oil is not a myth, it’s not an invention,” Guilbeault shot back, speaking in French. He stated that crude production will be needed even if the United Nations targets global warming to 1.5 degrees Celsius.

“What’s important are the emissions and the cap on greenhouse gases that we’re going to put into effect,” Guilbeault said. “Regardless of the production — if it’s the same, decreases, increases — emissions will decrease.”

While the country’s crude oil revenues have increased sharply in recent months due to rising prices, it has also been increasing exports in real terms. Volume-wise, oil shipments for the first three months in 2022 have increased by around 25% since Trudeau’s election.

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