Federal Environment Minister Steven Guilbeault has warned Canada's biggest oilsands producer that its planned mine expansion may not meet climate targets. 

In a letter released Wednesday to Mark Little, the head of Suncor Energy Inc., Guilbeault says the greenhouse gases that would be released by the company's proposed Base Mine expansion in northern Alberta may conflict with the government's carbon-reduction goals. 

"Emissions at this level may not align with the pace and scale of emissions reductions required to achieve our targets," the letter says. 

"I am of the opinion that the project, as currently proposed, would likely cause unacceptable environmental effects within federal jurisdiction."

Guilbeault also said the government is reviewing how fossil fuel projects are evaluated against each other.

"The government will develop guidance for how oil production projects subject to review ... should demonstrate that their emissions will be 'best in class,'" his letter says. 

That statement came as the federal Liberals approved the Bay du Nord oil project off the coast of Newfoundland, which is projected to emit carbon dioxide at about one-eighth the rate of Suncor's proposal. 

Suncor has been before the Impact Assessment Agency of Canada since July 2020 for its proposed extension. The project near Fort McMurray would continue to supply Suncor's upgraders with 25 years' worth of bitumen after the current mine is depleted.

Earlier this week, the company asked the agency for an extra nine months to file information required for the review. Suncor made the request, according to documents on the agency's website, to better align the project with Suncor's goals to be carbon-neutral by 2050 as well as the government's emissions reduction plan. 

"Some things have changed since we submitted the detailed project description," Suncor spokeswoman Sneh Seetal said in an email. 

"We want the opportunity to ... review government initiatives and meet the requirements set out by the (assessment agency). We want the best project possible."

The letter from Guilbeault signals the government is serious about reducing emissions without necessarily reducing oil production, said Martin Olszynski, a University of Calgary law professor with long expertise in energy regulation. He points out the government is expected to soon reveal a cap on total emissions from the oil and gas sector.

"The question then becomes, Where are you going to get the best bang for your buck," he said.

It will be tough for oilsands projects to match the low carbon intensity of offshore production, Olszynski said, even if the carbon is stored underground or the energy to run them is carbon-free. 

"Even with (carbon capture and storage) and small modular reactors, with all that money and risk you still don't get near the incredibly low GHG you get from the offshore. The business case seems pretty obvious."

Olszynski adds the government has yet to define what "best in class" means -- whether oilsands projects will be compared with each other or if all oil developments will be included. 

Seetal said the mine extension project can be modified to meet both the government's new policy environment and the company's increased climate-change ambition.

"We’re taking more time to improve the project in alignment with our strategy which includes meeting our emissions reduction ambition to be net-zero ... and meet the additional requirements set out by the (impact assessment) agency over the past year."

This report by The Canadian Press was first published April 7, 2022.

-- Follow Bob Weber on Twitter at @row1960

Bob Weber, The Canadian Press