
Capping Potential Blowouts
Making Canada's oil and gas greenhouse gas emissions cap effective
This policy brief argues that Canada's proposed oil and gas emissions cap is needed but cautions that some of the proposed compliance flexibilities may—instead of making the cap easier to achieve—amount to avenues for weakening it. In particular, the brief cautions that the proposed use of internationally transferred mitigation outcomes (ITMOs) and a Decarbonization Fund are ill-advised and that the use of domestic offsets needs to be approached with caution.
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Canada's oil & gas emissions cap is needed: emissions from this sector are almost 1/3 of Canada's total, and rising. But it also needs to be strong—some "compliance flexibilities" raise red flags!
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The devil is in the details! Canada's proposed oil & gas emissions cap features ways to make the cap more achievable that are actually ways to weaken it. Looking at you, ITMOs, Decarbonization Fund!
The Canadian government has proposed a greenhouse gas emissions cap for the oil and gas sector. The cap is needed, since emissions from the sector continue to rise despite existing policies, endangering the achievement of Canada's climate commitments.
But the cap contains a 25 Mt cushion of "compliance flexibilities" that are meant to make it easier for the sector to achieve its targets. The danger is that, as proposed, several of these flexibilities will allow firms to emit more without offsetting those emissions with real emissions reductions. As such, they are not meant to make it easier to achieve the target, but rather they may weaken that target.
The proposed Decarbonization Fund and the use of Paris Agreement offsets under Article 6.2 ITMOs would represent that sort of weakening and should not feature in the cap. The use of domestic offsets is also risky, though less so, and should only involve those offsets that can be demonstrated to be permanent and additional to what would have happened anyway.
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