The oilsands have reduced the amount of greenhouse gas they emit per barrel of oil produced but remain more carbon-intensive than the average barrel worldwide and are the fastest-growing source of emissions in Canada, according to a new report from the Pembina Institute.

That puts the sector in a risky position as the world looks to shift toward lower-carbon energy sources, the report says, and creates a challenge for Canada in meeting its climate commitments.

"We urgently need to work together to prepare Canada to compete in a low-carbon economy," the institute's executive director, Simon Dyer, said in a release.

"That includes a fact-based discussion about the role of the oilsands, which is the fastest-growing source of emissions in Canada. We need a constructive and thoughtful conversation — let's not shy away from it."

The report aims to "depolarize the conversation about continued production of oil from the oilsands," highlighting the success the industry has had in reducing emissions intensity over past decades while also warning of "unprecedented pressures" that lie ahead.

Despite those improvements in carbon intensity, total emissions from the oilsands have more than doubled since 2005 due to increased production and "are projected to keep growing at a similar pace through to 2030," the report says. That puts the industry on a "collision course" with Canada's commitment to achieve "deep decarbonization" as part of a global effort to stave off the most devastating effects of climate change.

Canada's annual emissions totalled 716 megatonnes in 2017. Under the Paris Agreement, it has pledged to reduce that amount to 511 megatonnes by 2030, but at its current rate is set to miss that target by nearly 100 megatonnes.

Even more challenging will be Canada's plan to become carbon-neutral — that is, to have zero net emissions when including carbon offsets — by 2050.

"Business-as-usual no longer applies — significant changes are necessary," the report reads.

Those changes will be particularly needed in Alberta, which accounts for more than a third of Canada's total greenhouse gas emissions, the report adds.

It notes the province's oil and gas sector is "the largest single source of emissions across Canada," making up 19 per cent of the country's total greenhouse-gas output in 2017.

Greenhouse gas emissions by province and sector in 2017. (Chart: Pembina Institute / Data: 2019 National Inventory Report)

"The pathway to make Canada's oilsands carbon-neutral will not be easy, and will only be more difficult if the discussion is not grounded in fact," Chris Severson-Baker, the Pembina Institute's Alberta regional director, said in a release.

"This report answers some of the key questions around oilsands and describes the challenge to go well beyond the incremental gains that have been made to date to reduce total emissions for the sector by 2030 and ultimately achieve net-zero emissions by 2050."

Some companies moving toward net zero

Several major oil-and-gas companies, including Cenovus, Canadian Natural Resources and MEG Energy have announced long-term plans to make their operations carbon-neutral in the coming decades, although exactly how to achieve that remains an open question.

Canadian Association of Petroleum Producers president Tim McMillan responded to the Pembina report with a written statement, saying the oilsands already have "an impressive track record when it comes to environmental performance."

"Lowering greenhouse emissions and reducing the environmental footprint of the oilsands are priorities for industry, and we are committed to addressing those challenges," McMillan said.

He noted that the report acknowledges how the oilsands reduced emissions intensity by 21 per cent between 2009 and 2017, and said the industry is working to further reduce the amount of greenhouse gas it emits per barrel of oil produced.

"The world needs energy and we believe that energy should come from Canada," McMillan said. "Our industry is ready to collaborate in the best interests of Canadians, as well as to make a difference in lowering global greenhouse gas emissions."

Alberta Energy Minister Sonya Savage said Wednesday she believes the sector can continue to see growth in the oilsands and meet Canada's emissions targets.

"Absolutely," she told reporters in Calgary. "That's what we're doing. And that's what we have the constitutional right and the jurisdiction in Alberta to do is produce — grow — our resources, and do it sustainably and responsibly. And we have our producers, we have our industry, moving toward net-zero."

The Pembina report also makes several recommendations it says would help toward the goal of reducing absolute emissions in line with Canada's climate commitments, including a return to an industry-wide standard in Alberta's carbon pricing policy for large emitters.

Effective Jan. 1, the provincial government changed that policy, creating different benchmarks for different facilities, a move the report describes as "a step backward in climate policy."

"In contrast, the previous provincial regulations were meant to accelerate the adoption of lower-carbon technologies through an industry-wide benchmark that created both a level playing field and a race to the top," the report reads.

It also recommends improved emissions monitoring, the creation of sector-by-sector emissions targets for 2030 and 2050 made enforceable in five-year increments and the establishment of more "credible and effective" energy regulators at both the provincial and federal levels that have "the capacity to follow through on that enforcement."

Finally, it calls for a "robust ecosystem to support innovation, research and development" of new technologies that go "beyond incremental improvements" in reducing oilsands emissions.

Such rapid changes will be necessary not only to meet Canada's climate commitments, the report says, but also to keep the industry competitive as "global shifts toward lower-intensity energy options are likely to put more carbon-intense crudes — such as the bulk of oilsands products — at risk over the next decade."

The Pembina Institute is a non-profit organization that produces research, analysis and recommendations on policies related to Canadian energy and climate change.