Rising carbon emissions from oilsands a 'unique' challenge, federal cabinet told

Greenhouse gas emissions from increasing oilsands production will rise faster than Canada's ability to curb them, the federal government was warned before new emissions reduction targets were announced last week.

Cabinet documents obtained by CBC News revealthe thinking behind the scenes as the cabinet members mulled over various proposals for Canada's target to cut its greenhouse emissions by 2030.

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The documents marked "secret" also suggest Canada should try to negotiate new North American-wide rules to reduce oil and gas emissions in lockstep with the U.S. and Mexico.

Andthey advise cabinet to follow Alberta's lead when it comes to adopting a national plan to cut emissions though that advice came a week before the provincial NDP's surprise victory in Alberta's May 5 election.

Increasing [oilsands] production is expected to outpace improvements in emissions intensity.Document to federal cabinet

Last Friday, federal Environment Minister Leona Aglukkaq announced Canada would cut its emissions by 30 per cent below 2005 levels by 2030.

The target is Canada's required contribution to a new global climate change agreement and has to be submitted to the G7 meeting in early June and filed with the United Nations Framework Convention on Climate Change.

Aglukkaq said Canada will meet its target by bringing in regulations to reduce methane that leaks from industrial processes and pipelines and by cutting emissions from the chemical and fertilizer industry and natural-gas fired electricity. All these align Canada with U.S. plans for the same sectors.

These new measures are in addition to phasing out traditional coal-fired power plants andstricter controls on cars and light trucks.

But the new targets don't specifically outline cuts to carbon dioxide emissions produced by the oilsands industry the largest and fastest growing source of Canada's greenhouse gas pollution.

Buy credits to offset oilsands, cabinet advised

The cabinet memorandum outlines the difficulty in tackling the oilsands emissions, providing an insight into why that sector was largely absent from Aglukkaq's announcement.

"The oilsands represent a unique emissions challenge," said the memorandum.

"Increasing production is expected to outpace improvements in emissions intensity and most technologies with the potential to reduce emissions have not been commercialized or technically proven."

"Emissions from oilsands are projected to increase by 102 MT [million tonnes]from 2005 to 2030."

The documents say that Canada should buy international emissions credits specifically to "counterbalance increasing emissions from the oilsands."

"Credits would be scalable and could be considered to offset the expected growth in oilsands emissions from 2020 to 2030."

Emissions credits could include investments in green projects in developing countries.

In its formal submission filed to the UN,Canada says it may have to buyinternational credits. But when asked about it during her announcement on Friday, Aglukkaq refused to address those questions from reporters.

A spokesman for Aglukkaq said Tuesday Canada would only consider international mechanisms that produce "real and verifiable emissions reductions."

"One approach that Canada could consider is that used by Japan that supports investment in clean technologies in exchange for a portion of the resulting emission reductions," Ted Laking said in an email to CBC News.

Follow Alberta

Another suggestion in the cabinet is to look to Alberta's practice of setting intensity targets and penalizing companies that fail to meet them.

At present, Alberta requires large industrial companies to reduce their energy intensity the energy used to produce a barrel of oil, for example by 12 per cent a year. Companies that don't meet the target have to pay $15 a tonne into a technology fund.

Alberta's rules have been criticized as being too weak to make companies do much to cut their emissions.

Former Alberta premier Jim Prentice had pledged to bring new rules by June of this year. The newly elected NDP government has not yet revealed the oil and gas regulations it's considering.

"Once Alberta's revised regulatory approach is confirmed, it may be possible in the context of its potential application on a continental basis with the U.S. and Mexico, to apply it nationally in Canada," advised the memorandum to cabinet.

The document proposes that"the minister of the environment would return to cabinet to seek policy approval to move forward with these regulations."

Aglukkaq's spokesman said a North American approach is what the government wants.

"We have been very clear that in order to protect the Canadian economy, we want to take cooperative action with our continental trading partners, particularly the United States, in integrated sectors of the economy, such as the oil and gas sector," Laking said.

But it is still a touchy file for the Conservative government. A warning in the memorandum points out Canada's newly announced target "will be subject to scrutiny of stakeholders, the media and other countries, focusing on the target's level of ambition and on its credibility."

It goes on to note the consequences of a country missing its 2030 target are "not expected to be punitive," but warns Canada's international image and its trade could suffer.

"Reputational damage is more likely and it is also possible that future emissions performance will be considered in bilateral and multilateral discussions outside of UN-sanctioned bodies. The EU's fuel quality directive and the difficulties it has presented for Canadian oil exports is a possible example."