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Public Statement

Title: Emissions Reduction Fund


Launched in October 2020, the $750-million Emissions Reduction Fund (ERF) aims to help Canada protect the environment while growing the economy as we recover from the COVID-19 pandemic. It supports Canadian oil and gas companies in their transition to a low-carbon economy, allowing them to be more globally competitive for years to come. The ERF provides funding, primarily in the form of repayable contributions, to eligible Canadian onshore (up to $675M) and offshore ($75M) oil and gas companies to invest in clean solutions to reduce greenhouse gas emissions and retain jobs in the sector

The Emissions Reduction Fund responds to several federal drivers:

  • the Minister of Natural Resources Canada’s (NRCan) mandate letter tasking to fight climate change while keeping the economy strong and growing, and producing cleaner oil and gas, including in the offshore;
  • Canada’s COVID-19 Economic Response Plan to support Canadians and businesses facing hardship as a result of the global COVID-19 pandemic; and
  • requirements for industry compliance with the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds (Upstream Oil and Gas Sector) by 2023.

The ERF will support Canada’s 2030 target for reduced GHG emissions; build public confidence in resource projects; support the economy; and increase clean technology exports.

Summary of SEA Results

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a Detailed Strategic Environmental Assessment (SEA) was undertaken for the Emissions Reduction Fund.  The Detailed SEA concluded that the proposal is unlikely to have any important negative effects and is expected to have important positive indirect environmental effects over the immediate- and long-term through the reduction of methane and GHG emissions. 

In line with the 2019-2022 Federal Sustainable Development Strategy and in support of COVID-19 economic relief, the Government of Canada expanded on its commitment to boost the growth of Canada’s clean technology sector by funding the Emissions Reduction Fund (ERF).  The initiative provides funding for the assessment, research and deployment of technologies and solutions for methane and other greenhouse gas (GHG) emissions reductions.  It will help Canada to achieve its environmental and climate change mitigation objectives, support industry competitiveness, and clean growth in the natural resource sectors.

The intent of the ERF is to support innovation, research, deployment of technologies and solutions with the long-term goal of contributing to Canada’s emission reduction targets and addressing broader environmental challenges related to water, air and land. The important positive indirect environmental effects of this program would largely arise from companies and organizations participating in the program that deploy emissions reducing technologies and solutions. 

Any projects for which potential adverse environmental effects are identified and determined to outweigh environmental benefits, and/or for which there would be significant public concern, would be screened through a robust project selection criteria. When applicable, projects would be subject to the environmental assessment process and other applicable legislation.

Potential positive environmental effects could arise through increased adoption and commercialization of deployed technologies, not only in the natural resources sectors directly, but through sectors wherein such technologies could be applied. Furthermore, improving spill monitoring, detection, and response capacity will enhance marine protection and support GHG emissions reductions.

Results of Consultations

In order to develop a policy response, a targeted consultation process was undertaken to identify gaps as well as operating considerations unique to the onshore and offshore oil and gas sector. Since April 2020, NRCan has heavily consulted with provinces, industry associations, onshore and offshore oil and gas companies, engineering firms and not-for-profit research organizations. The input NRCan received from stakeholders was considered at length, and was integrated into the program design.

Environmental Effects

Positive environmental effects of this initiative include reductions in methane and other GHG emissions and improved spill monitoring, detection and response capacity to enhance marine protection. Cumulatively, this program is expected to contribute to Canada’s broader environmental priorities and climate change targets by not only increasing the use of – and accessibility to – clean technology and innovative energy technologies by Canadians, but by making it easier for innovators to develop and market their products.

Given the nature of the initiatives contained within this proposal, it is difficult to assess the potential negative environmental effects. However, it is unlikely there will be any significant negative environmental effects, and any that are identified are anticipated to be mitigated through the project selection process.

Enhancement, Mitigation and Follow-up Measures

Enhancements were identified as part of the program design, such as including assessments of individual company needs, and the procurement and deployment of technology to address opportunities identified in the assessment. As funding for these activities will be made available in 2020-21 and 2021-22, it is expected that methane and emissions reductions will start occurring immediately upon deployment of technologies. Further, the identification of future enhancement available to the offshore oil and gas sector is expected to become known through the research funding stream. There are no other actions or program design improvements within the scope of this initiative that can be done to further enhance the direct or indirect positive environmental effects.

Follow-up measures and monitoring of emissions will be conducted by NRCan through the oversight of the contribution program in the short and medium term and indirectly over the long-term by Environment and Climate Chance Canada when the final phase of coming into force of the Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds occurs in 2023.

Linkage to Sustainable Development

The Emissions Reduction Fund directly or indirectly supports the following goals of the 2019-22 Federal Sustainable Development Strategy:

  1. Effective action on climate change. Specifically, the initiative will contribute to the medium-term target of, by 2030, reducing Canada’s total greenhouse gas (GHG) emissions by 30%, relative to 2005 emission levels;
  2. Effective action on climate change. Specifically, the initiative will contribute to the short-term milestone of, reducing methane emissions from the oil and gas sector by 40-45% by 2025;

Relevant Links

Emissions Reduction Fund: working together to create a lower carbon future
Clean Growth Collaboration Community

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