Here’s how Canadian oil and gas can fuel global emissions reductions

When that LNG replaces coal in power generation, the emissions impact is even greater. Based on modelling from Navius Research, if Canada reaches its projected LNG capacity of 47.6 million tonnes annually by 2035, and that production is exported to Asian markets like China, Japan, South Korea, and India, the net global impact could be a reduction of 40 to 70 megatonnes of CO₂ per year. That’s equivalent to 6 to 10 percent of Canada’s entire national emissions—eliminated not in Canada, but in Asia. The oil story is more complex but follows a similar logic. Canadian heavy oil from the oil sands has long carried a reputational burden as high-carbon crude. That reputation is increasingly outdated. Emissions intensity has dropped 30 percent since 2005, and the trend continues downward through electrification, solvent-assisted extraction, and carbon capture. More importantly, heavy oil competes against heavy oil. The relevant comparison isn’t Saudi light crude—it’s grades such as Venezuelan heavy, which carries an emissions intensity roughly 18 to 51 kilograms of CO₂ per barrel higher than Canadian product. If the Pathways Alliance carbon capture project proceeds as planned under the new MOU, that gap widens further. Today, China imports roughly 750,000 barrels per day of high-carbon-intensity Venezuelan crude. If that were replaced by Canadian oil sands flowing to the West Coast, it would have a greatly positive impact on global emissions. There is a potential climate advantage for increasing Canadian oil and gas exports today, but that advantage could become even greater in the future. The MOU commits both governments to making Alberta’s oil “among the lowest carbon intensity produced barrels of oil in the world.” It mandates a 75 percent reduction in methane emissions by 2035 compared to 2014 levels. It ties new pipeline construction to the Pathways carbon capture project, which would be the largest such facility on the planet. Yes, the MOU suspends the oil and gas emissions cap and several other climate regulations, but this doesn’t necessarily mean that it will increase emissions globally. The Refuel report suggests that Canadian oil and gas can be a potential climate solution, as long as Canada continues its progress on emissions reduction and targets markets where our products displace dirtier alternatives rather than cleaner ones. Smart policy can help further these gains. Canada should champion product-level carbon accounting that rewards low-intensity producers, rather than the current system that simply looks at national emissions inventories. Canada should also pursue bilateral agreements under Article 6 of the Paris Agreement to capture credit for emissions reductions enabled abroad. The Refuel report is careful to note that climate benefits aren’t automatic. They depend on continued investment in emissions reduction technologies. They depend on targeting the right markets. They depend on not making the perfect the enemy of the good when it comes to international climate policy. Climate change is indifferent to geography. A tonne of CO₂ avoided in Shanghai counts the same as a tonne avoided in Fort McMurray. If Canadian energy exports can displace coal in Asia and high-carbon crude from Venezuela, the planet benefits regardless of whether or not Canada’s domestic production rises. That’s an uncomfortable reality for those who’ve framed the energy transition as a simple binary of fossil fuels bad, renewables good. The world and the energy transition are messier than that. Fossil fuels will remain part of the global energy mix for decades, as the latest IEA World Energy Outlook suggests. The question isn’t whether more oil and gas will be produced, but which barrels and which molecules will meet that demand. Canada has a choice. We can either cede global markets to higher-emitting competitors or compete to supply the world with the cleanest product available. The Refuel report argues that the second option isn’t just good economics—it might be better climate policy, too.