How to account for a 10-megatonne discrepancy between federal and provincial oilsands reports

Alberta Premier Jason Kenney told an American audience earlier this month that greenhouse gas emissions from the province's oilsands total around 67 or 68 megatonnes per year, "right now."

That prompted some confusion, as it differs from numbers compiled by the federal government. 

The Globe and Mail was the first to publicly point out a "20-megatonne gap" between Kenney's numbers and Ottawa's latest submission to the UN, which pegs oilsands emissions at 87 megatonnes this year.

That, it turns out, was a bit of an apples-to-oranges comparison.

The Alberta government later clarified that, when Kenney said oilsands emissions are 67 megatonnes "right now," he was talking about 2018. That's the latest year for which the province has estimates of actual emissions. Those estimates aren't yet publicly available in any detail, as experts are still finalizing the exact numbers.

The federal figure of 87 megatonnes, meanwhile, is a projection of what emissions will be for 2020.

So the 20-megatonne gap was largely due to comparing different things (estimates vs. projections) from different years (2018 vs. 2020). But, even when you look at past emissions, a notable gap remains — of about 10 megatonnes.

That may not sound like a lot, in the context of Canada's roughly 700 megatonnes of annual greenhouse gas output. But consider how much political wrangling and public protest there was over the now-withdrawn Teck Frontier oilsands mine. The annual emissions from that project would have been about four megatonnes.

In that context, the 10-megatonne discrepancy certainly matters. It represents 2½ Frontier mines.

And even though the Teck project is now off the table, the oilsands cap remains relevant to the national debate over balancing resource development with climate change.

Legislation but no regulation

Alberta's 100-megatonne cap on annual oilsands emissions was created through legislation in 2015 by the province's previous NDP government, but was never made enforceable through regulations.

As part of its back and forth with Alberta's new UCP government over the Frontier project, Ottawa formally asked the province to give the cap regulatory teeth.

Even without Frontier, the federal government said the list of oilsands projects that have already been approved but not yet undertaken would push Alberta as high as 130 megatonnes, if all those projects were to actually go ahead. In theory, Teck could also bring the Frontier proposal back sometime in the future.

And, in its statement withdrawing Frontier, the company described itself as "strong supporters" of "climate policies such as legislated caps for oilsands emissions."

But for a cap to exist, there must first be some agreement on what oilsands emissions actually are. So why is there such a difference between the federal and provincial numbers?

That's not an easy question to answer. It took a couple of weeks of back-and-forth with officials from each level of government to sort out.

Here's what we learned.

Cap-applicable emissions in 2015: 68 Mt or 58 Mt?

First, the discrepancy. Let's look at 2015 as an example year, to keep things simple.

According to figures previously provided by the federal government, there were 68 megatonnes of emissions applicable under Alberta's oilsands cap that year.

The province, meanwhile, says cap-applicable emissions were actually 58 megatonnes in 2015.

Why are those figures off by 10 megatonnes?

There are several reasons, including:

• An apparent error in the initial federal figures, which failed to account for Saskatchewan's emissions.
• Different methods for calculating an emissions exemption for cogeneration of electricity.
• Different interpretations of whether primary bitumen or "CHOPS" (cold heavy oil production with sand) is included.
• "Residual differences" in the methods — and purpose — of the provincial and federal calculations.

Here's how that 10-megatonne discrepancy breaks down.

Emissions from Saskatchewan: 2 Mt

This one is relatively easy to understand.

In a statement provided to CBC News earlier this month, the federal government said Alberta's gross oilsands emissions (before cap exemptions) totalled 71 megatonnes in 2015.

It later corrected that figure, saying it was the total for Canadian oilsands emissions, including roughly two megatonnes from facilities in Saskatchewan.

OK, so that's two out of 10 down, leaving us with eight more megatonnes to explain.

Differences in cogeneration calculations: 3 Mt

As part of their operations, some oilsands facilities also produce electricity that is sold to the provincial power grid. This is known as cogeneration and, under Alberta's legislation, it is not counted toward the industry's emissions cap.

But the provincial and federal governments calculate the amount of this exemption in different ways.

The federal government's numbers are based on data reported to Statistics Canada by industrial facilities as part of an annual survey of fuel consumption. Environment Canada then uses that data to estimate greenhouse-gas emissions from cogeneration at oilsands facilities.

This "top-down" method varies from the province's "bottom-up" approach, said Justin Wheler, executive director of emissions regulation and compliance with the Alberta government.

"The federal … adjustment for cogen is going to be a little bit different than what we have," he said.

"When we adjust for cogen, we take the whole cogen — whether it's on-site or off-site, because there are both — and we treat them both the same."

For 2015, the province calculated about six megatonnes of cogen exemptions, while the feds came out with three.

