Opening Statement to the Standing Senate Committee on Energy, the Environment and Natural Resources
Study on Climate Change: Canadian Oil and Gas Industry
27 April 2023
Jerry V. DeMarco
Commissioner of the Environment and Sustainable Development
Thank you, Madam Chair. We are happy to appear before your committee as part of its study of climate change and the Canadian oil and gas industry. I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabe people. With me today are Kimberley Leach, James McKenzie, who were responsible for many of our audit reports on this topic.
The Office of the Auditor General of Canada has issued several reports related to climate change in recent years. In order to save time for questions, I will give a brief overview of 4 of our recent audit reports and our 2021 retrospective on lessons learned from Canada’s record on climate change since 1990.
Our 2021 retrospective sets out 8 lessons learned from Canada’s action and inaction on the enduring climate crisis, including Canada’s economic dependence on emission-intensive sectors, such as the oil and gas sector.
Oil and gas production accounts for the largest share of Canada’s greenhouse gas emissions by economic sector. Growing oil and gas production remains a barrier to meeting domestic and international climate targets.
One of Canada’s commitments is to move away from fossil fuel dependence to a low‑carbon economy that reaches net-zero emissions by 2050. In section 2 of our report, we identified several opportunities to address the challenges of such a transition.
In our 2022 audit of a just transition to a low-carbon economy, we found that as the government shifted its focus to low-carbon alternatives, it was not prepared to provide the support needed by the more than 50 communities and 170,000 workers who are directly employed in the fossil fuel sector.
We also found that as the lead department, Natural Resources Canada had done very little to deliver just-transition legislation. Since our audit, the department has announced an interim sustainable jobs plan, but actual legislation has yet to be introduced.
I will now turn to our 2022 audit of carbon pricing. Putting a price on carbon pollution drives changes in consumer and producer behaviour, which in turn reduce overall greenhouse gas emissions. Effective carbon pricing is therefore essential if Canada is to succeed in significantly reducing its greenhouse gas emissions.
We found that the federal requirements for large emitters continued to undermine the “polluter pays” principle by allowing weaker provincial pricing systems in some parts of the country. In addition, Indigenous communities and other groups in society remained disproportionately affected by carbon pricing systems.
Our 2021 audit of the Emissions Reduction Fund for the oil and gas sector examined measures created in response to the COVID‑19 pandemic to reduce emissions while maintaining employment and encouraging investments in oil and gas companies.
We found that the program was poorly designed because it did not link funding to net emission reductions from conventional onshore oil and gas operations. For example, for 27 of the 40 projects that we examined, companies stated in their applications that the funding would allow them to increase their production levels. When production increases, so do the related emissions, yet these increases were not reflected in Natural Resources Canada’s projections.
Lastly, as you may be aware, our audit of greenhouse gas regulations was tabled in Parliament last week. We found that Environment and Climate Change Canada did not know the extent to which the greenhouse gas regulations we examined contributed to meeting Canada’s overall emission reduction target. This was because the department’s approach to measuring emissions did not attribute results to specific regulations. Regulations are an important element of achieving Canada’s emission reduction target. However, without comprehensive impact information, the federal government does not know whether it is using the right tools to sufficiently reduce emissions to meet this target.
Despite repeated government commitments to decrease emissions, Canada’s emissions increased by approximately 14% from 1990 to 2021. Since the United Nations Framework Convention on Climate Change was signed in 1992, Canada has been the worst performer of all Group of 7G7 nations.
Canada has not met a single emission reduction target in the past 3 decades while it has continued to increase oil and gas production. The climate change clock is ticking, and our window of opportunity to prevent catastrophic climate change is quickly closing.
Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.