Thank you, Mr. Chair, and thank you to the committee for the invitation to be with you today.
The global economy is changing and changing rapidly. It's changing largely because climate change demands it, and markets are responding.
Just as any business has to interpret and react to changes in the business environment, countries, to sustain and enhance their prosperity, must also be capable of thoughtful response and action. This means that we must focus on actions to mitigate climate change while ensuring that there are economic opportunities in all parts of the country.
The emissions reduction fund's onshore program was designed as a COVID support program to contribute to both of these objectives.
In 2020, due to COVID, the oil and gas sector faced record-low prices that created significant financial strain and threatened tens of thousands of jobs. The emissions reduction fund was designed as a targeted COVID emergency support program that had two key objectives: to maintain jobs for oil and gas workers in Canada at a time of record-low oil prices and to ensure that work continued on reducing methane emissions at a time when emissions reduction would not be high on the agenda of firms whose finances were being stretched.
The program made significant progress on both of these objectives, and 99% of recipient companies were small and medium-sized enterprises. The program has been praised by mayors of communities like Estevan, Saskatchewan; Brandon, Manitoba; and Slave Lake, Alberta for the jobs saved within mostly small and medium-sized firms.
We estimate that, a year after completion, these projects will reduce the CO2 equivalent by 4.7 megatonnes. That's like taking a million cars off the road.
As I mentioned, this program was specifically established as a COVID‑19 support measure. And it was a program that was supported, not only by the sector, but also by a number of environmental organizations.
For example, the Pembina Institute described the fund as “one of the few programs around the world” that confronted the health crisis, created jobs and “contribut[ed] meaningfully” to reducing emissions. The David Suzuki Foundation said that the program will achieve outcomes that go beyond the methane regulations and that 97% were achieved at a cost below $20 a tonne, something they said was “a notable achievement”.
Today, the oil and gas industry's acute economic crisis of 2020 has passed, but the climate crisis remains. So we are amending the program to ensure that it confronts that crisis.
In re‑evaluating this program, we have taken into consideration the feedback presented by the Commissioner of the Environment and Sustainable Development.
Three important changes have been made for the third intake of the ERF. These changes will continue to accelerate the reduction of methane emissions. Going forward, the fund will only support projects that fully eliminate methane emissions from existing sources in oil and gas operations. Current Canadian regulations do not require zero venting or flaring from existing sources, so these projects will achieve additional emissions reductions.
The fund will apply strengthened criteria to ensure value for money, which is in line with the commissioner's recommendations. We will implement a cost-per-tonne threshold. We will require applicants to demonstrate that the project could not move forward without this funding, and we will determine the minimum funding required.
Finally, the fund will enhance the visibility of GHG emissions reductions by providing greater transparency on the emissions that are counted per project. We will engage an ISO-certified contractor to review and verify the program's methodology for assessing GHG reductions. We will require applicants to submit two GHG emission reduction plans to confirm the incrementality of the reductions.
These changes will enable high-impact methane reduction projects for Canada and will help drive Canada toward achieving its target of a 40% to 45% reduction in greenhouse gas emissions by 2030.
Once again, thank you for inviting me to speak to you today.