That three-megatonne difference accounts for another chunk of the discrepancy.

And it leaves us with five megatonnes left to explain.

Primary bitumen or CHOPS: 2 Mt (roughly)

This part of the discrepancy comes down to differing interpretations of whether to include emissions from primary bitumen extraction toward the cap.

The province doesn't include this type of oil production — also known by the acronym CHOPS, which stands for cold heavy oil production with sand — in its calculations, but the federal government does.

How much in emissions are we talking about, exactly? The province won't say. Wheler said the precise numbers are confidential but did offer a rough estimate of "two to three megatonnes, depending on the year you're looking at."

In a recent, independent analysis, meanwhile, the Pembina Institute projected emissions from primary bitumen to be roughly two megatonnes for 2020. So we'll go with two, as well, for 2015.

That leaves roughly three megatonnes' worth of discrepancy to account for.

And this is where things get a little fuzzy.

'Residual differences'

As part of its international obligations, Canada regularly prepares a high-level accounting of its greenhouse gas emissions. This is a large and complicated document known as the National Inventory Report or NIR, and it must meet United Nations standards for verification.

Meanwhile, Alberta's facility-by-facility reporting is used to calculate what a company owes (or gets credit for) under the province's large-emitter carbon-pricing policy.

This is where those "top-down" versus "bottom-up" approaches that we talked about earlier come back into play.

Wheler, with the Alberta government, said the province has always accepted the NIR "as the official and total inventory for the country and the province." But it's a fundamentally different type of report, he said, than what Alberta produces for the purpose of calculating provincial carbon-price obligations.

"They're not going to dig into the facility-by-facility data for that kind of national inventory compilation and approval process," he said. "So there's always going to be some minor differences there … that neither I nor, I suspect, my federal counterparts would be fussed about."

Wheler said he's satisfied that these basic differences in approach account for any remaining discrepancy between the provincial and federal numbers, or at least put them within a rounding error of one another.

So that may explain the 10-megatonne discrepancy in theory — but what does it mean, in practice?

If the provincial and federal governments use different calculations, interpretations and approaches to quantify Alberta's oilsands emissions, whose version reigns supreme?

That could be as much a matter of politics as policy.

Cap as a bargaining chip

Around this time last year, there was some discussion among the United Conservative Party about scrapping the cap altogether, but ultimately Kenney opted not to, once his party won the April 2019 election and formed government.

The premier has since described the cap as "academic" since Alberta, by his math, is "nowhere close to hitting it."

Not so fast, federal Environment Minister Jonathan Wilkinson has said: "Our modelling shows we're actually approaching the 100-megatonne cap in 2030."

That modelling is based, of course, on federal interpretations of cap-applicable emissions which — as we've seen — yield some significantly different results than what the province comes up with.

During the Teck deliberations, the cap became something of a bargaining chip between the federal and provincial governments. And so, too, could some of those interpretations, even now.

In his recent letter asking Alberta to give the cap regulatory teeth, Wilkinson also laid out the dilemma new oilsands projects create for the federal government in trying to balance economic development with climate commitments.

Those include the Paris Agreement, under which Canada pledged to reduce its annual emissions to 511 megatonnes by 2030, and the federal government's longer-term promise to bring emissions to net zero by 2050.

Federal officials who do emissions projections, meanwhile, told CBC News those projections would likely change if Alberta were to introduce specific regulations for its 100-megatonne cap, for two main reasons.

Firstly, enforcing the cap could change the forecasts for oil production put out by the Canada Energy Regulator, which are the primary source of data used to make projections of future emissions.

Secondly, they said if Alberta were to spell out exactly how to interpret some of the issues that have led to the discrepancy — such as cogeneration calculation methods and whether to include or exclude primary bitumen — the federal government would incorporate those interpretations into its projections. Up until now, the federal officials said they've been relying on their best interpretations of Alberta's 2015 legislation.

The province, for its part, hasn't ruled out regulating the cap but hasn't shown a ton of enthusiasm for the idea, either, accusing the federal government of shifting the goalposts and bringing the cap forward at the 11th hour in discussions about Teck Frontier.

"We are willing to have a conversation about potential regulations around our cap," Environment Minister Jason Nixon said before the project was withdrawn.

Of course, whether they are counted as part of Alberta's cap or not, all oilsands emissions count toward Canada's total greenhouse gas inventory. And that same Pembina analysis we heard about earlier also found that ongoing growth in oilsands output has made the industry the fastest-growing source of emissions in the country, putting it on a "collision course" with national climate goals.

So even with Teck off the table, a regulated cap may still figure into the development-versus-emissions debate. But to have a coherent discussion about the merits of putting a hard limit on oilsands emissions, we first need to come to a common understand of what those emissions are.