TRANSITION PATHWAYS FOR CANADA’S OIL AND GAS SECTOR

The report argues that Canada's oil and gas sector must dramatically reduce greenhouse gas emissions, specifically fugitive methane, to survive falling global demand. It proposes a short-term focus on decarbonizing production through a sector-specific emissions cap and a long-term pivot toward becoming 'carbon management' companies. These companies would leverage Canada's geological advantages to produce blue and green hydrogen, low-carbon chemical feedstocks, and carbon-negative products using carbon capture and storage (CCS) and direct air capture.

• The Canadian oil and gas sector was a significant economic driver in 2020, representing $105 billion of GDP (approximately 6.5%) and $105 billion in exports (approximately 16%), but it also accounted for about 27% of Canada's greenhouse gas emissions that year.
• Fugitive methane emissions are a critical target for reduction; the International Energy Agency (IEA) recommends a reduction of at least 75% by 2030. The report notes that 50-80% of current fugitives can be reduced for less than $50 per tonne of CO2 equivalent, with over half potentially achievable at a negative cost due to the value of the recovered methane.
• Global crude oil demand is projected to fall to about 20% of current consumption by 2050 in the IEA net zero scenario, with natural gas demand peaking in the mid-2020s and falling to about a third of current consumption by 2050.
• To ensure a transition to net zero by 2050, the report proposes a sector-specific and declining emissions cap for all oil and gas combustion and fugitive emissions, potentially replacing the Output-Based Pricing System or Alberta’s Technology Innovation and Emission Reduction Regulation.
• The report identifies a long-term opportunity for the sector to evolve into 'carbon management' companies. This involves using blue hydrogen (methane reforming with CCS) and eventually green hydrogen (water electrolysis) to create low-carbon aviation fuels, chemical feedstocks, and replacement fuels for buildings and industry.
• The report suggests the creation of industrial clusters in locations such as Fort Saskatchewan, Medicine Hat, and Lloydminster to collocate the supply, storage, and demand for hydrogen, oxygen, and carbon compounds near suitable geology for CCS and hydrogen storage.

APA

Bataille, C. (2022). TRANSITION PATHWAYS FOR CANADA’S OIL AND GAS SECTOR. Canadian Climate Institute. https://climateinstitute.ca/wp-content/uploads/2022/07/Transition-pathways-oil-and-gas-sector.pdf

Chicago

Bataille, Chris. TRANSITION PATHWAYS FOR CANADA’S OIL AND GAS SECTOR. Canadian Climate Institute, 2022. https://climateinstitute.ca/wp-content/uploads/2022/07/Transition-pathways-oil-and-gas-sector.pdf.

Wikipedia

{{cite report |last1=Bataille |first1=Chris |title=TRANSITION PATHWAYS FOR CANADA’S OIL AND GAS SECTOR |publisher=Canadian Climate Institute |date=July 2022 |url=https://climateinstitute.ca/wp-content/uploads/2022/07/Transition-pathways-oil-and-gas-sector.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bataille2022transition, author = {Bataille, Chris}, title = {{TRANSITION PATHWAYS FOR CANADA’S OIL AND GAS SECTOR}}, institution = {Canadian Climate Institute}, year = {2022}, month = jul, url = {https://climateinstitute.ca/wp-content/uploads/2022/07/Transition-pathways-oil-and-gas-sector.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }