ST. JOHN'S, N.L. — Anxiety is running high in Newfoundland and Labrador as the province waits on a federal decision about a proposed offshore oil project about 500 kilometres east of St. John's.
Equinor's Bay du Nord project would open a fifth oilfield for the cash-strapped province, whose oil sector was hit hard by the COVID-19 pandemic and crashing global prices. But some experts say an approval from Ottawa would undermine federal climate commitments and send a message to other provinces that oil and gas is a viable industry on which they can hook their financial hopes.
"If we're going to be serious about our net-zero commitment and our international commitments, then we cannot approve any new oil and gas projects," said Debora VanNijnatten, a public policy expert and associate political science professor at Wilfrid Laurier University.
"And we have to have a plan to help those regions that we say 'no' to," she added in a recent interview.
Oil accounted for nearly 21 per cent of Newfoundland and Labrador's GDP in 2019, according to its latest budget, which also forecasted a deficit of $826 million and a net debt of $17.2 billion. With an estimated 800 million recoverable barrels of oil in the proposed Bay du Nord site, the project is "is critical to the Newfoundland and Labrador economy," said a statement Thursday from Energy Minister Andrew Parsons.
Meanwhile, Canada has committed to achieving net-zero emissions by 2050 and to limiting global warming to 1.5 C. Bay du Nord is also among the first oil and gas projects to be considered for approval by the federal government since the International Energy Agency declared in May there can be no investment in new fossil fuel supply projects if the world is going to hit net-zero targets by 2050.
On Monday, the federal government rejected GNL Québec's proposed $14-billion liquefied natural gas project in Quebec's Saguenay region. A news release about the decision said the Impact Assessment Agency of Canada found the project could have adverse environmental effects due to an increase in greenhouse gases, among other concerns.
VanNijnatten noted that the federal environment minister is also putting together a national emissions reduction plan, due at the end of March. "I'm sure he's right now hearing from a whole bunch of stakeholders that are saying, 'No, you can't approve anymore oil and gas projects,'" she said.
Rob Strong has been a consultant in Newfoundland and Labrador's oil and gas industry for decades, and he said he feels a growing hesitancy from the federal government to keep supporting the fossil fuel industry. "I'm concerned," he said Friday about the Bay du Nord project.
Radio-Canada reported Thursday there was unease about the offshore oil project among members of Prime Minister Justin Trudeau's cabinet.
Newfoundland and Labrador's Progressive Conservatives held a press conference that afternoon demanding Liberal Premier Andrew Furey do something to ensure Bay du Nord's approval. On Friday, they called for the legislature to be opened for an emergency debate about the project.
Joanne Thompson, member of Parliament for St. John's East, issued a statement Friday calling for "united support" for the project.
Kathryn Harrison, a political science professor at the University of British Columbia, agrees that the Bay du Nord project is putting Ottawa in a complicated position.
"If the federal government said yes to this, how would they justify that as being consistent with Canada's own international commitments?" she asked.
In his statement Thursday, Newfoundland and Labrador's energy minister said Bay du Nord "will be the most carbon efficient development of its scale in Canada." It's also a key component of the province's mission of developing "responsible oil" while meeting its net-zero goals, Parsons said.
Both VanNijnatten and Harrison say that approach only addresses the emissions released when the oil is extracted and not when it's ultimately exported and burned elsewhere. Those downstream emissions, Harrison said, undercut Canada's commitment to limit global warming to 1.5 C.
"We've tended to have two very separate conversations, one about our commitment to reducing Canada's emissions and then … about our fossil fuel exports," she said.
Harrison said Bay du Nord provides an opportunity for Ottawa to send a clear message that it's committed to its domestic emissions reduction goals and takes responsibility for its contribution to global emissions.
This report by The Canadian Press was first published Feb. 11, 2022.
Sarah Smellie, The Canadian Press
