The oil sands sector accounts for roughly one-quarter of Alberta’s annual emissions. Oil sands facilities are currently charged a Specified Gas Emitter Regulation (SGER) levy based on each individual facility’s historical emissions, irrespective of how intense (e.g. tonnes of GHG per barrel produced) or efficient that operation has been. Oil sands operations currently emit roughly 70 Megatonnes (Mt) per year. There is currently no limit on oil sands emissions, either by facility or industry-wide.
Getting to 2030
Alberta will transition to an output-based allocation approach for the carbon price and will legislate an overall limit to oil sands GHG emissions. These will create the conditions for the oil sands sector to innovate and become more globally competitive.
Alberta’s new approach includes the following:
- An oil sands specific output-based allocation approach will replace the current approach. A $30/tonne carbon price will be applied to oil sands facilities based on results already achieved by high performing facilities — to drive towards reduced emissions and carbon competitiveness, rather than rewarding past intensity levels.
- A legislated emissions limit on the oil sands of a maximum of 100Mt in any year with provisions for cogeneration and new upgrading capacity. This limit will help drive technological progress and ensures Alberta’s operators have the necessary time to develop and implement new technology that takes more carbon emissions out of every barrel and helps bend Alberta’s overall emissions trajectory downward.
Alberta can’t let its emissions grow without limit. But we can grow our economy by applying technology to reduce our carbon output per barrel.
The 100 Mt limit provides room for growth and development of our resource as a basis for a strong economy. Overall, Alberta’s new approach will incent changes that see the number of produced barrels increase relative to associated emissions. The future production achievable within the annual 30Mt “room” in the limit will be higher than at any time in our past or present. And Alberta will be able to sell its product into global markets as one of the world’s most progressive and forward-looking energy producers.
A legislated emissions limit is an unprecedented step, taken as part of new climate leadership. It can help change the debate about Alberta’s most important export and the infrastructure needed to get it to market
The annual emissions limit was jointly recommended to government by Canadian and international leaders in Alberta’s oil sand industry and leaders in Canadian and international environmental organizations. Government will begin immediately to seek the advice of the industry, regulators, environmental organizations and Indigenous and Metis communities on the implementation of the 100 Mt limit.