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By Stewart Muir
For the second time in five months, Resource Works Managing Director Margareta Dovgal appeared before the House of Commons Standing Committee on Environment and Sustainable Development, and for the second time, she told parliamentarians something they needed to hear but mostly aren’t hearing from anyone else.
In October, Dovgal testified that Canada’s 2030 Emissions Reduction Plan was “fundamentally irreconcilable” with being an energy superpower. That testimony covered the waterfront: the emissions cap, methane regulations, electric vehicle mandates, the clean fuel standard. Since then, the government has moved on several of those files. The emissions cap is off the table. The Alberta MOU was signed. The Prime Minister now speaks routinely of trade diversification and energy security.
Yesterday’s appearance was narrower in scope but arguably more consequential. The committee is studying Canada’s industrial carbon pricing system: specifically the Output-Based Pricing System, or OBPS, examining its design, its effectiveness in reducing emissions, its competitiveness impacts, and its carbon-leakage protections. This is the plumbing of Canada’s climate policy. It is where the real costs are generated. And Dovgal came prepared to explain exactly how.
The machinery hasn’t changed
Her core argument was striking in its clarity: the government says the goal has changed, but the machinery hasn’t. “OBPS remains the single most consequential mechanism shaping industrial carbon costs in this country,” she told the committee, “and it is still built on assumptions, models, and design choices from a policy era whose effective goal was to constrain production, not to enable it.”
The technical heart of her testimony was stringency, which is the annual ratcheting down of emissions benchmarks that determines how much of a facility’s output is subject to the carbon price. It is, Dovgal argued, “a far more politically palatable way to burden our most productive industries than by raising the carbon price itself, which to be clear is already also happening year by year. That is precisely because almost no one outside industry understands how it works.”
She then trained her fire on a feature of the system she described as “deeply troubling”: the way energy-intensive, trade-exposed sectors are classified. Iron, steel, lime, cement — all receive favourable treatment and a slower tightening rate. Oil and gas extraction, which should qualify on the same criteria, does not. Dovgal told the committee that when you plot the government’s own published thresholds for determining which sectors qualify, “the boundary is non-linear. It appears to zig-zag specifically around oil and gas and conventional oil and gas production, excluding our largest and most trade-exposed sector from this favourable treatment.”
Original research
That is a serious accusation, and Dovgal signalled it is backed by original research. Resource Works has authored a comprehensive research report, set for public release in mid-April, which will be submitted to the committee. Without getting ahead of that publication, it is fair to say that the analysis goes considerably deeper than what could be conveyed in a five-minute opening statement, including independent verification of the government’s own regulatory data, and calculations that tell a very different story about the true cost of this system than the one Ottawa has been communicating.
The questioning from MPs drew out the practical consequences. When Conservative MP Carole Anstey asked about carbon leakage, Dovgal didn’t offer abstractions. “If you talk to oil and gas producers, it’s no longer theoretical,” she said. Thermal producers using steam-assisted gravity drainage, roughly 75 to 80 percent of in situ bitumen production, are doing the math on what the current schedule means. “I have heard from a number that at a certain point it becomes more economically rational for them to turn off the steam, pull as much oil out as they can, as fast as possible while the reservoir’s still hot, and then get out of Dodge, deploy that capital to a jurisdiction that doesn’t have comparable carbon costs.”
She added: “The ones that I’m speaking of, these aren’t marginal producers. These are, as we know, some of the lowest emissions intensity producers globally. And their liabilities are fully funded, so they can just get out whenever they want.”
‘Actively identifying pathways to get out of Canada‘
Pressed on the investment implications, Dovgal said companies are no longer just evaluating facilities individually, but they are now assessing their entire Canadian portfolios. “Many companies in those cases are actively now identifying pathways, I’ve heard, to get out of Canada.”
Anstey then asked whether the policy was proportionate to the environmental benefits. Dovgal’s answer was the line of the day: “If your objective is to decarbonize by deindustrializing, sure, the policy’s going to be a success and we’re just going to lose that industry and that investment and those emissions are going to go somewhere else. If your objective is to get the balance with the resources that we have, the assets that we have available to serve Canadians, then this policy’s not actually accomplishing that.”
Her closing argument to the committee tied it all together. The government says it wants Canada to be an energy superpower. “You cannot get there by slightly dialling back the mechanisms designed to keep energy in the ground,” she said. “The philosophy has to change, and those tools must change with it.”
The committee’s next steps
This is now the second time Dovgal has sat in front of ENVI and delivered testimony detailed, sourced, and grounded in the actual regulatory architecture. The forthcoming Resource Works report, which includes original data analysis, will put even more on the record.
The committee has a maximum of four meetings to complete this study and must report its findings to the House. It has also requested that the Minister of Environment and Climate Change appear. If the government is serious about the energy superpower ambition, the policy framework has to match the rhetoric. As Dovgal put it in October: “It is time to choose reality.” Yesterday, she showed the committee exactly what that choice looks like in practice, and what it costs when you refuse to make it.
Stewart Muir is the President and CEO of Resource Works Society. He can be reached at [email protected]
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